Glossary of U.S. Real Estate Terms

Introduction

Real estate in the United States is a diverse and complex world with its own set of specialized terms and jargon. Understanding these terms is essential for property buyers, sellers and real estate professionals alike. Whether you are looking to buy your first home, invest in property, or simply want to learn more about this market, this glossary will help you navigate the language of real estate.

From fundamental concepts such as "mortgage" and "property" to more specialized terms such as "easement" and "escrow," this glossary provides clear, concise definitions so you can make informed decisions in the exciting and sometimes complicated world of U.S. real estate. As you explore these terms, you'll discover how they apply in a variety of situations, from leases to commercial real estate transactions.

Whether you are looking to buy, sell or invest in real estate, this glossary will provide you with the tools you need to understand and make the most of your experience in the U.S. real estate market. With clear and accessible language, we invite you to explore and learn more about these crucial terms that shape the real estate industry in this country.

Real Estate Terms Beginning with A

Abutting (Adjacent): Means an area of land or a building that has a common boundary with another.

Acceleration clause (Acceleration clause): A contractual provision that allows the lender to require the borrower to repay the entire outstanding loan if payments are not made or a default under the contract occurs. A condition in a real estate financing instrument that gives the lender the power to declare all sums due and payable to the lender immediately due and payable upon the occurrence of an event, such as the sale of the property or default on the note.

Acceptance (Acceptance): The unconditional and unrestricted agreement of the offeree to the terms of the offer. When an offer is accepted, it becomes a binding contract.

Accession (Accession): In property law, accession is the acquisition of land by adding it to real property already owned through human or natural processes. The potential right of ownership of land that is produced, then added or attached to the owner's land.

Accretion (accretion): The slow accretion or acquisition of land, usually when soil is deposited due to the natural action of water. Long-term accretion may increase the size of a property. The process of gradual growth or accretion over a period of time from natural events, resulting in additional layers of matter.

AcknowledgementA formal statement made before an authorized person (e.g., a notary public) by a person who has executed an instrument, affirming that the execution was a voluntary act. In California, an acknowledgment is a statement by an official, such as a notary, that the signer of the instrument is the person he or she purports to be.

Active property (Active Property): If you or your client see a listing with the status "active", this indicates that the property is available for sale.

Current fraud (Actual fraud): It is an intentional misrepresentation of a fact; in simple terms, it is lying.

Actual NoticeExpress or implicit knowledge of a fact.

Addendum (Addendum): Used to clarify and add things that were not initially part of the original contract or agreement.

Additional Principal Payment

An additional principal payment is a payment made by a borrower of more than the scheduled amount of principal due in order to reduce the remaining balance of the loan. This type of payment is made to accelerate the amortization of the loan and ultimately decrease the outstanding debt.

Ad valorem (Ad valorem): The Latin phrase ad valorem means "according to value".

Adjustable-rate mortgage (ARM) (Adjustable Rate Mortgage): An adjustable rate mortgage has a flexible interest rate. Adjustable rate mortgages have a fixed period during which the initial interest rate remains the same, after which the interest rate adjusts at a preset frequency. The fixed rate period can vary significantly, from one month to 10 years.

Adjusted Basis

The adjusted basis is the original cost of a property plus the value of any capital expenditures for improvements to the property, less any depreciation taken.

Adjustment Date

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

Adjustment Period

The period between adjustment dates for an adjustable rate mortgage (ARM).

Administrator

A person appointed by a probate court to administer the estate of a person who has died without a will.

Adverse possession (Adverse Possession): The legal principle in which a person who does not have the legal right to a property acquires legal ownership based on continued occupation of the land without the permission of its true owner. A method of acquiring title to real property by meeting statutory requirements; a form of involuntary alienation of title.

Affidavits: A formal affidavit of fact. As part of the closing process, you will likely sign numerous affidavits. You may be required, for example, to sign an affidavit of occupancy. This states that you will use the property as your primary residence. Or you and the seller may be required to sign an affidavit stating that all improvements to the property required in the sales contract were completed prior to closing.

Your lender can provide you with additional information on any of these documents that you will sign.

Affordability Analysis: A detailed analysis of your ability to purchase a home. An affordability analysis takes into account your income, liabilities and available funds, along with the type of mortgage you plan to use, the area where you want to buy a home and the closing costs you could expect to pay.

Affinity housing (Affinity Housing): Allows marginalized groups with shared backgrounds to live in their own communities, avoiding certain FHA guidelines. These affinity communities are common on college campuses and allow students with protected characteristics to live in a familiar environment and culture.

Agency (Agency): The relationship between the principal and the principal's agent arising out of a contract, whether express or implied, written or oral, in which the agent is employed by the principal to perform certain acts in connection with a third party.

Agent (Agent): One who speaks for or represents someone. One who acts on behalf of and with authority of another called the principal.

Agreement of sale (Agreement of Sale): A form that states that the buyer consents to purchase a property and the seller agrees to sell that property under the terms and conditions illustrated by both parties.

Air rights (Air Rights): The rights to use space above the Earth.

Alienate - The ability of a property or property right to be sold or transferred from one party to another.

Alienation (Disposal): The act of transferring title, ownership, an estate, or an interest in real property from one party to another. The transfer of property to another person; the transfer of ownership and possession of land or other things, from one person to another.

Alienation clause (Dispossession clause): The provision in a mortgage or deed of trust signed with the lender that states that the borrower must pay the mortgage in full before the borrower can transfer the property.

Amendments (Amendments): Usually used to change something that is part of an original contract.

Amenities (Amenities): A useful feature or addition to a home that generally adds value to the property.

Americans with Disabilities Act of 1990The Americans with Disabilities Act (ADA) protects people with disabilities from discrimination in housing. This federal law states that housing providers must provide equal opportunity for people with physical or mental disabilities. It is a federal law that protects the rights of people with physical or mental disabilities.

Amortization (Amortization): When payments are divided into equal amounts over the life of the loan. Amortization is an accounting process in which the carrying value of a loan or intangible asset is reduced periodically through regular payments.

Amortization Term

The amount of time required to amortize the mortgage loan. The amortization term is expressed in number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

Amortize

Repay a mortgage with regular payments that cover both principal and interest.

Amortization Schedule

A schedule for repayment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal, and shows the remaining balance after each payment is made.

Annual Mortgagor Statement (Annual Mortgagor Statement)

A report sent to the mortgagee each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining balance of the mortgage loan at the end of the year.

Annual Percentage Rate (APR)

The cost of a mortgage expressed as an annual rate; includes items such as interest, mortgage insurance and loan origination fee (points).

The relative cost of credit, determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for the implementation of the Federal Truth in Lending Act.

Annuity: An amount paid annually or at other regular intervals, often on a guaranteed dollar basis.

Anticipatory RepudiationWhen a default occurs before the expiration of the performance period as a result of the clear intention of one of the parties not to substantially perform.

Antitrust laws (Antitrust laws): A set of federal and state government laws that regulate the conduct and organization of business, generally to promote fair competition for the benefit of consumers.

Application: A form used to apply for a mortgage loan and to record pertinent information about a prospective mortgagor and the proposed security.

*See also the "Loan Application" entry.

Appraisal (Appraisal/Appraisal): An estimate of the approximate value of something. A written statement, prepared independently and impartially by a qualified appraiser, that establishes an opinion in a federally related transaction as to the market value of an adequately described property as of a specific date. It is supported by the presentation and analysis of relevant market information.

Appraisal contingency (Appraisal Contingency): Most large lenders or banks require the buyer to have an appraisal done on the property before the loan is granted. This is done to make sure the home is worth approximately the accepted offer price.

Appraised Value

An opinion of the fair market value of a property, based on the knowledge, experience and analysis of an appraiser.

Appraiser (Appraiser/Appraiser): Although brokers and agents generally have some understanding of the appraisal process, they usually bring in an appraiser to do the work. Appraisers must have detailed knowledge of appraisal methods, and many states require a specific license or certification to perform these tasks. A person qualified by education, training, and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and the use of formal appraisal processes.

Appreciation (Appreciation): Any increase in the value of a property over time for any reason.

Appurtenance (Accessory): A noun describing an item attached to something. In real estate, after something is installed on a property, it can be called an appurtenance. It means that it is passed on to a new owner if the property is sold. Something that is outside the property itself but belongs to the land and contributes to its greater enjoyment, such as a right-of-way or a barn or a dwelling.

Appurtenant (Accessory): An adjective meaning attached to something. If something is accessory, it belongs to something else, either attached or by law.

Appurtenant easement (appurtenant easement): A type of easement that "runs with the land".

Arbitration (Arbitration): A way to resolve disputes. Normally, real estate arbitration occurs when two property owners want to resolve a problem and do not wish to involve the courts directly.

Assessment: The process of assigning a value to a property for the sole purpose of taxation. It may also refer to a charge against property for a special purpose, such as an assessment for the sewer system.

Assessment Rolls (Assessment Rolls): The public registry of taxable property.

Assessor (Appraiser): A public official who establishes the value of a property for tax purposes.

Asset: Anything of monetary value that is owned by a person. Assets include real estate, personal property, and claims enforceable against others (including bank accounts, stocks, mutual funds, etc.).

Assignment: The transfer of a mortgage from one person to another. A transfer of benefits and obligations within a contract to a third party who was not originally a party to the contract.

Assignees (Assignee)Those to whom the ownership or interest in the property has been transferred.

AssignorWho assigns or transfers the property.

Assumable Mortgage: A mortgage that can be assumed by the buyer when a home is sold.

Assumption (Asunción): The transfer of the existing mortgage from the seller to the buyer.

Assumption Clause: A provision in an assumable mortgage that allows the buyer to assume responsibility for the seller's mortgage. The loan need not be paid in full by the original borrower upon sale or transfer of the property.

Assumption Fee: The fee paid to a lender (usually by the real estate buyer) as a result of the assumption of an existing mortgage.

Attorney-in-fact (Practicing Attorney): Someone authorized to act on behalf of another person, usually in business or for some type of commercial transaction.

Automated Underwriting: After you complete your loan application with a lender, it is sent to "underwriting" for review. In short, underwriting is the process used to analyze how you have handled credit obligations in the past, whether you have the ability to repay the mortgage loan you are applying for (i.e., your income and assets), and whether the price you are willing to pay for the home is supported by the price of the property.

Avulsion (Avulsion): The immediate action of adding or uprooting land by violent acts of natural causes. An example of avulsion is a dam break or hurricane.

Real Estate Terms Beginning with B

Balance Sheet (Balance Sheet): A financial statement that shows assets, liabilities and net worth at a specific date.

Balloon loan (Balloon Loan: A loan that begins with fixed, regular payments over a specified term and ends with a final payment of the remaining balance. A Balloon loan is not fully amortized over the term.

Balloon Mortgage: A mortgage that has fixed monthly payments that will amortize over a specified period, but provides for a balloon payment to be made at the end of a previously specified term.

Balloon Payment: The final balloon payment that is made on the maturity date of a balloon mortgage.

Bankrupt: A person, firm or corporation that, through a judicial process, becomes exempt from payment of all debts after surrendering all assets to a court-appointed trustee.

Bankruptcy: A proceeding in federal court in which a debtor who owes more than he or she has in assets can discharge the debts by transferring his or her assets to a trustee. A legal proceeding by an individual or business that can no longer pay their respective debts.

Bargain and sale deed (Deed of Sale): Proves that only the seller of the property holds title to the property and has the legal right to transfer the property.

Before-Tax Income: Income before taxes are deducted.

Beneficiary (Beneficiary): An individual for whom a trust works. They "benefit" from the trust.

Bequeath (Legar): Transferring personal property through a will.

Betterment: An improvement that increases the value of a property, as opposed to repairs or replacements that simply maintain its value.

Bilateral contract (Bilateral contract): An agreement between at least two persons or groups. Most commercial and personal contracts fall into this category. A contract in which each party agrees to do something.

Bill of sale (Contract/CREDIT OF SALE): The documentation given to transfer title to an individual property. A written instrument delivered to transfer title to personal property from the seller to the buyer.

Binder (Preliminary Agreement)

A preliminary agreement, backed by the payment of an earnest money deposit, whereby a buyer offers to purchase real estate.

Biweekly Mortgages (Biweekly Mortgages)

Your lender will probably tell you that a biweekly mortgage is structured the same way as a traditional fixed-rate, level-payment amortizing mortgage. However, you make your payments every 14 days instead of once a month. The monthly payment is divided in half, resulting in the same total monthly mortgage amount, but the 26 and sometimes 27 biweekly payments per year translate into 13 monthly payments, or one additional monthly payment per year.

Borrowers may qualify for a 30-year monthly payment amount, but get a loan that pays off in approximately 22 years at current interest rates. At higher rates, the actual term decreases.

If you are looking to build equity in your home faster without the higher monthly payments that come with a shorter-term mortgage, you may want to consider the bi-weekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account.

Blanket Insurance Policy: A single policy that covers more than one property (or more than one person).

Blanket mortgage (Balloon Mortgage): A single loan that allows borrowers to purchase multiple real estate properties under one mortgage. Instead of having multiple mortgages for multiple properties, this type of mortgage allows borrowers to purchase multiple properties with a single mortgage.

Blind ad (Anonymous Advertising): An advertisement in which the advertiser does not disclose his or her name or licensing status. Real estate brokers and agents must identify themselves in all advertisements and provide sufficient information to notify the public of their status as real estate professionals. Failure to disclose licensing status is illegal in most states, so it is crucial that agents understand the intricacies of blind advertising. An advertisement that remains anonymous as to who is doing the advertising.

Blind offer (Blind Offer): An offer to purchase written by a buyer without seeing the property. Blind offers are a quick and easy way for buyers to bid on a home. It saves buyers and sellers time by omitting inspections or appraisals.

Blockbusting (Real Estate Pressure): The discriminatory practice of encouraging property owners to sell below market value due to the socioeconomic decline of the neighborhood, specifically due to the influx of minorities into that area. It is the use of prejudice to instill fear or panic (also known as panic selling) in order to motivate people in a particular area or neighborhood to sell or part with their property due to the influx or potential influx of a protected class.

Bona Fide (Good Faith): In good faith, without fraud.

Bond: An interest-bearing debt certificate with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation generally secured by a mortgage or deed of trust. A debt instrument representing a debt.

Borrower Paid PointsAdditional amounts paid by the borrower outside the cost of obtaining the loan.

Breach (Non-compliance)A violation of any legal obligation.

Breach of contract (Breach of contract): The failure to perform an agreement according to the agreed terms.

Bridge loan (Bridge Loan): Provides short-term financing to homeowners as they move from one home to another.

Broker: A person who, for a commission or fee, brings parties together and assists in negotiating contracts between them.

Budget: A detailed plan of expected income and expenses over a specified period of time. A budget can provide guidelines for managing future investments and expenses.

Budget Category A category of income or expense data that can be used in a budget. You can also define your own budget categories and add them to one or more of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category.

Buffer zone (Buffer Zone): A space of land between two use districts, such as a park, playground, or roadway. The purpose of a buffer zone is to facilitate the transition from one zone to another.

Building codes (Building codes): The rules and property standards for the protection of public safety and welfare. A systematic regulation of the construction of buildings within a municipality established by ordinance or law.

Bundle of rights (Package of Rights): When a person purchases property, he or she is granted rights to the property; these rights may be divided and granted to different parties. The rights or interests that a person has in a particular property. The right to dispose, the right to encumber, the right to possess, the right to use, and the right to exclude others (the right to quiet enjoyment).

Buydown (Buy-down): A financing process in which the borrower obtains a lower interest rate for a few years during the term of the loan by paying more up front. By paying a larger lump sum up front, buy-down allows the borrower to pay a lower interest rate for a few years.

Buydown Account (Interest Rate Reduction Account) An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment is due during the period that an interest rate reduction plan is in effect.

Buydown Mortgage (Mortgage with Interest Rate Reduction) A temporary interest rate reduction is a mortgage in which a down payment is made by either party to reduce a borrower's monthly payments during the early years of a mortgage. A permanent reduction reduces the interest rate for the life of a mortgage.

Buyer's home sale contingency (Buyer's Home Sale Contingency): This contingency allows the buyer to cancel the contract if they are unable to sell their current home within a specified period of time.

Buyer's agent (Buyer's Agent): If someone is in the market for a new home, they hire a buyer's agent. A buyer's agent represents the buyer in a transaction and receives a fee for their services.

Buyer's Market (Buyer's Market): An excess of supply and a decrease in demand.

Real Estate Terms Beginning with C

Capital gain (Capital Gain): The gain realized from the sale or auction of a property or investment. In the resale of a capital asset, the amount by which the net proceeds from the sale exceed the adjusted cost basis (book value). It is used for income tax calculations. Gains are referred to as short-term or long-term depending on the holding period after acquisition. Normally taxed at lower rates than ordinary income.

Capitalization (Capitalization): The conversion of assets or income into capital.

Capitalization rate (Capitalization rate): The rate used to indicate the expected return on a property. The interest rate that is considered a reasonable return on investment and is used in the income-based value determination process. Capitalization Rate = NOI / Purchase Price

Caveat emptor (Caveat emptor): Latin expression meaning "let the buyer or buyers beware". The concept is that the buyer is responsible for verifying the quality of a product before making a purchase.

Cetris peribus (Ceteris paribus): A Latin phrase meaning "all other things remaining equal" or, in simple terms, that all other conditions remain constant.

Chattels (Personal property): Another word for personal property.

Chattel mortgage (Chattel Mortgage): A loan for a mobile or manufactured home or a tangible movable asset, such as business equipment, machinery, or any type of vehicle. With a chattel mortgage, the movable assets (whatever they may be) are used as collateral on the loan.

Chronological AgeThe actual age of a building.

Civil Law - The legal system that deals with private relations between members of a community rather than criminal, military or religious matters.

Civil Rights Act of 1866 - A federal law that prohibits discrimination on the basis of race.

Civil Rights Act of 1964 (Civil Rights Act of 1964) - A law that prohibited discrimination on the basis of race, color, national origin, or gender in any housing program receiving federal funds.

Client (Client): Prior to signing a listing contract, a party to a real estate transaction who will employ an agent.

Closing (Closing): The final step in the execution of a real estate transaction. It is when ownership and official payment are transferred to the appropriate parties. Closing generally takes place after a purchase agreement has been made and title is ready to be transferred.

Closing cost (Closing Costs: Closing costs typically represent 2% to 5% of the purchase price of the home. Costs included in closing costs are all fees required to close the loan, including loan fees, origination fees, title fees, prepaid taxes, attorney fees and others.

Co-borrower (Co-borrower): Also known as co-applicant or joint applicant. They share responsibility for making loan payments as the primary borrower and have equal access to funds as the primary borrower.

Co-op (Cooperative): A non-profit corporation, with a board of directors, in which each resident is a shareholder. The major difference between a condominium and a cooperative is that most cooperative associations require that a potential buyer be approved by a committee composed of current owners of the cooperative.

Co-ownership (Joint Ownership): When title to a parcel of real estate is held by two or more individuals, those parties are called co-owners or concurrent owners. Individuals may co-own the property as tenants in common, joint tenants, or as community property.

Color of title (Color of title): The legal concept of a title claim that appears to be legally valid, but in reality, the claim is defective.

Collateral (Collateral): Something of value pledged to a lender as security (mortgage) for an obligation.

Commercial property (Commercial property): A property that generates income or salary.

Commingling (Commingling): In real estate, commingling refers to the act of mixing client funds with the broker's own funds. Commingling can be both legal and illegal, depending on the state and circumstances. Commingling or combining, for example, a client's funds in a broker's personal or general account.

Commingled real estate funds (commingled real estate funds): Broadly speaking, refers to funds that are commingled in real estate investments. From an agent's perspective, these funds are best defined as personal funds commingled with client funds.

Commission (Commission): A fee paid to an agent for conducting a transaction.

Community property (community property): Laws providing that husband and wife are equal and separate partners in marital property.

Comparables (Comparable Properties): Another word for properties sold in the same area that are used as a reference to determine the value of a property.

Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) (Comprehensive Environmental Response, Compensation, and Liability Act of 1980): Also known as "Superfund," this is a U.S. federal government program designed to fund the cleanup of sites contaminated with hazardous substances and pollutants.

Condemnation (Expropriation): The procedure used by a public or private entity with the powers granted by eminent domain to take possession of privately owned real property. Taking private property for public use, with just compensation to the owner; exercising the right of eminent domain.

Condominium (Condominium): Five or more units in which the owner has a freehold interest in the airspace, or the four walls in which he lives or occupies, plus the common areas held as tenancy in common.

Consideration (Consideration/Contract): Something of value given by one party to another as part of a valid contract. Anything given or promised by one party to induce another to enter into a contract, e.g., personal services or even love and affection. It may be a benefit conferred on one party or a detriment suffered by the other.

Conspiracy to boycott (Conspiracy to boycott): Occurs when two or more persons or entities conspire to restrict someone's ability to compete, which is antithetical and highly illegal.

Construction loan (Construction loan): A short-term loan that provides cash to build a residential property.

Constructive eviction (constructive eviction): A legal term used in real estate law to describe a situation in which a landlord performs or fails to perform an action that he or she has a legal duty to provide, leading the tenant to vacate the premises. Any disturbance of the tenant's possession of the leased premises by the landlord whereby the premises become unfit or unsuitable for the purpose for which they were leased.

Constructive fraud (Constructive fraud): This is best described as ignorance or lying without knowing that one is lying.

Constructive NoticeA fact imputed to a person by law, which should have been discovered because of the person's actual knowledge of the circumstances and the investigation that a prudent person would be expected to make.

Contiguous - Batches touching at any point (including corners).

Contingent property (Contingent ownership): Means that an offer for the property has been accepted, but there is a condition or "contingency" written into the contract that must be met before the sale can be completed.

Contract (Contract): An agreement between two or more parties that is legally binding. An agreement to do or not to do a particular thing. It must have four essential elements: parties capable of contracting, consent of the parties, a legal object, and consideration. A real estate sales contract must also be in writing and signed by the party or parties responsible for performance.

Conventional loan (Conventional Loan): A loan provided by a private lender and not part of any government program such as VA or FHA. These loans are backed by the private sector and are available through conventional lenders such as financial institutions, credit unions, banks and online lending platforms. A loan in which there is no government involvement or cooperation.

Corporation (Corporation): Corporations may be formed for profit or not-for-profit. A corporation is managed and operated by a board of directors. A corporation has certain rights, privileges and responsibilities beyond those of partnerships. Doing business as a corporation has its advantages and disadvantages.

Corporeal property (corporeal property): Refers to the property of a material thing. This type of property includes objects that can be seen or touched and that have a physical existence. So, if you have something in your possession that you can see and touch, it is corporeal property.

Cosigner (Co-signer): A person who agrees to be responsible for making loan payments if the borrower defaults or goes into default. Typically, the co-signer has better credit scores and is more financially stable than the borrower. Therefore, the co-signer may help the borrower qualify for the loan because of his or her creditworthiness.

Cost approach (Cost Approach): A real estate appraisal method that determines how much it would cost to replace a property, subtracting depreciation. The method is based on the idea that the price of a property should be determined by the value of the land plus the cost of construction (subtracting the cost of depreciation).

One of three methods in the appraisal process. An analysis in which an estimate of a property's value is derived by estimating the replacement cost of improvements, deducting the estimated accumulated depreciation, and then adding the market value of the land.

Counteroffer (Counteroffer): Similar to a purchase contract. If a counteroffer is made, the original offer ceases to exist because, legally, the seller has rejected it.

CovenantsAgreements included in deeds and other instruments promising the performance or nonperformance of certain acts, or stipulating certain uses or non-uses of the property.

Crawl Space (Crawl Space)An area of limited height below a floor or ceiling, providing access to wiring and plumbing.

Creative financing (Creative financing): A financing process that does not involve conventional lending practices. In this type of financing, an individual or business uses specialized tactics to obtain financing for real estate purchases.

Creditor - A person who regularly extends consumer credit that is subject to a finance charge, or that is paid by written agreement in more than four installments, not including a down payment, and to whom the obligation is initially owed, either for the face value of the note or contract, or by agreement where there is no note or contract.

Criminal Law: A legal system that deals with the punishment of those who commit crimes.

Real Estate Terms Beginning with D

 

Damages (Damages and Damages)Compensation recoverable by a person who has suffered an injury, whether to his person, property or relative rights, by reason of an act or default of another person. Loss suffered or damage caused to a person or property.

DatumThe data set representing heights and depths measured in a horizontal plane.

DBA (Doing Business As): Used to indicate that a company is doing business under a trade name other than its registered legal name.

Debt (Debt): Something owed or promised to be paid. That which is owed from one person to another; obligation, responsibility.

Debt InstrumentA paper or electronic obligation.

Deceit: Making a statement of fact that you know is not true. Making a statement of fact that no one has reason to believe is true, or failing to disclose a "material fact".

Deed (Deed): A written legal document by which ownership of real property is transferred from one party to another. A written instrument which, when properly executed and delivered, transfers title to real property from one person (grantor) to another (acquirer).

Deed in Lieu of Foreclosure (Deed in Lieu of Foreclosure)A deed to real property accepted by a lender on behalf of a borrower in default to avoid the need for foreclosure proceedings by the lender.

Deed restrictions (Deed Restrictions): Limitations on the use of property imposed by a previous or current owner and are generally legally binding on a permanent basis.

Defeasance clause (Release Clause): A required contractual provision that ensures that title to the property is transferred to the buyer once the mortgage is paid in full.

Deficiency JudgmentA judgment granted by a court when the value of the collateral offered as security for a loan is insufficient to pay the debt owed by the borrower in default.

Delinquent mortgage (Mortgage in default): A mortgage in which the borrower has failed to make the payments required under the mortgage contract.

Delinquent taxes (Delinquent taxes): Past due taxes that have not been paid on time.

Delivery (Delivery): The legal act of transferring ownership.

DemandThe general desire for a product or service. The supply of willing and able buyers in the market or lack thereof.

Department of Housing and Urban Development (HUD): A federal agency that administers funding for housing-related projects.

Depreciation (Depreciation): Any decrease in the value of a property over time, regardless of cause. The ability to deduct expenses on improvements made to income property.

Discount points (Discount Points): Prepaid interest that borrowers can purchase to reduce their interest on their monthly payment. These points take the form of a down payment or a one-time fee that is included in the closing costs.

Discount RateThe minimum interest rate established by the Federal Reserve for loans to other banks.

Dividing territories (Division of territories): When competing brokers agree to divide territories and divide interests accordingly. This constitutes a clear violation of antitrust laws.

Documentary Transfer Tax (Impuesto de Transferencia Documental)A state enabling law that allows a county to adopt a documentary transfer tax that applies to all transfers of real property located in the county. The notice of payment is entered on the deed or on a separate document filed with the deed.

Dominant estate (Dominant): A parcel of real estate that has an easement over another property.

Dominant Tenement (Dominant Tenement)Land benefiting from an accessory easement.

Double net lease (Double Net Lease): "Double" means that two additional costs will be added to your base rent. Generally, tax and insurance costs are added to the monthly lease payment.

Down payment (Down Payment): The amount the borrower pays to the lender as a percentage of the purchase price of a property.

Due on Sale ClauseAn acceleration clause that gives the lender the right to demand full payment of the mortgage when the property is sold.

Duress (Dureza): Coercion or pressure to force an individual or business to do something against its will.

Dual agency (Dual Agency): Occurs when a real estate agent represents both the buyer and seller in a transaction. An agency relationship in which the agent acts simultaneously for both principals in a transaction.

DVA loan (DVA Loan): A loan to a certified veteran through the Department of Veterans Affairs (DVA).

Real Estate Terms Beginning with E

Easement (Easement): A right that one person has to use another person's land for a specific purpose, such as driving across another person's property. A right, privilege, or interest limited to a specific purpose that one party has in the land of another.

Easement Appurtenance (Accessory Easement)A right to use another person's contiguous land that is conveyed with title to the property benefiting from the easement.

Easement by necessity (Easement by necessity): A type of easement that allows the use of land to reach another part of the land. It is a court-created easement, similar to an implied easement. Courts will only grant this type of easement if it is a real necessity for the use of the land. It exists when a landowner has no access to roads and is left without access to the land. It exists when a landowner has no access to roads and is left without access to the land.

Easement by PrescriptionObtained through the use of another person's land for the legally prescribed period of time.

Easement by Voluntary GrantA grantor transfers the right to use the grantor's land to a grantee for the purpose of access and egress.

Easement in gross (Easement in Kind): An easement that is attached to a person or entity rather than to the property itself. It differs from a regular easement in that most easements apply to the property, not to a specific part. A right to use another person's land without the need for the holder of the right to own contiguous land.

Easement for ingress and egress (Access and egress easement): An easement used to enter and exit a property.

Economic life (Economic Life): The specific period during which a property can be profitably used. The number of years a building can generate income.

Economic IndexA statistic used to assess the overall health or condition of the economy.

Economic obsolescence (Economic Obsolescence): Refers to the loss of value of a property due to external factors, i.e., things outside the property that affect its value. A loss in value due to factors external to the subject property, but which adversely affect the value of the subject property.

Effective age (Effective Age): The age of a property based on its usefulness, condition and physical wear and tear, not its actual age. Effective age is one of the concepts used in appraisal to determine the market value of a property. The conditional age of a building.

Effective Gross IncomeThe amount of income produced by a property, plus miscellaneous income, less vacancy costs and collection losses.

Egress (Egress): The right to leave a property.

Emblements (Emblems): Annual crops produced by cultivation that legally belong to the tenant with the implied right to harvest, and are treated as property of the tenant.

Eminent domain (eminent domain): The right of government to acquire privately owned real property for public use. A right of the government to acquire property for a necessary public use by c0mpensation; the owner must be fairly compensated.

Encroachment (Trespassing): An intrusion into a person's territory or property. An unlawful trespass on another person's adjacent property by means of improvements on real property (e.g., a swimming pool built across a property line).

Encumbrance (Encumbrance: Means that there is an involuntary encumbrance on the property. Any right or interest in land that interferes with its use or transfer, or subjects it to an obligation. Any charge, claim, right, right, burden (also called "cloud on title") and/or interest in real property other than the owner's, including, but not limited to, any restriction on the title to real property, which affects and/or limits any interest or its use.

Endorsement (Endorsement): The signing of documents, usually a contract.

Enforceability (Execution)The capacity to sue to enforce the contract.

Environmental Protection Agency (EPA) (Environmental Protection Agency): The Environmental Protection Agency (EPA) is the federal agency charged with addressing environmental issues.

Equal Credit Opportunity Act (ECOA) (Equal Credit Opportunity Act): Prohibits discrimination against borrowers applying for mortgage loans.

Equitable Remedies (Equitable Remedies)Remedies for the purpose of 'equity and fairness'.

Equitable title (Equitable title): The interest held by a party to purchase a property prior to closing.

Equity (Equity: The difference between the value of a property and the debt owed on it. The value of an asset minus the debt.

Erosion (Erosion): The wearing away of land or soil due to the action of wind, water, currents, or ice. The wearing away of a shoreline or land due to the action of water, ice and/or wind, or the wearing away of a surface due to corrosion or traffic.

Errors and omissions insurance (Errors and Omissions Insurance): A type of liability insurance that protects professionals against claims of insufficient work or negligent actions.

Escheat (Forfeiture): When an owner dies and leaves no documented estate plan, the property reverts to the government. The property reverts to the State in the event the owner abandons it or dies without leaving a will and has no heirs to whom the property can pass by legal descent.

Escrow (Deposit): A method of transferring money and property from one party to another through a neutral third party agent. The deposit of instruments and/or funds with instructions in the hands of a neutral third party to carry out the provisions of an agreement or contract.

Estate - The extent, amount, nature and scope of a person's interest in real and personal property (includes everything one owns).

Estate at sufferance (Suffering status/domain): Arises when the tenant remains in the property after the expiration of its term.

Continuing to occupy a property after the legal authorization has expired; a form of leasehold ownership.

Estate at will (Status at will): Means that it can be terminated at any time and its duration is indefinite.

A leasehold estate that may be terminated at the will of either party.

Estate for Years - A domain lease for a specific period of time. A domain for years is not automatically renewed.

Estate in Reversion (Reversionary Ownership) - Property or ownership that reverts to the grantor after a period of temporary ownership.

Estate in Remainder (Estate in Remainder) - A domain that is acquired after the termination of the previous domain.

Ethics: Moral principles that govern the behavior of a person or group.

EvictionA legal proceeding brought by a landlord or owner to recover possession of real property.

Exchange (Exchange): Transfer of goods or services.

Exclusive right to sell listing (Exclusive Right to Sell Listing): A broker is appointed as the seller's sole agent and has exclusive authority to represent the property.

Exclusive Right to Sell Listing Agreement (Exclusive Agreement)A listing granted to a single broker who is entitled to the commission if someone sells the property during the term of the listing contract.

Exclusive Agency Agreement: A listing granted to a single (exclusive) broker who is entitled to the commission if the broker or any agent of the listing broker effects a sale but does not impose any commission obligation on the owner who sells the property to a person who was not interested in the property through efforts of the listing broker or an agent of the listing broker.

Exclusive agency listing (Exclusive Agency Listing): An agreement in which the seller grants the exclusive right to sell his or her home to a real estate agent.

Exclusive listing (Exclusive Listing): An agreement in which the seller grants the exclusive right to sell his or her home to a real estate agent.

Executed contract (Executed contract): When the contracting parties have signed a contract and both have fulfilled everything promised.

Execution date (Date of execution): The day on which the contract is signed.

Executor (Testamentary Executor) - A person or institution appointed by a testator to carry out the terms of his or her will.

Executory contract (Executory contract): A contract in which the terms are established but will be fully completed later.

Express Agency (Express Agency): An agency relationship created by oral or written agreement between the principal and the agent.

Express Contract (Express contract): Occurs when both parties legally establish an agency relationship through a written contract. A contract that has been expressed in words, either spoken or written.

Real Estate Terms Beginning with F

 

Face ValueThe amount borrowed as shown on the promissory note.

Fannie Mae (Nickname for Federal National Mortgage Association, FNMA)A privately owned corporation that purchases conventional mortgages.

Fair Market Value (FMV)This is the amount of money that would be paid for a property offered on the open market for a reasonable period of time, with the buyer and seller knowing all the uses to which the property could be put and neither party being under pressure to buy or sell.

Federal Funds Rate (Federal Funds Rate)The rate at which member banks charge each other for short-term loans.

Federal income tax (Federal income tax): An annual government tax based on an individual's earnings.

Federal National Mortgage Association (Federal National Mortgage Association): Fannie Mae, or the Federal National Mortgage Association (FNMA), is a Government Sponsored Enterprise (GSE) that offers mortgages to low- to moderate-income borrowers.

Federal Reserve System (Federal Reserve System)The U.S. federal banking system under the control of the Federal Reserve Board, which involves a central bank in each of the twelve geographic districts with broad powers to control credit and the amount of money in circulation.

Fee simple absolute/Fee Simple Estate/Fee Simple Estate/Fee Estate (Freehold/Proprietary Freehold): Freehold in ownership, or simply dominion, is a real property ownership recognized by law as the highest form of ownership, in which the owner can enjoy the property to its fullest extent and is limited only by governmental powers. An inheritable ownership in land that provides the highest interest of any form of title.

Fee Simple Determinable (Full Determinable Domain) - An estate that will automatically terminate upon the occurrence of the stated event or condition. The interest will revert to the grantor or the grantor's heirs.

Fee Simple on Condition (Fee Simple on Condition) - A terminable domain (title), recognizable by the words 'but if'.

Fee simple defeasible (Conditional domain): A conditional domain is created when a condition is added to an absolute domain. If the condition is met, the property can be lost.

Fee Simple Estate (Absolute Ownership) - Absolute ownership of real estate; a person has this type of ownership where the person is entitled to all of the property with unconditional power of disposition during the person's lifetime and which passes to the person's heirs or distributees.

FHA appraisal (FHA Appraisal: The process performed by an approved FHA appraiser to appraise a property for an FHA loan.

FHA loans (FHA Loans: Mortgage loans issued by an FHA-approved lender and insured by the FHA, which is the Federal Housing Administration. FHA loans are sought after because they require minimum down payments and lower credit scores than many conventional loans.

Foreclosure (Foreclosure: The legal process in which a mortgage lender takes possession of a property if a borrower fails to make mortgage payments. A procedure by which property pledged as security for a debt is sold to pay the debt in the event of default in payments or terms.

FiduciaryA person in a position of trust and confidence, as between the principal and the broker; the broker as a fiduciary owes a certain loyalty that cannot be violated under agency rules.

Fiduciary DutyThat duty that an agent must act in the most sincere manner towards the principal and not gain any advantage over the latter by the slightest misrepresentation, concealment, coercion or pressure.

Financial contingency (Financing Contingency): A financing contingency provides a way for buyers to back out of the sale of the property if their loan fails.

Fixed Interest Mortgage (Fixed Interest Mortgage)A mortgage in which the interest rate does not change.

Fixed term tenancy or estate for years (Fixed-term lease or ownership for years): The term "ownership for years" refers to an ownership that has a specific duration as defined in the lease agreement.

Fixture (Fixture): A fixture in real property is an item of personal property that has been permanently attached or affixed to real property or land. Or an item that was once personal property, but is considered real property either by attachment or legal addition. An item of personal property after it has been attached to real property.

Flat RoofA roof that is almost level.

Floor PlanA scale drawing showing a top view of the relationships between rooms, spaces, and other physical features on one level of a structure.

Foundation PlanA scale drawing of the floor plan showing the location and size of the foundation walls of a building.

Fraud: The intentional and successful use of any cunning, deception, collusion or artifice used to evade, deceive or deceive another person, whereby that person acts in consequence by suffering a loss of property and legal damage.

Freehold estate (Dominio en propiedad/Property in Full Right): A dominion in property is a dominion in which you have the exclusive right to enjoy possession of a property indefinitely. It is contrasted with a leasehold estate, where possession is limited for a period of time. A right of title to land.

Freddie Mac (Nickname for Federal Home Loan Mortgage Corporation, FHLMC)A wholly owned corporation of the Federal Home Loan Bank System that purchases FHA, VA and conventional mortgages.

Frontage (Front) - The linear distance along which a building faces a lot or road.

Functional obsolescence (Functional Obsolescence): Refers to the loss of property value due to an obsolete design feature. A loss of value due to adverse factors from within the structure that affect the structure's utility, value and marketability.

Real Estate Terms Beginning with G

Gap (Gap): A real estate term meaning a space or pause in a contract.

Gambrel Roof (Gable Roof): A roof with two sides, each of which has a gentler slope over a steeper one.

Gable Roof (Gable Roof): A roof that slopes downward in two parts at an angle from a central ridge, so as to leave a gable at each end.

General agent (General Agent): A general agent is a retained agent who can perform all acts associated with a particular business for which a principal has appointed the agent; these relationships are usually ongoing. An agent with full authority over a principal's property, such as a property manager.

General contractor (General Contractor): The term used to describe someone whose primary responsibility is the construction, improvement, or renovation of a property or project. A contractor whose principal activity is related to any structure being built (or to be built), which requires in its construction the use of at least two unrelated building trades or crafts.

General LienA lien on all of a debtor's assets.

General warranty deed (General Warranty Deed): A deed in which the grantor (seller) warrants that he has clear title to real property and has the right to sell it to the grantee (buyer).

Ginnie Mae (Nickname for Government National Mortgage Association, GNMA)A government-owned corporation that guarantees bonds backed by home mortgages guaranteed by other government agencies (FHA and VA loans).

Good Faith Estimate - The lender's estimate of settlement costs to the borrower; RESPA requires the lender to provide it to the borrower at the time of the loan application.

Government National Mortgage Association (Ginnie Mae): Ginnie Mae, or Government National Mortgage Association, is a government organization that provides guarantees to investors in mortgage-backed securities. The federal corporation guarantees USDA, FHA and VA loans and enhances market interest in securities. It does this by ensuring timely payments on mortgage-backed securities.

Government power (Governmental Power): Governmental power is the constitutional authority and inherent power of a state to adopt and enforce laws and regulations to promote and support the public health, safety, morals and general welfare.

Government survey system (Government Survey System): This method of valuation is a federal system defined by identifying reference lines. The system is based on sets of two intersecting lines: principal meridians and base lines. It is sometimes referred to as the rectangular survey system.

Graduated payment mortgage (Graduated Payment Mortgage): A graduated payment mortgage is a mortgage loan with monthly payments that start at one amount and then, after a time, the payments gradually increase over time.

Grant (Concession): The transfer of title to real property.

Grant Deed (Grant Deed)A limited warranty deed that uses the word "grant" or other similar words and assures the grantee that the grantor has not previously conveyed the property to another person and that the property is free and clear of liens imposed by the grantor. Here you have a example of grant deed.

Grantee (Grantee/Beneficiary): The legal term for purchaser. A person who receives title to real estate by deed.

Grantor (Grantor/Grantee): The legal term for seller. A person who transfers title to real estate by deed.

Group boycotting (Group boycott): A group boycott occurs when two or more competitors agree to conspire against a third competitor by ceasing to work with it. A group boycott increases the market power of the competitors who joined and harms the boycotted business.

Gross Domestic Product (GDP)The aggregate value of all goods and services provided in the economy during a given period of time.

Gross IncomeTotal income from the property before deducting expenses.

Gross lease (Gross Lease): A gross lease is a rental agreement for the use of property in which the tenant pays a fixed amount that does not change as a result of changes in the various expenses of the property.

Gross national product (GNP) (Gross National Land (GNP)): The total price of all goods and services produced within a country annually.

Gross Rent Multiplier (Gross Rent Multiplier): A number that, when multiplied by a property's gross income, produces an estimate of the property's value. The Gross Rent Multiplier is a calculation used by real estate professionals to determine how quickly an investment property can pay for itself. Gross Rent Multiplier (GRM) = Price (Property / Purchase Price) ÷ Gross Annual Rental Income.

Growing equity mortgage (increasing principal mortgage): An increasing principal mortgage is a mortgage in which the interest rate remains the same during the term, but payments increase annually. Payments increase to include more principal according to the previously agreed upon payment schedule.

Real Estate Terms Beginning with H

Habendum clause (Habendum clause): The statement in a contract that describes the rights and interests being granted.

Heir (Heir): The person who would inherit an interest or property when the owner dies without leaving a will.

Highest and Best Use: An appraisal term meaning that use which at the time of an appraisal is most likely to produce the greatest net benefit for the land and/or buildings during a given period; that use which will produce the greatest amount of amenity or profit. This is the starting point for the appraisal.

Hip Roof (Tejado a Cuatro Aguas)A roof with sloping ends as well as sides.

Home Equity Line of Credit (HELOC) Home Equity Line of Credit (HELOC): A Home Equity Line of Credit (HELOC) allows homeowners to obtain cash against equity and repay the loan at a variable interest rate. This is a type of revolving line of credit that helps the homeowner establish credit in advance if needed, and the collateral is the home.

Home inspection (Home Inspection): A home inspection is an examination of the condition of a real property. This is usually conducted in connection with the sale of the property.

Homeowner insurance (Homeowner's Insurance): Homeowners insurance is property insurance that covers loss and damage. It covers the home and individual assets in the home. It can also provide liability coverage for accidents in the home or on the property.

Housing and Community Development Act (Housing and Community Development Act): The Housing and Community Development Act of 1974 added sex as a protected class in the Fair Housing Act and funded community development for low-income families.

HUD Department of Housing and Urban Development (HUD): The Department of Housing and Urban Development (HUD) is a U.S. government agency that deals with housing and urban development issues.

Hypothecate (Hypothecate)Pledge a thing as collateral without the need to physically deliver it.

Real Estate Terms Beginning with I

Income approach (Income Method): The income method is a process used by appraisers to determine the market value of a property based on its income. The approach is based on the financial concept of discounted cash flow analysis. Under the income method, the current value of the property is the present value of the future cash flows that the owner can expect to receive. One of three methods of the appraisal process generally applied to income properties. It involves a three-step process: (1) find annual net income, (2) establish an appropriate capitalization rate or "present value factor," and (3) capitalize the income by dividing the net income by the capitalization rate.

Independent Contractor: A person who renders services to another under terms specified in a contract or within an oral agreement. A person who acts on behalf of another but sells end results and whose methods of achieving those results are not subject to the control of another.

Injunction (Injunction or Injunction)An injunction or order issued under the seal of a court to restrain one or more parties to a suit or proceeding from doing an act that is considered inequitable or unfair as to the rights of some other party or parties to the suit or proceeding.

InflationAn increase in the supply of money and credit relative to available goods resulting in higher prices.

Implied Agency (Implied Agency): Agency that exists as a result of the actions of the parties.

Implied contract (Implied contract): An implied contract is a legally enforceable obligation that arises from one or more parties due to the party's actions, conduct or circumstances. It has the same legal effect as an express contract, a contract between two or more parties that is voluntarily entered into and agreed to orally or in writing. An implied contract is presumed to exist but does not require written or oral confirmation. An agreement that has not been expressed in words, but is inferred from the actions of the parties.

Implied grant (Implied grant): Implied concessions are used to create an easement.

Improvement (Improvement): An addition or complement to a property or real estate.

Index lease (Indexed Rental Agreement): A lease that determines rental prices by evaluating the annual consumption index and determining the fair rental price.

Inspection contingency (Inspection Contingency): If a home inspection reveals problems, the buyer may request repairs, compensation for the problem or simply cancel the offer altogether.

Ingress (Income): The right to enter a property.

Insurance (Insurance): Insurance is a contract in which a person receives legal protection or reimbursement for predetermined losses. A contract between the insurer and the insured.

Intercontinental Exchange London Interbank Offered Rate (LIBOR) (Intercontinental Exchange London Interbank Offered Rate)A reference rate that some of the world's major banks charge each other for short-term loans.

Interest (Interest): Money regularly paid or owed at a specified rate.

Interest RateThe percentage of a sum of money charged for its use. The rent or fee paid for the use of money, expressed as a monthly or annual percentage of the sum borrowed.

Interim financing (Interim Financing): A short-term loan.

Interpleader (Interpleader Demand)An equitable proceeding brought by a third party acting as custodian, in which there are rival claimants for the same money and/or property, and requests the court to determine the disposition of such property.

Intestate (No Testament): Failure to make a will before death.

Inverse condemnation (Reverse expropriation): The event in which the government takes private property but does not pay compensation or just compensation.

Investment (Investment): An investment is the legal acquisition of something that is not consumed today but will be in the future to generate profits.

Involuntary alienation (Involuntary alienation): Involuntary alienation occurs when property is transferred without the owner's consent.

Involuntary liens (Involuntary Liens): Involuntary liens are not created by the owner. It is a claim imposed against a property without the consent of its owner. A lien imposed against a property without the owner's consent (e.g., taxes, special assessments, federal income tax liens, etc.).

Real Estate Terms Beginning with J

Joint tenancy (Joint Tenancy): When a property is owned by joint tenants, the interest of a deceased owner automatically transfers to the remaining surviving owners. Undivided ownership of an interest in a property by two or more persons, each of whom is entitled to an equal share in the interest and the right of survivorship, i.e., the right to share equally with other surviving co-owners in the interest of a deceased co-owner.

Judgment Lien (Judgment Lien)A legal claim on all of a judgment debtor's property, allowing the judgment creditor to sell the property for payment of the judgment amount.

Jumbo loan (Jumbo Loan: A jumbo loan is a mortgage that exceeds the limits established by Fannie Mae and Freddie Mac. This type of loan is not guaranteed, reviewed or purchased by Fannie Mae or Freddie Mac because it exceeds the limits set by these organizations. Because it exceeds the borrowing limits of these organizations, it is also known as a non-conforming loan.

Real Estate Terms Beginning with K

Kickback (Kickback): A kickback is when a real estate agent receives financial benefits or items of value for referring customers to a business or service. This practice is called a kickback because it returns part of the profits from the referrals to the agent who helped them obtain the referrals.

Real Estate Terms Beginning with L

Land - It includes, but is not limited to, soil, land and terrain, that which is the result of nature or man, as well as an indefinite extension upward into the air and downward in a straight line from the surface to the center of the Earth.

Land Trust (Land Trust): A legal agreement in which an owner of property transfers title to the property to a trustee.

Landlord (Landlord): The owner of property (such as land, houses or apartments) that is rented or leased to another.

Latent defect (Latent defect): A latent defect is not discoverable by normal inspection, but may not be visible to the naked eye. However, it is known to the seller or owner.

Law: The system of rules that a particular country or community recognizes as regulating the actions of its members and can enforce through the imposition of sanctions.

Law of RegressionWhere a property is "over-improved" in relation to other surrounding properties in the area that are of lesser value.

Law of ProgressionThe value of a lower value residence tends to improve due to association with higher value residences in the same area.

Lease (Lease): A contract whereby one party transfers land, property, services, etc., to another for a specified period of time, usually in return for periodic payment. A contract whereby, in return for a consideration, usually called rent, one who is entitled to possession of real estate transfers such rights to another for life, for a term of years, or at will.

Leasehold Estate (Leasehold Property) - A non-fulfillment domain; of limited duration, which provides the right of possession and control but not the title.

Leaseback (Sale and leaseback): A leaseback, also known as a sale-leaseback, is a financial transaction in which a company sells its property and then leases it back to the new owner. The seller becomes the lessee and the buyer becomes the lessor.

Lease expiration (Expiration of the lease): The expiration of the lease occurs at the end of the lease term when the lease is no longer valid. At this point, the contractual relationship between the lessor and the lessee ceases to exist.

Lease option (Lease Option): A lease option, commonly referred to as a rent-to-own agreement, is available to tenants who wish to acquire a rental property. A lease option allows the tenant to purchase a property after a defined rental period.

Lease termination (Lease Termination): Lease termination occurs when a landlord or tenant terminates a rental agreement before the end of the lease term. Although in most cases it is not permitted to break a lease, there are some circumstances in which it is acceptable.

Lease violation (Lease Violation): A lease violation occurs when a landlord or tenant violates the terms of their lease agreement. Simply put, a lease violation is a breach of the lease.

Leasehold estate (Lease or tenancy of property): A less-than-free tenancy status (also known as a leasehold status) is a status held by someone who rents or leases property. The key difference between a leasehold and freehold status is the time limitation. Since a lease is a legal ownership, a leasehold estate can be bought and sold on the open market.

Lender (Lender): A lender can be an individual or a public/private group. A financial institution such as a bank may lend available funds to another person. A lender is usually the source of loans to individuals.

Lessee (Tenant): A tenant is a person, family, or business that rents property from a landlord. Lessees, often referred to as tenants, may live in or use the property as long as they comply with the terms of the lease. A person to whom property is rented under a lease.

Lessor (Landlord): A landlord is a property owner who agrees to lease his or her property to a person, family or business for a specified period of time. A person who rents property to another person under a lease.

Leverage (Leverage): Leverage is an investment strategy of using borrowed money to finance the majority of an investment.

Levy (Levy): A levy is the legal seizure of property to satisfy a tax debt or obligation.

Lien (Lien): A lien is a form of security interest granted on an item to secure the payment of a debt or the performance of some other obligation. A lien serves to secure an underlying obligation. Usually that obligation is the repayment of a loan. A form of encumbrance that generally converts specific property into security for the payment of a debt or the performance of an obligation (e.g., judgments, taxes, mortgages, deeds of trust, etc.).

Licensee - The holder of a license, particularly a real estate license.

License Suspension (License Suspension): The right of the BRE (Bureau of Real Estate) to deactivate the license of a broker or sales agent due to misconduct.

License Revocation When the BRE (Bureau of Real Estate) cancels the license of a sales agent or broker.

Life estate (Life Estate/Life Estate): A life estate is an interest in real estate that is held for the life of a designated person. It may be limited by the life of the person who owns it or by the life of another person. This designated person is called a life tenant. A freehold estate created for the duration of the life or lives of certain named persons; a noninheritable estate.

Listing AgentThe person who signs a listing contract with a principal.

Listing Contract (Listing Contract)A contract in which a property owner employs a real estate broker to market the property described in the contract.

Littoral Rights (Littoral Rights) - The right of a property owner whose land abuts a body of water, such as a lake, ocean, or sea, to reasonable use and enjoyment of the shoreline and water on which the property abuts.

Real Estate Terms Beginning with M

Mansard Roof (Mansard Roof): A roof that has four sloping sides, each of which becomes steeper halfway down.

Market data approach (Market Data Approach): The market data approach, also known as the sales comparison approach, involves comparing a property to other recently sold properties in the same area, of similar size and condition.

Market value or market price (Market value or market price): The actual selling price of the property. So, if your home sells for $200,000, its market value is $200,000.

Master plan (Master Plan): A master plan is a comprehensive plan that guides the long-term physical development of a particular area.

Material defect (Material defect): A material defect is a problem with the property or some part of it that would have a significant impact on the value of the property or that involves a great risk to the people on the property.

Material Fact: Any fact that would influence the decision of a reasonably prudent person.

Maturity DateThe date on which a loan must be paid in full.

Mechanic's lien (Mechanic's Lien): A mechanic's lien, also called a construction lien, is a lien placed on your property for nonpayment for work performed on the property. A lien created by statute that exists against real property in favor of persons who have performed work or furnished materials for the improvement of the real property.

Metes-and-Bounds (Meters and Boundaries): A method of surveying imported to the original colonies that formed the United States. The system uses physical features of the local geography, along with directions and distances, to define and describe the boundaries of a parcel of land. A term used to describe the boundary lines of the earth, setting out all boundary lines together with their terminal points and angles.

Mezzanine financing (Mezzanine financing): Mezzanine financing is a financing tool that combines debt and equity financing. This type of financing is also known as subordinated financing because lenders have a second priority on these loans after senior lenders.

Mill rate (Mill Rate): The mill rate is the amount of tax payable on each dollar of assessed value of a property. The mill rate is also known as the assessment rate.

Mobile HomeA transportable structure in one or more sections, designed and equipped to contain no more than two dwelling units and used with or without a foundation system.

Modified gross lease (Modified Gross Lease): A modified gross lease is a rental agreement in which the tenant pays rent plus a portion of operating expenses. This type of lease is also known as an industrial lease.

Mortgage (Mortgage): A loan between the lender and borrower to purchase a home. This is a type of secured loan in which the home is the collateral. It is a long-term debt that borrowers can obtain from any financial institution for a term of 15, 20 or 30 years. A contract whereby a mortgagor agrees to use real estate as collateral for the repayment of a debt.

Mortgage assignment (Mortgage Assignment): A mortgage assignment is when one mortgage lender transfers a mortgage account and its interest to another lender. The mortgage assignment is a document that indicates the transfer of the mortgage between lenders. This type of assignment is primarily seen when a mortgage lender sells the mortgage to a new lender.

Mortgage BankerA person whose principal business is the origination, funding, closing, sale and servicing of loans secured by real estate for institutional lenders under contract.

Mortgage broker (Mortgage Broker): A mortgage broker is a third party that brings the borrower and lender together on the same platform. They facilitate communication between the lender and borrower and help borrowers get the best mortgage deal. An intermediary that arranges a mortgage loan between a lender and a borrower for a fee.

Mortgage Insurance Premium (MIP) (Mortgage Insurance Premium)A one-time premium paid at the closing of the purchase.

Mortgage lien (Mortgage Lien): A mortgage lien is a voluntary, specific lien. In fact, it is the most common type of voluntary real estate lien. When you borrow money to buy real estate, you give the lender a lien on the property.

Mortgage servicing rights (Mortgage servicing rights): Mortgage servicing rights is a legal agreement in which the original lender assigns a third party the task of collecting mortgage payments from its borrower. With this agreement, the third party can perform the day-to-day mortgage functions in exchange for a fee.

Mrs. Murphy Exemption (Mrs. Murphy Exemption: The Mrs. Murphy Exemption provides that owner-occupied housing with four or fewer rental units is exempt from certain aspects of the Fair Housing Act. This exemption allows landlords to discriminate against certain groups when seeking tenants.

Multiple listing service (MLS) (Multiple Listing Service): A service used by a group of real estate brokers. It connects listings under one large umbrella.

Municipality (Municipality): A municipality is a city or town that is considered a local government.

Mutual agreement (Mutual agreement): The meeting of minds between the parties to a contract. It requires that the parties understand and agree on the essential terms of the contract.

Mutual Mortgage Insurance (MMI)A percentage of the amount owed.

Real Estate Terms Beginning with N

National Association of Realtors (NAR): A national organization of real estate brokers created to promote the real estate profession and encourage professional behavior in its members.

Negative fraud (Negative Fraud): Negative fraud is the act of intentionally omitting information that is legally required to be disclosed; or in layman's terms, lying by omission.

Negligence (Negligence): Negligence is the failure to perform a required action or, in simple terms, the lack of diligence.

Negotiable InstrumentAn unconditional promise or order to pay a fixed amount of money, with or without interest, or other charges described in the promise or order.

Net listing (Net Listing): A net listing is when an agent agrees to sell an owner's property for a set minimum price. Any amount above the minimum price belongs to the agent as a commission. A listing that provides that the agent may retain as compensation for the agent's services all amounts received above a net price for the owner.

Net operating income NOI (Net operating income): The total income of a property less all operating expenses. The annual income generated by an income property after taking into account all income earned from operations and deducting all expenses incurred in operations.

Net lease (Net Lease): An arrangement in which the tenant pays rent plus the additional costs of ownership. In a net lease structure, the tenant is responsible for the costs associated with the property as if he or she were the actual owner.

Non-conforming Use - The historic use whereby an individual would request to use that property for that historic use, otherwise they would have to endure undue hardship.

Nonhomogeneity (Non-homogeneity): Non-homogeneity occurs when homes in a real estate development are different. If something is non-homogeneous, it indicates a lack of uniformity in a real estate development or in multiple real estate properties.

Notice of default (Notice of Default): A notice of default is a public notice that a lender files with the court when a borrower fails to make payments on his or her mortgage. The notice indicates that the borrower is in default and the lender may proceed with the foreclosure process. A notice of default is the second step in foreclosure after the borrower has stopped making mortgage payments.

Novation (Novation): The procedure in which an original contract is terminated and replaced by a new contract. The legal process of novation allows all the benefits and responsibilities of the contract to be transferred from previous parties to a set of new parties. In simple terms, it is a way of replacing an old contract with a new one while maintaining most or all of its original attributes. The substitution or exchange of a new obligation or contract for an old one by mutual agreement of the parties.

Real Estate Terms Beginning with O

Objective ValueWhat something is worth when there is a reasonably prudent seller and a reasonably prudent buyer.

Offer (Offer): A proposal made by one party to another, expressing a willingness to enter into a contract on certain terms.

Open-end mortgage (Open-end mortgage): An open-end mortgage allows the borrower to obtain the highest loan amount for which he or she qualifies. This amount can be obtained even if the borrower does not need it all to purchase a home. Once the borrower has purchased the home, the unused loan amount remains. The borrower can use this unused amount later during the draw period for home improvements and renovations.

Open listing (Open Listing/Non-Exclusive Listing): An open listing is a real estate arrangement in which homeowners sell their home by themselves or using multiple real estate agents. In this type of non-exclusive listing agreement, the seller is not committed to any one exclusive agent; multiple agents may compete to find a buyer and receive a commission. A listing given to one or more brokers in which the broker who obtains a sale is entitled to the commission but imposes no commission obligation on the homeowner when the homeowner sells the property.

Optionee (Optionee): The legal term for a person who acquires and holds an option.

Optionor (Optionor): The legal term for a party who permits or grants an option.

Ordinary IncomeRevenue from the provision of services or the sale of goods (inventory).

Ostensible Authority (Apparent Authority): The authority that a third party reasonably believes an agent possesses because of the principal's acts or omissions.

Over-Improvement: An upgrade that is not the highest and best use for the site in which it is located due to its excessive size and cost.

Owner financing (Owner Financing): Owner financing is a process in which the property owner provides funds to the buyer to purchase the property. This financing is useful if the borrower does not qualify for a traditional mortgage due to strict eligibility requirements.

Ownership (Property): The act, state or right to possess an object, in our case, property.

Ownership in severalty (Sole Proprietorship): Exclusivity ownership means that only one person owns the property. Title to real estate that is held in the name of only one person.

Real Estate Terms Beginning with P

Package mortgage (Package mortgage): A package mortgage is a loan that covers the purchase of real estate and the personal property it contains, using both as collateral for the loan.

Package LoanA type of loan used in home financing that covers real property, improvements and mobile equipment/appliances.

Partition (Partition): Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination.

Participation loan (Participating loan): Participating loans involve more than one lender. These loans are popular because they allow borrowers to obtain large sums of money. In these loans, different lenders join together to share the financing of the loan.

Partnership (Partnership): A partnership is composed of 2 or more people who agree to contribute money, labor, or skills to a business. Each partner shares in the profits, losses and management of the business, and each partner is personally and equally liable for the debts of the partnership.

Pending property (Property Pending): The term "pending" means that the offer has been accepted and both parties are moving forward with the sale. When a property is pending, it is in the period following the resolution of contingencies.

Percentage lease (Percentage Lease): A percentage lease is an arrangement in commercial real estate in which the tenant pays rent plus a percentage of his or her earned business income.

Periodic tenancy (Periodic Lease): A periodic lease is a lease agreement that specifies an initial lease term and the duration of the agreement, but does not terminate after the specified term. This type of lease agreement renews automatically.a A lease that automatically renews for successive periods unless terminated by either party; also called a year-to-year tenancy.

Personal property (Personal Property): Personal property is all things that can be removed, such as clothing, lawn mowers, sofas, televisions, and furniture. All property that is not considered real estate. That which is movable (not attached to land).

Physical ObsolescenceLoss of value due to the actual wear and tear of the improvements.

Planned unit development (Planned Unit Development): A planned unit development or PUD is a community that is not limited by standard zoning regulations, allowing for greater flexibility in the type of properties. The development could include residential, commercial, industrial, and common areas in a single community.

Police Power - The right of any political entity to enact laws and to enforce them, for the order, safety, health, morals and general welfare of the public.

Power of attorney (Power of Attorney): A legal document that authorizes someone to act on behalf of another person, usually in commercial matters or business transactions.

Plot Plan (Plot Plan)A scaled plan diagram showing buildings, utility piping and equipment layout, position of roads and other construction on an existing or proposed project site.

Pre-approvalA step above pre-qualification, it involves checking the buyer's credit, down payment and work history.

Prepayment penalty clause (Prepayment Penalty Clause): A prepayment penalty clause provides that a lender may penalize a borrower if the borrower pays the mortgage much earlier than usual. A penalty for paying off a loan before its due date.

Prescriptive easement (Prescriptive easement): A prescriptive easement, sometimes known as an easement by prescription, is a legal agreement that allows someone to access another person's property for specific reasons. Easements by prescription exist through the legal principle of Adverse Possession.

Principle of ConformityIt holds that maximum value is achieved when there is a reasonable degree of homogeneity of improvements in a particular area. Conformity of use is desirable, which creates and maintains higher values.

Price fixing (Price fixing): Price fixing is the practice of setting the price of a good or service so that a particular price is standard. Any agreement, even if only implicit with other brokerages to establish a standard commission rate, is a violation of the antitrust laws.

Primary Mortgage MarketThe market where loans are originated.

Prime rate (Prime Rate): The prime rate determines the interest rates for mortgages, personal loans and small business loans. Lenders generally charge this rate to their most favored borrowers. This rate is used as the basis for calculating variable rate mortgage rates.

Principal payment (Principal Payment): A principal payment is a payment toward the original amount of the loan that a borrower takes out.

Principal (Principal): A principal or client is a party who has signed an agreement with an agent or, more specifically, a broker. In other words, it is anyone directly involved in a contract, such as a buyer or seller. An agent's employer; a principal party to a real estate transaction, such as a buyer, borrower, seller or landlord.

Principle of AnticipationValue is created by the anticipated benefits to be derived in the future.

Principle of conformity (Conformance Principle): The conformity principle states that the value of a property is maximized when it complies with the design and characteristics of the surrounding area. Value is created when properties tend to be similar in a particular neighborhood.

Principle of contribution (Contribution Principle): The contribution principle states that the actual value of an improvement is what contributes to the market value of the property, not the cost of the improvement. A component part of a property is valued in proportion to its contribution to the value of the whole. It holds that maximum values are achieved when improvements on a site produce the highest (net) return, commensurate with the investment.

Principle of ChangeHe argues that the future, not the past, is of paramount importance in estimating value. Change is largely the result of cause and effect.

Principle of highest and best use (Highest and Best Use Principle): The highest and best use principle of a property is the concept that finding the best use of real estate would create its highest net return.

Principle of progression (Principle of progression): The progression principle states that the value of a property increases as more valuable properties are built in the area.

Principle of regression (Regression Principle): The regression principle states that the value of a property decreases when less valuable properties are built in the area.

Principle of Supply and DemandIn appraisal, a valuation principle that states that market value is affected by the intersection of supply and demand forces in the market at the date of appraisal.

Principle of substitution (Principle of substitution): The substitution principle states that a buyer will not pay more for a property than the cost of an equally desirable property. It states that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming that no costly delay is found in making the substitution.

Privity (Legal Relationship)Mutual relationship with the same property rights, contractual relationship.

Privity of Contract (Legal Relationship of Contract)The relationship that exists between persons who are parties to a contract.

Privity of Estate (Legal Relationship of Estate)A mutual or successive right or interest in the same real property.

Probate (Testament): The official proof of a will. The official probate of a will. The legal process in which a decedent's estate is administered.

Promissory note (Promissory Note): A real estate promissory note is a written agreement in which the homebuyer agrees to repay the mortgage loan to the mortgage lender. It is a legal document that the borrower signs to promise payment. After receiving a loan commitment from the lender, the borrower signs a promissory note agreeing to repay the loan according to the terms. The promissory note establishes personal liability for repayment. It is evidence of indebtedness.

Property management (Property management): Real estate and property supervision.

Property manager (Property Manager): Someone hired to maintain and manage properties. A property manager makes a landlord's life much easier, simply put. He or she can take care of day-to-day tasks such as managing new tenants, collecting rents, or maintaining the property.

Property tax (Property Tax): Property tax is an ad valorem real estate tax assessed by the local government, which is paid by the property owner. The tax is generally based on the value of the property owned.

Punitive DamagesDamages simply for the purpose of punishment.

Purchase agreement (Purchase agreement): A purchase agreement is a contract that legally binds two or more parties, establishing specific obligations that create a legally binding contract between the buyer and seller.

Purchase money mortgage (Purchase money mortgage): A purchase money mortgage is a loan for the purchase of a home offered by the seller to the buyer. In most cases, the lender issues a mortgage loan to the buyer to purchase the home, but in this mortgage, the seller is involved. For this reason, this mortgage is known as owner financing or seller financing.

Pur autre vie (Pur autre vie): The term "pur autre vie" is used in property law to indicate the duration of a specific form of life estate created when the holder of a life estate transfers his interest to another person. It is a French expression meaning "for the life of another", therefore, a pur autre vie life estate would last as long as the life of another person.

Real Estate Terms Beginning with Q

Quitclaim deed (quitclaim deed/assignment deed): A quitclaim deed contains no covenant of title and, therefore, provides the grantee with no warranty as to the status of title to the property. A deed to relinquish any interest in the property by the grantor without interference with possession. Click to see an example of Quitclaim deed.

Real Estate Terms Beginning with R

Radon (Radon): A radioactive gas dispersed from the natural decay of minerals in the earth; odorless, colorless, tasteless. A colorless, odorless radioactive gas present in the soil that enters a home through small spaces and openings.

Real estate (Real estate): A term used to describe property or buildings. Land and, in general, everything that is built on or attached to it. Improvements, such as buildings, structures, landscaping, fences, etc., are included.

Real estate agent (Real estate agent): A professional who has passed the required real estate classes and licensing exams in the state where he or she plans to work.

Real Estate Salesperson (Real Estate Agent, same as above) - A person who performs any of the acts included in the definition of real estate broker, but while associated with and supervised by a broker.

Real estate broker (Real Estate Broker: A person who acts as an intermediary between sellers and buyers of real estate/property. A broker may work independently or employ other agents. The major difference between a broker and a real estate agent is that a broker can work on his or her own, while an agent must work under a licensed broker. Obtaining a broker's license is a separate process from the standard license. A person employed for a fee by another to perform any of the activities listed in the licensing law definition of a broker.

Real estate economics (Real estate economics): Application of economic techniques in real estate.

Real estate license exam (Real Estate License Examination): The real estate license examination is divided into two parts: the national part and the part specific to your state. The real estate exam consists of multiple choice questions and is a mixture of problem solving, math and vocabulary. The most important part of the real estate license exam is the vocabulary, so it is most likely to be here. Be sure to use a real estate practice test to prepare!

Real estate license requirements (Real Estate License Requirements): The state-specific requirements that determine what you need to accomplish to become a licensed real estate agent.

Real estate lien (real estate lien): Real estate liens are financial claims against a property. A mortgage is the most common form of real estate lien.

Real Estate Owned (REO) (Real Estate Owned by the Bank)A term used to denote that real estate has been foreclosed.

Real estate pre licensing (Real Estate Pre-licensing): State-required courses that cover a wide range of real estate topics and concepts. All states require taking and completing a pre-licensing course, and it can be done in person or online.

Real Estate Settlement Procedures Act (Real Estate Settlement Procedures Act): The Real Estate Settlement Procedures Act requires lenders and mortgage brokers to provide homebuyers with information about the real estate settlement process. This law, also known as Regulation X, protects homebuyers from predatory lending arrangements.

A consumer protection law, first passed in 1974. The purposes of RESPA are:

  1. Helping consumers to become better buyers of settlement services and
  2. Eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

Real property (Real Property): All things attached to land and all legal rights to it. Generally, real property is things that are not movable, such as one's home or buildings within the property line. That which is immovable. Land, things affixed to the land, and appurtenances. Real estate plus the bundle of rights.

Real Property Sales Contract (Real Property Sales Contract)An agreement to transfer title to real property once specified conditions are met, which does not require transfer within one year from the formation of the contract.

REALTOR (REALTOR®: A REALTOR® is a real estate agent who is a member of the National Association of REALTORS®. REALTORS® have a specific association, code of ethics, and rules. Although the terms REALTOR® and real estate agent are commonly used interchangeably, they are actually two different titles.

Rear Yard - A patio that extends along the entire length of an actual lot line.

Receivership (Receivership): In real estate, receivership is a legal solution in which a lender or a court appoints a receiver to recover the remaining funds from a delinquent borrower.

RecessionTwo or more consecutive quarters of negative growth.

Recovery fund (Recovery Fund): A fund established by commissions in some states to protect the public from real estate agents who commit harmful acts. Basically, it is an insurance policy for states, homeowners and their agents.

Redlining (Redlining: The practice of denying services to eligible applicants, usually on the basis of race. The term "redlining" comes from when banks used to highlight risky investment neighborhoods on maps in red. It is the refusal to lend money within a specific area for various reasons.

Refinancing (Refinancing): The process of revising an existing loan with different rates or loan terms.

Regulation Z - The Truth in Lending Act of 1968 is a U.S. federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and costs, and to standardize the way in which the costs associated with borrowing are calculated and disclosed.

Release clause (Release Clause): A contract provision (usually in a blanket mortgage) that allows for the release of all or part of a property from a claim through a proportionate or total amount of the mortgage paid.

Remainder (Remainder): A remainder in real estate is a future interest in property. It is the right to own and possess the land after the fixed interest of the current owner expires.

Remaining Economic LifeEqual to the economic life minus the effective age.

Rent (Rent): The amount owed each month, period or year that covers the cost of living or residing in the property.

Rent control (Rent Control): A program that imposes a ceiling on how much landlords can charge tenants for rent. The cap, also known as a "rent ceiling," is designed to stabilize rental prices and help tenants afford housing.

Rent roll (Rental Register): A report detailing information about a property and its tenants. The purpose of a rent roll is to provide a snapshot of how a property is performing in terms of cash flow and profitability.

Rent stabilization (Rent Stabilization): A system that protects tenants by imposing a limit on how much landlords can raise the rent. Landlords cannot raise the rent above a certain percentage in a rent stabilized apartment. As a result, a rent-stabilized tenant can enjoy stable prices and the option to renew the lease at the end of the term.

Resident ManagerA person who oversees the care of an apartment complex while living in one of the units in the complex.

Respondeat SuperiorA common law doctrine that holds an employer liable for the actions of an employee when the actions occur within the scope of employment.

RescissionThe cancellation of a contract and the restoration of the parties to the same position they occupied before the contract was entered into.

Restrictive covenants (CCR) (Restrictive Covenants): Restrictive Covenants limit the use of a particular property, condominium or subdivision. The primary purpose of restrictive covenants is to maintain the look and feel of the community.

Return of InvestmentThe return or recovery of the original amount of the investment.

Return on Investment (Return on Investment)Any additional amount after the return on investment.

Reverse mortgage (Reverse Mortgage): A reverse mortgage loan is a mortgage loan that allows the borrower to obtain cash against the value of his or her property. With this mortgage, the borrower does not repay the amount as long as he or she lives in that property. The loan amount can be a lump sum, monthly income, or when the borrower needs cash.

Reversion (Reversion): In real estate, reversion is the return of property or assets to their original owner after a specific action or period of time. A future interest that is retained by the grantor after the grant of a lesser estate than he/she holds.

Revocation (Revocation): The act of withdrawing an offer before it is accepted. An offeror may revoke an offer at any time prior to acceptance.

Rezoning (Reclassification): The legal process approved by the government to adjust a zone.

Riparian rights (Riparian rights): Under riparian rights, all landowners whose property abuts a river or stream have the right to make reasonable use of the river or stream as it flows through or over their property. The rights of a landowner or occupier of land to use flowing water (such as a river) that is adjacent to the property.

Real Estate Terms Beginning with S

Safe Drinking Water Act (SDWA) (Safe Drinking Water Act): Established in 1974, it allowed greater control by the EPA to monitor contaminant levels, take legal action against public water authorities for violations, and require periodic testing of water and notification of state authorities and landowners if it is contaminated.

Sales Comparison Approach (Sales Comparison Approach)One of the three main valuation methods, which compares the characteristics of a subject property with those of comparable properties that have recently sold in similar transactions.

Sales contract (Sales Contract): An agreement containing all the terms of the sale between a customer and a seller.

Sandwich lease (Sandwich Lease): A rental arrangement in which a landlord rents his property to an investor who, in turn, rents that property to a tenant.

Satisfaction of mortgage (Satisfaction of Mortgage): A legal document that confirms that the mortgage is completed, releases the loan lien on the property, and transfers title to the borrower. The document includes the borrower's and lender's contact information, loan and property details, and verification of authenticity.

ScarcityLack of supply.

Secondary market (Secondary market): The secondary market is the loan resale market. Specifically, in real estate, it is where investors buy and sell mortgages and mortgage-backed securities.

Secondary Mortgage MarketThe market where loans originated in the primary mortgage market are bought and sold.

Section 1031 Exchange: A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any like-kind exchange of property for business or investment purposes.

Secured DebtDebt backed or secured by collateral to reduce the risk associated with the loan.

Secured loan (Secured Loan): A secured loan allows you to obtain a loan with your property or assets as collateral. This loan requires you to offer collateral as security to the lender.

Security InstrumentA contract by which a debtor agrees to use property as security or collateral for the payment of a debt.

Seller's agent (Seller's Agent): If someone wants to sell his or her home, he or she hires a seller's agent. A seller's agent (also known as a listing agent) represents the seller in the transaction and, in exchange for his or her services, receives a commission.

Seller's Market: Shortage of supply and high demand.

Selling AgentThe person who finds the buyer (or seller) for the property.

Servient estate (Servient estate): The servient estate is a parcel of land subject to an easement.

Servient Tenement (Servient Tenement)Land encumbered by an easement.

Setback (Separation Margin) - The distance at which a structure should be placed away from the street.

Shared appreciation mortgage (Shared Appreciation Mortgage): A shared appreciation mortgage is a mortgage loan in which the lender shares a percentage of the appreciated (increased) value of the home with the buyer. The phrase 'shared appreciation' means a portion of the appreciated value of the property. The lender offers these mortgages at lower than market value, but in return, requests a percentage of the increased value of the property when it is sold.

Sherman Anti-Trust Act (Sherman Anti-Trust Act)Federal legislation imposing civil and punitive damages for antitrust activities.

Short SaleThe attempt by a seller to sell real property when the liens are greater than the value of the property.

Single AgentAn agent who works only for the buyer or seller.

Single-Family Home Exemption (Single-Family Dwelling Exemption): The Single-Family Housing Exemption provides that any single-family home sold without an agent is exempt from FHA. This means that single-family homeowners can discriminate more by selling their homes themselves.

Side Yard - A patio that extends along a sideline from the front yard to the rear yard.

Sole proprietorship (Sole proprietorship): A sole proprietorship is a person or married couple conducting a business on their own. Sole proprietorships are the most common form of business structure.

Special warranty deed (Special Warranty Deed): A deed in which the grantor warrants only against defects occurring during ownership.

Special agent (Special Agent): A special agency occurs when a real estate agent is hired by a client, also known as the principal, to perform a specific task or duty. A real estate agent is considered a special agent because he or she is authorized only in that specific job, such as helping someone sell his or her home. An agent with limited authority to act on behalf of the principal, such as that created by a listing contract.

Special AssessmentA legal charge against real property imposed by a public authority to pay for the cost of public improvements such as street lights, sidewalks and street improvements.

Specialty Contractor: A contractor whose operations involve the performance of construction work requiring special skills and whose principal contracting activity involves the use of specialized construction trades or crafts.

Specific Lien (Specific Lien)A lien that attaches to a specific property only.

Specific PerformanceAn action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission.

Statute of FraudsA state law that requires certain contracts to be in writing and signed before they are legally enforceable. Examples: Contracts for the sale of real estate, contracts not to be performed within one year.

Steering (Direction/Guidance): The unlawful practice of guiding or directing someone to purchase or rent housing in a specific area or community based on their race, religion, gender, color, familial status, or disability. It is the use of racial, ethnic or religious criteria to suggest, recommend and/or influence people's decisions about locations for the purchase or rental of a single-family dwelling or rental housing.

Stock (Shares)Represents the ownership interest in a corporation.

Straight Line DepreciationA method of depreciation in which improvements are depreciated at a constant rate over the estimated useful life of the improvement.

Straight note (Footnote): A note that requires interest payments during the term of the mortgage and a principal payment in the form of a balloon payment at the end. This type of note is not amortized.

Subletting (Subletting): A sublease, sometimes called a sublease, is a lease in which a current tenant rents his apartment or part of his apartment to another person while his name is still on the lease.

Subleasing (Sublease): A sublease is a rental arrangement in which a current tenant rents a property to a new tenant for a portion of the initial lease term.

Subordination clause (Subordination clause): The subordination clause (in real estate) establishes the order of priority of financial claims (liens).

Subordinate loan (Subordinated loan): A secondary or subsequent loan that is repaid after the primary or initial loans have been repaid. It has the lowest rank and generally higher interest rates than other loans. Subordinated loans are riskier because they are repaid only after other loans have been repaid.

Subjective ValueWhat something is worth to an individual person regardless of market conditions.

Sub-Prime Mortgages (Sub-Prime Mortgages)A type of loan granted to people with poor credit histories (often below 600) who, because of their poor credit ratings, would not qualify for conventional mortgages.

Subsidized housing (Subsidized Housing): Subsidized housing provides government-sponsored housing assistance to low-income tenants. Another popular term for subsidized housing in the United States is "affordable housing".

Superfund Amendments and Reauthorization Act of 1986 (SARA) (Superfund Amendments and Reauthorization Act of 1986): The Superfund Amendments and Reauthorization Act of 1986 (SARA) was passed when the original law, CERCLA, expired in 1985. It amended the comprehensive environmental response, compensation, and liability law.

Supply (Supply)The quantity of a specific good or service available on the market.

Real Estate Terms Beginning with T

 

Tax DeedThe deed delivered to a purchaser at a public auction of land that was withheld due to nonpayment of taxes. It grants to the purchaser only the title held by the delinquent taxpayer.

Tax lien (Tax lien): A tax lien is placed on real estate for unpaid real estate taxes.

Tax rate (Tax rate): The tax rate is the rate designated by the government to tax a person, business or entity.

Tax SaleSale of a property after a period of non-payment of taxes.

Taxation (Taxation): The process of taking a portion of the value of a person or business and using it for the public welfare.

Tenancy in common (Co-ownership): Co-ownership is when a parcel of real estate is owned by two or more co-owners. Upon the death of one co-owner, that share is transferred to the estate or heir of the deceased co-owner. An ownership of real estate by two or more persons, each of whom has an undivided interest, without the "right of survivorship".

Tenant (Tenant): A person occupying land or property leased from a lessor.

Tenant rights for repairs (Tenant's Rights to Repairs): Tenant rights for repairs are the implied right that allows a tenant to make necessary repairs and deduct the cost of repairs from rent in certain circumstances.

Tenant turnover (Tenant turnover): Tenant turnover is the proportion of tenants who remain in a rental property compared to those who leave. Tenant turnover can also be used to describe the time lag between the departure of a former tenant and the arrival of a new tenant.

Tenants by the entirety (Joint tenants with right of survivorship): Joint tenants with right of survivorship is a special form of joint ownership used in some states that allows a husband or wife to inherit the other spouse's ownership interest upon death. Couples who are joint tenants with right of survivorship automatically have the right of survivorship. The surviving spouse immediately becomes the sole owner of the property when the other spouse dies.

Testate (With Will): To have made a valid will before death.

The Clean Water Act (CWA) (Clean Water Act): Passed in 1972 and amended in 1977 and 1987, the Clean Water Act was originally known as the Federal Water Pollution Control Act. It is intended to regulate pollutants discharged into waterways.

The Fair Housing Act (Fair Housing Act): The law that prohibits discrimination in the purchase, sale, rental or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, handicap, disability, children, national origin, and more.

The Fair Housing Amendments Act of 1988 (Fair Housing Amendments Act of 1988): The Fair Housing Amendments Act (FHAA) of 1988 enforces Title VIII and makes discrimination against families with children and persons with disabilities illegal.

The Right of Lateral Support - The right of a landowner to have the natural physical support of the adjacent land.

The Truth in Lending Act (Truth in Lending Act): The Truth in Lending Act (TILA) protects consumers against unfair and predatory lending practices by credit companies. This law, passed in 1968, requires lenders to fully explain to consumers the terms and conditions of their loans.

Tie in agreement (tying arrangement): A tie-in agreement is when a seller requires the purchase of another product or service in order to sell the first one. This means that if a buyer does not agree to the terms of the tie-in sale, they cannot purchase the item or service they wanted in the first place.

Timeshare (Timeshare): A property with a divided form of ownership or rights of use.

Title (Title): The legal concept of saying that you are entitled to some type of asset or interest.

Title contingency (Title Contingency): If the title to the property is under review, the buyer may add a title contingency to the offer. During this process, a title report will be run which may reveal a conflict in ownership status, in which case the buyer may choose not to purchase.

Title insurance (Title Insurance): A type of insurance that protects homebuyers and mortgage lenders from defects in title. It is a one-time fee that the buyer must pay when purchasing a property. Insurance that protects a real estate owner or lender up to a specified amount against certain types of losses (e.g., defective or unmarketable title).

Tort LiabilityA legal obligation of a party to a victim as a result of a civil wrong or injury.

Trade Fixtures (Trade Fixtures) - Removable personal property that a tenant attaches to leased land for commercial purposes.

Triple net lease (Triple Net Lease): "Triple" means that three additional costs will be added to your base rent. Typically, taxes, insurance and maintenance are added to the monthly lease payment.

Trespass (Invasion)The improper entry onto the land of another, either in person or by means of instruments.

Trust (Trust): A trust is a three-party relationship in which the first party, the trustor or settlor, transfers property to the second party for the benefit of the third party, the beneficiary.

Trust Funds - Funds held by a real estate broker in trust for clients and/or potential clients.

Trustee (Trustee): A trustee is required to administer a trust in accordance with the wishes of the trustor and in the best interest of the beneficiary. A trustee may be an individual or a financial institution such as a bank. One who holds property in trust for another to secure the performance of an obligation. Third party under a deed of trust.

Trustor (Mortgagor)One who borrows money from a lender under a deed of trust, then transfers the real property securing the loan to a trustee to hold as collateral until the mortgagor has satisfied the obligation to the lender under the terms of a deed of trust.

Real Estate Terms Beginning with U

Unconventional Loan (Unconventional Loan)A loan in which there is government participation or cooperation.

Under-Improvement (Under-Improvement): An improvement that, due to its deficiency in size or cost, is not the highest and best use of the site.

Underwriting (Underwriting): Underwriting is a process lenders use to determine if a borrower qualifies for a loan. An underwriter evaluates the risk and determines whether the lender should enter into a loan agreement. The criteria by which a lender determines creditworthiness to qualify for a loan.

Underwriter (Underwriter): An underwriter conducts the underwriting process and determines the risk suitability of a loan. An individual at a lending institution who determines creditworthiness to qualify an applicant for a loan.

Unenforceable contract (unenforceable contract): An unenforceable contract is one that is valid but which the court will not enforce. Any contractual agreement created between two parties for illegal actions is considered an unenforceable contract.

Unilateral contract (Unilateral contract): A unilateral contract is a one-party agreement. Only one party makes a promise to perform. One party pays the other party to perform a specified duty. If the first party performs the duty, the second party is obligated to transfer the specified funds. When one party promises to do something if the other party performs a specific act, but the other party does not undertake to perform it; the contract is formed only if the other party performs the requested act.

Universal agent (Universal agent): A universal agent is a retained agent who can act on behalf of a principal with full power of attorney. In other words, a universal agent can legally act in place of its principal. The agent who has full authority over any activity of the principal; for example, a power of attorney.

Unsecured loan (Unsecured Loan): An unsecured loan allows you to obtain a loan without using any collateral. Instead of requiring collateral, lenders review your credit history and ability to repay loans based on your past records.

Unsecured DebtAn obligation or debt that does not have a specific property as security for the payment of the debt.

USDA loan (USDA Loan): A USDA loan is a mortgage offered by the USDA as part of the Rural Development Guaranteed Mortgage Loan Program. This program is designed to improve the economy and quality of life in rural America.

Usury (Usury): Usury is the act of lending money at disproportionately high interest rates. This illegal practice is an example of predatory lending.

UtilityThe ability to provide satisfaction and/or awaken the desire for possession. An element of value.

Real Estate Terms Beginning with V

VA Loans (VA loans): A VA loan is a mortgage loan available to active duty service members, veterans and eligible surviving spouses. They often come with better terms than a traditional mortgage, which is why they are commonly sought after.

Valid contract (Valid Contract): A valid contract meets all legal requirements of a court of law and is legally enforceable.

Validity: To have a mutual agreement and consideration.

ValuePresent value of future benefits derived from the property for typical users and investors.

Variance (Variance): A variance is a request to deviate from current zoning requirements. If granted, it allows the owner to use his or her land in a way that is not normally allowed by the zoning ordinance.

The authorization to improve or develop a property in a manner not authorized by zoning.

Variable lease (Variable Lease): A variable lease is a rental agreement in which the lessee's payments vary over the term due to changing market conditions.

Variable interest rate (Variable interest rate): A variable interest rate is a rate that increases or decreases in accordance with changing market rates. An interest rate on a real estate loan that, according to the terms of the note, varies up and down over the term of the loan according to money market conditions.

Vendee (Buyer): A buyer.

Vendor: A salesman.

Void contract (Void contract): A void contract is one that lacks one or more of the elements that make a contract valid. The contract is invalid at the time of its establishment and is not legally enforceable. Void contracts are not contracts because they lack an essential element of a contract and are therefore unenforceable.

Voidable contract (Voidable contract): A voidable contract is a legal agreement between two parties that may be unenforceable for a variety of reasons. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but may be rejected by one of the parties if the contract is found to be defective. That which is capable of being declared void, but is not void unless some action is taken to make it so.

Voluntary alienation (Voluntary alienation): Voluntary alienation is a transfer of title made with the consent of the owner. Transfers such as this are initiated either by a public grant, a property owner executing a will, gift, sale of the property or by a dedication.

Voluntary liens (Voluntary liens): Voluntary liens are created by a contract between the creditor and the debtor. The most common type is a mortgage. Any encumbrance placed on property with the consent or as a result of the voluntary act of the owner.

Real Estate Terms Beginning with W

Warranty deed (Warranty Deed): A warranty deed is a type of legal document in which the grantor (seller) warrants that he or she has clear title to real property and has the right to sell it to the grantee (buyer). A deed used to convey real property that contains warranties of title and quiet possession, and the grantor agrees to defend the property against unlawful claims by third parties. It is commonly used in many states, but in others, the grant deed has replaced it due to the modern practice of securing title insurance policies that have reduced the importance of express and implied warranty in deeds. Here is a Warranty deed example.

Water diversion (Water diversion): Water detour refers to the withdrawal or transfer of water from one location to another.

Water rights (Water Rights): Water rights are the legal rights to use rivers, lakes, or oceans that are adjacent to a land property. The rights of a landowner and/or occupier of land to use adjacent bodies of water in a reasonable manner.

Wrap-around loan (Wrap-around loan: A wrap-around loan is a new loan that is "wrapped" around the seller's original loan. It is a secondary financing option in which the seller provides the loan instead of a bank or credit union. These loans can be used in owner-financing contracts and are primarily used as mortgages.

Real Estate Terms Beginning with Y

YieldA return on investment.

Real Estate Terms Beginning with Z

Zoning (Zoning): Zoning is the regulation of the use and development of public land by local government. Zoning generally refers to local government laws that dictate how real property can and cannot be used in certain areas. The division of an area into zones in order to restrict the number and types of buildings and their uses.

Zoning ordinances (Zoning ordinances): Zoning ordinances are written regulations and laws that define how property may be used in specific zones.

Legal and Tax Disclaimer

Please be advised that the content presented in this blog is for informational purposes only and should not be construed as legal or tax advice. The articles and information provided here are written from the perspective of a real estate agent affiliated with Keller Williams, and do not represent legal or tax counsel.

As the author, I am a licensed real estate professional under Keller Williams, holding Brokerage DRE License Number: #02197031. However, it is important to note that my expertise is in the field of real estate, and not in legal or tax matters. The insights and opinions shared on this blog are based on my experiences and knowledge in the real estate industry and should be treated as general guidance rather than definitive legal or tax advice.

For specific legal or tax concerns relating to any real estate transactions or investments, readers are strongly encouraged to consult with a qualified attorney or tax advisor who can provide tailored advice based on your individual circumstances and the latest legal and regulatory requirements.

The information on this blog is provided "as is" without warranty of any kind, and I, along with Keller Williams and its affiliates, disclaim all liability for any loss, damage, or misunderstanding arising from reliance on the information contained herein.

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2 thoughts on “Glosario de Términos Inmobiliarios en los Estados Unidos”

  1. Hi there! This article could not be written much better!
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