ABANDONMENTThe failure to occupy and use property that may result in a loss of rights.
How do I deal with abandoned property in California?
The landlord must personally deliver or mail a “Notice of Right to Reclaim Abandoned Personal Property” to the former tenant. The form of the “Notice of Right(...)
ABSTRACT OF TITLE A summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impair title.
ABSTRACTION A method of valuing land. The indicated value of the improvement is deducted from the sale price.
ACCELERATED DEPRECIATION A method of cost write-off in which depreciation allowances are greater in the first few years of ownership than in subsequent years. This permits an earlier recovery of capital and a faster tax write-off of an asset.
ACCELERATION CLAUSE A condition in a real estate financing instrument giving the lender the power to declare all sums owing 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.
ACCEPTANCE The act of agreeing or consenting to the terms of an offer thereby establishing the ?meeting of the minds? that is an essential element of a contract.
ACCESS RIGHT The right of an owner to have ingress and egress to and from owner?s property over adjoining property.
ACCESSION An addition to property through the efforts of man or by natural forces.
ACKNOWLEDGMENT A formal declaration made before an authorized person, e.g., a notary public, by a person who has executed an instrument stating that the execution was his or her free act. In this state an acknowledgment is the statement by an officer such as a notary that the signatory to the instrument is(...)
ACOUSTICAL TILE Blocks of fiber, mineral or metal, with small holes or rough-textured surface to absorb sound, used as covering for interior walls and ceilings.
ACTUAL FRAUD An act intended to deceive another, e.g., making a false statement, making a promise without intending to perform it, suppressing the truth.
AD VALOREM A Latin phrase meaning ?according to value.? Usually used in connection with real estate taxation.
ADDENDUM Additional pages of material that are added to and become part of a contract.
ADMINISTRATOR A person appointed by the probate court to administer the estate of a deceased person who died intestate. (Administratrix, the feminine form.)
ADVANCE Transfer of funds from a lender to a borrower in advance on a loan.
ADVANCE COMMITMENT The institutional investor?s prior agreement to provide long-term financing upon completion of construction; also known as a ?take-out? loan commitment.
ADVANCE FEES A fee paid in advance of any services rendered. Sometimes unlawfully charged in connection with that 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 persons representing themselves as real estate(...)
ADVERSE POSSESSION A method of acquiring title to real property through possession of the property for a statutory period under certain conditions by a person other than the owner of record.
AFFIDAVIT A statement or declaration reduced to writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.
AFFIDAVIT OF TITLE A statement, in writing, made under oath by seller or grantor, acknowledged before a Notary Public in which the affiant identifies himself or herself and affiant?s marital status certifying that since the examination of title on the contract date there are no judgments, bankruptcies or(...)
AFFIRM To confirm, to aver, to ratify, to verify. To make a declaration.
AGREEMENT OF SALE A written agreement or contract between seller and purchaser in which they reach a ?meeting of minds? on the terms and conditions of the sale. The parties concur; are in harmonious opinion.
AIR RIGHTS The rights in real property to the reasonable use of the air space above the surface of the land.
ALIENATION The transferring of property to another; the transfer of property and possession of lands, or other things, from one person to another.
ALIENATION CLAUSE A clause in a contract giving the lender certain rights in the event of a sale or other transfer of mortgaged property.
ALLUVIUM The gradual increase of the earth on a shore of an ocean or bank of a stream resulting from the action of the water.
ALTA OWNERS POLICYAn owners extended coverage policy that provides buyers and owners the same protection the ALTA policy gives to lenders.
ALTA TITLE POLICY (American LandTitle Association) A type of title insurance policy issued by title insurance companies which expands the risks normally insured against under the standard type policy to include unrecorded mechanic?s liens; unrecorded physical easements; facts a physical survey would show;(...)
AMENITIESSatisfaction of enjoyable living to be derived from a home; conditions of agreeable living or a beneficial influence from the location of improvements, not measured in monetary considerations but rather as tangible and intangible benefits attributable to the property, often causing greater(...)
AMORTIZATION The liquidation of a financial obligation on an installment basis; also, recovery over a period of cost or value.
AMORTIZED LOAN A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity. Also called a Level Payments Loan.
ANNUITY A sum of money received at fixed intervals, such as a series of assured equal or nearly equal payments to be made over a period of time, or it may be a lump sum payment to be made in the future. The installment payments due to the landlord under a lease is an annuity. So are the installment(...)
APPELLANT A party appealing a court decision or ruling.
APPR0PRIATION OF WATER The taking, impounding or diversion of water flowing on the public domain from its natural course and the application of the water to some beneficial use personal and exclusive to the appropriator. APPURTENANCE: That which belongs to something, but not immemorially; all those rights,(...)
ASSESSOR The official who has the responsibility of determining assessed values.
ASSIGNMENT A transfer to another of any property in possession or in action, or of any estate or right therein. A transfer by a person of that person?s rights under a contract.
ATTACHMENT The process by which real or personal property of a party to a lawsuit is seized and retained in the custody of 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.
ATTEST To affirm to be true or genuine; an official act establishing authenticity.
AVULSION A sudden and perceptible loss of land by the action of water as by a sudden change in the course of a river.
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B.T.U. British thermal unit. The quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit.
BACKFILL The replacement of excavated earth into a hole or against a structure.
BALANCE SHEET A statement of the financial condition of a business at a certain time showing assets, liabilities, and capital.
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.
BASE AND MERIDIAN Imaginary lines used by surveyors to find and describe the location of private or public lands. In government surveys, a base line runs due east and west, meridians run due north and south, and are used to establish township boundaries.
BASIS(1) Cost Basis?The dollar amount assigned to property at the time of acquisition under provisions of the Internal Revenue Code for the purpose of determining gain, loss and depreciation in calculating the
income tax to be paid upon the sale or exchange of the property. (2) Adjusted Cost(...)
BEARING WALL A wall or partition which supports a part of a building, usually a roof or floor above.
BENCH MARK A monument used to establish the elevation of the point, usually relative to Mean Sea Level, but often to some local datum.
BETTERMENT An improvement upon property which increases the propertyvalue and is considered as a capital asset as distinguished from repairs or replacements where the original character or cost is unchanged.
BINDER An agreement to consider a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser. Also, a notation of coverage on an insurance policy, issued by an agent, and given to the insured prior to issuing of the policy.
BLIGHTED AREA A district affected by detrimental influences of such extent or quantity that real property values have seriously declined as a result of adverse land use and/or destructive economic forces; characterized by rapidly depreciating buildings, retrogression and no recognizable prospects for(...)
BLOCKBUSTING The practice on the part of unscrupulous speculators or real estate agents of inducing panic selling of homes at prices below market value, especially by exploiting the prejudices of property owners in neighborhoods in which the racial make-up is changing or appears to be on the verge of changing.
BONA FIDE In good faith; without fraud or deceit; authentic.
BUNDLE OF RIGHTS All of the legal rights incident to ownership of property including rights of use, possession, encumbering and disposition.
BUREAU OF LAND MANAGEMENT A federal bureau within the Department of the Interior which manages and controls certain lands owned by the United States.
BUSINESS OPPORTUNITY The assets for an existing business enterprise including its goodwill. As used in the Real Estate Law, the term includes ?the sale or lease of the business and goodwill of an existing business enterprise or opportunity.?
BUYER'S MARKETThe condition which exists when a buyer is in a more commanding position as to price and terms because real property offered for sale is in plentiful supply in relation to demand.
BYLAWS Rules for the conduct of the internal affairs of corporations and other organizations. 566 CHAPTER TWENTY-SEVEN
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CAL-VET PROGRAM A program administered by the State Department of Veterans Affairs for the direct financing of farm and home purchases by eligible California veterans of the armed forces.
CAPITAL ASSETS Assets of a permanent nature used in the production of an income, such as land, buildings, machinery and equipment, etc. Under income tax law, it is usually distinguishable from ?inventory? which comprises assets held for sale to customers in ordinary course of the taxpayer?s trade or business.
CAPITAL GAIN At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Usually taxed at lower rates than ordinary income.
CAPITALIZATION RATEThe rate of interest 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(...)
CARRYBACK LOAN The extension of credit from the seller to the buyer to finance the purchase of the property, accepting a deed of trust or mortgage instead of cash. Sometimes called a purchase money loan.
CC&Rs Covenants, conditions and restrictions. 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(...)
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 wherein the property is located. Any loss resulting to any person from an error in a tax certificate shall be paid by the county which such treasurer represents.
CERTIFICATE OF TITLE A written opinion by an attorney that ownership of the particular parcel of land is as stated in the certificate.
CHAIN A unit of measurement used by surveyors. A chain consists of 100 links equal to 66 feet.
CHAIN OF TITLE A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner. GLOSSARY 567
CHANGE, PRINCIPLE OF Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely result of cause and effect.
CHOSE IN ACTION A personal right to something not presently in the owner?s possession, but recoverable by a legal action for possession.
CIRCUIT BREAKER (l) An electrical device which automatically interrupts an electric circuit when an overload occurs; may be used instead of a fuse to protect each circuit and can be reset. (2) In property taxation, a method for granting propertytax relief to the elderly and disadvantaged qualified taxpayers(...)
CLOSING (l) Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds. (2) Condition in description of real property by courses and distances at the boundary lines(...)
CLOSING STATEMENT An accounting of funds made to the buyer and seller separately. Required by law to be made at the completion of every real estate transaction.
CODE OF ETHICS A set of rules and principles expressing a standard of accepted conduct for a professional group and governing the relationship of members to each other and to the organization.
COMMERCIAL ACRE A term applied to the remainder of an acre of newly subdivided land after the area devoted to streets, sidewalks and curbs, etc., has been deducted from the acre.
COMMERCIAL LOAN A personal loan from a commercial bank, usually unsecured and short term, for other than mortgage purposes.
COMMERCIAL PAPERNegotiable instruments such as promissory notes, letters of credit and bills of lading. Instruments developed under the law of merchant.
COMMINGLING The illegal mixing of personal funds with money held in trust on behalf of a client. See CONVERSION.
COMMISSION An agent?s compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.
COMMON INTEREST SUBDIVISION Subdivided lands which include a separate interest in real property combined with an interest in common with other owners. The interest in common may be through membership in an association. Examples are condominiums and stock cooperatives.
COMMON LAW The body of law that grew from customs and practices developed and used in England ?since the memory of man runneth not to the contrary.?
COMMON STOCK That class of corporate stock to which there is ordinarily attached no preference with respect to the receipt of dividends or the distribution of assets on corporate dissolution.
COMPACTION Whenever extra soil is added to a lot to fill in low places or to raise the level of the lot, the added soil is often too loose and soft to sustain the weight of the buildings. Therefore, it is necessary to compact the added soil so that it will carry the weight of buildings without the(...)
COMPARABLE SALES Sales which have similar characteristics as the subject property and are used for analysis in the appraisal process. Commonly called ?comparables?, they are recent selling prices of properties similarly situated in a similar market.
COMPARISON APPROACH A real estate comparison method which compares a given property with similar or comparable surrounding properties; also called market comparison.
CONDEMNATION The act of taking private property for public use by a political subdivision upon payment to owner of just compensation. Declaration that a structure is unfit for use.
CONDITION In contracts, a future and uncertain event which must happen to create an obligation or which extinguishes an existent obligation. In conveyances of real property conditions in the conveyance 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.
CONDOMINIUM An estate in real property wherein 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(...)
CONFORMITY, PRINCIPLE OF Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.
CONSERVATION The process of utilizing resources in such a manner which minimizes their depletion.
CONSIDERATION Anything given or promised by a party to induce another to enter into a contract, e.g., personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other.
CONSTANT The percentage which, when applied directly to the face value of a debt, develops the annual amount of money necessary to pay a specified net rate of interest on the reducing balance and to liquidate the debt in a specified time period. For example, a 6% loan with a 20 year amortization has a(...)
CONSTRUCTION LOAN A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses.
CONSTRUCTIVE FRAUD A breach of duty, as by a person in a fiduciarycapacity, without an actual fraudulent intent, which gains an advantage to the person at fault by misleading another to the other?s prejudice. Any act of omission declared by law to be fraudulent, without respect to actual fraud.
CONTOUR The surface configuration of land. Shown on maps as a line through points of equal elevation.
CONTRACT An agreement to do or not to do a certain thing. It must have four essential elements - parties capable of contracting, consent of the parties, a lawful object, and consideration. A contract for sale of real property must also be in writing and signed by the party or parties to be charged(...)
CONTRACT, IMPLIED An agreement that has not been put into words, but is implied by the actions of the parties.
CONTRACT, UNILATERAL When one party promises to do something if the other party performs a certain act, but the other party does not promise to perform it; the contract is formed only if the other party does perform the requested act.
CONTRIBUTION, PRINCIPLE OF A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment.
CONVENTIONAL MORTGAGE A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association. 570 CHAPTER TWENTY-SEVEN
CONVERSION (1) Change from one legal form or use to another, as converting an apartment building to condominium use. (2) The unlawful appropriation of another?s property, as in the conversion of trust funds.
COOPERATIVE (apartment) An apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by purchase of shares of the stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building. In California, this type of ownership is(...)
CORPORATION An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person. Being created by law it may continue for(...)
CORRECTION LINES A system for compensating inaccuracies in the Government Rectangular Survey System due to the curvature of the earth. Every fourth township line, 24 mile intervals, is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a(...)
CORRELATION A step in the appraisal process involving the interpretation of data derived from the three approaches to value (cost, market and income) leading to a single determination of value. Also frequently referred to as ?reconciliation.?
COUNTER OFFER A response to an offer to enter into a contract, changing some of the terms of the terms of the original offer. A counter offer is a rejection of the offer (not a form of acceptance), and does not create a binding contract unless accepted by the original offeror.
COVENANT An agreement or promise to do or not to do a particular act such as a promise to build a house of a particular architectural style or to use or not use property in a certain way.
CPMCertified Property Manager, a designation of the Institute of Real Estate Management.
CRAWL HOLE Exterior or interior opening permitting access underneath building, as required by building codes.
CREDIT A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense, or the creation of or addition to a liability or item of equity or revenue.
CURTAIL SCHEDULE A listing of the amounts by which the principal sum of an obligation is to be reduced by partial payments and of the dates when each payment will become payable.
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DAMAGES The indemnity recoverable by a person who has sustained an injury, either in his or her person, property, or relative rights, through the act or default of another. Loss sustained or harm done to a person or property.
DEBENTURE Bonds issued without security, an obligation not secured by a specific lien on property.
DEBIT A bookkeeping entry on the left side of an account, recording the creation of or addition to an asset or an expense, or the reduction or elimination of a liability or item of equity or revenue.
DEBT That which is due from one person or another; obligation, liability.
DEBTOR A person who is in debt; the one owing money to another.
DEFEASIBLE FEE Sometimes called a base fee or qualified fee; a fee simple absolute interest in land that is capable of being defeated or terminated upon the happening of a specified event.
DEFENDANT A person against whom legal action is initiated for the purpose of obtaining criminal sanctions (criminal defendant) or damages or other appropriate judicial relief (civil defendant) .
DEFERRED MAINTENANCE Existing but unfulfilled requirements for repairs and rehabilitation. Postponed or delayed maintenance causing decline in a building?s physical condition.
DEFERRED PAYMENT OPTIONS The privilege of deferring income payments to take advantage of statutes affording tax benefits.
DEFICIENCY JUDGMENT A judgment given by a court when the value of security pledged for a loan is insufficient to pay off the debt of the defaulting borrower.
DIRECTIONAL GROWTH The location or direction toward which the residential sections of a city are destined or determined to grow.
DISCOUNT To sell a promissory note before maturity at a price less than the outstanding principal balance of the note at the time of sale. Also an amount deducted in advance by the lender from the nominal principal of a loan as part of the cost to the borrower of obtaining the loan.
DISCOUNT POINTS The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate. This amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender for it under market(...)
DISINTERMEDIATION The relatively sudden withdrawal of substantial sums of money savers have deposited with savings and loan associations, commercial banks, and mutual savings banks. This term can also be considered to include life insurance policy purchasers borrowing against the value of their policies. The(...)
DISPOSABLE INCOME The after-tax income a household receives to spend on personal consumption.
DRAW Usually applies to construction loans when disbursement of a portion of the mortgage is made in advance, as improvements to the property are made.
DUAL AGENCY An agency relationship in which the agent acts concurrently for both of the principals in a transaction.
EMINENT DOMAIN The right of the government to acquire property for necessary public or quasi-public use by condition; the owner must be fairly compensated and the right of the private citizen to get paid is spelled out in the 5th Amendment to the United States Constitution.
EQUITY The interest or value which an owner has in real estate over and above the liens against it. Branch of remedial justice by and through which relief is afforded to suitors in courts of equity.
EROSION The wearing away of land by the act of water, wind or glacial ice.
ESCALATION The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event.
ESCALATOR CLAUSE A clause in a contract providing for the upward or downward adjustment of certain items to cover specified contingencies, usually tied to some index or event. Often used in long term leases to provide for rent adjustments, to cover tax and maintenance increases.
ESCHEAT The reverting of property to the State when heirs capable of inheriting are lacking.
ESCROW The deposit of instruments and/or funds with instructions with a third neutral party to carry out the provisions of an agreement or contract.
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 such tenant for a similar term and under the conditions of the tenant?s previous holding. Also called a tenancy at sufferance.
ESTATE AT WILL The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties.
ESTATE FOR LIFE A possessory, freehold estate in land held by a person only for the duration of his or her life or the life or lives of another.
ESTATE FROM PERIOD TO PERIOD An interest in land where there is no definite termination date but the rental period is fixed at a certain sum per week, month, or year. Also called a periodic tenancy.
ESTATE OF INHERITANCE An estate which may descend to heirs. All freehold estates are estates of inheritance, except estates for life.
ESTIMATE A preliminary opinion of value. Appraise, set a value. 574 CHAPTER TWENTY-SEVEN
ESTIMATED REMAINING LIFE The period of time (years) it takes for the improvements to become valueless.
ESTOPPEL A legal theory under which a person is barred from asserting or denying a fact because of the person?s previous acts or words.
ET UX Abbreviation for ?et uxor.? Means ?and wife.?
ETHICS That branch of moral science, idealism, justness, and fairness, which treats of the duties which a member of a profession or craft owes to the public, client or partner, and to professional brethren or members. Accepted standards of right and wrong. Moral conduct, behavior or duty.
EVICTION Dispossession by process of law. The act of depriving a person of the possession of lands in pursuance of the judgment of a court.
EXECUTE To complete, to make, to perform, to do, to follow out; to execute a deed, to make a deed, including especially signing, sealing and delivery; to execute a contract is to perform the contract, to follow out to the end, to complete.
EXECUTOR A man named in a will to carry out its provisions as to the disposition of the estate of a deceased person. (A woman is executrix.)
FACADE The front of a building, often used to refer to a false front and as a metaphor. FAIR MARKET VALUE. This is the amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property(...)
FARMERS HOME ADMINISTRATION An agency of the Department of Agriculture. Primary responsibility is to provide financial assistance for farmers and others living in rural areas where financing is not available on reasonable terms from private sources.
FEDERAL RESERVE SYSTEM The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
FEE SIMPLE The maximum possible estate in land in which the owner holds unconditional power of disposition; an estate freely transferable and inheritable.
FIDELITY BOND A security posted for the discharge of an obligation of personal services.
FIDUCIARY A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency.
FIDUCIARY DUTY That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
FILTERING The process whereby higher-priced properties become available to lower income buyers.
FINANCIAL INTERMEDIARY Financial institutions such as commercial banks, savings and loan associations, mutual savings banks and life insurance companies which receive relatively small sums of money from the public and invest them in the form of large sums. A considerable portion of these funds are loaned on real estate.
FINANCING PROCESSThe systematic 5 step procedure followed by major institutional lenders in
analyzing a proposed loan, which includes ? filing of application by a borrower; lender?s analysis of
borrower and property; processing of loan documentation; closing (paying) the loan; and servicing
(collection and(...)
FIRST MORTGAGE A legal document pledging collateral for a loan (See ?mortgage?) that has first priority over all other claims against the property except taxes and bonded indebtedness. That mortgage superior to any other.
FIRST TRUST DEED A legal document pledging collateral for a loan (See ?trust deed?) that has first priority over all other claims against the property except taxes and bonded indebtedness. That trust deed superior to any other.
FISCAL CONTROLS Federal tax revenue and expenditure policies used to control the level of economic activity.
FISCAL YEAR A business or accounting year as distinguished from a calendar year.
FIXITY OF LOCATION The physical characteristic of real estate that subjects it to the influence of its surroundings.
FORFEITURE Loss of money or anything of value, due to failure to perform. 576 CHAPTER TWENTY-SEVEN
FRANCHISE A specified privilege awarded by a government or business firm which awards an exclusive dealership.
FRAUDThe intentional and successful employment of any cunning, deception, collusion, or artifice, used
to circumvent, cheat or deceive another person whereby that person acts upon it to the loss of property and
to legal injury. (Actual Fraud ? A deliberate misrepresentation or representation made(...)
FRONT MONEY The minimum amount of money necessary to initiate a real estate venture, to get the transaction underway.
FRONTAGE A term used to describe or identify that part of a parcel of land or an improvement on the land which faces a street. The term is also used to refer to the lineal extent of the land or improvement that is parallel to and facing the street, e.g., a 75-foot frontage.
FROSTLINE The depth of frost penetration in the soil. Varies in different parts of the country. Footings should be placed below this depth to prevent movement.
GOVERNMENT SURVEY A method of specifying the location of parcel of land using prime meridians, base lines, standard parallels, guide meridians, townships and sections.
GRADUATED LEASELease which provides for a varying rental rate, often based upon future determination; sometimes rent is based upon result of periodical appraisals; used largely in long-term leases.
GRADUATED PAYMENT MORTGAGE Providing for partially deferred payments of principal at start of loan. (There are a variety of plans.) Usually after the first five years of the loan term the principal and interest payment are substantially higher, to make up principal portion of payments lost at the beginning of the loan.(...)
GRANT A technical legal term in a deed of conveyance bestowing an interest in real property on another. The words ?convey? and ?transfer? have the same effect. GLOSSARY 577
GRATUITOUS AGENT A person not paid by the principal for services on behalf of the principal, who cannot be forced to act as an agent, but who becomes bound to act in good faith and obey a principal?s instructions once he or she undertakes to act as an agent.
GRID A chart used in rating the borrower risk, property and the neighborhood.
GROUND LEASE An agreement for the use of the land only, sometimes secured by improvements placed on the land by the user.
GROUND RENT Earnings of improved property credited to earnings of the ground itself after allowance is made for earnings of improvements; often termed economic rent.
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HABENDUM CLAUSE The ?to have and to hold? clause which may be found in a deed.
HEIR One who inherits property at the death of the owner of the land, if the owner has died without a will.
HIGHEST AND BEST USE An appraisal phrase meaning that use which at the time of an appraisal is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest amount of amenities or profit. This is the starting point for appraisal.
HIP ROOF A pitched roof with sloping sides and ends.
HOLDER IN DUE COURSE One who has taken a note, check or bill of exchange in due course: 1. before it was overdue; 2. in good faith and for value; and 3. without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated to him or her.
HOMESTEAD (exemption) A statutory protection of real property used as a home from the claims of certain creditors and judgments up to a specified amount.
HUD The Department of Housing and Urban Development which is responsible for the implementation and administration of U.S. government housing and urban development programs.
HUNDRED PERCENT LOCATION A city retail business location which is considered the best available for attracting business.
HYPOTHECATE To pledge a thing as security without the necessity of giving up possession of it. 578 CHAPTER TWENTY-SEVEN
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IMPERATIVE NECESSITY Circumstances under which an agent has expanded authority in an emergency, including the power to disobey instructions where it is clearly in the interests of the principal and where there is no time to obtain instructions from the principal.
IMPOUNDS 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. Impounds are usually collected with the note payment. The(...)
INCOME (CAPITALIZATION) APPROACHOne of the three methods of the appraisal process
generally applied to income producing property, and involves a three-step process? (1) find net annual
income, (2) set an appropriate capitalization rate or ?present worth? factor, and (3) capitalize the income
dividing the net income by the(...)
INCOMPETENT One who is mentally incompetent, incapable; any person who, though not insane, is, by reason of old age, disease, weakness of mind, or any other cause, unable, unassisted, to properly manage and take care of self or property and by reason thereof would be likely to be deceived or imposed upon(...)
INCREMENT An increase. Most frequently used to refer to the increase of value of land that accompanies population growth and increasing wealth in the community. The term ?unearned increment? is used in this connection since values are supposed to have increased without effort on the part of the owner.
INDEMNITY AGREEMENT An agreement by the maker of the document to repay the addressee of the agreement up to the limit stated for any loss due to the contingency stated on the agreement.
INDENTURE A formal written instrument made between two or more persons in different interests, such as a lease.
INDEPENDENT CONTRACTOR A person who acts for another but who sells final results and whose methods of achieving those results are not subject to the control of another.
INDORSEMENT The act of signing one?s name on the back of a check or note, with or without further qualification.
INJUNCTION A writ or order issued under the seal of a court to restrain one or more parties to a suit or proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding.
INSTALLMENT NOTE A note which provides for a series of periodic payments of principal and interest, until amount borrowed is paid in full. This periodic reduction of principal amortizes the loan.
INSTALLMENT REPORTING A method of reporting capital gains by installments for successive tax years to minimize the impact of the totality of the capital gains tax in the year of the sale.
INSTITUTIONAL LENDERS A financial intermediary or depository, such as a savings and loan association, commercial bank, or life insurance company, which pools money of its depositors and then invests funds in various ways, including trust deed and mortgage loans.
INSTRUMENTA written legal document; created to effect the rights of the parties, giving formal
expression to a legal act or agreement for the purpose of creating, modifying or terminating a right. Real
estate lenders? basic instruments are ? promissory notes, deeds of trust, mortgages, installment(...)
INTEREST A portion, share or right in something. Partial, not complete ownership. The charge in dollars for the use of money for a period of time. In a sense, the ?rent? paid for the use of money. GLOSSARY 579
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 ONLY LOAN A straight, non-amortizing loan in which the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.
INTEREST RATE The percentage of a sum of money charged for its use. Rent or charge paid for use of money, expressed as a percentage per month or year of the sum borrowed.
INTERMEDIATION The process of pooling and supplying funds for investment by financial institutions called intermediaries. The process is dependent on individual savers placing their funds with these institutions and foregoing opportunities to directly invest in the investments selected.
INTERPLEADER A court proceeding initiated by the stakeholder of property who claims no proprietary interest in it for the purpose of deciding who among claimants is legally entitled to the property.
INTESTATE A person who dies having made no will, or one which is defective in form, is said to have died intestate, in which case the estate descends to the heirs at law or next of kin.
INVOLUNTARY LIEN A lien imposed against property without consent of an owner; example - taxes, special assessments, federal income tax liens, etc.
IRREVOCABLE Incapable of being recalled or revoked, unchangeable.
IRRIGATION DISTRICTS Quasi-political districts created under special laws to provide for water services to property owners in the district; an operation governed to a great extent by law.
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JOINT NOTE A note signed by two or more persons who have equal liability for payment.
