Glossary

Real Estate glossary

175 definitions · page 2 of 3.

BUYER-AGENCY AGREEMENT: A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.
CAPITALIZATION: A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as Income -------- = Value Rate
CAPITALIZATION RATE: The rate of return a property will produce on the owner's investment.
CASH FLOW: The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results .
CASH RENT: In an agricultural lease, the amount of money given as rent to the landowner at the outset of the lease, as opposed to sharecropping.
CERTIFICATE OF SALE: The document generally given to the purchaser at a tax foreclosure sale. A certificate of sale does not convey title; normally it is an instrument certifying that the holder received title to the property after the redemption period passed and that the…
CERTIFICATE OF TITLE: A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
CHAIN OF TITLE: The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
CHANGE: The appraisal principle that holds that no physical or economic condition remains constant.
CIVIL RIGHTS ACT OF 1866: An act that prohibits racial discrimination in the sale and rental of housing.
CLOSING STATEMENT: A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.
CLOUD ON TITLE: Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
CLUSTERING: The grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas.
CODICIL: A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will.
COINSURANCE CLAUSE: A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.
COMMINGLING: The illegal act by a real estate broker of placing client or customer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker.
COMMISSION: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
COMMON ELEMENTS: Parts of a property that are necessary or convenient to the existence, maintenance and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
COMMUNITY PROPERTY: A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in western states; the system was unknown under…
COMPARABLES: Properties used in an appraisal report that are substantially equivalent to the subject property.
COMPETITION: The appraisal principle that states that excess profits generate competition.
CONDEMNATION: A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.
CONDITIONAL-USE PERMIT: Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
CONDOMINIUM: The absolute ownership of a unit in a multi-unit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the com- mon elements, which are owned jointly with the other condominium unit…
CONFESSION OF JUDGEMENT CLAUSE: Permits judgment to be entered against a debtor without the creditor's having to institute legal proceedings.
CONFORMITY: The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.
CONSIDERATION: (1) That received by the grantor in exchange for his or her deed. (2) Something of value that induces a person to enter into a contract.
CONSTRUCTIVE EVICTION: Actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.
CONSTRUCTIVE NOTICE: Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in…
CONTINGENCY: A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
CONTRACT: A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all…
CONTRIBUTION: The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
CONVEYANCE: A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.
COOPERATIVE: A residential multi-unit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each…
CORPORATION: A legal entity that exists separately from the owners. Legally, a corporation is like a person: It can be sued, own property, or acquire debts. Setting up a corporation is expensive initially, but is usually well worth it if you are going to be in business…
CORPORATION: An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.
CORRECTION LINES: Provisions in the rectangular survey (government survey) system made to compensate for the curvature of the earth's surface. Every fourth township line (at 24-mile intervals) is used as a correction line on which the intervals between the north and south…
COST APPROACH: The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building, less depreciation.
COUNTEROFFER: A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.
COVENANT: A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts for deed.
COVENANT OF QUIET ENJOYMENT: The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant's possession or use of the property.
CREDIT: On a closing statement, an amount entered in a person's favor--either an amount the party has paid or an amount for which the party must be reimbursed.
CURTEST: A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.
DEBIT: On a closing statement, an amount charged; that is, an amount that the debited party must pay.
DEDICATION: The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.
DEED: A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
DEED IN LIEU OF FORECLOSURE: A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure.
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. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement.
DEED RESTRICTION: Clauses in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions, for example, they may limit the density of buildings, dictate the types of structures that can be erected or prevent…
DEFAULT: The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.
DEFEASANCE CLAUSE: A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.
DEFEASIBLE FEE ESTATE: An estate in which the holder has a fee simple title that may be divested upon the occurrence or nonoccurrence of a specified event. There are two categories of defeasible fee estates: fee simple on condition precedent (fee simple determinable) and fee…
DEFICIENCY JUDGEMENT: Point levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.
DEMAND: The amount of goods people are willing and able to buy at a given price; often coupled with supply.
DENSITY ZONING: Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision.
DEPRECIATION: (I) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and external obsolescence. (2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of…
DESCENT: Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.
DEVELOPER: One who attempts to put land to its most profitable use through the construction of improvements.
DEVISE: A gift of real property by will. The donor is the devisor, and the recipient is the devisee.
DISCOUNT POINT: A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan.