Fridrich & Clark Realty, LLC

Glossary of Real Estate Terms

This glossary is for informational purposes only and should not be used without legal counsel for the purpose of reading/understanding a contract.


The voluntary surrender, relinquishment, disclaimer or cession of property claims or rights.

Absentee Owner

An owner who does not live or mange his or her own property but uses the services of a property manager.

Absolute Ownership

See Fee simple estate.

Absorption Rate

How long it will take to sell the current inventory of comparable homes at the present rate of sales in the market.

Abstract of Title

A set of documents which record the ownership through time of a property.

Accelerated Depreciation

A method of cost write-off, which permits an earlier recovery of capital and a faster tax write-off of an asset, in which depreciation allowances are greater in the first few years of ownership than in subsequent years.

Acceleration Clause

A condition in a real estate financing instrument giving the lender the power to declare all sums owed to the lender immediately due and payable upon the happening of an event such as sale of the property or a delinquency in the repayment of the note.


One of the four essential elements of a valid contract whereby the offeree agrees or consents to the terms of an offer therefore establishing the “meeting of the minds.”

Accrual for Depreciation

In appraisal, a provision in the income approach in which a return of the investment is provided for out of the income by way of the capitalization rate.

Ad Valorem

A Latin phrase meaning “according to value” that is usually used in reference to real estate taxation.

Ad Valorem Tax

A tax based on the value of the thing being taxed.  Cities, counties and school districts raise most of their tax revenue form ad valorem taxes on real estate.


Nearby but not necessarily adjoining.


Contiguous; attaching; sharing a common border.

Adjudged Incompetent

A person who has been declared by the courts to be incapable of handling his or her own affairs.

Adjustable Rate Mortgage

A general term for any mortgage in which the interest rate and generally the payments change over the life of the loan. Your interest rate will be adjusted to match the rise or fall of a preselected interest rate index and your regular payments will increase or decrease accordingly.

Different types of ARMs have different frequencies for these adjustments. Some ARMs have limits on payment and interest rate changes and the maximum interest rate over the life of your loan.

To your advantage, the initial rate of an ARM is usually low, permitting you to buy real estate that would be unaffordable with a fixed rate mortgage. But you risk higher payments later on.

To limit the borrower's risk, the ARM may have a payment or rate cap.


Same as draw.

Advance Commitment

The institutional investor's prior agreement to provide long-term financing upon the completion of a construction project. Also known as a “take-out” loan commitment.

Advance Fee

1. A fee paid in advance of any services rendered such as in obtaining a loan. 2. Sometimes unlawfully charged in connection with the illegal practice of obtaining a fee in advance for the advertising of property or businesses for sale, with no intent to obtain a buyer, by a person representing himself as a real estate licensee or a representative of a licensed real estate firm.


A statement or declaration reduced to writing and sworn to or affirmed before a public official who has authority to administer an oath or affirmation.

Affiliate Broker

Generally, a person who holds a broker’s license that is held under the license of another broker.  In some areas, it is used to refer to a real estate licensee who holds a salesperson’s license. (also known as and “Associate Broker”)

Affordable Housing

A comprehensive term applied to the efforts of the public and private sector to help low- and moderate-income people purchase homes through programs that offer lower down payments, easier loan-qualifying rules, and/or below-market interest rates.


Pursuant to Tenn. Code Ann. Section 62-13-401:
A real estate licensee may provide real estate services to any party in a prospective transaction, with or without an agency relationship to one (1) or more parties to the transaction. 

Until such time as a licensee enters into a specific written agreement to establish an agency relationship with one (1) or more parties to a transaction, such licensee shall be considered a facilitator and shall not be considered an agent or advocate of any party to the transaction. 

An agency or subagency relationship shall not be assumed, implied or created without a written bilateral agreement that establishes the terms and conditions of such agency or subagency relationship. 

The negotiation and execution of either an exclusive agency listing agreement or an exclusive right to sell listing agreement with a prospective seller shall establish an agency relationship with the seller.

Agency Coupled with an Interest

An agency relationship where the agent holds an estate or interest in the property that is the subject of the agency relationship.

Agency Disclosure

A written declaration signed by a prospective buyer or seller informing that party of the role that the broker is playing in a specific transaction. The purpose of disclosure is to explain whether the broker represents the buyer or seller or is a dual agent (representing both) or a subagent (an agent of the seller's broker). This allows the customer to understand to which party the broker owes loyalty.


An understanding between two or more parties that is often embodied in a legally binding, written contract.

Agreement of Sale

A written agreement or contract between a buyere and a seller in which they reach a “meeting of minds” whereby the purchaser agrees to buy specific real estate and the seller agrees to sell upon specific terms and conditions set forth in the contract.

All-Inclusive Mortgage

A purchase money mortgage that is subordinate to, but also including, the original loan.

Allodial Land

Land held in absolute independence without being subject to any rent, service or acknowledgment to a superior. See opposite Feudal land.

Allodial Tenure

A real property ownership system where ownership may be absolute except for those governmentally-held rights and which is the opposite of feudal tenure.


Satisfaction of enjoyable living to be derived from a home; conditions of agreeable living or a beneficial influence from the location of the improvements that are not measured in monetary considerations but rather as tangible and intangible benefits of the property which often result in greater pride of ownership. Sometime referred to as amenity return.


The benfits a property offers such as a good neighborhood, schools, parks, a view or other tangible or intangible assets.


The gradual elimination of a liability, such as a mortgage through regular payments over a specified period of time which must be sufficient to cover both the principal and the interest.

Amortization Schedule

A table showing the periodic principal and interest payment requirements and the unpaid loan balance for each period of the life of a loan.

Amortization Table

A table showing the required payments to amortize loans at various interest rates over various periods of time

Amortized Loan

A mortgage where the principal and interest are repaid according to a plan through a series of equal or nearly equal payments in monthly or other periodic installments without any special balloon payment prior to maturity. Also known as a Level payment loan.<

Anchor Tenant

The key tenant in a commercial development such as a mall whose quality often determines the size of a loan that can be secured.

Annual Percentage Rate

(APR) The identified cost of credit as determined in accordance with Regulation Z and the Federal Truth in Lending Act.

Apartment Building

A multifamily dwelling structure with individual housing units called apartment frequently with a common entrance and hallways which usually is a rental property. See Multifamily housing


The division of rights or liabilities among several persons entitled to them or liable for them in accordance with their respective interests.


An estimate or opinion of value of a specific property as of a specific date resulting from an analysis of the facts about that property by an qualified impartial third party.

Appraisal Inventory

A compilation of all of the specific items that make up the property that were valued by the appraiser and included in an appraisal report.

Appraisal Report

A report setting forth the estimate and conclusion of appraised value along with the pertinent information concerning the appraised property as well as the evidence and analysis leading to the reported estimate of value.

Appraised Value

An opinion of a property’s fair market value, based on what a willing buyer will pay and what a willing seller will accept for a piece of real property, in an arms-length transaction, and on an appraiser's knowledge, experience, and analysis of the property.


A person who is in the business of making appraisals for a fee or salary and who is qualified to estimate the value of real and personal property based on education, training, experience, judgment of facts and the use of the formal appraisal processes.


The increase in value of property over a time period

Arms Length Transaction

A transaction such as a sale of property in which all parties involved are acting in their own best-interest and are under no undue influence or pressure to act from any other parties.

As Is

1. In real estate, a sale without any guarantees as to condition and where the premises are being accepted by a buyer or tenant as they are including any physical defects. Illegal in many states. 2. A sale made with only the disclosure of latent defects. See Caveat empto

Assessed Value

An amount that might be higher or lower or at market value or that is based upon a percentage of market value that is placed upon a piece of property by a public authority as a basis for levying ad valorem taxes on the property.


The official valuation placed on property for ad valorem taxation or public improvements.

Assessment Ratio

The ratio of assessed value divided by market value.

Assessment Roll

See Tax roll.


An official whose responsibility is to discover, list and value real property for ad valorem taxation.


The Real or personal property under ownership and having value

Assignment of Lease

The transfer of rights to use leased property.  The Asignee aquires the same rights and privileges as the Assignor.  The Assignor remains liable unless released by the landlord.

Assignments and Warranties

See Mineral rights. Example: In an oil and gas lease, the owner is to receive $100 per acre as a bonus payment, and one eighth of the value of minerals found on the property.

Assignments of Rents

A mortgage clause under which the lender may upon the default by the borrower take possession of the property, collect its income and apply it to the loan balance and the costs incurred by the beneficiary.


A person who assigns or transfers property.

Associate Broker

Generally, a person who holds a broker's license that is held under the license of another broker.  In some areas, it is used to refer to a real estate licensee who holds a salesperson's license. (also known as and “Affiliate Broker”)

Associate Licensee

A broker or salesperson who is employed by or in an independent contractor relationship with a real estate broker.

Assumable Loan

A mortgage loan without due-on-sale clause that allows an owner to sell property to a purchaser who is permitted under the loan documents to undertake the obligation of the loan with no change in loan terms. Most FHA and VA loans are assumable.


The agreement between buyer and seller in which the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money, since this is an existing mortgage debt, unlike a new mortgage where closing costs as well as new, possibly higher, market-rate interest charges may apply.

Assumption Agreement

The adoption or taking on a debt or contractual obligation primarily resting upon another party

Assumption of Loan

A purchase of property wherein the grantee accepts liability for the payment of the existing note secured by a mortgage or trust deed against the property and becomes a co-guarantor with the seller for the payment of the loan unless the lender releases the seller.

Assumption of Mortgage

See Mortgage assumption.


The seizure of real or personal property of a party to a lawsuit by the court for the purpose of acquiring jurisdiction over the property to compel an appearance before the court or to furnish security for a debt or costs arising out of the litigation.


An official act establishing authenticity or to affirm that a statement or document is true, genuine or accurate.

Balloon Mortgage

A mortgage with a balloon payment. See Balloon payment.

Balloon Payment

An installment payment on a promissory note usually the final one for discharging the debt which is significantly larger than the other installment payments provided under the terms of the promissory note.

Bargain and Sale Deed

A deed that conveys title to real property but does not guarantee clear title that is often used by court officials and fiduciaries who are only holding title by force of law. See Grant deed, Quitclaim deed and Warranty deed.


The exchange of goods or commodities for other goods or commodities.

Basic Employment Urban Growth Employment

Employment in establishments that receive their income from outside the community.


1) A party entitled to the benefit of a trust; (2) A party who receives profit from an estate, the title of which is vested in a trustee; (3) A party to whom a insurance policy is payable; (4) The lender on the security of a note and trust deed

Beneficiary Statement

A statement of the unpaid balance of a loan and the condition of the debt, as it relates to a trust deed.


An improvement to property which increases the value of the property which is considered to be a capital asset rather than repairs or replacements where the original character or cost remains unchanged.


The amount a party offers to pay.

Bill of Sale

A deed transferring personal property.

Binding Agreement Date

The date and time at which both Buyer and Seller have reached an agreement on the terms of the sale of real property.  This date and time shall be that point at which the last offeror, or licensee of the offeror, received notice of the offeree's acceptance. 

Buyer made an offer to Seller on April 1, 2007 at noon. 

Seller countered the offer to Buyer on April 3, 2007 at noon. 

Buyer accepted Seller's Counter on April 4, 2007 at noon. 

Seller's Agent received notice (i.e., the signed contract) from the Buyer on April 4, 2007 at 2:00 p.m. 

The Binding Agreement Date would be April 4, 2007 at 2:00 p.m. 

NOTE: There is a Binding Agreement date section on both form F9, the Purchase and Sale Agreement and form F8, the Counter Offer form.  In the event that a counter offer is what was accepted, the Binding Agreement Date shall be placed on the Counter Offer form.  Basic key to this - the Binding Agreement Date is placed on the document (whether it be the offer or the counter offer) that is signed by both the buyer and the seller to create the contract.  In the above example, the Binding Agreement Date of April 4, 2007 at 2:00 p.m. would go on the Counter Offer which was signed by both Buyer and Seller.

Blighted Area

The amount a party offers to pay.


A detailed set of plans used as the guide for the construction of a property.

Bona Fide

In good faith and being authentic and without fraud or deceit


A written instrument given by a corporation or government entity as evidence of a debt and also meaning a guarantee of performance.

Book Depreciation

An accounting concept which an allowance is taken to provide for the recovery of invested capital

Book Sale

A sale in name only of real property to the state when a taxpayer is delinquent in paying property tax.

Book Value

The current value for accounting purposes of an asset expressed as original cost, plus capital additions and less accumulated depreciation.

Boundary Line Survey

A mathematically closed diagram of the complete peripheral boundary of a site, reflecting dimensions, compass bearings and angles. It should bear a licensed land surveyor’s signed certification, and may include metes and bounds or other written description.


The breaking or violating of a law or duty either by commission or omission or the failure to meet a contractual obligation.

Breach of Contract

The violation of any terms or conditions in a contract without having a legal excuse such as the failure to make a loan payment when due.

Breakeven Point

The amount of income needed to simply meet the total amount of expenses for a project.

Bridge Loan

The mortgage financing that falls in between the termination of one loan and the beginning of another loan. See Gap loan and Swing loan.


Small wood or metal pieces inserted between floor joists to give them lateral rigidity.


Any person who for a fee, commission, finders fee or any other valuable consideration, or with the intent or expectation of receiving the same from another, solicits, negotiates or attempts to solicit or negotiate the listing, sale, purchase, exchange, lease or option to buy, sell, rent or exchange for any real estate or of the improvements thereon or any time-share interval as defined in the Tennessee Time-Share Act, compiled in title 66, chapter 32, part 1, collects rents or attempts to collect rents, auctions or offers to auction, or who advertises or holds out as engaged in any of the foregoing;

Broker Salesperson Relationship Agreement

A written agreement required by state regulations setting forth the material aspects of the relationship between a real estate broker and each salesperson or broker performing licensed activities in the name of the supervising broker.


The business in which brokers are engaged to earn money by assisting people to buy, sell, rent or lease, manage or finance property or property rights.

Budget Mortgage

A type of amortizing mortgage which includes the principal, interest and other costs such as taxes and fire insurance - referred to as a PITI monthly payment - in the monthly payment

Build to Suit

An contract whereby an owner of land offers to construct a building on his or her land as specified by a potential tenant and then to lease land and building to that party.

Building Capitalization Rate

In appraising. the capitalization rate is used to convert an income stream into a lump sum value and where the rate for the building may differ from that of the land because the building is considered to be a wasting asset.

Building Codes

A systematic method established by ordinance or law of regulating and setting minimum construction standards for buildings within a municipality to protect the public's safety and health.

Building Inspection

1. A physical review of property as construction progresses to ensure that each major component - foundation, plumbing, electrical wiring, roofing, materials meets the building codes. 2. A periodic inspection of existing public buildings for health and safety compliance.

Building Line

A line established by law or a deed restriction that determines the distance from a street in front of which an owner cannot build.

Building Permit

The authorization by a local government for the erection, alteration or remodeling of improvements within its jurisdiction.

Building Residual Technique

In appraisal, a method of determining the contribution of an improvement to the current value of the entire property.

Building Restrictions

Limitations established by zoning legislation, covenants or deeds limiting the type, size and use of buildings.


The features constructed as part of the house such as cabinets, etc.

Bulk Sales Transfer

A sale of the entire stock of a business along with real estate as opposed to it being sold in the ordinary course of its business. See Uniform Commercial Code.

Bundle of Rights

A concept or theory of ownership that holds that the entire set of legal rights are included with the ownership of land including the rights to possess, use, encumber, dispose and exclude.

Buy-Back Agreement

A contractual provision in which the seller agrees to repurchase the property at a named price upon the occurrence of a specified event within a certain period of time.


A mortgage financing technique in which the interest rate has been reduced over the first few years of the loan because the lender received an initial payment from the builder or seller to reduce the rate, or in effect a discount, thus reducing the monthly payments for a fixed time period.

Buy-Sell Agreement

A pact among stockholders, partners or co-owners where some will agree to buy out the interests of others upon the happening of some event.


One who purchased or is purchasing the property—also referred to as Vendee, Payor, and Purchaser. Buyer may also refer to more than one person in cases of co-buyers.

Buyer-Agency Agreement

A principal-agent relationship in which the broker is the agent for the buyer and owing fiduciary responsibilities to the buyer/principal under the law of agency.

Buyers Agent

A real estate broker or salesperson who represents a prospective purchaser or tenant in a real estate transaction and who owes the buyer/tenant/principal common-law or statutory agency duties.

Buyers Broker

A real estate broker who from a personal or brokerage point of view represents prospective buyers exclusively and who owes the buyer/principal common-law or statutory agency duties.

Buyers Market

The condition which exists when a buyer is in a better position as to price and terms because the real property for sale is in greater supply in relation to demand.

Buying Subject To

Phrase meaning no personal liability is assumed in regard to a mortgage debt which exists against real estate at the time of purchase.

Buying, Assuming and Agreeing to Pay

Undertaking and promising to pay the seller's personal liability for a debt at the time of purchase.


An arrangement by an owner of a building agreeing to take on the liability for the remaining lease term of a tenant in a different building which releases the tenant from the old lease obligation and permits him/her to negotiate a lease in the owner's building.

Call Provision

A clause in a loan that gives the lender the right to accelerate the debt upon the occurrence of a specific event which is normally an attempt to sell. See Acceleration clause and Alienation clause.

Called Loan

A loan that is due and payable at the demand of the lender usually as a result of an acceleration or alienation clause becoming effective. See Acceleration clause and Alienation clause.

Cancellation Clause

A provision in a contract that gives a party the right to terminate his or her obligations upon the occurrence of specified conditions or events.


A limit placed on the adjustments in an adjustable rate mortgage to protect the borrower from large increases in the interest rate or the payment level. See Annual cap and Payment cap.

Cap Rate

See Capitalization rate.


The legal ability of a person or entity to enter into a contract that is legally binding and to perform certain other civil acts such as making a will.

Capacity of Parties

A requirement for having a valid contract. Parties having less than full capacity include minors, persons adjudged mentally incompetent and those who are intoxicated.

  1. A sum of money used to purchase long-term assets.
  2. Stocks, bonds, or mortgages that were sold to raise money to purchase assets, as well as retained earnings.
  3. Assets, other than land, used to generate income.
Capital Appreciation

The appreciation accruing to the benefit of the capital improvement to real estate.

Capital Assets

Any asset of a permanent nature used for the production of income (land, buildings, machinery, equipment, etc.) which under income tax law, is normally distinguishable from “inventory” which are assets held for sale to customers in the ordinary course of the taxpayer's trade or business.

Capital Calls

Example: Oliver paid $25,000 cash as original equity and borrowed $75,000 to purchase a $100,000 vacation home. His laborious efforts to remodel added $20,000 through sweat equity, and inflation raised the value by another $10,000.

Capital Expenditures

The cost of a capital improvement such as investments in land, buildings, machinery, and equipment.

Capital Gain

Income of a capital item that results from the sale of an asset and not from the usual course of business, the amount by which, the net sale proceeds exceeds the adjusted cost basis (book value). Gains are used for income tax computations and are taxed at a lower rate than ordinary income and are termed long or short term based upon length of time it was held.


See Capital loss.

Capital Improvement

Any structure erected as a permanent improvement to real estate, usually extending the useful life and value of a property such as the replacement of a roof.

Capital Loss

A tax-deductible loss on real property that has been held for more than six months. See Capital gain.

Capital Market

The portion of the market funds where equities, mortgages, and bonds are traded. Contrasted with Money market

Capital Recapture

The manner in which the investment in a property is to be returned to investors, normally stated as a rate or dollar amount per unit of time.


A process of reflecting future income in present value and used to determine the value of property by considering its net income and a percentage of reasonable return on the investment. The value of an income property can be determined by dividing annual net operating income by its capitalization rate.

Capitalization Rate

The rate of interest, made up of the interest rate (return on the investment) plus the recapture rate (return of the original investment), which is considered a reasonable return on the investment and used in the process of determining value based upon net income. It may also be described as the yield rate that is necessary to attract the money of the average investor to a particular kind of investment. In the case of land improvements which depreciate, to this yield rate is added a factor to take into consideration the annual amortization factor necessary to recapture the initial investment in improvements. This amortization factor can be determined in various ways (a) See straight-line depreciation method, (b) See Inwood Tables and (c) See Hoskold Tables.


An estimation of the present lump sum value of an income stream. See Capitalization rate.

Carryback Financing

Financing in which the seller takes back a note for part of the purchase price secured by a junior mortgage, a wraparound mortgage or a land contract..

Carrying Charges

Charges for holding property such as the expense of property tax on vacant land or on property under construction.


In a tax-deferred exchange, the adjusted tax basis of the property surrendered that is used to determine the tax basis of the property acquired. See Basis.

Cash Equivalent

The conversion of the price a piece of property sold for with either favorable or unfavorable financing into the price the property would have sold for had the seller accepted all cash in the transaction.

Cash Flow

The net income generated by a property before depreciation and other non-cash expenses.

Cash Method

An accounting method that calls for income and expenses to be booked when the amount is received or the obligation is paid. See Accrual method.

Cash Rent

In an agricultural lease, the amount of money given to the landowner as rent at the beginning of the lease as opposed to sharecropping

Casualty Insurance

A type of insurance that protects a property owner from claims arising from damage to his or her own property such as fire or theft. See Liability insurance.

Caveat Emptor

A common law concept which from the Latin means “let the buyer beware” which expresses the general concept that in the absence of any misrepresentation, the buyer must examine the goods or property and purchase at his or her risk and that neither express nor implied warranties are made by the seller.

Cease and Desist Order

An order by a court or administrative agency prohibiting a person or business from continuing an activity. Used in real estate brokerage to prevent antitrust behavior among firms or in illegal discrimination

Certificate of Clearance

A certificate obtained from the state showing that no sales tax is due from the seller of a business which protects a buyer from successor's liability. Also called a Clearance receipt.

Certificate of Eligibility

Issued by the Department of Veterans Affairs as evidence of a veteran's eligibility to obtain VA loan.

Certificate of Insurance

A document issued by an insurance company to verify the existence of coverage.

Certificate of Occupancy

A document issued by a local government to a developer which permits a structure to be occupied by the general public and generally indicates that the building is in compliance with public health and building codes.

Certificate of Reasonable Value

(CRV) The Federal VA appraiser's opinion as to the value of a property.(CRV) The Federal VA appraiser's opinion as to the value of a property.

Certificate of Sale

A document issued to the highest bidder at a tax foreclosure sale to indicating ownership but which does not convey actual title indicating that all past due taxes have been paid and that title will pass upon the expiration of the redemption period.

Certificate of Taxes Due

A written statement or guaranty of the condition of the taxes on a certain property made by the County Treasurer of the county where the property is located and any loss sustained due to an error in the tax certificate will be paid by the county reporting.

Certificate of Title

A written document issued by an attorney or a qualified person who has examined the record of the real estate title reporting the state of that title.

Certificates of Beneficial Interest

A written document that identifies an owners shares in a business, trust or mutual fund

Cestui Que Use

One who has the right to receive the profits and benefits of the lands or tenements, the legal title and possession of which are held by another person as trustee

Chain of Title

A history of all conveyances and encumbrances affecting the title from the time the original patent was granted or as far back as records are available and identifies how title came to be vested in current owner.


Goods or every type of personal property that are movable or immovable and which are not real property. See Personal property or Chattel real.

Chattel Mortgage

A claim on personal property rather than on real property used to secure or guarantee a promissory note to acquire personal property.

Circuit Breaker

In property taxation, a method for granting property tax relief to the elderly and disadvantaged qualified taxpayers by rebate, tax credits or cash payments which is usually limited to homeowners and renters.

Circulating Fireplace

A type of fireplace which is built around a metal form, containing air ducts to distribute heat by convection.


The distance around the exterior boundary of a circle.

Claim of Right

An aspect of adverse possession or easement by prescription whereby a person occupies property even though having no legal right to title, but nevertheless claiming such a right under a claim of right-when the adverse user or possessor treats the land as his or her own, or under a color of title - when they have some reason to believe that they have title.

Class A Building

An attractive and efficient building of high quality that is sought by investors and prestigious tenants and is well designed and constructed with above-average material, workmanship and finishs and is excellently maintained and managed especially and are the most desirable in their markets

Class B Building

An building that offers useful space without special features and has a functional layout and design although not unique and maintenance and management average to good which is usually from 10 to 50 years old..

Class C Building

A typically older building that offers space without amenities with average to below-average maintenance and management and having average to poor mechanical, electrical, ventilation systems that attracts moderate- to low-income tenants who need affordable space.

Class of Property

A subjective division of buildings as to their desirability to tenants and investors which is based on age, location, construction quality, attractiveness of style, level of maintenance, etc.

Clear Title

A title free of any encumbrances or defects.


A party to a transaction with whom the broker has entered into a specific written agency agreement to provide services.


A parcel of land enclosed by a fence, hedge or visual enclosure. In surveying it has several meanings and could easily be confused with “closing.” Close also refers to completing a transaction; when real estate formally changes ownership.

Closed End Loan

A mortgage that does not principal payment amounts to be increased during the payment period. See Open-end loan..


Per the TAR Purchase and Sale Agreement, the transaction is closed when these two things have occurred:

  1. Delivery of warranty deed; and
  2. payment of the purchase price

NOTE: It is  known generally as a meeting at which all the parties to a real estate transaction conclude their details and deliver the title to real estate and the disbursal of funds pursuant to the sales contract.

Closing Costs

The miscellaneous expenses buyers and sellers normally incur at settlement in the transfer of ownership of real property over and above the cost of the property such as recording fees, attorney fees, title insurance premium, etc.

Closing Statement

A separate accounting of funds to the buyer and seller as required by law at the completion of every real estate transaction.

Cloud On The Title

Any outstanding claim, lien, encumbrance, document or condition usually revealed by a title search which impairs the title and the marketability of a property until it is removed by a quitclaim deed or quiet title court action.

Cluster Development

A housing arrangement in which units are placed close together to allow for large recreational or common areas..


The ownership of the same property by two or more persons.


Any real or personal property having marketable value that a borrower pledges as security in order to obtain a loan. In mortgage transactions, specific land is the collateral..

Collateral Security

An additional separate obligation attached to a contract to guarantee its performance such as by agreeing to transfer certain property or valuables to insure the performance of the contractual agreement..

Colonial Architecture

The traditional design, usually using the characteristics of New England homes that is usually a two-story house with balanced openings along the main facade, with windows constructed of small panes, shutters and dormer windows on the third floor with attention to small detail.

Color of Title

A written document that appears to be good title but which in fact is not title usually because the grantor either did not hold title or the document given was a defective mode of conveyance..


The compensation or fee for services that a licensee receives for performing the agreed-upon terms under a brokerage contract which iIn the practice of real estate this is usually a percentage of the selling price of a property, a percentage of rentals, a flat fee, etc..

Commission Split

1. A previously-agreed upon sharing of funds by a listing broker with one or more cooperating brokers when a commission or funds have been received as a result of a sale. 2. A previously-agreed upon sharing of funds between a broker and a sales-associate when the brokerage office receives a commission or funds as a result of a sale made by an sales-associate..

Committment Fee

A charge made by a lender at the time of a loan application to lock in or guaranty specific terms.

Committment Letter

An official notification to a borrower which generally specifies the terms of the loan and a date for the closing by a lender of the intent to grant a loan.

Common Property
  1. Land considered to be public property.
  2. A legal term denoting an incorporeal hereditament consisting of a right of one person in the land of another such as a right to fish
Community Apartment Project

Multiple ownership of an unincorporated apartment building in which each owner is a tenant in common and has the right to occupy one of the apartments..

Community Property

In eight western states, the property acquired by husband and/or wife during a marriage when not acquired with the intent of being the separate property of either spouse and where each spouse has equal rights similar to property owned by a partnership of management, alienation and testamentary disposition.

Comparative Market Analysis

(CMA) A comparison of recently-sold homes that are substantially equivalent to another home in terms of selling price, location, style and amenities. Also know as a Competitive Market Analysis.(CMA) A comparison of recently-sold homes that are substantially equivalent to another home in terms of selling price, location, style and amenities. Also know as a Competitive Market Analysis..

Comparison Approach

A method of real estate comparison also called “market comparison” that compares a particular property with similar or comparable surrounding properties.

Compensating Balance

A requirement of a commercial bank for the borrower to keep a specified amount of funds on deposit in the institution as a condition of the loan or line of credit.


Money or equivalent of money received for services rendered

Competitive Market Analysis

(CMA) See Comparative Market Analysis


The party who instigates or starts a legal action.

Complete Appraisal

A professional opinion of value without invoking the departure provision of USPAP because all relevant appraisal approaches have been included and is different than a “limited appraisal.” A complete appraisal may be a Self-contained appraisal report, a Summary appraisal report or a Restricted appraisal report.

Completion Bond

A bond guaranteeing the proposed construction of an improvement for which a lender advances money to the owner will be completed according to specifications and free and clear of all mechanics liens.

Compound Interest

The interest paid on original principal and on the accrued and unpaid interest that has accumulated as the debt matures until the time it becomes due.

Comprehensive Envirnmental Response, Compensation and Liability Act

(CERCLA) An act which established the “Superfund” to clean up uncontrolled hazardous waste sites.


1. The act by which property of a private owner is taken for public use by a political subdivision without the owner's consent but with the owner's awareness and with the payment of just compensation. 2. A declaration that a structure is unfit for use


1. In contracts, a future and uncertain event that must happen to create an obligation or which extinguishes an existing obligation. 2. In conveyances of real property, those conditions in the conveyance that may cause an interest to be vested or defeated.

Condition Precedent

A qualification of a contract or transfer of property, providing that unless and until a given event occurs, the full effect of a contract or transfer will not take place..

Condition Subsequent

A condition attached to an already-vested estate or to a contract whereby the estate is defeated or the contract extinguished through the failure or non-performance of the condition.

Conditional Commitment

A commitment of a definite loan amount for some future unknown purchaser of satisfactory credit standing.

Conditional Estate

Often called a “fee simple defeasible estate” that is granted subject to a condition subsequent or after transfer of title. The estate is terminates upon the happening of the condition.

Conditional Mortgage Commitment

A written statement by a lender that funds will be provided if certain terms and conditions are met and therefore permits an owner or developer to begin construction.

Conditional Offer

A purchase contract that is presented to a seller that demands that one or more items be satisfied before the buyer is obligated to buy.

Conditional Sale

A term most frequently applied to a sale where-in the seller reserves the title to the goods, though the possession is delivered to the buyer, until the purchase price is paid in full..

Conditional Sales Contract

See Land contract.

Conditional Use Permit

The written governmental permission that allows a use that is inconsistent with current zoning but is necessary for the common good. such as locating an medical facility in a predominantly residential area.


A short name for a condominium.


An estate in real property where there is an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map or condominium plan. The areas within the boundaries may be filled with air, earth or water or any combination and need not be attached to land except by easements for access and support.

Condominium Conversion

A process by which rental units are turned into individually owned units..

Condominium Declaration

A legal document used to create and establishe a condominium that includes a description of the property and the uses to which it is restricted, a description of individual ownership units, common elements and procedures for amending the declaration and describes the property rights of the unit owners

Confirmation of Sale

A court approval of the sale of property by an executor, administrator, guardian or conservator of an estate..


Refers to the term “consanguine”, which means being from the same lineage as another person. In that respect, consanguinity is the quality of being descended from the same ancestor as another person.

Consanguinity is an important legal concept in that the laws of many jurisdictions consider consanguinity as a factor in deciding whether two individuals may be married or whether a given person receives property when a deceased person does not leave a will.


Consideration is a benefit or right for which the parties to a contract must bargain; the contract is founded on an exchange of one form of consideration for another. Consideration may be a promise to perform a certain act -- for example, a promise to fix a leaky roof -- or a promise not to do something, such as build a second story on a house that will block the neighbor's view. Whatever its particulars, consideration must be something of value to the people who are making the contract.

Consolidation Loan

A new loan that pays off more than one existing loan and usually provides better repayment terms..

Constant Payment Loan

A loan reduction plan whereby the borrower pays a fixed amount each month, a part of which is applied to the payment of interest and the remainder to the repayment of the principal..

Construction Loan

A loan that is made to finance the actual construction of improvements on land and the funds are usually dispersed in three payments as the construction progresses..

Constructive Eviction

A breach of a covenant of warranty or quiet enjoyment such as the inability of a lessee to obtain possession because of a major defect in title or a condition making occupancy hazardous or unfit for its intended use..

Constructive Notice

1. A fact, imputed or knowable to a person by law, which should have been discovered because of the person's actual notice of circumstances or the inquiry that a prudent person would have been expected to make. 2. Notice of the condition of title to real property given by governmental official records and which does not require actual knowledge of the recorded information


A substance, element. or compound such as asbestos, benzene, radon, PCBs, perchloroethylene, and lead-based paint above acceptable levels and/or are in locations where they should not he found that may be harmful to humans or other forms of life if released into the environment.

Contemporary Architecture

Modern design differentiated from traditional functional design.


Ownership of an interest in a particular parcel of land by more than one person such as with tenancy in common or joint tenancy.


Adjacent; touching, adjoining or in close proximity.


An event that may or may not occur. Dependent upon conditions or events specified but not yet accomplished. A condition that must be met in order for a contract to be legally binding.

Property may be sold contingent upon the seller or buyer meeting specific predetermined conditions. For example, financing is the most frequent contingency. A buyer who cannot arrange an appropriate loan need not complete the transaction and should receive a refund of the earnest money.

Continuous Occupancy Clause

Definition goes hereA requirement frequently included in a shopping center lease requiring a retail store to remain open.


A written or oral agreement to do or not to do certain obligations which has four essential elements 1. Parties who have the capacity or legal ability to contract, 2. Consent of the parties, 3. Consideration and 4. A lawful object. A contract for the sale of real property must also be in writing and signed by the party or parties who have agreed to perform to be enforceable.

Contract for Deed

See Land contract.

Contract Rent

The amount of rent called for in a lease agreement.


One who has the responsibility for and supervises the improvement of land.

Contractual Intent

An intent to be bound by an agreement therefore preventing jokes from becoming valid contracts.


A payment by each or any of several entities having a common interest or liability for his or her share in the loss suffered or in the money necessarily paid by one of the parties in behalf of the others.

Controllers Deed

A deed issued by the state, usually when property is sold due to tax delinquency.

Conventional Home

A home that is constructed totally at the site. It is the opposite of a factory-built, manufactured or mobile home.

Conventional Loan

A mortgage loan that is not insured, guaranteed or funded by the Veterans Administration (VA), the Federal Housing Administration (FHA) or Rural Economic Community Development (RECD) (formerly Farmers Home Administration).

Convertible ARM

An adjustable rate mortgage that allows the borrower the option to convert at a specified point in time to a fixed-rate schedule for a nominal fee and at a rate that is determined according to the loan documents.


To transfer title to property from one person to another..


A written instrument transferring the title to land or an interest therein from one person to another such as with a deed or a trust deed.

Cooperating Broker

See Listing broker.


Any building but usually an apartment building where the property is owned in severalty by a corporation often called a “stock cooperative” in which ownership of a specific apartment unit is acquired by purchasing shares of the stock of the corporation and occupancy is permitted by entering into a proprietary lease with the corporation. A cooperative places substantial restraints on the alienation (sale) of the units as well as their use.

Corporeal Rights

The rights to possess and alter visible or tangible real or personal property.

Correction Deed

A written instrument which corrects an error in a recorded deed.


A second party who signs a promissory note together with the primary borrower.


That which must be given up to obtain property.

Cost Approach

A value estimate of a property by one of three appraisal methods which is arrived at by estimating the replacement cost of the improvements and then deducting the estimated accrued depreciation from it and then adding back the market value of the land.

Cost Per Front Foot

The cost of a parcel of real estate can expressed in terms of front foot units where the total sales price of the parcel is divided by its number of front feet to state the cost per front foot.


An agreement on a construction project in which the contractor is paid a named fixed fee over and above the actual costs of construction as profit.

Cost-Plus-Percentage Contract

An agreement on a construction project in which the contractor is paid a named percentage over and above the actual costs of construction as profit. These contracts are considered poor business practice because the contractor has little incentive to hold down costs. See Cost-plus-fixed-fee contract.


Ownership of an interest in a particular parcel of land by more than one person such as with tenancy in common or joint tenancy.

Counter offer

A response to an offer to enter into a contract which acts as a rejection of the original offer and introduces a new offer or one with different terms and conditions.


A contractual promise that may be positive by agreeing to do or negative by agreeing not to do a particular act such as a promising to build a house of a particular size or to not use property in a certain way.

Covenant for Further Assurance

An undertaking in the form of a covenant on the part of the vendor of real estate to perform such further acts for the purpose of perfecting the purchaser's title as the latter may reasonably require.

Covenant of Quiet Enjoyment

A covenant implied by law by which a landlord guarantees that a tenant may take possession and use of leased premises and that the landlord will not interfere in the tenant's enjoyment of the property.

Covenants, Conditions and Restrictions

(CC&Rs) The basic rules establishing the rights and obligations of owners (and their successors in interest) of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners

Creative Financing

Any financing arrangement other than a traditional mortgage from a third-parry lending institution. Creative financing devices include: loans from the seller; Balloon payment loans; Wraparound mortgage Mortgage assumption; Sale-leaseback; Land contract; Alternative mortgage instrument.


1. In lending, the power of an individual to secure money or obtain goods on time, in consequence of the favorable opinion held by the community or by the particular lender, as to his or her solvency and reliability; a debt considered from the creditor's standpoint or that which is to be incoming or due to one. 2. In accounting, a bookkeeping entry on the right side of a bookkeeping account that records the reduction or the elimination of an asset or an expense or the creation of or addition to a liability or item of equity or revenue.

Credit Rating Report

An evaluation of a person's history or capacity of debt repayment which is generally available for individuals from a retail credit associations and to which individuals have access and for businesses by companies such as Dunn & Bradstreet and for publicly held bonds by Moody's, Standard & Poors.

Credit Scoring

In mortgages, the process of evaluating and rating a loan applicant according to the quality of his or her credit worthiness based on past use of credit, current indebtedness and frequency of application for credit and where a person's score may determine whether he or she is eligible for conventional loan standard terms or must obtain a sub-prime loan with less favorable terms

Curable Depreciation

An item of physical deterioration or functional obsolescence which customarily gets corrected by repair or replacement by a prudent property owner and is thus considered to be “cured.”

Current Assets

An asset such as cash, accounts receivable and merchandise inventories that are liquid or can easily be sold.

Current Index

In an adjustable rate mortgage, it is the current value of an easily-recognized index that is calculated and published nationally or regionally. The current index value changes periodically and is used in calculating the new note rate as of each rate adjustment date.

Current Liabilities

A short-term debt that is generally a debt due within one year.

Current Yield

A measurement of investment returns based on the percentage relationship of annual cash income to the investment cost whose formula is current income divided by investment cost equals current yield.


A third party for whom an agent provides some level of informational service.

Declaration of Abandonment

A document recorded to terminate a homestead

Declaration of Condominium Ownership

A legal document that allows a condominium to he built or sold under relevant state law. See Condominium declaration.

Declaration of Homestead

A recorded document that protects a homeowner from foreclosure by certain judgment creditors.

Decree of Foreclosure

Decree by a court ordering the sale of mortgaged property to pay an obligation found to be due and owing to the lender out of the proceeds..


An offer of land for some public made by its owner and accepted for such use by or on behalf of the public by authorized officials.


A written instrument which when properly executed (signed) and delivered (accepted) conveys title to real property from one party, the grantor to another party, the grantee.

Deed Books

Part of the public records found in the county clerk's or recorder's office in which copies of deeds transferring real property in that jurisdiction are recorded. These books are also known as libers.

Deed in Lieu of Foreclosure

A deed to real property from a defaulting borrower and accepted by the lender to avoid the necessity of having the lender go through formal foreclosure proceedings.

Deed in Trust

An instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate where the beneficiary controls the trustee's use of these powers under the trust agreement provisions.

Deed Money Escrow

An agreement where money is held by a third party to be delivered to a seller of real estate upon the receipt of the deed to the property sold..

Deed of Conveyance

A legal document signed and sealed and delivered to effect a transfer of property and to show the legal right to possess it.

Deed of Trust

A deed of trust is a special kind of deed that is recorded in public records, where it tells everyone that there is a lien on your property. It is used in place of a mortgage.

A deed of trust involves three parties. You as the debtor/mortgagor, the lender as the beneficiary, and a neutral third party as the trustee, who you can think of as someone who holds temporary (but not full) title until the lien is paid.

The deed of trust is canceled when the debt is paid. Until then, the trustee has the power to foreclose if the debt is not paid, without going through the court system, making it easier and quicker than foreclosing on a mortgage.

Deed Restrictions

The limitations in the deed to a property that dictate specific ways that a property must or must not be used.


The failure to fulfill a duty or promise or to discharge an obligation or the failure or omission to perform an act.

Default Judgment

A court order resulting from the failure of a defendant to answer a complaint in a lawsuit.

Defeasance Clause

A clause in a mortgage that gives the mortgagor the right to redeem his or her property upon the payment of the mortgagor's obligations to the mortgagee.

Defective Title

A title which would be impaired if an outstanding claim proved to be valid.

Defects in Title

The imperfections that cast a reasonable doubt on the marketability of a title.

Delegation of Authority

A transfer of authority by one party to another


A financial obligation which is in default, such as an overdue loan.

Delinquency Rate

The number of loans with delinquent payments divided by the number of loans held in a portfolio.

Demand Note

A note which is payable on the demand of the lender or holder.


The transfer of interest or conveyance of an estate primarily by lease.

Demised Premises

The property that is subject to a lease..


The necessary destruction and removal of an existing structure from a site in order to prepare it for new construction. Example: A block of old houses in the city is to be converted into a new shopping mall. This conversion will require demolition of the houses, site preparation, and construction of the mall.


The money commonly used with sales contracts and leases that is paid in good faith to assure performance of a contract. If the party who put up the deposit fails to perform, the deposit is forfeited, unless conditions in the contract allow a refund. Brokers are to put deposits in a separate checking account pending completion of the contract See Earnest money. Example: Whitman presented a $1,000 check as an earnest money deposit on a home she would buy provided she could get a 10% rate, 30-year loan for 80% of the price. The broker deposited the check in an Escrow account, and refunded it when Whitman could not arrange said loan.

Deposit Account

An arrangement whereby an individual or organization may place cash under the safekeeping of a financial institution which may invest the cash and pay the depositor a specified amount of interest and that the depositor can reclaim the full value of the account according to the agreed-upon procedures governing it.

Depreciable Real Property

In taxation, real estate that is subject to deductions for depreciation which includes income producing property as well as property used in a trade or business. Example: Abel buys an apartment complex for $1 million. Of the purchase price, $100,000 is the value of the land, the remaining $900,000 is the value of depreciable real estate. Abel uses the straight-line depreciation method and a 27 ½ -year remaining depreciable life.


In appraisal, a loss of value due to any cause which can occur due to physical deterioration, functional obsolescence or economic obsolescence.

Depreciation Methods

1. In appraising, the methods used to measure decreases in the value of an improvement which generally are the annuity, the sinking fund and the straight-line methods. 2. In accounting, the methods by which capital impairment is computed are the declining balance and variations thereon such as weighted rate and accelerated.

Depreciation Rate

The periodic amount or percentage at which the usefulness of a property is used up and especially referring to the percentage at which amounts are computed to be set aside as an accrual for future depreciation.


In real estate, the part of the deed, mortgage, trust deed, etc., that is used to locate the boundaries of real property.

Designated Agency

The party selected to represent a principal/client in a designated agency office. Designated agency has been legislatively created in many states, allowing the management of a brokerage to establish an office policy, whereby the managing broker appoints, or designates, a licensee associated with that brokerage to act as the exclusive agent of a principal/client, buyer or seller. No other licensee in the brokerage has an agency relationship to represent that principal/client.

Detached Housing

A residential dwelling unit which is surrounded by freestanding walls and is sited on a separate lot. See Duplex, Row house, Townhouse.


A worsening of the condition of a property.

Development Method

An appraisal method used to value raw land wherein an appraiser locates comparable improved property with a known value and then deducts the cost of the improvements to arrive at the value of the raw land. The appraiser or investor estimates the gross sales of the developed lots and then deducts the costs of development and expenses. The remainder indicates the present value of the land after allowing for the time involved..

Direct Costs

The costs that are readily identified in the construction of real estate namely labor, materials, and contractor's overhead and profit. Also known as Hard Costs. See Indirect costs. Example: Direct costs for an apartment building were S2 million: indirect costs, such as architects fees, interest during construction, and builder's overhead and profit allowance, totaled S500,000.

Direct Reduction Mortgage

A loan secured by real estate which is to be repaid by periodic, usually equal, amounts that include part of the principal plus interest due on the unpaid balance..


To reject or to withdraw a consent once given or to deny the intention of being bound by an previous or earlier transaction.


1. A statement whereby responsibility is rejected. Example: Abel, a certified public accountant, is asked to write up the financial statements of Baker without testing (auditing) the validity of the statements. Abel's report provides a disclaimer in which he states that he did not examine the financial statements and does not accept responsibility for their accuracy. 2. Renunciation of ownership of property. Example: Because they were no longer profitable, I claimed apartments that had become dilapidated.

Disclosure Statement

A statement required by law in which the sellers of specific types of real property or under certain circumstances must reveal specified information to potential buyers.


The legal right of a landlord to obtains a court order to seize a tenant’s personal property to satisfy payment of back rent. Example: Abel is 6 months in arrears on rent. Landlord Baker obtains a court order to seize Abel’s furniture to satisfy the rent due. Baker is exercising his right of distraint.


The act of causing pressure or stress on a person by assuming possession of a tenant's chattels, personal property, by a landlord in order to satisfy in whole or in part a claim for rent in arrears. Also know as distrain.


One who receives part of the property of a person who died intestate.


The division and transfer of the property of a decedent.


A city area with a land use different from that of adjacent areas like commercial, industrial or residential areas.

Documentary Transfer Tax

A tax that applies on all transfers of real property located in a county. A notice of payment is entered on face of the deed or on a separate paper filed with the deed.


The written legal real estate instruments such as mortgages, contracts, deeds, options, wills and bills of sale.


A place where a person has his true, fixed, permanent home and principal establishment and the place where he has the intention of returning whenever he is absent. See Primary residence.

Down Payment

An initial partial payment of the total selling price.

Drive-by Appraisal

A value estimate prepared without the benefit of an interior inspection and which may not conform to USPAP Standard 1. See Self-contained appraisal report, a Summary appraisal report or a Restricted appraisal report. Limited appraisal. Example: Because of a contentious divorce, an appraiser hired by one of the parties was not allowed to enter the property, so a drive-by appraisal was performed.

Dual Agency

An agent representing both the buyer and seller in a transaction. Dual agents should always get written consent of both parties. If a licensed real estate agent licensee lists a property which their buyer client wishes to buy, the licensee will be the agent for both the buyer and the seller. This is called Dual Agency. If this situation were to occur, the buyer would be informed and asked to sign a Dual Agency Consent Agreement. This Agreement provides that the agent will not disclose either client’s personal, financial or confidential information.

Dual Contract

The illegal or unethical practice of providing two different contracts for the same transaction. Example: Abel wants to purchase a home from a builder for $144.000 but has no cash for the downpayment. The builder suggests that they prepare a fictitious contract for $160,000 and try to borrow 90% of $ 160,000. The bank's attorney discusses the dual contract and explains that they could be guilty of attempted fraud.

Due Care

The standard of conduct required of an ordinary, prudent and reasonable person. Example: While Professor Dirby was on sabbatical, the broker who managed his house was required to take due care of the property. The broker had to be certain that the tenant who occupied the property observed the lease.

Due Diligence

1.The making of every reasonable effort to perform one's contractual obligations. Example: A prospective homebuyer signed a sales contract contingent on the sale of her present residence. She is expected to use due diligence in marketing her present house. 2. The making of every reasonable effort to provide accurate, complete information. A study that often precedes the purchase of property, which considers the physical, financial, legal and social characteristics of the property and expected investment performance; the underwriting of a loan or inverstment.

Due Process

A legal principle that notice must be given to all affected parties along with an opportunity to be heard when any governmental powers are exercised.

Due-on-Sale Clause

An acceleration clause granting the lender the right to demand full payment of the loan upon a sale of the property.


This usually means two dwelling units one above the other under one roof. See Double..


A place where people live such as apartments, hotels, mobile homes, nursing homes and single-family houses.

Earnest Money

A sum of money or other consideration tendered by a prospective purchaser as evidence of good faith in conjunction with an offer to purchase rights in real property.


A right, privilege or interest limited to a specific use or control purpose which one party has in the land of another party and which runs with the land and is not a personal right of an individual.

Easement Appurtenant

An easement which is annexed to the ownership of one parcel of land that allows one party the use of his or her neighbor's land and which runs with the land when is the title is transferred to another party.

Easement by Condemnation

An easement created by the government or a governmental agency upon exercising its right under eminent domain..

Easement by Necessity

An easement granted by a court to give the right of ingress and egress over a grantor's land as being necessary to permit the full enjoyment of a parcel of real estate..

Easement by Prescription

An easement acquired by open, notorious, hostile and continuous use of a property for the period of time as prescribed by law.

Easement in Gross

A personal easement which does not run with the land and therefore is not transferred through the conveyance of the title.

Economic Obsolescence

A loss in value due to factors outside the property lines of the subject property that adversely affect the usability and value of the subject property or its actual or potential income. Also known as Social obsolencence and Environmental obsolencence.

Economic Rent

The reasonable rental expectancy the property could command if it were available for rent at the time of its valuation.

Ellwood Technique

In appraisal, a technique used to estimate the present value of mortgaged income property where the appraiser determines and discounts to a present value the annual cash flow to the equity owner and the expected resale proceeds. Those amounts are added together to derive the equity value, then added to the mortgage balance to offer a property value estimate. The late L. W. Ellwood provided capitalization rate tables that accelerate the process. Example: An equity owner expects to receive $10,000 of annual cash flow for 10 years. then $100,000 upon resale. A $500,000 mortgage is currently on the property. Using 12% as the appropriate equity yield rate.


The crops growing on a property which require annual care and are usually considered to be a possession of the tenant..

Eminent Domain

The right of the government to acquire property for necessary public use with just compensation the right of which is found in the 5th Amendment to the Constitution..

Enabling Act

A state statute that provides a legal base for zoning codes or other local governmental action.


An unlawful intrusion onto adjacent property of another by improvements to real property such as a patio built across a property line which reduces the value of the property intruded upon..


The voluntarily or involuntarily placing of a lien or a charge on or a limiting of the use of land or property.


Anything which affects or limits the fee simple title to or value of property such as a mortgage or an easement.


A person who envisions, organizes, manages and assumes responsibility for a business.

Equitable Lien

A lien granted by the court as a result of legal action taken rather than as a result of statute. See Statutory lien.

Equitable Mortgage

A legal document that encumbers property but is not technically a mortgage because of the existent some legal error. Example: Although there was an error in the property's description that was attached to the documents, the parties in the transaction to be a mortgage loan, and the judge enforced equitable mortgage as if it were a mortgage loan on the property.

Equitable Right of Redemption

The right of a property owner in default to recover his or her property prior to its sale by paying the appropriate fees and charges.

Equitable Title

An interest in land that may not be fee simple ownership but one that a court will take notice of the rights of the interest holder.


The interest or value which an owner has in real property over and above any liens against it.

Equity Build-Up

The increase of owner’s equity in property due to mortgage principal reduction and value appreciation.

Equity Funds

Capital invested to gain a residual ownership interest in property.

Equity Interest

The amount of the value or total combined worth of a property minus any debts outstanding against it. The amount of the interest may be established through: (a) cash originally put into the property called a down payment, (b) the amortization of any debt against the property or (c) any appreciation in the value of the property.

Escape Clause

A contractual provision that parmit one or more of the parties to cancel all or part of the contract if certain events or situations do or do not materialize. Example: Mary agrees to buy Joe's house for $100,000: the sales contract includes an escape clause that allows Mary to cancel the contract if she cannot obtain approval for a mortgage loan of $80,000 within 60 days.


An intestate condition where property reverts back to the state when no heirs are capable of inheriting the property or the heirs are unknown..


An arrangement for the deposit of instruments and/or the handling of funds with instructions with a neutral third party to carry out the provisions of the agreement or contract when the specified conditions have been met.

Escrow Account

See Trust account.

Escrow Agent

The neutral third party who is holding something of value such as funds from a grantee or a deed from a grantor in trust for another or others until all of the conditions of the contract have been met..

Escrow Contract

An escrow contract is entered into between a buyer, seller and escrow holder setting forth rights and responsibilities of each when earnest money is deposited into an escrow account.

Escrow Instructions

A document seting forth the duties, requirements and obligations of all parties including the escrow agent for a transaction being closed by escrow..


In real estate, the degree, quantity, nature and duration of interest, share, right, equity of which riches or fortune may consist and which a person holds in real property.

Estate at Sufferance

An estate arising when the tenant wrongfully holds over after the expiration of the term. The landlord has the choice of evicting the tenant as a trespasser or accepting the tenant for a similar term and under the conditions of the tenant's previous holding. Also known as a Tenancy at sufferance..

Estate at Will

The occupation of lands and tenements by a tenant for an indefinite or unspecified period terminable by one or both parties. Also known as a Tenancy at will.

Estate by the Entireties

See Tenancy by the entireties

Estate for Life

See Tenancy by the entireties.

Estate for Years

A leasehold interest in land by virtue of a lease contract for its possession for a definite, specified and limited period of time which may be for one year or less. Notice to terminate is not required..

Estate From Period to Period

A leasehold interest in land where the rent is set at a certain amount per period which could be a week, a month or a year and where there is no definite or established termination date. Also called a Periodic tenancy. Notice to terminate is required

Estate in Expectancy

A classification of estates by time of enjoyment when possession will be at some future time..

Estate in Fee

The most complete form of ownership of real property which is a freehold estate that can be passed by descent or by will after the owners death. Also known as Estate of inheritance or Fee simple estate..

Estate in Land

The degree, quantity, nature, and extent of interest a person has in real property.

Estate in Possession

A classification of estates by time of enjoyment when possession is present.

Estate in Remainder

A future interest given by the grantor to a third person to take effect upon the termination of a life estate.

Estate in Reversion

The remnant of a life estate left in the grantor where possession will begin when a lesser estate granted by him or her to another ends.

Estate in Severalty

A classification of estates according to the number of owners and where the number is one and which is owned by a single party.

Estate of Inheritance

All freehold estates are estates of inheritance and can descend to heirs except for life estates. See Estate in fee or Fee simple estate.

Estate Taxes

The federal taxes due or paid on a decedent’s real and personal property.


A legal theory under which a person is stopped or barred from asserting or denying a fact because of the person's previous actions or words..


The study of a property’s potential uses such as feasibility or marketability and which does not determine its present value.


The act of dispossessing or depriving a person of the possession of land as a result of the judgment of a court. See Actual eviction and Constructive eviction.

Eviction Notice

A notice to a tenant to vacate premises because of nonpayment of rent or other violation of of the covenants of the lease agreement.

Evidence of Title

The proof of ownership of property such as a certificate of title, an abstract of title with lawyer's opinion, title insurance, or a Torrens registration certificate.

Ex Officio

The power to act by virtue of holding of a particular office.

Ex Parte

A one sided action or an act done in behalf of one person only.


A matter such as a reservation, an objection or a contradiction that affects title to a particular parcel of real property which is excluded from coverage in a title insurance policy.

Excess Depreciation

The amount of depreciation being applied beyond the normal rate allowed.

Excess Rent

The monetary difference between contract rent and economic rent.


A means of trading equities in two or more real properties which are handled in a single escrow and as a single transaction.

Exchange Brokerage

A real estate activity bringing two or more parties involving in trading real properties together in real estate transaction


A broker or salesperson who accomplishes the exchange.


General matters affecting title to real property that are not included in the coverage of a title insurance policy..

Exclusionary Zoning

An illegal zoning law that would serve to prohibit low- and moderate-income housing in a community. Example: Ocean Park adopted a zoning ordinance that required a housing density of not more than four homes per acre. This exclusionary coning would prevent apartments and condominiums from being built and was being challenged by a low-income housing developer

Exclusive Agency Listing

A listing agreement where a seller employs one broker to the exclusion of all others and agrees to pay that broker a fee if a buyer is secured through a broker under the terms of the contract but not pay a fee if a sale is negotiated directly by the owner without the services of any broker..

Exclusive Listing

A general term applied to a listed property which usually refers to an “exclusive right to sell” or “exclusive agency” contract.

Exclusive Right to Sell Listing

A listing agreement where a seller employs a broker and agrees to pay a commission if a buyer is secured under the terms of the contract and if it is sold by anyone including the owner during the term of the agreement and simultaneously also employs and authorizes the broker to act as the sole or exclusive agent for the seller in an agency relationship for the entire transaction process.

Exculpatory Clause

A clause often included in leases that clears or relieves the landlord of liability for personal injury to tenants as well as for property damages.

Executed Contract

A contract in which all parties have fulfilled their promises and whose terms have been performed and completed. At the closing, all parties signed the contract, made it an executed contract.


The completion of an act or process such as an escrow.

Executory Contract

A contract in which something remains to be done (or executed) by one or more of the parties..

Existing Mortgage

The debt contract which is to be assumed by the purchaser in which the seller of real estate is the mortgagor.

Exoneration (in suretyship)

The right which a surety has, on payment of the principal debtor’s obligation, to look to the principal debtor for reimbursement.

Express Agency

An agency relationship based on clearly-presented words in a formal written or oral agreement between the parties. See Implied agency.

Express Agreement

See Express contract and opposite Implied contract

Express Contract

An oral or written agreement in which the parties have clearly stated their intentions and terms in words. See opposite Implied contract..


The act or process whereby private property is acquired for public use or the rights therein modified by a sovereignty or any entity vested with the necessary legal authority, such as where property is taken under eminent domain.

Extended Coverage

An additional endorsement to a fire insurance policy which extends the coverage to include losses caused by windstorm, hail, explosion, riot, aircraft, vehicle and smoke damage.

Face Value

The dollar amount shown on a document by words or numbers. Example: A mortgage has a face value of $10,000, amortization term of 30 years, and 8% face interest rate. It will be amortized in 13 years to $8,000 by annual payments.

Fair Credit Reporting Act

A federal law that allows individuals to examine and correct credit information about them that is used by credit reporting services.

Fair Housing Act

A federal law that prohibits discrimination in housing based on a person's race, color, religion, sex, handicap, familial status, and national origin

Fair Market Rent

The amount that a property would command if it were currently available for lease. Contrast with Contract rent. See Economic rent, Rent control, Section 8 housing.

Fair Market Value

The amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under any pressure to buy or sell.

Federal Fair Housing Act of 1968

A federal law that prohibits discrimination against any person due to race, color, religion, sex, handicap, familial status, or national origin in the sale, rental, leasing, financing and advertising of housing or in the prevention of real estate brokerage services

Fee Simple

In modern estates, the terms “fee" and "fee simple” mean substantially the same thing.

Fee Simple Absolute

A Title that is absolute and unqualified and is the best one can have giving complete ownership and control of real property without any conditions or limitations..

Fee Simple Defeasible

An estate in fee subject to the occurrence of a condition happening subsequently or afterwards, upon which the estate may be terminated. See Fee simple determinable.

Fee Simple Determinable

A fee that may terminate upon the occurrence of a specific event that may or may not ever occur or the time of which is uncertain..

Fee Simple Estate

The greatest interest that one can have in real property which is unqualified, of indefinite duration, freely transferable and inheritable..

Fee Simple Limited

See Fee simple determinable

Fee Simple Qualified

An estate in which the holder has a fee simple title, subject to return to the grantor if a specified condition occurs. See Fee simple determinable.

Fee Tail

A freehold estate of inheritance limited so as to descend to a particular class of heirs of the person to whom it is granted.

Fee Tail Estate

An estate or a limited estate in which transfer of the property is restricted in that the property must pass to the descendants of the owner and which was originally used to insure the passing of land in a direct ancestral line..

Feudal Tenure

A real property ownership system in which ownership rests with a sovereign who may grant lesser interests in return for service or loyalty and which is in contrast to allodial tenure.


Grants of land.

FHA Loan

A loan made by an approved lender in accordance with the FHA’s regulations and insured by the Federal Housing Administration.

Fictitious Mortgage or Trust Deed

A recorded generic mortgage or trust deed that is not related to one specific transaction but is used as a reference mortgage or trust deed to avoid lengthy mortgages or trust deeds for each title transfer.

Fiduciary Duties

The duties or responsibilities that an agent owes to his or her principal or client of loyalty, obedience, disclosure of material facts, accountability for funds, confidentiality and to exercise the highest skill level to the principal and not to gain any personal advantage over the principal by even the slightest misrepresentation, concealment, duress or pressure..

Financial Feasibility

1. The ability of a proposed land use or change of land use to justify itself from an economic point of view. 2. One of but not the only test of the highest and best use of land because it does not necessarily make it the best use of the land. Example: A proposed small office building will cost $1 million to build, including direct costs and indirect costs. It is expected to generate $150,000 in annual net operating income. Building investors require a 12% rate of return on the $1 million investment, or $120,000, so this project is financially feasible.

Financial Institutions

The organizations such as commercial banks, savings and loan associations, credit unions, savings banks and insurance companies that deal in money or claims to money and serve the function of channeling money from those who wish to lend to those who wish to borrow.

Financial Institutions Reform, Recovery, and Enforcement Act

(FIRREA) A federal law passed in 1989 in response to the savings and loan crisis of the 1980s that restructured the regulatory and deposit insurance program for dealing with S&Ls and changed the rules under which federally-regulated S&Ls operate. See Federal Housing Finance Board, Office of Thrift Supervision, Resolution Trust Corporation. Example: The FIRREA was intended to address the major problem of failing S&Ls due to mounting nonperforming loans held in portfolio, as well as to make reforms that would prevent the problem from retuning. Often referred to as the “S&L bailout.” the law represents a large expenditure of federal funds to pay off depositors at failed associations. The law also created the Resolution Trust Corporation. which is charged with managing and liquidating the assets of associations seized by the government. The Federal Savings and Loan Insurance Corporation was abolished by the law. and its insurance and regulatory responsibilities were brought under the Federal Deposit Insurance Corporation, which also insures commercial banks.

Financial Intermediary

The financial institutions such as commercial banks, savings and loan associations, mutual savings banks and life insurance companies that act as an intermediary or go-between for savers and borrowers by selling its own obligations for money and, in turn, lending the accumulated funds to borrowers in the form of real estate loans.


The use of another party's, which is typically a lending instution's, money to buy something which in real estate is property. The following are examples of financing:

  • Obtaining a mortgage loan on a purchase
  • Assumptions of a mortgage from a seller
  • Arranging for the seller to take a loan as part of the purchase price
  • Arranging an installment sale
Financing Expenses

The amounts used to pay the costs of acquiring real estate such as interest on all loans, ground rent for leased land. Loan principal payments reduce the debt, so technically they are not expenses. Contrast Operating expenses. Example: Florence owns both units of a duplex, each financed with a separate mortgage. She lives in one unit and rents the other. From the $2,000 monthly rent received from her tenant, Florence has to pay, financing expenses (interest on both mortgages) and operating expenses.

Financing Process

The systematic five-step procedure followed by major institutional lenders when analyzing a proposed loan: 1. Application filed by a borrower; 2. Analysis of borrower and property by lender; 3. Processing of loan documentation; 4. Closing (funding) the loan; and 5. Servicing through collection and recordkeeping..

Financing Statement

An instrument filed in order to give public notice of a security interest and which protects the interest of any secured parties in the collateral. See Security interest and Secured party

Finders Fee

A monetary payment which is prohibited or limited in most states to a party who locates suitable property or a purchaser who is other than a licensed broker. Example: Broker Abel has a listing on a particular property. Baker knows several people interested in such property. Abel arranges with Baker to provide a finder's fee should one of the prospects identified by Baker purchase the property

Firm Commitment

1. An unqualified written promise as to under what specified terms and conditions a lender will lend money. 2. A commitment assumed by the FHA to insure a mortgage of a specified mortgagor;

First Mortgage

A legal document that is pledged as collateral for a loan that was recored first giving it first priority and will be superior to all other liens or claims against the property except for taxes and bonded indebtedness. See Mortgage..

First Refusal Right

See Right of first refusal..

First Trust Deed

See First mortgage.

Fixed Assets

The tangible property such as buildings, furniture and fixtures and equipment that are used in a business operation that is not for sale and is shown on the financial statement of the company.

Fixed Expenses

The regular recurring costs required in owning a property or business such as taxes and fire insurance

Fixed Payment Loan

A mortgage secured by real property featuring periodic principal and interest payments that are constant over the term of the loan. All fixed payment mortgages are Fixed rate loans but some may have variable payments such as a Graduated payment loans.

Fixed-Rate Loan

A mortgage secured by real property featuring a constant interest rate for the term of the loan. See Adjustable rate loan. Example: A fixed-rate mortgage is originated with an interest of 10% for a term of 30 years. the rate will remain at 10% until loan is retired or the due-on-sale clause is exercised at resale of the property.


The movable items such as toilets and built in store showcases that are attached to land or its improvements which become appurtenances and which under normal circumstances cannot be removed without a prior agreement because the affixing converts them to real property.


1. A one-level apartment. 2. A level payment (flat) mortgage or (flat) lease requirement. Example: A 2-room flat is an apartment having 2 rooms. Example: A flat lease is one that requires level payments each month or other specified period.

Flat Fee Broker

A real estate broker who charges a fixed or flat fee for brokerage services instead of a commission based on a percentage of the sales price of the property. See Discount broker. Example: Kramden., a flat fee looker, charges $5,000 to arrange the sale of a home, no matter what price is agreed upon by the buyer and seller. If a sale is not consummated within the listing contract, no fee is paid..

Flat Lease

A lease in which the rent is a fixed (flat) sum paid periodically throughout the entire lease term..

Flexible Payment Mortgage

A loan in which the repayment schedule is based on the borrower's financial position to pay so payments are usually lower in the earlier years and increase as the borrower's ability to repay increases.

Floating Rate

An interest rate that is not fixed over the term of a loan, bond, or other fixed-income security, but is allowed to vary according to the change in a specified index. See adjustable Mortgage. Example: Financial Securities Company created a floating mutual fund based on a portfolio of adjustable-rate mortgages yield on the fund varies from year to year depending on the in rates charged on the ARMS in portfolio.

Floor Plan

A plan drawn to scale indicating wall-to-wall dimensions, room sizes and exposures and the placements of windows, doors, partitions, etc.

Flow of Funds

An accounting method used primarily by the Federal Reserve to describe the sources and uses of the nation's funds in a given period of time.

For Sale By Owner

(FSBO) A term referring to properties on the market that are not listed with a real estate broker because the owner desires to sell the property his or her self without paying a commission. Example: The Mathers are attempting to find a buyer for their home by placing an ad in the paper and putting up a sign in the yard. Such activities indicate the existence of a FSBO..


Definition goes hereA tolerant action by a creditor against a borrower who has not received payment once the debt has become due.

Force Majeure

A clause is often inserted in a construction contract to protect the contractor from unavoidable delays or of failure to perform the contractual obligations in a timely manner due to a force(s) beyond control such as weather, labor disputes or strikes or other unavoidable events.

Forced Sale

The act of selling property under a compulsion as to time and frequently the result of legal proceedings ordering the sale.


The loss of money or something of value resulting from the failure to perform.

Form Appraisal

See Uniform Residential Appraisal. Report (URAR).


A building containing four dwelling units in comparison to a duplex with two. Many FHA loan programs are available for 1-to-4-unit housing.

Four-Three-Two-One Rule

An appraisal rule for computing value based on the depth factors of lots primarily in retail environments.

Fractional Interest

An ownership interest of some but not all real estate rights. Examples include, leasehold, easement and hunting rights.

Free and Clear Sale

A real estate sale that is clear fee simple estate that is unclouded by any encumbrances such as liens, mortgages, etc

Freehold Estate

An estate such as a fee simple or life estate of a duration that runs forever and its end cannot be determined.


An important property valuation concept used mainly in retail or commercial situations due to the belief that the more frontage certain businesses have is an advantage and whereby a property is identified by its number of linear front feet facing the most important street or road surrounding the property and with imaginary parallel lines one foot apart extending the full depth of the lot resulting in a 75-foot frontage.


Pronounced “fizzbo.” See For Sale By Owner

Full Disclosure

A requirement to reveal all material facts pertinent to a transaction. Example: Under fill disclosure, a broker is required to give the buyer all known material facts about the physical, financial, and economic condition of the subject property..

Full Face Rate of Interest

The rate of interest stated in the debt. See Nominal interest rate

Fully Amortized Note

A note that is fully repaid at maturity by periodic reduction of the principal..

Fully Indexed Note Rate

In adjustable rate mortgages this is the rate at the time of the loan application which is agreed upon termed indexed to which the gross margin stated in the note has been added.

Functional Obsolescence

A loss of value due to adverse factors from inside the property lines such as defects in the plan or design which affect how well the property can be used, function or perform which affects its value and marketability.


A loan concept whereby the lender provides the cash for for the seller to be paid. Example: When a loan is approved, the lender issues a commitment to make the loan at certain specified terms. At closing, the lender funds the loan by forwarding sufficient cash..


The cash or other resource having value which may be sold in order to buy another asset.

Furniture, Fixtures and Equipment

(FF&E) A term frequently found in the ownership of a hotel or motel that wears out much more rapidly than other the components so an owner or prospective buyer needs to establish the condition, cost, and frequency of replacement of the FF&E. Example: In measuring the profitability of a hotel, a real estate appraiser subtracted 3% of total revenues to provide for the eventual replacement of FF&E. The useful life of FF&E in a hotel was estimated at 7 years..

Gap Loan

A loan that fills the difference between the first loan and the full amount of the permanent loan. See Bridge loan and Swing loan. Example: A developer arranges a permanent mortgage R fund $1,000,000 when the apartments she is building are 80% pied. From completion of construction until 80% occupa reached, the mortgage is only $700,000. The developer arrange loan of $300.000 for the RENT-UP PERIOD


A slang term to describe the practice of reneging on an oral commitment to buy or sell a property because a better offer or opportunity was presented after the oral commitment was made but before a legal sales contract was consummated. Example: Gazumping can be a big problem in areas where a formal sales contract is signed only after the buyer has thoroughly investigated the property. The buyer may have invested much time and money in the due diligence process, yet lose out if the seller gets a better offer It can also work in reverse. The buyer may renege after the seller has held the property off the market. The seller may valuable exposure time during the peak marketing season. .

General Agent

A party who has been authorized by a principal to represent the principal in a broad range of matters such as a property manager..

General Contractor

A party who constructs buildings or other improvements for an owner or developer and who might employ a construction labor force or use subcontractors. See Contractor. Example: Collins. a landowner, has architectural plans and specifications for an office building. She enters into a contract with Baker, a general contractor, to build the structure. Baker hires subcontractors who put up the foundation, walls, roof, electrical and plumbing systems, etc. .

General Lien

A lien on all of the property of a debtor..

General Mortgage Bond

A document representing an obligation secured by a mortgage.

General Real Estate Tax

A tax levied by governmental agencies and municipalities on real estate to operate the government.

General Warranty Deed

A deed that guarantees the quality of title to property conveyed and undertakes to defend that title and to pay damages if the title is defective.

Gift Deed

A deed for which the consideration is for love and affection and not monetary.

Gift Tax

A federal tax on a monetary gift to a relative or friend. Generally, each person may give up to 510,000 per year to each donee without imposition of a federal gift tax. On higher gifts. there may be a gift tax, or the gift may affect the donor's estate tax. Example: Mr. and Mrs. Abel together give $20,000 this year to each of 3 sons ($60,000 total). There will be no gift tax imposed.

Good and Marketable Title

The title to a piece of real estate that generally can be shown by title search or abstract of title to be vested in the owner of record and free of claims or liens which would harm its marketability.


Good Consideration

A contractual “consideration” that is based on love and affection rather than money and is usually considered to be a gift.

Good Faith

An honest intention to abstain from taking conscious advantage of another.

Good Faith Estimate

An estimate of closing costs that must be given with residential loans on one to four units under the Real Estate Sett1ement Procedures Act by a lender to a mortgage applicant within three days after the loan application based on the lender's best estimate. Example: Gwen applied for a mortgage loan on a duplex. Within three days the mortgage banker sent a good faith estimate of closing costs including points; origination fees, title, and legal expenses.

Grace Period

An agreed-upon time after the payment of a debt is past due and during which time a party can perform without being considered in default.

Graduated Lease

A lease used mainly in long-term leases which provides for a varying rental rate often based upon a future determination where sometimes the rent is based upon the result of periodical appraisals. See Step-up lease.

Graduated Payment Loan

A loan that provided for partially-deferred payments of principal during the first five years of the loan term after which the principal and interest payment is substantially higher in order to make up for the principal portion of the payments that were lost at the beginning of the loan. See Variable interest rate loan.


1. A technical legal term that has the same effect as “convey" and "transfer” in a deed of conveyance bestowing an interest in real property on another. 2. A private grant is the transfer of real property from one person to another. 3. A public grant is a government transfer of ownership of public real property to a private party.

Grant Deed

A limited warranty deed using the word “grant” or like words that assures a grantee that the grantor has not already conveyed the land to another and that the estate is free from encumbrances placed by the grantor.


A party who receives a transfer of real property by a grant deed.

Granting Clause

The words in a deed of conveyance such as “convey and warrant"; "grant"; "grant, bargain and sell”; etc. that demonstrate the grantor's intention to convey the property now.


A party who transfers his or her interest in real property to another by a grant deed.

Gross Annual Multiplier

 A factor (number) used to arrive at an estimate of value for smaller commercial properties from the relationship between and by dividing the gross annual income (rent) into the selling or asking price of properties. See Gross Rent Multiplier.

Gross Area

The total floor area of a building which is usually measured from its outside walls..

Gross Domestic Product

(GDP) The total value of all goods and services generated through production by labor and property which is physically located within the confines of a country during a given period of time.

Gross Equity Loan

A mortgage in which the monthly payments increase annually, with the increased amount being used to reduce the outstanding principal balance and therefore shorten the overall term of the loan..

Gross Income

The total income from a property before any expenses are deducted.

Gross Income Multiplier

A rule of thumb technique used to estimate the market value of residential income-producing property by multiplying a factor arrived at by dividing known sales prices of comparable properties by their annual rental income times the subject property's annual gross income. See Gross Rent Multiplier.

Gross Lease

A lease for property under the terms of which the lessor is to assume all of the expenses of the property such as taxes, maintenance, etc.

Gross Margin

An amount expressed as percentage points identified in an adjustable rate mortgage which gets added on the rate adjustment date to the current index value to establish the new rate of the note.

Gross Revenue

The total revenue from all sources before subtraction of expenses incurred in gaining such revenue.

Gross Sales

The total amount of sales as shown by invoices before deducting returns, allowances, etc.

Growing Equity Loan

A mortgage in which the monthly payments increase annually, with the increased amount being used to reduce the outstanding principal balance and therefore shorten the overall term of the loan.

Guarantee of Title

An assurance of clear title.

Guaranteed Mortgage

A mortgage in which a party other than the borrower assures payment in the event of default by a mortgagor such as VA-guaranteed mortgages

Guaranteed Sale

The written commitment by a broker that within a specified period of time he or she will in absence of a sale purchase a listed property at a specified sum.


The assurance given by one party that another party will fully perform their duties under a contract.

Habendum Clause

The “to have and to hold” clause which may be found in a deed that describes the extent of the interest conveyed such as fee or life estate which is no longer an essential part of a deed


The ability to live in according to the interpretations of the courts which is broader than “tenantability” which complies with the Civil Code.

Half Bath

A room in a home that contains a toilet and sink but no facilities such as a bathtub or shower stall.

Hard Costs

Direct costs.

Hard Money

The cash including the cash proceeds from a loan as distinguished from credit extended by a seller. See Soft money.

Hard Money Loan

A debt that is taken on in exchange for cash.

Hazard Insurance

A form of insurance that protects against certain risks such as from fires or storms.

Hazardous Substance

A type of contaminant regulated under CERCLA.

Hidden Defects

A title defect that is not apparent for an examination of the public records

High-Loan-to-Value Loan

A home equity refinancing loan typically at 125% of the market value of a home which makes it inherently high-risk and reserved for only the lowest-risk borrowers since a portion of the loan is unsecured and where the lender is gambling on the borrower's integrity. Example: When the Dawsons refinanced their old $90,000 mortgage, they were able to get a high loan-to-value loan of $125,000, despite the fact that their home was worth only $100,000. They used the $35,000 cash proceeds of the transaction (minus transaction costs) to remodel and retire other existing debts

Highest and Best Use

An appraisal phrase that is the starting point for appraisal indicating the highest level according to the current zoning classifications that improvements can be built and then indicating the best use the property can be put so it will produce the greatest net return to the land over a given period of time


An indefinite term used to describe the modern apartment building with an elevator and over five stories

Hold Harmless Clause

A contractual clause whereby one parry agrees to protect another party in the event of any claims. Example: Big Buy Foods is leasing property from its landlord, Lucky Lessors. A customer is injured by a falling light fixture, and she sues both Big Buy Foods and Lucky Lessors. In the lease, Big Buy Foods agreed to a hold harmless clause whereby they indemnified Lucky Lessors against such events.

Holder In Due Course

A party who has taken a note, check or bill of exchange in the due course of a transaction, before it was overdue and in good faith and for value and without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated to him or her.

Holding Period

The period of time during which a party owns a capital asset.


An owner standing in the path of an assemblage who attempts to realize the highest possible price by refusing to sell during the early stages of assemblage.

Holdover Tenant

A tenant remaining in possession of leased property after the leased term has expired.

Home Equity Loan

A loan sometimes called a “line of credit” where an owner uses his or her residence as collateral for a loan which permits the draw of funds up to a preset amount

Home Inspector

A professional who in some states must be bonded or licensed who evaluates the structural and mechanical condition of a home prior to transfer of title. Example: Before closing on their new home, the Felixes hired a home inspector to check the condition of the structure. The inspector discovered an unsafe furnace burner and a leaking faucet. The seller agreed to have the problems repaired before the closing.

Home Loan

See Mortgage.

Homeowners Association

An organized group of homeowners whose members regulate and enforce the rules and standards of their community.

Homeowners Insurance Policy

A standardized insurance policy package that covers residential real estate owner against financial loss from fire, theft, public liability and other common risks.

Homeowners Loan Corporation

A federal agency that refinanced mortgages in default in the early 1930s.

Housing and Urban Development

(HUD) A department of the federal government created in 1965 which is responsible for the implementation and administration of the U.S. government housing and urban development programs which include FNMA, FHA, Public Housing Urban Renewal and Community Facilities.

Housing Code

A local government ordinance that sets minimum standards of safety and sanitation for existing residential buildings. See Building codes. Example: Because of violations of the housing code, including a badly leaking roof and rat infestation, the old apartment building was condemned.


See Housing and Urban Development.

HUD-1 Form

See Uniform settlement statement.


An abbreviation for Heat, Ventilation, and Air-Conditioning and refers to the climate control system in a building.


A thing that is deceptive; deceiving by false appearances or an illusion and not real.

Implied Agency

An agency relationship that is concluded from the actions of the parties by which a third party might reasonably conclude that an agency relationship has been formed.

Implied Contract

A contract that one would conclude exists as a result of the acts and/or conduct of the parties involved.

Implied Warranty of Habitability

Implied Warranty:  One that is not written but exists under the law.  See also STATUTE OF FRAUDS.

     EXAMPLE:  Under the law in several states there is an implied warranty of       habitability for apartments leased to tenants.  This means that the tenant has the right to a dwelling that is fit for living, i.e., there are no BUILDING CODE VIOLATIONS.

Impound Account

A trust type account established by lenders for the accumulation of borrowers funds to meet periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security and are usually collected with the note payment. See PITI.

Improper Improvement

An out-of-place building which does not conform to the best use of the site.

Improved Land

Land that has had some improvements required to serve a useful purpose and has been partially or completely developed.

Improved Value

The difference between the income-producing ability of a property and the amount required to pay a return on the investment in the property..


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

Improvements to Land

The publicly owned additions such as curbs, sidewalks, street lighting system and sewers, constructed so as to permit the development of privately owned land for utilization as opposed to improvements on land which are usually privately owned.

Imputed Interest

In a mortgage that names an insufficient interest rate, The law will require that the rate be seen higher and the principal be seen less. Example: Abel sells property to Baker. Baker gives Abel a portion of the price in cash and Abel takes a note for the remainder. Since the gain on the sale is taxable at capital gains rates and the interest paid on the note is taxed as ordinary income, it is in Abel's favor to set a higher price in exchange for charging a low rate of interest on the note. If this is done, the Internal Revenue Service will consider a portion of the principal paid on the note as imputed interest and tax that portion as ordinary income.

Imputed Notice

A legal concept that holds that information communicated to an agent is communicated to the principal because in the client agent relationship, nothing is held back because it was the duty to report the information to the principal

Including Interest

A loan payment term that includes both principal and interest - a level-payment plan or an amortized loan.

Inclusionary Zoning

An ordinance that requires a builder of new housing to set aside a designated number of units for low and moderate income people.

Income Property

A property in which the the purpose of its existence is to produce income which may come from several sources such as commercial rents or business profits attributable to real estate other than rents, etc. is generated by means of commercial rentals or in which the returns attributable to the real estate can be so segregated as to permit direct estimation.

Incorporeal Rights

The non-possessory rights in real estate arising out of ownership such as rents or out of a right-of-way.


The increase of value of land most frequently used to refer to that which accompanies population growth and increasing wealth in the community

Independent Fee Appraiser

A person who estimates the value of property and who has no personal interest in the property nor connected to it by any lender.

Index Lease

A lease in which the rental payment varies in accordance with variations in an agreed-upon established index of prices or costs

Index Method

An appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to determine current cost of construction.

Injection Well

An injection well is defined by the Tennessee Department of Environment and Conservation as:

(26) “Injection well” means a structure or other device which is used for the emplacement of fluids into a subsurface stratum including, but not limited to:


(a) a well used for the emplacement of fluids;

(b) a subsurface fluid distribution system;

(c) an improved sinkhole; or

(d) infiltration cell and any other structures or devices designed, constructed or used to emplace fluids into the subsurface, except as provided in rule 1200-4-6-.03(3).

Rule 1220-4-6-.02

Basically, this is a well with a pump on one end that forces fluids down into the earth. It is usually used for equalizing pressure to combat sinkholes, to improve drainage, etc. They are not common in all areas of the state. However, if they are on someone’s property and they break, they are very expensive to repair.

Inner City

The generally older and more urbanized area of a large city surrounding the central business district which often refers to densely populated blighted areas characterized by low-income residents and a high proportion of minority racial and ethnic groups. Examples: Many inner city neighborhoods have been rehabilitated by URBAN RENEWAL projects. Violence is a problem in some inner city schools. The mayor promises a construction program to rehabilitate the inner city

Innocent Purchaser

A party not responsible for cleanup of contaminated property. Under SARA. anyone who is in the chain of title becomes responsible for such cleanup, even those with no responsibility for the pollution. One exception is a purchaser who knew nothing about the contamination and had a Phase I investigation done prior to the purchase. Example: Discarded electrical parts containing hazardous PCBs and lead were found on land, requiring a cleanup of the environmentally contaminated property. All current and prior owners and users were potentially responsible parties. Irene, however, bought the land after a qualified inspector had determined that it was free of hazards, so she is an innocent purchaser, not responsible for cleanup.

Inside Lot

A lot in a subdivision that is surrounded on each side by other lots and having frontage on only one side as opposed to a corner lot which has frontage on at least two sides..


A physical scrutinizing of documents or property done to assure correctness of paperwork such as loan papers, compliance with building codes or absence of termites, etc.

Installment Contract

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser who is in possession of the property even though the seller retains title until a future date which typically is not until final payment. Also known as a Contract for deed or Warranty deed..

Installment Note

A note which provides for a series of two or more payments of principal and interest until the amount borrowed is paid in full and has amortized the loan.

Installment Sale

The sale of real property on an extended payment basis often used to spread the tax consequence of a sale over a period of years.

Institutional Lenders

A financial depository such as a commercial bank, life insurance company or savings and loan association or an intermediary (go-between) which pools the money of its depositors and then invests those funds in various ways including loans secured by mortgages and trust deeds.

Insurable Interest

An ownership interest which an insurer will recognize as a property right, the loss of which will result in true loss of money value to the insured party.

Insurable Title

A title that a title insurance company is willing to insure. Example: In some contracts for the sale of real estate the buyer must receive insurable title or he is not obligated to purchase the property..

Insurable Value

The value at which an insurer will recognize any loss

Insurance Rate

The ratio of the insurance premium to the total amount of insurance carried thereby usually expressed in dollars per $100 or per $1,000 sometimes in percent.

Insurance Risk

A general or relative term denoting the hazard involved in the insuring of property. The premium or cost of insurance is determined by the relative risk or hazard considered to be involved.

Insured Mortgage

A mortgage in which a party other than the borrower, in return for the payment of a premium, assures payment in the event of default by a mortgagor such as FHA-insured mortgages, PMI (private mortgage insurance).


A property such as goodwill that cannot be touched..

Intangible Assets

The elements of property in an enterprise that are represented in the established organization doing business, goodwill and other rights incident to the enterprise as distinguished from the physical items comprising the plant facilities and working capital..

Intangible Value

An asset's worth which is not immediately available in dollars but may be of significant value such as “goodwill” of an established business.


1. The cost in dollars for the use of money for a period of time or “rent” paid for the use of money. 2. The type and extent or having a portion, share or right in the ownership of something. Example: Lenders require payment of interest at a specified rate, to compensate for risk. deferment of benefits, inflation. and administrative burdens. Example: One may hold either a partial or fee simple interest in a property That interest entitles one to specific ownership rights..

Interest Extra Loan

A loan in which a fixed amount of principal is repaid in installments along with interest accrued each period on the amount of the then outstanding principal only.

Interest Rate

The percentage of a sum of money charged for its use and like rent paid for use of the money. It is expressed as a percentage - usually annually, but can also be monthly or daily - of the sum borrowed.

Interest Rate Risk

The risk of loss due to changes in the interest rate. Earnings or the value of a property that may be affected as a result of changes in prevailing interest rates in the money market. When interest rates go up capitalization rates are generally lower rates and property values go down.

Interim Loan

A temporary or short-term loan that is also called an interim financing that is secured by a mortgage which is used until permanent financing is available and then paid off from the proceeds of permanent financing. See Construction loan..

Internal Revenue Service

(IRS) An agency of the federal government that is responsible for the administering the agency, collecting taxes and auditing federal income tax returns.


The Interpleader Statute is designed to take licensees out of the middle of a transaction where there is dispute over who is entitled to earnest money. The whole idea behind this statute is for licensees to be able to take the amount of earnest money held in escrow and pay that money into the General Sessions court and let the court decide who has a right to the money (i.e. buyer or the seller). By doing so, the licensee avoids personal liability.

The interpleader statute provides that amounts up to twenty five thousand dollars ($25,000) can be pled into a General Sessions Court of the county where the property is located. For amounts of $25,000.00 or more, an interpleader may be filed in the Chancery Court for the county in which the property sits. The rights of the buyer and seller would be determined by the court.


A contiguous urban development larger than a city or metropolitan area.

Interval Ownership

A contiguous urban development larger than a city or metropolitan area.

Intrinsic Value

An appraisal term pointing to the value created in a person's own mind for a particular type of property.

Inverse Condemnation

An action brought by a property owner seeking just compensation for the use or value of land being so diminished due to the public use of adjacent property when the taker has not done so through an eminent domain proceeding.

Investment Property

A property which is in and of itself a business enterprise consisting of tangible and intangible assets that are considered necessary to the property which have been assembled and or developed into a single unit of use that is for lease or rental in whole or in part to others with the anticipation of profit.

Involuntary Lien

A lien imposed against property without consent of an owner which typically are property taxes, special assessments and federal income taxes.

Inwood Compound Interest Method

An appraisal formula used to estimate today's value of a series of annual payments of principal and interest of one dollar.

Joint and Several Liability

A responsibility where two or more parties are liable for the full payment of a debt or obligation and where the creditor may enforce payment against all of the parties together (jointly) or against each individually (severally).

Joint Tenancy

An equal undivided ownership interest of a property by two or more natural persons each of whom has the right, called the right of survivorship, upon the death of one joint tenant to the automatic succession of the title of the deceased tenant.

Joint Venture

A contractual arrangement under which two or more individuals or businesses firms participate as partners to share in the losses and profits of only one single specific project rather than as a continuing business relationship.

  1. A final determination of a court of competent jurisdiction of a matter presented to it.
  2. A money judgment is awarded to compensate for damages or to provide for the payment of a claim presented to the court.
Judgement Creditor

A party who has received from the court a decree or judgment against a debtor to to have him or her pay all money due.

Judgement Debtor

A party who has been issued a judgment by the court to pay the money owed.

Judgement Lien

A legal claim placed on all of the real and personal property of a judgment debtor which enables a judgment creditor to have the property of the debtor sold for payment of the amount of the judgment.

Judicial Foreclosure

A court action to taken to collect a debt owed.

Judicial Notice

The doctrine that a court will, of its own knowledge, assume certain facts to be true without the production of supporting evidence often because they are common knowledge.

Judicial Precedent

A legal concept established by a previous court decision.

Judicial Sale

A legal process that enforces a judgment lien whereby property is sold to pay the debt.

Jumbo Loan

A mortgage generally for $250,000 or more. Example: Not all lenders offer jumbo mortgages and those that do may charge a higher interest rate for the loans.

Junior Lien

A lien on a different loan involving the same property that is placed after an earlier-placed lien.

Junior Mortgage

A mortgage recorded later than another mortgage on the same property and whose claim against the property will be settled only after the earlier-recorded mortgage has been satisfied.


The clause written at the foot of an affidavit stating when, where and before whom such affidavit was sworn.


A political subdivision with power to govern its own affairs.

Just Compensation

The amount paid to the owner of a property when it has been acquired under eminent domain. See Condemnation. Example: Property is condemned to construct a sewage treatment plant. The owner is entitled to just compensation equal to the fair market value of the property taken.

Key Lot

A lot in such a position that one side is adjacent to the back of other lots. It is considered to be the least desirable of the lots in a subdivision.


The material of the earth, whatever it may be such as soil, rock or other substance and it includes the free or unoccupied space for an indefinite distance upwards as well as downwards.

Land and Improvement Loan

A loan obtained by the builder-developer for the purchase of land and to cover expenses for subdividing.

Land Contract

A contract used in a sale of real property whereby title to the property remains vested in the seller until the buyer who receives the right to possession has paid in installments over a long period of time a preset amount or all of the purchase price and upon default by the buyer all payments may be forfeited. Also known as a Conditional sales contract, an Installment sales contract and a Real property sales contract. See definition of Security interest.

Land Grant

A gift of government land to a university, public utility or railroad or for a purpose that would be in the best interest and benefit of the general public; also, the original granting of land from the public sector to the private sector commonly used in the early history of the United States.

Land Improvements

The physical alterations to or construction of a relatively permanent nature attached to or appurtenant to land and of such a character as to increase its utility and or value.

Land Lease

A lease covering only the ground. See Ground lease. Example: Abel arranges a land lease from Baker for 50 years at a net annual rent of $5,000. Abel builds a shopping center on the land. At the end of 50 years the entire property will revert to Baker.

Land Planning

The designing of land use areas, road networks and layout for utilities to achieve efficient utilization of real estate resources.

Land Residual Technique

An income approach method of appraisal used in estimating the value of the land as separate from the building that is used for feasibility studies and highest and best use purposes.

Land Trust Certificate

An instrument used in financing larger real estate transactions where the investor receives a trust certificate as evidence of his or her share in the trust which serves as the investment vehicle.

Land Use Planning

An activity, generally conducted by a local government and used to guide decisions on zoning, that proposes public and private land use recommendations that are consistent with community policies.


The condition of a lot that has no access to a public thoroughfare except through an adjacent lot. See Egress. Compare with Easement and Right-of-way.


A party who is called a lessor that rents property to another when done under a lease.


A monument or erection placed on the boundary line of two adjoining parcels to establish the boundary mark.

Landscape Architect

A professional who designs subdivisions, building sites, and other projects that require grading, drainage, utility installation and site improvements and plant placement selection and layout.


The utilization of a lawn and plantings to improve the appearance of a lot.

Late Charge

A charge assessed by a party against another party for failing to make agreed to payments when due. See Penalty.

Latent Defects

The physical weaknesses or construction defects not noticeable even after a reasonable inspection of the property.


1. A contract between owner and tenant setting forth conditions upon which a tenant may possess and use the property and the term of the occupancy. 2. Sometimes used as a method of financing as an alternative to purchasing property outright.

Lease Option

See Lease with an option to purchase.

Lease Purchase Agreement

An arrangement whereby a portion of the rent may be applied toward an established down payment or purchase price. Upon payment of the down payment the tenant, using borrowed funds, purchases the property and becomes the owner outright rather than a mere lessee.

Lease With An Option To Purchase

A lease in which the lessee (tenant) has the right to purchase real property under certain conditions such as a stipulated price or within a stipulated time frame either during or at the end of the lease term.

Leased Fee

The interest, that can be valued, in a property that has been leased to others that the owner has such as the right to receive ground rent over a period of time and also the right to repossess the property at the termination of the lease.


See Leasehold estate.

Leasehold Estate

A less-than-freehold estate or personal property interest that a tenant has in property which is obtained through the lease.

Leasehold Improvements

The fixtures that are generally acquired or installed by a non-residential tenant and which can normally be removed upon lease expiration provided no damage is done to the property and the removal does not conflict with the lease terms.

Leasehold Value

The value of a tenant's interest in a lease which can be significant when the rent is below market and the lease has a considerable term remaining. Example: When land rent for an acre of Manhattan was $10,000 per year, a knowledgeable investor bought the rights of a 99-year lease. A comparable TRACT today commands $150,000 annual rent. The lease-hold value of the subject property is the present value of the bargain rent ($140.000) over the remaining lease term.

Legal Description

A description of land recognized by law by which property can be positively located by reference to government surveys or approved recorded maps such as Lot, Block, and Tract; U.S. Government Survey; and Metes and Bounds.Legal description - A means of identifying the exact boundaries of land by metes and bounds, by a plat or by township and range survey system. Metes refer to measures; bounds refer to direction. Metes and bounds descriptions are means of describing land by measurement and direction from a known point or marker on land. A plat is a recorded map of land that identifies a parcel by a number or other designation in a subdivision. A township and range survey system is a system of legal description of land with a township as the basic unit of measurement. Abase line is a parallel that serves as a reference for other parallels. Meridians are the north-south lines of survey, 6 miles apart. Parallels are the east-west lines of survey, 6 miles apart. A principal meridian is a meridian that serves as a reference for other meridians. A range is a north-south row of townships; the 6-mile strip of land between meridians. A section is a 1-mile square in a township. A tier is an east-west row of townships; the 6-mile strip of land between parallels. A township is a 6-mile square of land bounded by parallels and meridians and composed of 36 sections.

Legal Notice

The information required to be given by law.

Legal Person

An entity which is usually a corporation that has the legal powers and duties of a natural person.

Legal Residence

A person's permanent home. Example: Although President Gardner lives in Washington, DC, and has a vacation home in New England, he claims Houston as his legal residence because he maintains a permanent home there.

Legal Title

A title which lacks the full bundle of rights commonly associated with ownership and which might be being held by a trustee under a trust deed.

Legality of Purpose

An essential element of every contract is that it involves a lawful object and if not, the contract is void. See Lawful object.

Less Than Freehold Estate

An estate commonly called a leasehold that exists for a definite period of time or for successive periods of time until terminated.


The party commonly referred to as the tenant who has the right to possession and use of real estate for a limited time under a lease agreement.


An owner or landlord who entered into a lease agreement and granted a tenant possession and use.

Level Payment Loan

A mortgage on real estate that is paid off by making a series of nearly-equal payments at regular intervals where a part of the payment goes to interest and the remainder goes to reduce the amount of the unpaid principal on the loan. See Amortized loan or Installment note.


A person to whom a license has been granted.

Licensing Examination

A written test given to a propective real estate BROKER or salesperson to determine ability to represent the public in a real estate transaction.  Most states offer examinations on at least 5 dates each year.  

        EXAMPLE:  Assessment Systems, Inc. (ASI), Psychological Systems, Inc. (PSI), Applied Measurement Professional (AMP), Experior, and National Assessment Institute     ( NAI) prepare licensing examinations for most states.  Some states prepare their own licensing examination.


A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation such as judgments, taxes, mortgages, deeds of trust, etc.

Life of Loan Cap Rate

 In an adjustable rate mortgage this is the ceiling rate that the note cannot exceed over the life of the loan. See Capitalization rate.

Life Tenant

A person who is in possession of a life estate.


A contract by which a party employs an licensed real estate broker to assist them in a real estate transaction which usually refers to the sale of property.

Listing Agent

The real estate broker who has obtained a signed listing contract from an owner/seller.

Listing Agreement

See Listing contract.

Listing Broker

The licensed real estate broker who has entered into a listing contract with an owner to assist in the selling of his or her property for which the owner agrees to pay certain identified compensation. in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person. See Cooperating broker.

Listing Contract

1. An employment contract between an owner and a licensed real estate broker entered into for the purpose of the broker providing services to find ready, willing and able persons to buy, rent or lease a particular property under the terms specified in the contract for an identified period of time and where the owner agrees to pay certain identified compensation. In addition, it usually authorizes the broker to be the agent of the owner/principal and to perform services for the principal in a fiduciary capacity involving the principal's identified property. 2. The employment of a licensed real estate broker by a prospective purchaser or lessee to locate property to purchase or lease can also broadly be considered a type of listing.

Load Bearing Wall

An integral and relatively permanent part of a house which helps support the floors or roof.

Loan Application

A source of information on which a lender bases a decision about making a loan which defines the loan contract, shows the desired loan amount, the repayment terms, the name of the borrower, place of employment, salary, bank accounts, credit references and describes the real estate that is to be mortgaged.

Loan Commitment

A lender's contractual commitment to make a loan based on the appraisal and underwriting.

Loan Correspondent

A representative who negotiates or services loans for a lender.

Loan Fee

A service charge in addition to the required interest made by a lender for granting a loan.

Loan Maturity

The life of the loan or the amount of time the loan will remain in existence until the debt is paid off such as a 30-year loan having a maturity of 30 years.

Loan Origination Fee

A fee charged to the borrower by the lender for the administrative costs of processing and creating a mortgage loan which is usually computed as a percentage of the loan amount and is often expressed in points.

Loan Term

The length of time that the mortgage loan will be in effect.

Loan to Value Ratio

The amount of mortgage debt that a lender can or may loan to a borrower compared to the market or appraisal value of a property being pledged as collateral expressed as a percentage. The greater the loan-to-value ratio, the greater the financial leverage available to the purchaser.For example, an 80% loan to value ratio on a $100,000 property means a mortgage of up to $80,000 may be obtained.

Loan Value

A value which determines the highest amount a lending institution will lend on a property.


The position of land and improvements in relation to other land and improvements and to local or general economic activity.

Location, Location, Location

A popular statement that is traditionally referred to as the “three most important things in real estate” indicating the great importance of location with respect to the value of real estate.


A specific plot of land.

Lot and Block

(Sometimes called a recorded plat.) A method of identifying real property on a recorded subdivision plat that identifies a parcel of land by reference to its lot and block numbers within the subdivision.

Lot Line

A boundary line of a lot as that is identified in a property survey.

Lot Split

The division of an existing small parcel into two separate parcels.

Low Ball Offer

An offer from a prospective property buyer that is much lower than the listing price which may indicate that the buyer believes that the property will not receive many good offers and that the buyer is interested in the property only if it can be purchased at a bargain price. Example: Although the house was listed at $180,000, Lowry made a low-ball offer of $120,000. The seller was at first insulted by the low offer, yet eventually agreed to sell the home to Lowry for $150,000.

Maintenance Fee

An assessment by a homeowners' association or a condominium owners' association used to pay the costs of operating the common elements.

Maintenance Reserve

The sum of money allotted to cover future anticipated maintenance expenses.

Management Fee

The investment in professional property management that can be set as a fixed percentage of total rental income generated by the property managed or as a flat fee or any other agreed-upon method. Example: Acme Management Company is employed by several property owners to oversee and collect rent for their properties. Acme's standard management fee is 5% of gross rental income.


A set of arrangements for bringing buyers and sellers together through the price mechanism. A buyer's market is a market in which buyers can fulfill their desires at lower prices and on more advantageous terms than those prevailing earlier. It is a market characterized by many properties available and few potential users demanding them at prevailing prices. A capital market is comprised of the activities of all lenders and borrowers of equity and long-term debt funds. A money market is a market for borrowed funds, generally short-term. A seller's market is a market in which potential sellers can sell at prices higher than those prevailing in an immediately preceding period. It is a market characterized by very few properties available and a large number of users and potential users demanding them at prevailing prices.

Market Analysis

An estimate of value developed for the purpose of arriving at a selling or market price.

Market Indicators

The sign posts or indexes of market activity.

Market Price

The price paid regardless of external influences such as pressure, motive or intelligence.

Market Rent

The amount for rent that can be charged by pricing the rent at a level near that of similar properties in the market area.

Market Value of Building

The sum of money that the presence of a structure - based on its highest and best use - adds to or subtracts from the value of the land on which it sits.


The ease and speed with which a property can be sold at or near its market value based on its expected market appeal. Example: A single-family house in an active market typically provides greater marketability than a farm or ranch in a rural area.

Material Fact

Any fact that would affect the judgment or decision making of a person in giving his or her consent to enter into a particular transaction based on the proposed terms and one which an agent must disclose about his non-client to his or her principal and one which an agent must disclose about the property or the area to his non-clients.

Misplaced Improvements

The improvements on land which do not conform to the most profitable use of the site.


A false or misleading statement or assertion or presenting something not in accordance with the facts from one person to another in words or by conduct.

Mobile Home

A standardized manufactured home structure designed and equipped to be not more than two dwelling units to be used with or without a foundation system and which is entirely constructed in a factory and then transported to the site in one or more sections. See Manufactured home

Modular Housing

A system used for the construction of factory-built homes and other improvements to real property that comply with local building codes, using very little labor through the on-site assembly of component parts or modules that have been mass produced at a different location. See Manufactured home.


Temporary suspension of development or utilities connections imposed by local government.


An instrument recognized as evidence by law by which property is hypothecated or pledged as security for the payment of a debt or obligation and by which a procedure for foreclosure is established by statute in event of default.


A lender or creditor who is the receiver of a mortgage and to whom a mortgagor gives a mortgage to secure a loan or the performance of an obligation. See Secured party.

Mortgage Banker

A party whose principal business is the originating, financing, closing, selling and servicing of loans secured by real property for institutional lenders on a contractual basis.

Mortgage Bond

The evidence of a debt secured by a mortgage in favor of individual parties as a group, usually with the mortgage held by a third party in trust for the mortgage bond creditors.

Mortgage Broker

A party who acts as agent and brings a lender and borrower together in order to earn a commission.

Mortgage Commitment

A notice in writing from a lending institution promising to make the loan in the future and also specifying its terms and conditions.

Mortgage Company

The private business whose principal function is to originate by bringing lender and borrower together for a fee, to acquires loans for the purpose of resale and to service mortgage loans sold to financial institutions.

Mortgage Guaranty Insurance

The insurance that is available to mortgage lenders from Private Mortgage Insurance Companies (PMICs) such as MGIC that protects the lenders against possible financial loss.

Mortgage Insurance

A policy that guarantees the repayment of a loan in the event of the death or disability of the borrower.

Mortgage Insurance Premium

(MIP) The amount the borrower pays for the insurance on an FHA loan.

Mortgage Investment Company

A company or group of private investors that buys mortgages for investment purposes.

Mortgage Loan Disclosure Statement

The statement on a form approved by the state which is required by law to be furnished by a mortgage loan broker to a prospective borrower of a statutorily-prescribed time before the borrower becomes obligated to complete the loan.


A lender or creditor who is the receiver of a mortgage and to whom a mortgagor gives a mortgage to secure a loan or the performance of an obligation.

Mortgagee in Possession

A situation in which a lender upon foreclosure of the loan secured by the mortgage takes possession and control of the mortgaged property and collects any income produced until it is sold at a foreclosure sale. Example: Following nonpayment of debt service for a period of 6 months, Savings Bank filed for foreclosure of the loan. Fearing dam-ages to the property, Savings immediately took possession under an action of mortgagee in possession.

Mortgagee Policy

A title insurance policy issued to the lender. It protects the lender for the amount of the mortgage loan.


A debtor or borrower who gives a mortgage on his or her property to a mortgagee to secure a loan or assure performance of an obligation.

Motivated Seller

A party who urgently needs to dispose of his or her property. Examples:
Seller desperate for cash.
Seller who has been transferred to another location and must sell in order to buy another house.
Seller who can't meet payments.
Seller who needs to pay other expenses.
Seller who has become unemployed.

Multiple Listing

In most cases this is an exclusive-right-to-sell listing taken by a member of a cooperative organization of real estate licensees and shared in a pool with all of its members who have agreed to cooperate so the property will receive the greatest market exposure and so the members will have the opportunity to try to find an interested buyer and share in any commissions or fees earned.

Multiple Listing Clause

A provision in an exclusive listing giving the the listing broker the authority and obligation to distribute the listing to other brokers in the Multiple-Listing System.

Multiple Listing Service

(MLS) An association of real estate licensees that provides for a pooling of listings and the sharing of commissions on a specified basis.

Mutual Consent

The agreement of the provisions of a contract by the parties involved along with a mutual willingness to enter into a contract


The bargaining process that precedes a successful contractual agreement and generally creates a win-win situation for all of the parties. Example: Nelson wishes to purchase a property from Newman. Nelson is willing to pay up to a certain price and desires certain conditions placed on the sale. Newman will accept anything over a certain price and may be willing to help finance the purchase for a higher price. In negotiation Nelson and Newman attempt to come to an agreement over the price and conditions. When they agree, a sales contract is EXECUTED.


An area within a larger community with similar type occupants, buildings and business enterprises.

Non Institutional Lender

A source of real estate loan funds other than a bank or similar institution such as mortgage companies, pension funds, individuals and finance companies.

Nonbearing Wall

A wall used as a divider that does not carry any load.

Nonconforming Loan

A loan that does not meet the standards of, or is too large to be purchased by, FNMA or FHLMC and where the interest rate is at least ½ a percentage point higher than a conforming loan. Example: Nicholas's monthly income is $10,000; he wants to buy a house that would require monthly principal and interest Payments of $4,000 which is a 40% ratio of his income. Currently, FNMA/FHLMC requires that the house payment be not more than 28% of monthly income. Private lenders, who examined Nicholas's circumstances and the appraisal in detail, are willing to make the loan. Because it is considered a higher-risk and less liquid investment (it cannot be sold to FNMA or FHLMC) than an FNMA/FHLMC conforming loan, a nonconforming loan is obtained. It requires a higher interest rate and/or more discount points.

Notice of Default

A letter sent as a reminder to a borrower who has breached one or more of the loan covenants that may indicate the grace period and any penalties for failing to cure the default.

Notice of Intention to Sell

A document that is recorded and published prior to the sale of a business opportunity in order to give the seller's creditors notice. Also called notice to creditors of bulk transfer.

Notice of Nonresponsibility

A notice provided by law designed to relieve a property owner from the responsibility for the cost of unauthorized work done on the property or materials furnished therefore which must be verified, recorded and posted on the property.


The one to whom a debt is owed.


The one who owes a debt.


A presentation of a set of terms that is subject to another party's acceptance that is essential to arrive at a meeting of the minds needed to result a valid contract.

Offer to Purchase

A presentation of a set of terms made by a potential buyer to a property owner to purchase his or her property


The one who receives an offer.


The one who makes an offer.

Open House

A property that is being presented without the need for an appointment that is available for inspection by potential purchasers.

Open Listing

A nonexclusive authorization given to a licensee and which may be given to a number of licensees by a property owner, who retains the right to sell directly, to try to secure a purchaser without any liability to compensate anyone but the one who is the first to produce a ready, willing and able buyer who meets the terms of the listing or the one who gets the seller to accept an offer. Upon the sale of the property, the owner is under no obligation to notify anyone of the fact of the sale.


A right, given for a consideration, to purchase or lease a property, upon specified terms and within a specified time period, and placing no obligation on the party receiving the option to purchase the property.

Option Listing

A listing that give the listing broker the right (option) to purchase the listed property.

Option to Purchase

A contract giving one party the right but not the obligation to buy the property of another party within a certain time, for a stated amount, and subject to specific conditions. Example: Marco needs two adjacent parcels of land for a project he wishes to build. He can obtain an option to purchase one of them; if he is able to buy the other, he can use his option to buy the first one. If he cannot buy the other, he can let the option expire.


The one who receives an option who might be the potential purchaser of real property.


The one who gives the option who is usually the owner of the real property.

Overall Interest Rate

A rate that includes interest on the land and the building and provides for a recapture of the capital invested.


The person who owns property and might be listing it and since he or she has not sold the property, so would not yet be considered to be a “seller.”

Owner Financing

See Seller financing.

Owner Occupant

A resident who also owns the property. Example: Homer lives in a home that he also owns. Landon owns a home but rents it to Renton- Homer is an owner occupant, Landon is an absentee owner, and Renton is a rental tenant.

Owner of Record

The owner who holds record title and whose name appears on the recorded deed.

Owners Policy

Title insurance for the owner of property, rather than a lien holder.

A policy of title insurance, which insures a named owner against loss by reason of defects, liens and encumbrances or lack of marketability of the title.


The right of one or more parties to possess, use, enjoy and to dispose of property and to exclude all others.

Participation Loan

A sharing of an interest in an income property by a lender in addition to the base interest collected on a mortgage loan, a percentage of gross income is required, sometimes predicated on certain conditions being fulfilled such as a minimum occupancy rate or a percentage of net income after expenses of debt service and taxes. Also called Equity participation.

Payback Period

The period of time necessary for the cash flow from a project to equal the amount of money invested.

Payment Adjustment Date

The date the borrower's monthly principal and interest payment may change in an adjustable rate mortgage.

Payment Cap

The maximum amount of increase that is at the borrower's option that can be made to the interest in an adjustable rate mortgage on the payment adjustment date, if the increase called for, exceeds the payment cap amount and which may result in negative amortization.

Payment Rate

The rate at which the borrower repays an adjustable rate loan that reflects any buy downs or payment caps.

Payoff Statement

The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller's and the buyer's interests. Also called a reduction certificate.

Personal Liability

The responsibility that an individual has for a debt. Most mortgage loans on real estate are recourse (i.e., the lender can look to the property and the borrower for repayment). Contrast Nonrecourse, Exculpatory clause.

Personal Property

Any property which is not real property.

Personal Representative

An executor, guardian or administrator who represents another party under contract or judicial appointment.

Planned Unit Development

(PUD) An area which is designed and provides for intensive use of land often through a combination of private and common areas with arrangements for sharing responsibilities for the common areas. Typically, zoning boards consider the entire development as a residential cluster and allow its design to be substituted for a traditional subdivision.


The depositing of personal property by a debtor with a creditor as security for a debt or engagement.


A party who is given a pledge or a security. See Secured party.


A party who is given a pledge or a security. See Secured party.


A party who offers a pledge or gives security. See Debtor.

Plus Interest

A loan payment plan that calls for straight (or equal) principal reduction payments plus the accrued interest.


A charge assessed by a lending institution to increase the yield of a mortgage loan above the contract rate to the market rate so that it is competitive with other investments and is equal to the difference between the stated principal amount on the note and the lesser amount loaned. One point equals 1 percent of the loan amount. See Discount points.


A right that an owner or another person holding a right, such as a tenant, has to control, take custody of and use property.

Power of Attorney

A written instrument whereby a principal authorizes an agent who is sometimes called an attorney in fact to perform specified acts on his or her behalf.

Power of Sale

The power that an instrument such as a trust deed grants to a trustee or mortgagee to sell the secured property without judicial proceedings if a borrower defaults in payment of the promissory note or otherwise breaches the terms of the mortgage or trust deed.


A lending practice whereby a borrower can demonstrate to a seller and broker that they can qualify for an identified loan amount which permits a prospective buyers to shop with condidence that a loan will be approved.


A rehearsal of the closing whereby instruments are prepared and signed by some or all parties to the contract which is used when a closing is expected to be complicated.

Preliminary Title Report

A report used as a basis for title insurance on the quality of the title which searches the public land records to determine the extent to which someone has legal interest in a parcel and also for encumbrances and liens or any other items of record that might affect ownership.


An estate of land and its improvement often the subject matter of a conveyance.

Prepaid Interest

The interest paid before it has accrued or due, or paid before the funds are available to the borrower.


A loan payment that is greater than the amount due or in advance of the due date.

Prepayment Clause

A clause in a loan contract that gives a borrower the right to make loan payments that are greater than the amount due or in advance of the due date.

Prepayment Penalty

The charge payable under the terms of a loan agreement to a lender by a borrower if the outstanding principal balance of the loan is paid off prior to its maturity.

Prepayment Yield

The sum that may be saved by a borrower by paying off a debt prior to the date due.


The amount of value in terms of money at which property is offered for sale or is exchanged for at a sale.

Price Fixing

Most state statutes provide that fixing the price of a product or service in agreement with another individual or business is illegal. The general rule provides that a vendor may not in combination with another vendor agree to set a certain price thereby creating a fixed price within a certain market. A business acting on its own and not in concert with another may use legitimate efforts to obtain the best price they can, including their ability to raise prices to the detriment of the general public. Also, conformity of prices within a given product is not illegal unless such conformity was created by a combination of vendors agreeing on a set price. For example, where competitors agree to sell their goods or services at a specified price, minimum price or maximum price and they receive profits from such an agreement, they are in violation of price fixing. Additionally, setting a price to be charged only within a certain area in order to get rid of competition or to create a monopoly is generally illegal under most state laws. A majority of states have also enacted a “Below-Sales-Cost” law wherein businesses may not sell goods below cost if they do so with anti-competitive intent or effect. See Antitrust laws.

Price Level

A relative position on the scale of prices as determined by a comparison of prices of labor, materials, capital, etc. found at one time with prices at other times.

Price Level Adjusted Mortgage

A loan whose payment is adjusted according to the rate of inflation. The payments are generally quite low, typically 3 to 5% annually of the debt. This type of mortgage is not commonly used in the U.S.

Prima Facie

In Latin meaning “at first sight” and refers to a fact which is presumed to be true or legally sufficient to establish that fact unless it is rebutted or disproved by evidence to the contrary.

Primary Financing

An identification of a mortgage or trust deed and a note that has the earliest recording date for a specific property or a loan of first priority.

Primary Lease

A lease, between the owner and a tenant, whose interest all or in part has been sublet.

Primary Mortgage Market

The mortgage market made up of lenders such as commercial banks, savings and loan associations and mutual savings banks in which loans are originated.

Primary Residence

The main or principal home in which a person resides who may have multiple personal residences but for tax purposes may have only one primary residence. See Domicile.

Prime Rate

The lowest commercial interest rate charged by banks on short-term loans to their most creditworthy customers.


A person for whom another acts as and agent or representative.

Principal and Interest Payment

(P&I) A payment in an amortized loan that is typically paid monthly that includes the interest charged for the period plus an amount that is applied to the amortization of the principal balance.

Principal Balance

The outstanding amount owed on the original sum borrowed under a mortgage or loan.

Principal Broker

The licensed broker responsible for the complete operation of a brokerage firm. Example\: As principal broke, Collins receives a 10% override on all sales commissions earned by the other agents.

Principal, Interest, Taxes and Insurance

(PITI) A mortgage payment made periodically and typically monthly on an amortized loan that includes a Principal and Interest payment plus a contribution into a lender-established escrow account to pay property Taxes and Insurance premiums on the property.

Principle of Progression

An appraisal principle that holds that the worth of a residence of lesser quality will tend to be increased by being in association with residences of higher quality in the same area. The opposite of the Principle is regression.

Principle of Regression

An appraisal principle that holds that a property of higher quality in a neighborhood of properties of lower quality seeks the value level of the properties of lower quality. The opposite of the Principle of progression.

Principle of Substitution

An appraisal principle that holds that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution.

Principle of Supply and Demand

An appraisal principle that holds that market value is affected by the intersection of supply or quantity of units available and the demand forces or quantity of units desired in the market as of the appraisal date. 

The appraisal principle that follows the interrelationship of the supply of and demand for real estate. As appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace just as is any other commodity.

Prior Appropriation

A concept of water ownership in v which the landowner's right to use available water is based on a government-administered permit system.

Prior Lien

A lien which is senior or superior to others.

Priority of Lien

The order in which liens are given legal precedence or preference.

Private Grant

The granting of private property to another private party.

Private Mortgage Insurance

(PMI) A type of mortgage insurance available to conventional lenders on the first, high risk portion of a loan guarantying payment.

Private Offering

An investment or business offered for sale to a small group of investors, generally under exemptions to registration allowed by the Securities and Exchange Commission and state securities registration laws.

Procuring Cause

The cause, originating from a series of events that without a break in continuity that results in the prime object of a licensee's employment, that of being the first to procure or produce the buyer who is ready, willing and able to buy the property for the agreed-upon price and terms and is therefore entitled to the commission.


Property includes all those things and rights which are the object of ownership.

Real property consists of land or anything attached to or a part of the land, such as a house.

All other property, such as stocks, insurance, jewelry, are called personal property.

Property Brief

A folder that presents pertinent information about a property.

Property Line

A recorded boundary of a plot of land.

Property Management

The day-to-day operation of real property including the marketing and leasing of space, collection of rents, selection of tenants and the maintenance, repair and renovation of the buildings and grounds and the financing of rental properties.

Property Manager

A licensee and agent of the owner of real property or properties handling all matters which are under his or her direction pertaining to its operation and who is paid for his or her services.

Property Owners Association

An organization established with the purpose of administering private regulations affecting residential land uses.

Property Tax

A government levy on privately owned property based on its market value or other uniformly-applied standard which is sometimes referred to as ad valorem tax or real estate tax.


The degree of relationship or ratio between two things.

Proration of Taxes

To divide or split the taxes usually between seller and buyer in proportion to actual time of ownership or use.

Public Property

A property owned by the government.

Public Records

The records which by law give constructive notice to all of matters relating to land.

Public Restriction

A government regulation limiting the use of real property.

Punch List

An recording of items that need to be corrected prior to a sale or acceptance of a completed construction project.

Punitive Damages

A fine used to punish the wrongdoer is assessed in excess of the damages actually suffered.

Purchase Agreement

See Sales contract.

Purchase and Installment Saleback

A purchase of property upon the completion of construction and an immediate sold back on a long-term installment contract.

Purchase and Leaseback

A transaction method used to free up cash whereby an investor becomes the actual owner of a property by purchasing it from the original owner-occupant who subsequently continues to occupy and use the property under a long-term leaseback with the new owner.

Purchase Contract

See Sales contract.

Purchase Money Mortgage

A mortgage or trust deed given as all or part of the purchase price for real property.In some states the purchase money mortgage or trust deed loan can be made by a seller who extends credit to the buyer of property or by a third party lender (typically a financial institution) that makes a loan to the buyer of real property for a portion of the purchase price to be paid for the property. In many states there are legal limitations upon mortgagees and trust deed beneficiaries collecting deficiency judgments against the purchase money borrower after the collateral hypothecated under such security instruments has been sold through the foreclosure process. Generally no deficiency judgment is allowed if the collateral property under the mortgage or trust deed is residential property of four units or less with the debtor occupying the property as a place of residence.Purchase money mortgage - A mortgage given concurrently with a conveyance of land on the same land, by the vendee to the vendor, to secure the unpaid balance of the purchase price.Purchase money mortgage - A mortgage that is given in part payment of the purchase price as security for repayment of funds.Purchase Money Mortgage - (PMM) A note secured by a mortgage or trust deed given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.

Purchase of Land, Leaseback and Leasehold Mortgages

An arrangement whereby land is purchased by the lender and leased back to the developer with a mortgage negotiated on the resulting leasehold of the income property constructed. The lender receives an annual ground rent, plus a percentage of income from the property.


One who purchased or is purchasing the property—also referred to as Vendee, Payor, and Buyer. Purchaser may also refer to more than one person in cases of co-purchasers.

Quasi Contract

An obligation similar to a contract that is implied by law.

Quiet Enjoyment

A right that a tenant (typically) or an owner has to the use of the property without interference or possession with others.

Quiet Title Action

A court action brought to establish title from a questionable claim or to remove a defect or cloud on the title to property.

Quitclaim Deed

A deed used to surrender any interest in property which the grantor may have without any warranty of title or interest.

Rate Adjustment Date

The date on which the borrower's note rate may change in an adjustable rate mortgage.

Rate Cap

1. The limit on the amount the interest rate can he increased at each adjustment period in an adjustable-rate loan.

2. The maximum interest rate that can he charged during the life of the loan.

Rate of Return

(ROR) A rate expressed as a percentage that is based on the annual net operating income generated by a property compared to by dividing it by the capital invested.

Ready, Willing and Able Buyer

A party who is fully prepared to enter into a contract and really wants to buy and clearly meets the financial requirements to do so.

Real Estate

A term that generally narrowly refers to land with or without buildings or improvements. See more broadly Real property.

Real Estate Agent

A generic term pointing to a person licensed by a state who holds either a real estate broker or real estate salesperson license who assists people to buy, sell, rent or lease, manage, finance or value real estate for some type of anticipated compensation.

Real Estate Broker

A person or other legally-licensed entity by a state holding a real estate broker license who assists people to buy, sell, rent or lease, manage, finance or value real estate for some type of anticipated compensation.

Real Estate Commission

A state agency or department that enforces its real estate license laws.

Real Estate Commissioner

The head of a state's Real Estate Department or Commisssion.

Real Estate Financing

The channeling of monies into the production and use of real estate facilitating the production and use of real estate through borrowed or equity funds.

Real Estate Law

The body of laws relating to real estate which generally evolved from the English common law but now include governmental regulations such as zoning, building codes, etc.

Real Estate License Law

The state law that regulates the practice of real estate brokers and salespersons.

Real Estate Market

All of the potential buyers and sellers for various real properties such as the housing market, office market, condominium market or land market who are all currently active and seeking the same type of real property.

Real Estate Owned

(REO) A term used for property acquired through foreclosure by a lender and currently held in inventory.

Real Estate Salesperson

A person who holds a valid real estate salesperson's license and who for compensation or anticipated compensation has contracted to work under a real estate broker to assist people to buy, sell, rent or lease, manage, finance or value real property on a full or part time basis.

Real Estate Securities and Syndication Institute

Real Estate Securities and Syndication Institute - (RESSI) Provides educational opportunities in the field of marketing securities and syndication of real estate.

Real Estate Settlement Procedures Act

(RESPA) A federal law passed in 1975 requiring the disclosure to borrowers by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development, HUD of the settlement (closing) procedures and costs.

Real Estate Tax

A money charge levied upon real property to fund local government and to provide public services.

Real Estate Trust

A special arrangement under federal and state laws whereby investors may pool funds for investments in real estate and mortgages and be able to avoid corporate taxation by having the profits passed to individual investors who pay taxes.

Real Property

The land and everything growing on it, attached to it or erected on it but not including anything that may be severed from the land without injuring it.

Real Property Sales Contract

A term used in some states for an agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract. See Land contract.


The process of revising or updating the value estimate of property for ad valorem taxation purposes.


A process by which an owner can recover money invested by engaging and using an interest rate that provides for the full return of an investment over the investment period. This should not be confused with the interest rate which the earnings on an investment.

Recapture of Excess Depreciation

The need to pay income taxes on depreciation taken that is excess of the straight line depreciation permitted by the IRS.

Recapture Rate

The rate of depreciation that needs to be taken to provide for a full recapture. See Recapture.


The transfer of the title of land from one person to the immediately-preceding owner.

Reconveyance Deed

A commonly used instrument executed by a trustee reconveying or returning the legal title to real estate secured by a trust deed back to the trustor (borrower) upon full payment of the debt.


A system by which documents concerning title and other legal matters are collected in one convenient, public place, commonly the county recorder's office and when properly recorded, constitute constructive notice as to their contents.

Recorder of Deeds

The county government officer in charge of the office of land records who is also know as a registrar of deeds.

Recordiing Acts

The laws providing for the recording of instruments affecting title as a matter of public record to preserve such evidence and give notice of their existence and content; laws providing that the recording of an instrument in-forms all who deal in real property of the transaction and that, unless the instrument is recorded, a prospective purchaser without actual notice of its existence is protected against it.


The process of placing a document on file with a designated county public official for public notice who is usually known as the county recorder of deeds and who designates the fact that a document has been presented for recording by placing a recording stamp upon it indicating the time of day and the date when it was officially placed on file. Documents filed with the Recorder are considered to be placed on open notice which is also called “constructive notice" or "legal notice” to the general public of that county. Claims against property usually are given a priority on the basis of the time and the date they are recorded with the most preferred claim going to the earliest one recorded and the next claim going to the next earliest one recorded and so on.


An illegal lending policy of denying real estate loans on properties in specific older, changing urban geographical areas usually with large minority populations because of assumed higher lending risks without due consideration being given by the lender to the credit worthiness of the loan applicant.


The paying off of an existing mortgage loan obligation by extending or renewing existing financing or taking on a new loan obligation in its place.


An action taken to correct a mistake or error in a deed or other legal document.

Release Clause

A stipulation by a holder of a blanket mortgage that upon the payment of a specific sum of money that the lien to the specifically-described lot or area shall be removed from the blanket lien on the whole area involved.

Release Deed

An instrument executed by the mortgagee or the trustee reconveying or returning the title to the real estate secured by the loan back to the mortgagor or trustor upon full payment of the debt. Also known as a Reconveyance deed.

Release Statement

The form prescribed by the Uniform Commercial Code for indicating the release of all or part of a security interest.


To make physical alterations that are greater than simply keeping the property in good state of repair.

Renegotiable Rate Mortgage

(RRM) A loan secured by a long term mortgage which provides for renegotiation at predetermined intervals of the interest rate to a maximum variation of a set percentage over the life of the mortgage.


The price one party pays for the use of land or real property to its owner as a return on his or her investment.

Rent Control

The legal regulation as to the maximum rental charge that can be made for the use of certain real property.

Rent Schedule

A plan to establish the rental amounts to be paid and also, the records of the rents actually paid during a specific period.

Rental Value

The amount of rent a prospective tenant is justified in paying for a set period of time such as a month, a year, etc., for the right to occupy and use real property under certain prescribed or assumed conditions.

Replacement Cost

The cost to build something that is substantially similar to the original but is constructed with modern materials and according to current standards, design and layout and having equal utility.


See Real Estate Settlement Procedures Act.

Reverse Annuity Mortgage

(RAM) A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than in a lump sum and which must be repaid at a prearranged date, or upon the death of the owner or upon the sale of the property.


A right to take back or recall a previously-conferred power or authority such as to revoke a license or withdraw an offer prior to its acceptance.

Right of Occupancy

A right to occupy and use property for a specified period of time under the terms of a contract such as a lease or other formal agreement.

Right of Redemption

A right a party has to buy back or repurchase and recover property lost through a judicial sale. The right of a mortgagor to retain title to a property during a foreclosure period as well as the right to regain the title within a permitted set period after foreclosure sale by paying the full amount owned. See Equity of redemption.

Right of Reversion

The lessor (landlord) grants the right of possession to the lessee (tenant) but retains the right to retake possession at the expiration of the lease term.

Right of Survivorship

The right, which is the distinguishing feature of joint tenancy, of a surviving tenant or tenants to become owner of the entire interest of a deceased tenant.

Right of Way

A privilege operating as an easement upon land which an owner does by grant or by agreement give to another the right to pass over a specific part of the owner's land, to construct a roadway or use as a roadway, to construct through and over the land, to install telephone or electric power lines or to place underground water mains, gas mains or sewer mains.

Right to Rescind

A right to terminate a contract unilaterally or by one side only.

Rule of Thumb

Those simple guidelines or averages such as gross rent multipliers, prices per square foot, prices per front foot, costs per room and costs per apartment that are sometimes used to assist in determining the value of a property which are accurate because of the user's experience with the same unit of measurement.

Rules and Regulations

In real estate licensing, the orders of the regulatory authority that govern licensees' activities and which usually have the same force and effect as statutory law.


An area outside larger and moderate-sized cities and surrounding population concentrations that typically has farms, ranches, small towns and unpopulated regions. See Suburb.

Sale and Leaseback

A financial arrangement where at the time of sale, the seller gets cash and retains occupancy by concurrently agreeing to lease the property back from the buyer and becomes the lessee. The buyer gets a fixed return on his or her investment plus gets a known tenant and becomes the lessor.


A sale and leaseback transaction in which the lessee has the option to buy back his or her original property after a specified period of time.

Sales Comparison Approach

One of the three appraisal methods where an estimate of value is obtained by comparing the property being appraised with actual recently-sold comparable properties. Previously known as the Market data approach and the Market comparison approach. See Income approach and Cost approach.

Sales Contract

A contract by which a buyer and a seller agree to the terms to the sale of real property.

Sales Expenses

In brokerage, an agent's commissions, advertising costs and costs incurred in the sale are examples of common expenses.


A person who holds a salesperson license and is employed by a real estate broker.

Salvage Value

In computing depreciation for tax purposes, the reasonably anticipated fair market value of the property at the end of its useful life after being fully depreciated which must be considered with all methods of depreciation except for the declining balance method.

Sandwich Lease

A leasehold interest that exists when subleasing property that is between the primary lease and the operating lease when the holder of a sublease in turn sublets to another, his or her position is that of being sandwiched between the original lessee and the second sub-lessee.

Savings and Loan Association

(S&L) A state or federally chartered thrift institution that specializes in making residential mortgages.

Savings Association Insurance Fund

A fund managed by the FDIC that insures deposits in savings and loans which is the successor to the former FSLIC. See Federal Savings and Loan Insurance Corporation.

Savings Bank

A type of bank which receives savings in the form of the deposits in mortgages and other securities allowed by law and which are mutual institutions and usually are governed by a self-perpetuating board of trustees.

Second Mortgage

1. A mortgage loan made to secure a loan to make home improvements or some other related purpose.

2. A mortgage loan given by a buyer to generate enough capital to make the down payment required under the first mortgage loan.

Secondary Financing

A mortgage or trust deed that is securing a loan that is in addition to the first mortgage on the property, which makes it a second mortgage, and where others could be added which would make them a third, fourth, fifth or sixth mortgage or trust deed, but they are still referred to as a second mortgage.

Secondary Mortgage Market

A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.

Security Deposits

The funds given as collateral by a tenant so that at the termination of the lease the leased property can be restored to its original condition if necessary.

Security Interest

A Uniform Commercial Code term which replaces such terms as chattel mortgage, pledge, trust receipt, chattel trust, equipment trust, conditional sale, inventory lien, etc. that is used to designate the interest of a creditor in the property of a debtor in all types of credit transactions


Entity that has legal possession, (ownership) of any interests, benefits or rights inherent to the real or personal property. The person(s) or company that owns a property, or debt instrument and wants to sell it.

Seller Financing

A financing arrangement whereby the owner acts as the lender for the buyer until he or she can qualify and obtain financing from an instutional lender.

Sellers Market

The economic market condition that exists when a seller is in a more commanding position as to price and terms because of a limited number of properties being available and the demand from users and potential users exceeds the supply.

Selling Agent

A licensee who actually gets a buyer into contract for a property. Do not confuse a selling agent with the seller's agent who is normally the listing agent.

Separate Property

The property owned by a husband or wife in his or her own right outside of the community interest including property acquired by the spouse (a) before marriage, (b) by gift or inheritance, (c) from rents and profits on separate property or (d) with the proceeds from other separate property.


A counterclaim or cross-demand charged by a defendant against the claim of a plaintiff in an action seeking money damages.


The distance from curb or other established line on which nothing may be erected.

Setback Ordinance

A law that requires improvements not be built on property within a specified distance from the property line, street or curb.


The process at the closing of a sale of real estate negotiated by a real estate broker whereby the broker accounts to his or her principal for the earnest money deposit and deducts commission and advances by use of a form of settlement statement. See Closing.


The ownership of real property by one party or person.

Severalty Ownership

See Sole ownership.


The act of (literally) cutting or removing something from the land that is attached such as removing shrubs from a property or the taking of a part of a parcel of land for another use.

Severance Damages

The loss in value caused by cutting or removing something from the land such as the damage resulting from the taking of a fraction of a whole property that lowers its utility and the remaining value in the land due to the fractional taking.

Simple Interest

The interest computed only on the principal amount of a loan. See Compound interest.

Simultaneous Issue

the issuance of owner's and lender's policies of title insurance at the same time. Such issuance often carries a discount to the premium payer.

Single Agency

A situation in which a licensee/agent represents either the buyer or the setter in a real estate transaction - but never both.

Single-Family Home

A dwelling designed for occupancy by one household only.

Soft Costs

See Indirect costs.

Sole Ownership

A property owned by only one party or person. Also known as Severalty ownership.

Standing Loan

A mortgage that provides for only interest payments and where the entire principal falls due in one payment at the maturity of the loan.

Statement of Consideration

A statement in a deed or other sales contract that confirms the fact that the purchaser actually gave something of value for the property.

Statute of Limitations

The commonly-used identifying term for various statutes which require that a legal action be begun within a prescribed time after acquiring the right to seek legal relief.


A term pointing to the laws created by the enactment of legislation as opposed to law created by court decisions.

Statutory Dedication

The giving of private land for public use under a procedure established by statute.

Statutory Lien

A lien, such as a real estate tax lien, granted to a party by a statute or operation of law.

Statutory Redemption Period

The time period granted to a delinquent borrower to pay up and cure his loan deficiencies before his property can be permanently taken away.

Statutory Right of Redemption

The legal right under state law granted for a limited period of time for a mortgagor to redeem or buy back the title to his or her real property after a foreclosure sale has taken place by paying the full amount of the debt plus any costs involved to the lender.

Statutory Warranty Deed

A short-term warranty deed outlined by state statutes which to protect the buyer warrants by inference that the conveyor is the undisputed owner and has the right to convey the property and will defend the title against all claims if necessary and if the conveyor fails to do so the new owner can defend the claim and sue the former owner. See Warranty deed.


The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their home choices.

Step-up Lease

A lease that increases the rental rate at specified times during the lease term. Also know as a Graduated lease.

Stigmatized Property

A classification of specific property holding a negative reputation, which varies significantly from state to state, as a result of an event that occurred on or near it such as murder, death, illness, personal tragedy or gang-related activity. Most states have very strict rules regarding what can and cannot be disclosed about stigmatized property.

Straight-line Depreciation

In accounting, a method of decreasing the value of an asset for tax purposes by which the cost of improvements are reduced at a constant rate and in equal amounts throughout the estimated useful life of the improvement. See Depreciation.

Strict Foreclosure

The action taken by a court upon determining that sufficient time has elapsed and the mortgagor has not paid that which is past due, which terminates all rights and interests of the mortgagor in the real property and which orders a forced sale of the property to pay the mortgage creditors.

Strict Liability

A party being held responsible to an injured party without any excuses.


The relationship under which a person becomes an agent and the powers of an agent have been conferred not directly by the principal but by his or her agent and who has been as authorized to do so by the principal. A once common relationship under a Multiple Listing Service (MLS) it is now rarely practiced due to dual agency issues. See Dual agency.


A person upon whom the powers of an agent have been conferred not directly by the principal but by his or her agent and who has been as authorized to do so by the principal.


An area of land regulated by state law that is divided into parcels or lots that are suitable for building and having the eventual goal of sale, lease or financing..

Subdivision and Development Ordinances

The municipal ordinances that establish subdivision and development requirements.

Subject Property

The property under consideration and being appraised.

Subject To

See Subject to mortgage.


To execute a lease by a lessee to a third party that conveys his or her estate to a “sub” estate for part or all of the lessee's remaining term.


The leasing of a premise by a lessee to a third party for part or all of the lessee's remaining term. See Assignment.

Subordination Agreement

An agreement by the holder of an encumbrance against real property to permit his or her claim to take an inferior position to other encumbrances against the property often such as with construction loans.

Subordination Clause

A clause in a first trust deed that permits it to be subordinated to subsequent liens such as construction loan liens and sometimes in a junior or a second lien permitting it to hold priority over prior liens.

Subprime Loan

A loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans. Subprime loans tend to have a rate that is 0.1% to 0.6% higher than the prime rate. Although the additional percentage may seem small, for mortgages and other large loans, this translates to thousands of dollars worth of additional interest payments.


The replacing or substituting of one person with another in regard to a legal right or obligation such as in place of the creditor to whose rights he or she succeeds in relation to the debt. The doctrine is used when one person agrees to stand to guarantee another person's performance of a contract or the payment of an insurance contract claim.

Subsidized Housing

The housing for low- and moderate-income families in which rentals are paid in part by the government or in which the government pays a portion of the developer's loan interest costs so that he or she can charge lower rentals.


In real estate, a grant by government that eases the financial burden of holding, using or improving real property. 1. A direct subsidy is a subsidy which is of direct, visible benefit to the recipient, such as a cash grant. 2. An indirect subsidy is a subsidy whose benefit is felt indirectly, such as tariffs or farm price supports which may affect the land values in a particular area.

Subsidy Buy-down

The funds provided typically by a builder or seller to temporarily reduce a borrower's monthly principal and interest payments.

Subsurface Rights

The ownership rights a parcel of real estate has to the water, minerals, gas, oil that is beneath the surface.


A development of real estate in areas surrounding the central area of a city.


The legal act or right of acquiring property by descent or also succeeding to an asset by will or inheritance.


A party who follows or comes after such as a buyer of a business who becomes the seller's successor.

Successors Liability

The liability that a buyer of a business might have for nonpayment of sales taxes by the seller.


The interest that an owner has when a tenant holds over without the owner's consent after the expiration of a lease. See Estate at sufferance.

Sufficient Description

A means by which conveyed real estate can be identified in a deed so that it will legally hold up in court.

Suit for Possession

A law suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached the terms of the lease or has retained possession after the lease has expired.

Suit To Quiet Title

A legal action intended to establish, settle or remove a cloud on the title of a particular property.

Surface Rights

The ownership rights in a parcel of land that are limited to the surface of the property and do not include the air rights above it or the subsurface minerals below it.

Swing Loan

A short-term loan enabling the purchaser of a property to purchase another property before receiving the cash equity from the property he or she is selling.

Take-out Loan

A loan typically arranged by a builder or developer for a buyer from which the proceeds of this more permanent loan goes to pay the construction loan in full.

Tangible Personal Property

Property that can be seen, touched, and moved without great difficulty.  Excludes real estate and tangibles.


    EXAMPLE:  State law often governs or describes property and classifies it for AD VALOREM TAX purposes.  Property considered tangible personal property might include:

Machinery, equipment, jewelry and trucks.


Tangible Property

Any real or personal property that may be physically touched or handled or perceived by the senses such as land, its fixed improvements, furnishings, merchandise, cash, leases, etc.


Any real or personal property that may be physically touched or handled or perceived by the senses such as land, its fixed improvements, furnishings, merchandise, cash, leases, etc.

Tax Abatement

The amount of decrease or deduction of a tax improperly levied.

Tax Credit

A credit received for a particular item such as a solar energy credit that becomes a direct reduction from the amount of tax owed.

Tax Deed

The deed given to a purchaser at a public sale of land for nonpayment of property taxes which can convey only as much title as the defaulting taxpayer held.

Tax Liability

The taxes owed to a taxing authority which can be real estate taxes, ordinary income tax or capital gains tax.

Tax Lien

A claim against property which may be sold by the taxing authority arising out of nonpayment of taxes.

Tax Participation Clause

An agreement in a lease where the lessee agrees to pay all or a part of any real estate tax increases.

Tax Penalty

The amount to be paid as a result of nonpayment of taxes that is usually expressed as a percent of the unpaid balance.

Tax Roll

A list of all taxable property used to establish the tax base which shows the assessed value of each parcel and its owner. Also know as Assessment roll.

Tax Sale

The sale after a set time period of property for nonpayment of taxes.

Tax Sale Certificate

A certificate bought at a tax sale which transfers the lien but not the title to the purchaser. The county gets its tax money, the owner keeps the property and the purchaser gets a high yield on the certificate.

Tax Shelter

An investment motivated primarily to obtain an income tax deductions to apply against taxable income earned from other sources.

Tax Title

The title transferred through a tax sale.

Tax-deffered Exchange

A real estate transaction in which one real property in whole or in part is exchanged for another “like kind property” to defer the payment of capital gains tax. Also referred to as a Tax-free exchange. See Like kind property.

Tax-free Exchange

See Tax-deferred exchange.

Taxable Gain

An amount received on a sale of a property that is greater than what it was purchased for and which is subject to federal taxation.

Taxable Value

The value upon which the taxes are computed when tax rates have been determined.


A forced contribution levied upon property by the government and taken from persons, corporations and organizations to be used to support government services and programs.

Taxation (several types)

The process by which a government or municipal quasi-public body raises monies to fund its operation. The right of government to payment for the support of activities in which it engages. A double tax in real estate is the taxation of the property as an asset and the taxation of the property income the owner receives. Estate taxation is the tax imposed by government on property passed by will or descent. A personal property tax is a tax imposed upon owners of personal property. - A real property tax is a tax imposed upon the owners of real property.


An interest in real property giving the right to its possession and use

Tenancy At Sufferance

A wrongful holding of premises by a tenant after his or her lease has terminated.

Tenancy At Will

A possession of premises by permission of an owner or landlord and having no fixed term.

Tenancy By The Entireties

The ownership of property under certain state laws that is acquired by a husband and wife during marriage is jointly and equally owned and upon the death of one spouse it becomes the property of the survivor which is not used in community property states.

Tenancy In Common

The co-ownership of property by two or more persons whose interests need not be equal and who each hold an undivided interest in the entire property and without the right of survivorship.


The party who has legal temporary possession and use of real property belonging to another.

Tenant Improvements

The alterations to the interior of a building made to meet the functional needs of the tenant.

Tenant Pur Autre Vie

A party who holds lands for the period of another's life. See Pur autre vie

Tenant Selection

An evaluation process used by property managers to approve rental prospects to be tenants.


A specific list of items according to state guidelines which makes a property fit to live in.

Tenants By The Entireties

See Tenancy by the entireties.


An unconditional offer of money or performance by one of the parties to a contract to carry out his or her part of the contract which when unjustifiably refused may permit the party making tender to exercise remedies for breach of contract.


All things which may be owned that are of a permanent nature such as land and buildings and in a more restrictive sense a house or a dwelling.


See Tenure in land.

Tenure In Land

A concept of American real estate ownership that holds that all rights and title in and to the land rest with the owner.


The length of the contract period.

Term Mortgage

A specific type of loan having a stated length which is normally under 5 years, on which only interest is paid and at the expiration of the term, the entire principal is paid. See Straight loan.

Termination Statement

The document recorded to cancel and remove a financing statement previously filed under the Uniform Commercial Code.

Termite Shield

A shield of non-corrodible metal located on top of the foundation wall or around pipes to prevent the entrance of termites.


The ant-like insects which feed on wood and are highly destructive to wooden structures.


The conditions spelled out in an arrangement or agreement such as a mortgage or a contract.

Time Is of the Essence

A contract clause that emphasizes punctual performance as an essential requirement of the contract. Thus, if any party to the instrument does not perform within the specified time period (the drop-dead date), that party is in default, provided the nondefaulting party has made a valid tender of performance. If no tender is made, then the clause may be waived. The clause may also be waived by the subsequent acts of the parties such as accepting tardy payments or signing escrow instructions that allow for extensions of time in which to perform.


1. The union of all elements (as ownership, possession, and custody) constituting the legal right to control and dispose of property; the legal link between a person who owns property and the property itself. 

2.  Legal evidence of a person's ownership rights in property; an instrument (such as a deed) that constitutes such evidence.

Title Company

A corporation whose primary function is to insure titles to real property.

Title Guarantee Policy

The title insurance provided by the owner in lieu of an abstract of title.

Title Report

A title company report that is made prior to the issuance of title insurance policy which discloses the condition of the title.

Title Search

A review of all recorded documents affecting a specific piece of property to determine the present condition of title.

An investigation into the history of ownership of a property to check for liens, unpaid claims, restrictions or problems, to prove that the seller can transfer free and clear ownership.

TN Residential Closing Funds Distribution Act of 2005

Defined as the disbursement of funds as the delivery of the funds by the mortgage lender to the settlement agent in one or more of the following forms:

  1. Cash
  2. Wired funds
  3. Checks issued by the State of Tennessee or a political subdivision of the state;
  4. Cashier’s check
  5. Teller’s check or other official check, however designated, which is:
    1. issued by a financial institution; and
    2. drawn on or payable through a financial institution within the same Federal Reserve check processing region as the location of the settlement agent;
  6. Checks issued by an instrumentality of the United States organized and existing under the Farm Credit Act of 1971, as amended; or
  7. Checks issued from the escrow account or trust account of a real estate broker licensed pursuant to the Tennessee Code Annotated, § 62-13-101 et seq. and drawn on or payable through a financial institution within the same Federal Reserve check processing region as the location of the settlement agent in an amount not to exceed the earnest money paid by the purchaser and collected in such fiduciary amount.

This means that if the Settlement Agent (Closing Attorney) has not received the funds by one of the above methods, the closing cannot be fully funded and finalized.


In the survey of United States public lands, a territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square which is located between two range lines and two township lines.

Township Lines

All the lines in a government survey or rectangular survey system that run east and west, parallel to the base line and are six miles apart.Township Lines

Transaction Broker

Any licensee:

  1. Who assists one (1) or more parties to a transaction who has not entered into a specific written agency agreement representing one (1) or more of the parties; or
  2. Whose specific written agency agreement provides that if the licensee or someone associated with the licensee also represents another party to the same transaction, such licensee shall be deemed to be a facilitator and not a dual agent; provided, that notice of assumption of facilitator status is provided to the buyer and seller immediately upon such assumption of facilitator status, to be confirmed in writing prior to execution of the contract. A facilitator may advise either or both of the parties to a transaction but cannot be considered a representative or advocate of either party. ‘‘Transaction broker’’ may be used synonymously with, or in lieu of, ‘‘facilitator’’ as used in any disclosures, forms or agreements under this chapter;
Transfer Fee

A charge made by a lending institution holding or collecting on a real estate mortgage to change its records to reflect a different owner.

Transfer Tax

The tax required by state law to be paid when real estate is sold.


A potential for being conveyed from one owner to another and which is one of the four essential elements of value.

Trust Deed

An instrument in use in many states, that takes the place of and serves the use of a common law mortgage, by which a trustor places the legal title to real property with a trustee to secure the repayment of a sum of money to the beneficiary or the performance of other conditions.
Just as with a mortgage this is a legal document by which a borrower pledges certain real property or collateral as guarantee for the repayment of a loan. However, it differs from the mortgage in a number of important respects. For example, instead of there being two parties to the transaction there are three. There is the borrower who signs the trust deed and who is called the trustor. There is the third, neutral party, to whom trustor deeds the property as security for the payment of the debt, who is called the trustee. And, finally, there is the lender who is called the beneficiary, the one who benefits from the pledge agreement in that in the event of a default the trustee can sell the property and transfer the money obtained at the sale to lender as payment of the debt.

Trust Deed Lien

A lien on the property of a trustor that secures a trust deed loan.

Trust Funds

The money received by real estate broke or salespersons on behalf of others.

Trustee Deed

A device used to transfer property from a trustee back to the borrower, the trustor which has a similar effect as a quitclaim deed.

Trustee Sale

The forced sale of real property under a trust deed, by a lender, beneficiary, to satisfy the debt


The party who borrows money from a trust deed beneficiary (lender) and who deeds the real property securing the loan to a trustee (third party) to be held as security until the trustor (borrower) has performed (paid back) the obligation to the lender under terms of a trust deed. Also used for other purposes such as management.

Truth In Lending Act

The name given that portion of the federal statute Public Law 90-231 (the Consumer Credit Protection Act) and Regulation Z which are designed primarily to insure that prospective borrowers who purchase on credit receive information regarding the true cost of credit before entering into a transaction. See Regulation Z.

Undivided Interest

A fractional ownership without a physical division into shares.

Undue Influence

The using of a fiduciary or confidential relationship to obtain a fraudulent or unfair advantage of the weakness of mind, distress or necessity to control another.

Unenforceable Contract

A good contract but for some reason one that cannot be enforced under the law such as an unwritten real estate sales contract which cannot be enforceable due to the Statute of Frauds.

Uniform Residential Appraisal Report

(URAR). The most common appraisal form in use which is also know as a form appraisal and is used to document the methods used to determine the market value of single-family residences and planned unit developments.

Uniform Settlement Statement

The special form known as HUD-1 that itemizes all charges to he paid by a borrower and seller in connection with the settlement is required to be given to the borrower, lender and seller at or before settlement by the settlement agent in a transaction covered by RESPA.


An undertaking by, done or obligating only one side.

Unilateral Contract

A contract under which one party promises to do something in exchange for the completed act of another.

Unilateral Recission

A legal action taken by one party to repeal a contract when the other party has breached a contract

Unimproved Land

Land that is vacant or returned to nature or lacking in essential appurtenant improvements required to serve a useful purpose.
Example: Any of the following activities on a piece of raw land will result in improved land:
landscaping and grading
installation of utilities
const ruction of roads, curbs, and/or gutters
construction of buildings

Unimproved Property

See Unimproved land.

Unities of Title

The particular characteristic of an estate held by several in joint tenancy and which contains the four unities of time, title, interest and possession giving all joint tenants one and the same interest, by commencing at the same time, through the same conveyance and being held by each through an undivided possession of the whole property.

Unity of Ownership

The four unities that are traditionally needed to create a joint tenancy - unity of time, title, interest and possession.


A lien for which no specific property stands as security for the debt.

US Government Survey System

See United States Government Survey System


A uniform practice or course of conduct followed in certain businesses or professions or some procedure or phase thereof.

User of Real Estate

A party who has the rights to use property whether through ownership, lease, easement or license.


See Uniform Standards of Professional Appraisal Practice.


The illegal practice of lending money and charging a rate of interest greater than the maximum permitted by law.

Valid Contract

A contract that complies with the four essential elements of a contract - capacity, consent, consideration and lawful object - and is binding and enforceable by all of its parties.


The estimated worth, price or the estimation thereof or the act of valuing a property by appraisal


The present worth of future benefits arising out of ownership to a typical user or investor.

Variable Rate Mortgage

(VRM) An interest rate in a real estate loan which by the terms of the note varies upward or downward over the term of the loan depending on current money market conditions.

Void Contract

An agreement that is not good and is entirely null and non binding on either party and which cannot be ratified because it lacks at least one of the four essential elements of a valid contract.


That which is capable of being adjudged void in a court of law but which is not in and of itself unless and until some action is taken to have it declared void.

Voidable Contract

An agreement that is capable of being made void but is not null and void and so it must be either confirmed or voided.


To relinquish, abandon or forego a right to enforce or require something.


A voluntary act to intentional relinquish a known right which implies an election by the party to dispense with something of value or to forego some advantage or right.

Walk Up

An apartment of more than one story that does not have an elevator which means that the tenants must walk up the stairs to get to their apartments.

Warranty of Authority

A representation by an agent to third persons that the agent has and is acting within the scope of authority conferred by his or her principal.

Wear and Tear

The depreciation that an asset has due to ordinary usage.

Window Treatment

Refers to a blind, shade and/or curtains used to cover a window. Window treatments are not Real Property.

Without Recourse

An without recourse endorsement specially refuses to assume any responsibility to subsequent holders for the payment of a debt instrument that gets transferred by endorsement.

Words of Conveyance

The statement that follows the statement of consideration in a deed to show the intent on the part of the grantor to transfer the property.

Wrap Around Loan

A financing device used when it is not feasible or desirable to pay off the first mortgage whereby a lender assumes the payments on a borrower's existing loan and takes a new junior mortgage from the borrower that has a face value in an amount equal to the amount outstanding on the old mortgages plus the additional amount of money borrowed.


The regulation of land by local government under its police powers in controlling things such as height, size and use of buildings and the use of land.

Zoning Map

A map showing the various sections of the community and the division of the sections into zones of permitted land uses under the zoning ordinance in specific areas.

Zoning Ordinance

An act by city or county authorities to regulate and control the use of real estate for the health, morals, safety and welfare of the general public.