Archives: Glossary Terms

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

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.

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.

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

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

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.

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.

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.

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