Glossary

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A

  • abatement:
    1. A reduction or decrease. 2. The removal of a nuisance.
  • A, B, C, D paper:
    Mortage loans are rated as A, B, C, or D paper. “A” paper loans are the highest quality, lowest risk loans; “B” quality are loans where the borrower has minor credit problems; “C” quality are borrowers with marginal or poor credit; “D” quality indicates very high risk loans.
  • absorption rate:
    The total number of vacant square feet of office space divided by the square footage leased per year historically. Used to analyze demand of office space in a given market area.
  • abstract of title:
    A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate, together with a statement of all recorded liens and encumbrances affecting the property and their present status. The abstract of title does not guarantee or ensure the validity of the title of the property. Rather, it is a condensed history that merely discloses those items about the property that are of public record; thus, it does not reveal such things as encroachments and forgeries. (See abstracter, title insurance policy, certificate of title)
  • abstract of judgment:
    A full summary by the court of a judgment. It becomes a general lien on all of a debtor’s property in the county where it is recorded. (See general lien, judgment)
  • abstracter:
    The person preparing the abstract of title. The abstracter searches the title as recorded or registered with the county recorder, county registrar, circuit court and/or other official sources. He or she then summarizes the various instruments affecting the property and arranges them in the chronological order of recording, starting with the original grant of title.
  • acceleration clause:
    A provision in a mortgage, trust deed, promissory note or contract for deed (agreement of sale) that, upon the occurrence of a specified event, gives the lender (payee, obligee or mortgagee) the right to call all sums due and payable in advance of the fixed payment date. (See alienation clause)
  • acceptance:
    An acceptance is a promise by the offeree to be bound by the exact terms proposed by the offeror. The acceptance must be communicated to the offeror. (See offeree, offeror)
  • accession:
    Acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams.

  • accord and satisfaction:
    The settlement of an obligation. An accord is an agreement by a creditor to accept less than bargained for from a debtor. The creditor’s acceptance of the accord constitutes satisfaction of the debt.
  • accounting:
    The agent must be able to report the status of all funds received from or on behalf of the principal. Most state real estate license laws require a broker to give accurate copies of all documents to all parties affected by them and to keep copies on file for a specified period of time. Most license laws also require the broker to deposit immediately, or within 24 to 48 hours, all funds entrusted to the broker (such as earnest money deposits) in a special trust or escrow account. Commingling such monies with the broker’s personal or general business funds is strictly illegal.
  • accretion:
    The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake or sea. The gradual and imperceptible addition of land by alluvial deposits of soil through natural causes, such as shoreline movement caused by streams or rivers. This added land upon a bank or stream, navigable or not, becomes the property of the riparian or littoral owner, and it also becomes subject to any existing mortgages.
  • accrued depreciation:
    1. In accounting, a bookkeeping account that shows the total amount of depreciation taken on an asset since it was acquired; also called accumulated depreciation. (See depreciation) 2. For appraisal purposes, the difference between the cost to reproduce the property (as of the appraisal date) and the property’s current value as judged by its “competitive condition.” In this context, accrued depreciation is often called diminished utility.
  • accrued items:
    In a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
  • accusation:
    The first step in a disciplinary action against a licensee.
  • acknowledgment:
    A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document; also, the document itself. An acknowledgment is designed to prevent forged and fraudulently induced documents from taking effect.
  • acquisition cost:
    The amount of money or other valuable consideration expended to obtain title to a property. It includes the purchase cost, plus such items as appraisal fees, closing costs, finance charges, mortgage loan origination fees and title insurance. (See title)
  • acre:
    A measure of land equal to 43.560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods or 0.4047 hectares.
  • actual damages:
    Real, substantial and just damages, or the amount awarded to a complainant in compensation for his actual and real loss or injury.
  • actual eviction:
    The legal process that results in the tenant’s being physically removed from the leased premises. (See eviction, constructive eviction, lease)
  • actual notice:
    Express information or fact; that which is known; direct knowledge.
  • addendum:
    Additional material attached to and made part of a document. If there is space insufficient to write all the details of a transaction on the sales contract form, the parties will attach an addendum or supplement to the document. The sales contract should incorporate the addendum by referring to it as part of the agreement. The addendum should refer to the sales contract and be dated and signed or initialed by all the parties.
  • add-on rate:
    Interest charged on a principal amount for specified term, regardless of any repayments of principal. The borrower is paying interest on the full principal sum for the entire loan period, even though the principal is being reduced each month.
  • ademption:
    Disposal by a testator in his or her lifetime of a specific property bequeathed in his or her will so the bequest is revoked. (See testator)
  • adjustable rate mortgage (ARM):
    A broad term for a loan (mortgage or deed of trust) with rates and terms that can change. The adjustable rate loan has become commonplace, with allowable ranges as to time intervals, percentage of increase or decrease and total increases or decreases likely to change as market conditions change. (See caps, index rate, initial rate, rate cap, rate factor)
  • adjusted basis:
    The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition is reduced by the amount of allowable depreciation or depletion allowances taken by the taxpayer, and by the amount of any uncompensated property losses suffered by the taxpayer. It then increases by the cost of capital improvements plus certain carrying costs and assessments. The amount of gain or loss recognized by the taxpayer upon sale of the property is determined by subtracting the adjusted basis on the date of sale from the adjusted sales price. (See basis, capital gain)
  • adjustment:
    Decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison with the subject property.
  • adjustment period:
    In an adjustable rate mortgage (ARM), the “adjustment period,” is the period of time (i.e., one month, three months, six months, one year, etc.) between changes in one interest rate charged and the next interest rate to be charged. (See adjustable rate mortgage (ARM))
  • administered price system:
    Federal National Mortgage Association securities purchasing procedure where required yields are adjusted daily to reflect financial market factors. (See Federal National Mortgage Association)
  • administrative agency:
    A government agency that makes rules and regulations to carry out the law. A state’s real estate commission develops regulations to complement license law.
  • administrative order:
    A legal document signed by the EPA directing an individual, business, or other entity to take corrective action or refrain from an activity. The order describes the violations and action to be taken and can be enforced in court.
  • administrator:
    A male person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executor)
  • administratrix:
    A female person appointed by the court to settle the estate of a person who has died intestate (leaving no will). Sometimes referred to as the personal representative. (See executrix)
  • advance fee:
    A fee paid before any services are rendered. Specifically, it is a practice of some brokers to obtain a nonrefundable fee from the seller in advance to cover the advertising of properties or businesses for sale while giving no guarantee that a buyer will be found, which is often held to be improper conduct. Brokers must keep accurate records of expenditures.
  • advance fee addendum:
    An agreement specifying services for which an agent or broker will be compensated including a provision for payment of an advance fee. (See advance fee)
  • ad valorem:
    The Latin word for “according to value.”
  • ad valorem tax:
    A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
    * IRS on Real Estate Taxes
  • adverse action:
    A denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit either on the amount requested or on the terms requested.
  • adverse possession:
    The acquiring of title to real property owned by someone else by means of open, notorious, hostile and continuous possession for a statutory period of time. The burden to prove title is on the possessor, who must show that four conditions were met: 1. He or she has been in possession under a claim of right. 2. He or she was in actual, open and notorious possession of the premises so as to constitute reasonable notice to the record owner. 3. Possession was both exclusive and hostile to the title of the owner (that is, without the owner’s permission and evidencing an intention to maintain the claim of ownership against all who may contest it). 4. Possession was uninterrupted and continuous for at least the prescriptive period stipulated by state law.
  • aesthetic zoning:
    Zoning for beauty. May regulate architectural styles, colors or signage. (See zoning)
  • affirmation:
    A formal declaration that an affidavit is true.
  • affirmative easement:
    Gives the owner of the dominant tenement the right to use the servient tenement. (See dominant tenement, servient tenement)
  • affidavit:
    A sworn written statement made under oath before a notary public or other official authorized by law to administer an oath. The term literally means “has pledged one’s faith.” The affiant (person making the oath, sometimes called the deponent”) must swear before the notary that the facts contained in the affidavit are true and correct.
  • affidavit of title:
    A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor 1. identifies himself or herself and indicates marital status, 2. certifies that since the examination of the title on the date of the contracts no defects have occurred in the title and 3. certifies that he or she is in possession of the property (if applicable).
  • after-acquired title:
    Title or interest acquired by the grantor after a property has been conveyed. (See grantor)
  • agency:
    A relationship created when one person, the principal, delegates to another, the agent, the right to act on his or her behalf in business transactions and to exercise some degree of discretion while so acting. An agency gives rise to a fiduciary relationship and imposes on the agent, as the fiduciary of the principal, certain duties, obligations, and high standards of good faith and loyalty. (See agent, fiduciary, dual agency, buyer’s broker)
  • agency coupled with an interest:
    An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).
  • agent:
    One authorized to represent and to act on behalf of another person (called the principal). Unlike an employee, who merely works for a principal, an agent works in the place of a principal. The main difference between an agent and an employee is that the agent may bind his or her principal by contract, if within the scope of authority, whereas an employee may not unless given express authorization. (See law of agency, principal)
  • agent property evaluation:

    A questionnaire filled out by real estate agents while reviewing a listed property. Often completed during the course of a caravan. (See caravan)

  • aggrieved party:
    One whose legal right is invaded by an act(s) of another. The word “aggrieved” refers to a substantial grievance, a denial of some personal or property right, or the imposition upon a party of a burden or obligation.
  • agricultural lease:
    Agricultural landowners often lease their land to tenant farmers, who provide the labor to produce and bring in the crop. An owner can be paid by a tenant in one of two ways: an agreed cash in advance rental amount (cash rents) or as a percentage of the profits from the sale of the crop when it is sold (sharecropping). (See cash rents, sharecropping)
  • AIDA:
    Attention, Interest, Desire, Action. In real estate advertising, creating ads that get the Attention of prospects, stimulating their Interest in a property, generating a Desire to purchase, and motivating the prospect to take Action.
  • AIDS:
    Persons with acquired immunodeficiency syndrome are protected under most federal and state discrimination laws. If buyers ask the real estate agent whether a prior occupant had AIDS, most agents point out that the law prevents responding one way or the other. Many states have emended their licensing laws to include that someone who has AIDS is not deemed a material fact, and therefore, does not form the basis for a claim that a broker concealed a material fact. Also protected are persons with AIDS-related complex (ARC) or human immunodeficiency virus infection (HIV).
  • air lot:
    A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
  • air rights:
    Rights to the use of the open space or vertical plane above a property. Ownership of land includes the right to all air above the property. Until the advent of the airplane, this right was unlimited, but now the courts permit reasonable interference with one’s air rights, such as is necessary for aircraft, so long as the owner’s right to use and occupy the land is not lessened. Thus, low-flying aircraft might be unreasonably trespassing, and their owners would be liable for any damages. Governments and airport authorities often purchase air rights adjacent to an airport, called an avigation easement, to provide glide patterns for air traffic.

    The air itself is not real property; however, air space is real property when described in three dimensions with reference to a specific parcel of land, as in a condominium unit. A Maryland case has decided that separate owners of the land and the air rights may be separately assessed for tax purposes. Air rights may be sold or leased and buildings constructed thereon, such as was done with the Pam Am Building constructed above Grand Central Station in New York City.

    Air rights may also be transferred by way of easements, such as those used in
    constructing elevated highways or in acquiring scenic easements or easements of light and air. Because of the scarcity of land, many developers are examining the possibilities for developing properties in the airspace above prime properties owned by schools, churches, railways and cemeteries. (See surface rights, subsurface rights)

  • air quality standards:
    The level of selected pollutants set by law that may not be exceeded in outside air. Used to determine the amount of pollutants that may be emitted by industry
  • alienation:
    The act of transferring ownership, title, interest, or estate in real property from one person to another. Property is usually sold or conveyed by voluntary alienation, as with a deed or assignment of lease. Involuntary alienation takes place when property is sold against the owner’s will, as in a foreclosure sale or a tax sale. (See alienation clause)
  • alienation clause:
    A provision sometimes found in a promissory note or mortgage that provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the alienation of the property by the mortgagor. Alienation is usually broadly defined to include any transfer of ownership, title, interest, or estate in real property, including a sale by way of a contract for deed. Also called a due-on-sale clause. (See acceleration clause)
  • all-inclusive encumbrance:
    See wraparound mortgage
  • allodial system:
    A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is held under the allodial system in the United States.
  • Alquist-Priolo Special Study Zone:
    A California law requiring a real estate agent or owner to disclose to prospective buyers that a property is located within a special studies zone (geological hazard zone) and if the property contains or will contain a dwelling (a residentally zoned lot). “Special study zones” cover an area 660 feet on each side of fault lines and are indicated on maps prepared by the California Department of Mines and Geology.
  • ambient:
    Any unconfined portion of the atmosphere; open air; outside surrounding air.
  • amendment to the escrow instructions:
    A change to escrow instructions requiring the agreement of both buyer and seller. (See escrow instructions)
  • amendments:
    An amendment is a change to the existing content of a contract. Any time words or provisions are added to or deleted from the body of the contract, the contract has been amended.
  • amenity or amenities:
    The qualities and state of being pleasant and agreeable. In residential appraising, those peculiar and intangible benefits of home ownership such as satisfaction of possession and use arising from architectural excellence, scenic beauty, and desirable social environment.
  • American Institute of Real Estate Appraisers (AIREA):
    A professional organization formerly affiliated with the National Association of REALTORS. AIREA promoted professional practice and ethics in the real estate appraisal industry and identified experienced, competent, ethical appraisers by awarding the MAI (Member Appraisal Institute) and RM (Residential Member) designations. In 1991, AIREA was merged with the Society of Real Estate Appraisers into the Appraisal Institute. The only designations awarded now are the MAI and SRA (Senior Residential Appraiser)
    * Appraisal Institute Homepage
  • American Land Title Association (ALTA) policy:
    A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan. (See title insurance)
    * ALTA Homepage
  • American Society of Appraisers (ASA):
    A professional organization of appraisers engaged in the appraisal of both real and personal property. It confers the designations ASA and FASA (Fellow).
  • American Society of Real Estate Counselors (ASREC):

    A professional organization, affiliated with the National Association of REALTORS, composed of individuals with proven success in real estate counseling who serve clients on a fee basis. The society offers its members exclusive use of the professional designation CRE (Counselor of Real Estate).

  • Americans with Disabilities Act (ADA):
    On July 26, 1990, President Bush signed into law the Americans with Disabilities Act of 1990 (”ADA”), a federal law which prohibits discrimination against individuals with disabilities. The ADA addresses discrimination in four general areas:
    1. Employment (Title I);

    2. Public services (Title II);
    3. Public accommodations and commercial facilities (Title III); and,
    4. Telecommunications (Title lV).

    The purpose of the ADA is to give individuals with disabilities civil rights protection against discrimination similar to hose afforded to individuals on the basis of race, color, national origin, sex, and religion.

    * Americans with Disabilities Homepage—Department of Justice

  • amortization:
    The gradual repayment of a debt by means of systematic payments of principal and/or interest over a set period, so that at the end of the period there is a zero balance. The principal is thus directly reduced or amortized over the life of the loan. Some loans are not fully amortized, and require a balloon payment at the end of the term of the loan. (See balloon payment, fully amortized)
  • annexation:
    An addition to property by the act of joining or uniting one thing to another, as in attaching personal property to real property, thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
  • annual debt service:
    Monthly loan payments (principal and interest, if any) times 12 months.
  • annual operating expenses:
    The actual costs it takes to run the property, such as property tax, insurance, maintenance, repairs, management fees, utilities, and supplies.
  • annual percentage rate (APR):
    An expression of the relationship of the total finance charge to the total amount to be financed as required under the federal Truth-in-Lending Act. Tables available from any Federal Reserve bank may be used to compute the rate, which must be calculated to the nearest one-eighth of 1 percent. Use of the APR permits a standard expression of credit costs, which facilitates easy comparison of lenders. (See interest, Truth-in-Lending Act)
  • annuity:
    A sum of money recieved by an annuitant in a series of fixed periodic payments.
  • anticipation
    The appraisal principle which holds that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property. (See appraisal)
  • antimerger clause
    A clause in a mortgage or deed of trust specifying that the senior lienholder will retain lien priority in the event of a merger. (See merger)
  • antitrust laws:
    State and federal laws designed to maintain and preserve business competition. The Sherman Antitrust Act (1890) is the principal federal statute covering competition, which is defined by most courts as “that economic condition in which prices are determined by market forces without interference from private concerns and there is reasonable freedom of entry into most businesses.”

    Certain real estate brokerage activities have come under public scrutiny by the Federal Trade Commission. These activities include the fixing of general commission rates by local boards or groups of brokers and the exclusion of brokers from membership in local boards or in multiple-listing arrangements due to unreasonable membership requirements. As a result of court cases, local real estate boards no longer directly or indirectly influence fixed commission rates or commission splits between cooperating brokers. Moreover, in some states, clients must be specifically informed that the commission rates are negotiable between client and broker.
    * Antitrust Division—Department of Justice
    * Federal Trade Commission

  • apartment building:
    A building having separate units for permanent tenants who rent or lease them. The owner of the building provides common facilities, such as lights, heat, elevator and garbage disposal services, and maintains common entrances and hallways.
  • appraisal:
    An estimate of the monetary value of a property on the open market; an estimate of a property’s type and condition, its utility for a given purpose or its highest and best use. (See cost approach, income approach, index method, market-data approach, quantity survey method, sales comparison approach, square-foot method, unit-in-place method)

    * Appraisal Foundation

  • appraiser:
    An independent person trained to provide an unbiased estimate of value, such as a professional service performed for a fee.
  • appreciation:
    An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation. (See depreciation)
  • appropriation:

    Appropriation is the way a taxing body authorizes the expenditure of funds and provides for the sources of funding. Appropriation generally involves the adoption of an ordinance or the passage of a law that states the specific terms of the proposed taxation.

  • appropriative water rights:
    A water right favored in some states where an owner has the exclusive rights to take all the water for specific beneficial uses. (See correlative water rights, riparian rights)
  • appurtenant:
    Belonging to; adjunctive; appended or annexed to. For example, the garage is appurtenant to the house, and the common interest in the common elements of a condominium is appurtenant to each apartment. Appurtenant items run with the land when the property is transferred.
  • appurtenant easement:
    An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land.
  • aquifer:
    An underground water-bearing layer of rock, including gravel and sand, that will yield water in usable quantity. Aquifers are sources of water for wells and springs.
  • arbitrage:
    Borrowing at one interest rate and investing at a higher rate.
  • arbitration:

    A nonjudicial method of resolving disputes by selecting a neutral party to make a final determination. This method was either previously agreed to by the disputing parties or stipulated by law.

  • arranger of credit:
    As defined under the federal Truth-in-Lending Law, a person who regularly arranges for the extension of consumer credit by another person if a finance charge will be imposed, if there are to be more than four installments, and if the person extending the credit is not a creditor. At present, the term does not include a real estate broker who arranges seller financing of a dwelling or real property. (See Truth-in-Lending Law)
  • arrears:
    1. The state of being delinquent in paying a debt. 2. At or after the end of the period for which expenses are due or levied; the opposite of in advance. Mortgage interest and real estate taxes are often paid in arrears.
  • Article 5:
    The part of the Business and Professions Code governing transactions in real property sale contracts and trust deeds.
  • Article 6:
    The part of the Business and Professions Code governing real property securities dealers.
  • Article 7:
    The part of the Business and Professions Code governing commissions, loan costs, and payment requirements in loan brokerage activities.
  • asbestos:

    A mineral once used in insulation and other materials that can cause respiratory diseases. Asbestos has been classified as carcinogenic. (See carcinogen)
    * National Safety Council on Asbestos

  • asbestos containing material (ACM):
    The EPA defines asbestos containing material as any material or product that contains more than one percent asbestos. Some states regulate smaller percentages of asbestos containing material.
  • Asbestosis:
    A disease associated with inhalation of asbestos fibers. The disease makes breathing progressively more difficult and can be fatal. (See asbestos)
  • “as-is”:
    Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject property and that it is being purchased exactly as it is found. An “as-is” indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers from using “as-is” wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.
  • assemblage:
    The combining of two or more adjoining lots into one larger tract to increase their total value.
  • assessment:
    The imposition of a tax, charge or lein, usually according to established rates.
  • asset:

    An asset is something of value, encumbered or not, owned by a person, corporation or other entity. Assets are financial (cash or bonds), tangible or intangible, or physical (real or personal property).

  • asset management:
    The assembly, management and disposition of a portfolio of investment properties.
  • assignment:
    The transfer of the right, title and interest in the property of one person (the assignor) to another (the assignee). There are assignments of, among other things, mortgages, sales contracts, contracts for deeds, leases and options.
  • associate broker:
    A real estate license classification used in some states to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-salesperson, broker-associate or affiliate broker.
  • assumption of mortgage:
    The acts of acquiring title to property that has an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments. (See acceleration clause, due-on-sale clause, novation, subrogation)
  • assumption “subject to”:
    When a loan is taken “subject to,” the seller agrees to remain liable and the buyer accepts no liability in the event of a deficiency on a foreclosure. (See assumption of mortgage, foreclosure)
  • attachment:
    The legal process of seizing the real or personal property of a defendant in a lawsuit by levy or judicial order, and holding it in court custody as security for satisfaction of a judgment. The lien is thus created by operation of law, not by private agreement. The plaintiff may recover such property in any action upon a contract, express or implied.
  • Attorney General:
    The chief law officer of the federal or state government, who appears for the people in criminal court.
  • attorney-in-fact:
    A competent and disinterested person who is authorized by another person to act in his or her place. In real estate conveyance transactions, an attorney-in-fact, who has a fiduciary relationship with his or her principal, should be so authorized by way of a written, notarized and recordable instrument called a power of attorney. (See power-of-attorney)
  • attorney’s opinion of title:
    An abstract of title that an attorney has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership. (See abstract of title)
  • attractive nuisance doctrine:
    An owner has a duty to reasonably protect children from injury when his or her property is likely to attract children.
  • auction:
    Selling property to the highest bidder.
  • automated underwriting:
    Computer systems that permit lenders to expedite the loan approval process and reduce lending costs.
  • automatic extension:
    A clause in a listing agreement that states that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited.
  • avulsion:
    The sudden tearing away of land, as by earthquake, flood, volcanic action or the sudden change in the course of a stream.

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B

  • backup offer:
    An offer to buy, submitted to a seller, with the understanding that the seller has already accepted a prior offer; a secondary offer. Sometimes the seller accepts the backup offer contingent on the failure of the sales transaction on the part of the first purchaser within a specified period of time. The seller must be careful how he or she proceeds, however, when the time for the buyer’s performance, under the first contract, has expired.
  • back-end qualification:
    When qualifying a prospective buyer for financing, the ratio of the borrower’s income to monthly debt obligation is a primary consideration. Based on “back-end qualification,” the ratio of a prospect’s income to their total housing expense plus their long-term debt obligation should not exceed 36%. (See front-end qualification, prequalify)
  • back-end ratio:
    The ratio of monthly housing costs (PITI) plus long-term debt service to total monthly income. (See front-end ratio, PITI)
  • bail bond lien:
    A real estate owner who is charged with a crime for which he or she must face trial, and may post bail in the form of real estate rather than cash. The execution and recording of such a bail bond creates a specific, statutory, voluntary lien against the owner’s real estate. If the accused fails to appear in court, the lien may be enforced by the sheriff or another court officer.
  • balance:

    The appraisal principle that states that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as the land.

  • balanced trust:
    A “combination trust” is referred to as a “balanced trust” in California. (See combination trust)
  • balloon payment:
    Under an installment loan agreement, a final payment that is substantially larger than the previous installment payments and repays the debt in full; the remaining balance that is due at maturity (stop date) of a note or obligation. (See amortization, fully amortized, stop date)
  • baluster:
    Any of the vertical supports for a stair, balcony or railing.
  • banker’s rule:
    Using a 360-day year for prorations.
  • bankruptcy:
    A condition of financial insolvency in which a person’s liabilities exceed assets and the person is unable to pay current debts.
  • bankruptcy score:

    A scoring system to indicate risk of borrower default. (See bankruptcy)

  • bargain and sale deed:
    A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.
  • base line:
    One of a set of imaginary lines running east and west used by surveyors for reference in locating and describing land under the government survey method of property description.
  • basic form homeowner’s policy:

    The most common homeowner’s policy is called a basic form. It provides property coverage against fire and lightning; glass breakage; windstorm and hail; explosion; riot and civil commotion; damage by aircraft; damage from vehicles; damage from smoke; vandalism and malicious mischief; theft; and loss of property removed from the premises when it is endangered by fire or other perils. (See homeowner’s insurance policy)

  • basis:
    The dollar amount that the Internal Revenue Service attributes to an asset for purposes of determining annual depreciation or cost recovery, and gain or loss in the sale of the asset. The determination of basis is of fundamental importance in tax aspects of real estate investment. All property has a basis. If property was acquired by purchase, the owner’s basis is the cost of the property plus the value of any capital expenditures for improvements to the property, reduced by any cost recovery depreciation actually taken or allowable. The basis is also reduced by any untaxed gain “carried over” to the new property in cases where the new property is a replacement of a former residence or is acquired through a like-kind exchange or through an involuntary conversion. This new basis is called the property’s adjusted basis. (See adjusted basis, depreciable basis, original basis)
  • before-tax cash flow:

    The result when the annual debt service is subtracted from the net operating income. (See annual debt service, net operating income)

  • benchmark:
    A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
  • beneficiary:
    A person who receives benefits from the gifts or acts of another, as in the case of one designated to receive the proceeds from a will, insurance policy, or trust; the real owner, as opposed to the trustee who holds only legal title. With a trust, the trustee holds the legal title, but the beneficiary enjoys the benefits of ownership.
  • beneficiary statement:
    When an existing loan is to be paid or assumed by a buyer, the escrow agent will obtain a statement of the balance due on the loan so the buyer receives the proper amount of credit.
  • best-faith estimate:
    The acquisition cost is the purchase price plus a “best-faith estimate” of all settlement costs. (See acquisition cost)
  • blended rate:
    An interest rate for a newly financed loan that is higher than the existing rate but lower than the current market rate.
  • bilateral contract/agreement:
    A contract in which each party promises to perform an act in exchange for the other party’s promise to perform. The usual real estate contract is an example of a bilateral contract in which the buyer and seller exchange reciprocal promises respectively to buy and sell the property. If one party refuses to honor his or her promise and the other party is ready to perform, the nonperforming party is said to be in default.
  • bill of sale:
    A written agreement by which one person sells, assigns or transfers to another his or her right to, or interest in, personal property. A bill of sale is sometimes used by a seller of real estate to evidence the transfer of personal property, such as when the owner of a store sells the building and includes the store equipment and trade fixtures.
  • BIF:
    Bank Insurance Fund
  • binder:

    An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction.

  • binder policy:
    A type of title insurance policy offered by some title companies which allows for a refund of the basic title insurance rate if the property is sold within a specified period of time.
  • biweekly loan:
    A loan with twice-monthly payments to match a borrower’s payroll schedule.
  • bird dogs:
    See centers of influence.
  • blanket loan:
    A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien upon repayment of a definite portion of the debt.
  • blanket trust deed:
    A trust deed secured by several properties or a number of lots. A blanket mortgage is often used to secure construction financing for proposed subdivisions or condominium development projects. The developer normally seeks to have a “partial release” clause inserted in the mortgage so that he or she can obtain a release from the blanket loan for each lot as it is sold, according to a specified release schedule.
  • blind ad:
    An advertisement that does not include the name and address of the person placing the ad, only a phone number or post office box address. Licensed brokers are generally prohibited by state license laws from using blind ads.
  • blockbusting:
    An illegal and discriminatory practice whereby one person induces another to enter into a real estate transaction from which the first person may benefit financially by representing that a change may occur in the neighborhood with respect to race, sex, religion, color, handicap famial status or ancestry of the occupants. A change possibly resulting in the lowering of the property values, a decline in the quality of schools or an increase in the crime rate. Also called panic selling or panic peddling.
  • blue-sky provision:
    Requiring full disclosure of all risks in a limited partnership solicitation under the Uniform Partnership Act. (See Uniform Partnership Act)
  • bona fide:
    In good faith, honestly, openly, and sincerely and without deceit or fraud. In an attitude of trust and confidence, without notice of fraud.
  • bond:
    1. A debt instrument; an obligation to pay; a security issued by a corporation. 2. A written promise that accopmpanies a mortgage and is evidence of the debt secured by the mortgage. 3. An interest-bearing certificate issued by a government to finance public projects. (See security)
  • boot:

    Money or other property that is not like-kind, which is given to make up any difference in value or equity between exchanged properties. Boot may be in the form of cash, notes, gems, the market value of an asset such as a mortgage, land contract, personal property, goodwill, a service or a patent offered in an exchange. The taxable gain in the like-kind exchange is recognized immediately to the extent of boot, whereas, other gain from the exchange may be deferred until subsequent transfer. (See exchange, like-kind)

  • branch office
    A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed real estate broker working on behalf of the broker.
  • breach of contract:
    Violation of any of the terms or conditions of a contract without legal excuse; default; nonperformance. The nonbreaching party can usually seek one of three alternative remedies upon a material breach of the contract: rescission of the contract, action for money damages or an action for specific performance.
  • breaker:
    A switch-like device in electrical panel boxes used to keep the electrical current from exceeding the recommended load for the wire size connected to the breaker.
  • breaker panel:
    A large rectangular shaped electrical box used to distribute electricity throughout a house after passing through protective breakers located within the box. (See breaker)
  • break-even point:
    In income property, the figure at which rental income is equal to expenses and debt service.
  • bridge loan:
    A short-term loan made to cover the period between the termination of one loan, such as an interim construction loan, and the beginning of another loan, such as a perminent takeout loan. (See interim financing, swing loan, takeout)
  • broad-form homeowner’s policy:
    Covers falling objects; damage due to the weight of ice, snow or sleet; collapse of all or part of the building; bursting, cracking, burning or bulging of a steam or hot water heating system or of appliances used to heat water; accidental discharge, leakage or overflow of water or steam from within a plumbing, a heating or an air-conditioning system; freezing of plumbing, heating and air-conditioning systems and domestic appliances; and injury to electrical appliances, devices, fixtures and wiring from short circuits or other accidentally generated currents.
  • broker:

    One who acts as an intermediary on behalf of others for a fee or commission.

  • broker cooperation:
    Working with outside licensed real estate brokers who have prospective tenants in exchange for a finder’s fee or commission split.
  • brokerage:
    The bringing together of parties interested in making a real estate transaction. The business of a broker in acting as a third party agent to a transaction.
  • brownfields:
    Economically depressed urban areas suffering from real or perceived hazardous material contamination.
  • budget loan:
    A loan with payments set up to cover taxes and insurance in addition to interest and principal reductions.
  • building code:
    An ordinance that specifies minimum standards of construction for buildings to protect public safety and health. (See Uniform Building Code)
  • building inspection:
    An overall inspection of a home or building performed by a qualified contractor or inspector. The inspection usually covers all major systems including foundation, plumbing, electrical, roof, heating and air conditioning.
  • Building Owners and Managers Association (BOMA):
    A national organization of more than 4,000 professionals in the highrise/office building industry, with 80 local BOMA associations. The Building Owners and Managers Institute (BOMI) is the related educational institute that provides professional training in all aspects of building management and operations via courses in individual study leading to professional certification as a Real Property Administrator (RPA). The seven required courses are Engineering and Building Structures, Real Property Maintenance, Risk Management and Insurance, Accounting and Financial Concepts, Law, Finance and Management Concepts.
    * Building Owners and Managers Association Website
  • building permit:
    Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.
  • build-up rate:
    The discount or interest rate used in the selection of the capitalization rate for an investment property. (See capitalization rate)
  • Bulk Sales Act:
    An act that requires the recording and publication of a sale that is not in the normal course of business. The act is intended to give notice to the creditors of the seller so they can protect their interests.
  • bulk sales transfer:
    Any transfer in bulk (and not a transfer in the ordinary course of the seller’s business) of a major part of the materials, inventory or supplies of an enterprise. The Uniform Commercial Code (UCC) regulates bulk transfers to deal with such commercial frauds as a merchant selling out stock, pocketing the proceeds and leaving creditors unpaid. The UCC requires the buyer of the goods to demand that the seller provide a schedule of all the property and a list of all creditors and that the buyer give notice to creditors of the pending sale. Failure to comply with UCC means that the transfer or sale is ineffective in respect to the claims of any creditor of the seller. Bulk transfers usually become relevant upon the liquidation or sale of a business.

    Under state law, a bulk sale must be reported by the seller to the state tax authorities, and the purchaser must withhold payment until the seller’s tax clearance is received. If the tax clearance is not made, the purchaser may become liable for any unpaid taxes that are a lien against the items sold. (See Uniform Commercial Code)

  • bulk transfer of goods:

    Any transfer in bulk of a substantial part of the materials, supplies, merchandise, equipment or other inventory of an applicable enterprise that is not in the ordinary course of the transferor’s business.

  • bulk zoning:
    Zoning for density. Regulates height restrictions, open-space requirements, parking and setback. (See zoning)
  • bullet loan:
    A loan that includes a call date earlier than its normal amortization period; also called a renegotiable rate loan or a rollover loan.
  • burden of proof:

    The obligation to prove the truth or falsity of a fact.

  • bundle of legal rights:
    The concept of land ownership that includes ownership of all legal rights to the land. For example, possession, control within the law and enjoyment.
  • business cycle:
    The wavelike movement of increasing and decreasing economic prosperity consisting of four phases: expansion, recession, contraction and revival.
  • business opportunity:
    Any type of business that is for sale (also called business brokerage). The sale or lease of the business and goodwill of an existing business, enterprise or opportunity, including a sale of all or substantially all of the assets or stock of a corporation, or assets of partnership or sole proprietorship.
  • buydown:
    A financing technique used to reduce the monthly payments for the first few years ofa loan. Funds in the form of discount points are given to the lender by the builder or seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
  • buyer listing:
    An agreement where a buyer agrees to pay a commission if a broker locates a property that the buyer purchases.
  • buyer’s agent:
    A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer’s agent owes the buyer/principal the common-law or statutory agency duties. (See seller’s agent)

    * Real Estate Buyer’s Agent Council Online
    * National Association of Exclusive Buyer Agents

  • 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.
  • buyer’s broker:
    A broker who represents the buyer in a fiduciary capacity. Some buyer’s brokers practice single agency, in which they represent either buyers or sellers, but never both in the same transaction. Some buyer’s brokers represent only buyers and refer prospective sellers to other brokers. The broker is paid by the buyer, or through the seller or listing broker at closing, provided all parties consent.
  • buying motives:

    Ownership of real estate satisfies certain basic human needs. These needs are what motivate a person to purchase real property. They include: comfort and convenience, desire for profit, pride of ownership, and security.

  • buying on contract:
    A type of contract used in connection with the sale of real property where the seller retains legal title to the property until some future date, usually when the full purchase price has been paid. Referred to as one of four terms, all meaning much the same thing: agreement to convey, contract for deed, contract of sale, or installment sales contract.
  • buying signals:
    Words, actions or facial expressions that signal a prospect’s readiness to buy.
  • buyer’s remorse:
    Buyers of expensive items, like a home or automobile, sometimes regret their decision. They wonder if they paid too much or made the wrong selection. This fear of having made a serious mistake is referred to as “buyer’s remorse.”

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C

  • California Environmental Quality Act:
    The Act allows local governments to require environmental impact reports for private or government projects that may have a significant impact on the environment. (See environmental impact report, National Environmental Policy Act)
  • California Housing Financial Discrimination Act of 1977:
    Also known as the Holden Act. A California act prohibiting discrimination by a lender for any reason unrelated to the creditworthiness of the loan applicant.
  • California Residential Mortgage Lending Act:
    An act administered by the Commissioner of Corporations which provides licensing authorizing mortgage lending and brokering.
    *   CRMLA pages at the Department of Corporations
  • CAL-FIRPTA:

    California’s version of the federal FIRPTA. It is a tax act which became effective in 1988 and was subsequently amended in September, 2002 to become a withholding tax for residents and non-residents who sell California real estate. Assembly Bill 2065 requires that all sales closing after December 31, 2002 in California withhold 3 1/3% of the sales price for certain California real property transactions. (See FIRPTA)

  • Cal-Vet:
    A program to help eligible California Veterans finance the purchase of farms and ranches within the state.
    *   Cal-Vet Loan Programs
  • canceling escrow:
    Providing written notification that an escrow is to be terminated; must be done by mutual consent of all parties to the escrow and in accordance with governing agreements.
  • capacity of parties:
    The legal ability of people or organizations to enter into a valid contract. A person entering into a contract will have full, limited or no capacity to contract.

    • No capacity to contract: The inability of a person to enter into a valid contract under any circumstances. Such inability can arise when a person has been adjudicated insane or is an officer of a corporation who is not authorized to execute a contract in behalf of a corporation.

  • capital gain:
    Profit earned from the sale of an asset, where the sales price was greater than the adjusted basis. (See adjusted basis, deferred capital gain, excluded capital gain, realized capital gain (loss), recognized capital gain)
  • capital loss:
    Loss sustained from the sale of an asset, where the sales price is less than the adjusted book basis. (See adjusted basis)
  • capitalization:
    A mathematical process for converting net income into an indication of value, commonly used in the income approach to value. The net income of the property is divided by an appropriate (capitalization) rate of return to give the indicated value. (Income ÷ Rate = Value)
  • capitalization rate:

    The rate of return a property will produce on the owners investment.

  • capping:
    The process at of laying two to four feet of soil over the top of a landfill site and then planting vegetation to prevent erosion and enhance the landfill’s aesthetic value. (See landfill)
  • caps:
    Yearly and/or life-of-loan limitations on the amount of variation allowed when adjusting interest on variable-rate loans. (See adjustable rate mortgage (ARM), rate cap)
  • caravan:
    A group tour by a real estate office’s sales agents to view listed properties. (See agent property evaluation)
  • carbon monoxide (CO):
    A colorless, odorless gas that occurs as a byproduct of burning such fuels as wood, oil and natural gas due to incomplete combustion.
    *   National Safety Council on Carbon Monoxide
  • care:

    The agent must exercise a reasonable degree of care while transacting the business entrusted to him or her by the principal. The principal expects the agent’s skill and expertise in real estate matters to be superior to that of the average person. The most fundamental way in which the agent exercises care is to use that skill and knowledge on the principal’s behalf. The agent should know all facts pertinent to the principal’s affairs, such as the physical characteristics of the property being transferred and the type of financing being used. (See agent, law of agency, principal)

  • carcinogen:
    A cancer producing substance. (See asbestos, radon)
  • carry-back:
    Financing where the seller takes back a note for part of the purchase price secured by a junior mortgage, wraparound mortgage or contract for deed. (See wraparound, junior mortgage)
  • cash flow analysis:
    A cash flow analysis shows the effect an investment property has on an owner’s income in terms of tax benefits. Analyzes the return on investment after taxes on an income producing property. Measures the property manager’s performance from period to period by comparing income and expenses for a given property.
  • cash now:

    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-out:
    When a seller of a property wants to receive the entire sales price in cash with no carry-back financing. (See carry-back)
  • “cash-out” scheme:
    Where a buyer offers a large cash downpayment and asks the seller to carry-back the balance as a subordinate trust deed. (See carry-back, subordination clause)
  • 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 share cropping.
  • casualty:
    Casualty insurance policies include coverage against theft, burglary, vandalism and machinery damage as well as health and accident insurance. Casualty policies are usually written on specific risks, such as theft, rather than being all-inclusive.
  • caveat emptor:
    Latin for “let the buyer beware.” A buyer should inspect the goods or realty before purchase.
  • CC&Rs:

    Covenants, conditions and restrictions are limitations on land use, which are imposed by deeds, usually when land is subdivided. CC&Rs are a means of regulating building construction, density and use. May be referred to simply as restrictions. (See deed restrictions, restrictive covenants)

  • centers of influence:
    Influential people in a community. Real estate agents cultivate relationships with these “centers of influence” as a method of locating prospects in the community where the person has influence. Also known as “bird dogs,” indicating that these people “point the way” to new prospects.
  • certificate of eligibility:
    A certificate issued by a Veterans Administration regional office to veterans who qualify for a VA loan. The Veteran Housing Act permits regional administrators to restore a veteran’s entitlement to loan-guarantee benefits after his or her property purchased with an existing VA-guaranteed loan has been disposed of and 1. this loan has been paid in full; 2. the administrator is released from liability under the guarantee or 3. any loss suffered by the administrator has been repaid in full. It is no longer required that property ownership was transferred for a compelling reason.

    The act also authorizes regional administrators to restore a veteran/seller’s entitlement to loan-guarantee benefits and release the veteran from liability to the VA when another veteran has agreed to assume the outstanding balance on the veteran/seller’s existing VA-guaranteed loan and consented to the use of his or her entitlement to the same extent that the veteran/transferor had used the original entitlement. This is not a release from the lender, however. The veteran/transferee and the property must otherwise meet the requirements of the law. Reinstatement of eligibility is never automatic but must always be applied for, preferably at the time of the sale of property purchased with an existing VA-guaranteed loan.

    Many veteran/sellers presume that they are eligible for a new VA loan after selling their property by way of a loan assumption. In a loan assumption, the broker should point out that for the seller to have complete VA entitlement restored, the buyer must be a veteran and must agree in the sales contract to substitute his or her entitlement for the seller’s. (See VA loan)

  • certificate of occupancy (CO):
    A certificate issued by a governmental authority indicating that a building is ready and fit for occupancy and that there are no building code violations. Some condominium developers insert language into the sales contract to the effect that upon notification that the units are ready for occupancy, the buyer must accept the unit despite any construction defects that may exist, although acceptance will not bar the buyer from obtaining redress for such defects. Once the building has been certified for occupancy the developer can then close the individual sales, transfer title to the buyers and, most important, begin to pay off the construction loan and eliminate the interest payments.
  • certificate of reasonable value (CRV):
    A certificate insured by the Veterans Administration setting forth a property’s current market value estimate, based on a VA-approved appraisal. The CRV places a ceiling on the amount of a VA-guaranteed loan allowed for a particular property. (See VA loan)
  • 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 holder paid the property taxes for that interim period.
  • certificate of title:
    A statement of opinion prepared by a title company, licensed abstracter or an attorney on the status of a title to a parcel of real property, based on an examination of specified public records. This certificate of title should not be confused with the certificate of title that is issued to a titleholder of land registered under the Toreens system, or with a title insurance policy.

    A certificate of title does not guarantee title, but it does certify the condition of title as of the date the certificate is issued, on the basis of an examination of the public records maintained by the recorder of deeds, the county clerk, the county treasurer, the city clerk and collector and clerks of various courts of record. The certificate also may include records involving taxes, special assessments, ordinances, zoning and building codes.

    Note that a certificate of title does not offer protection against “off -the-record” matters such as undisclosed liens, rights of parties in possession and matters of survey and location. Nor does it protect against “hidden defects” in the records themselves, such as fraud, forgery, lack of competency or lack of delivery. A title insurance policy, not a certificate of title, protects against certain off-the-record and hidden defects risks.

  • cessation of work:

    A period of 60 days where no work is being conducted. (See notice of cessation)

  • chain of title:
    The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title. (See conveyance)
  • change:
    The appraisal principle that holds that no physical or economic condition remains constant. (See appraisal)
  • chattel:
    See personal property.
  • civil action:
    An action where an issue, formed by some kind of complaint, is presented for trial. Proceedings are for declaration, enforcement, protection of a right, redress, or prevention of a wrong.
  • civil law:
    A system of law codified by statutes. (See common law, constitutional law, Roman Civil Law, statutory law)
  • Civil Rights Act of 1866:
    The Civil Rights Act of 1866 prohibits racial discrimination in the sale and rental of housing. (See Federal Fair Housing Law)
  • Civil Rights Act of 1870:
    The Voting Rights Act of 1870 (aka, Civil Rights Act of 1870) includes a clause reaffirming the remedies of the Civil Rights Act of 1866.
  • Civil Rights Act of 1964:
    The first modern civil rights act made into law by President John F. Kennedy’s Executive Order 11063 prohibiting discrimination in housing where federal funds were involved. (See Federal Fair Housing Law)
  • Civil Rights Act of 1968:
    In 1968, Congress enacted Title VIII of the Civil Rights Act, called the federal Fair Housing Act, which declared a national policy of providing fair housing throughout the United States (Reference Sections 3601-3631 of Title 42, United States Code). This law makes discrimination based on race, color, sex, familial status, handicap, religion or national origin illegal in connection with the sale or rental of most dwellings and any vacant land offered for residential construction or use. (See Fair Housing Act, Federal Fair Housing Law)
  • classified ads:

    Advertisements purchased by the line and placed in the classified ad section of newspapers or real estate magazines. Used primarily for advertising residential properties and rentals. (See display ads)

  • client:
    The person who employs an agent to perform a service for a fee. In traditional real estate brokerage, the client is the seller, and the buyer is the prospect or customer. In modern practice, more and more buyers are seeking representation as a client. Dual agency occurs when a broker represents the seller and the buyer as clients.
  • close-of-escrow/closing:
    The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price. Closing in some areas may not occur until the documents are recorded; however, under general rules of real estate law, transfer of title takes place upon delivery of the deed to the grantee.
  • closing costs:

    Expenses of the sale (or loan refinancing) that must be paid in addition to the purchase price (in the case of the buyer’s expenses) or be deducted from the proceeds of the sale (in the case of the seller’s expenses). Some closing costs result from legal requirements; others are a matter of local custom and practice.

  • 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.
  • CLTA policy:
    A standard coverage title insurance policy protects real estate buyers in matters of record and specific risk. (See standard coverage policy, title insurance)
  • clustering:
    The grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas.
  • CMO:
    Securities (a series of bonds) issued backed by mortgages.
  • code of ethics:
    A written system of standards of ethical conduct. Because of the nature of the relationship between a broker and a client or other persons in a real estate transaction, a high standard of ethics is needed to ensure that the broker acts in the best interests of both his or her principal and any third parties.
  • 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.
  • collateral:
    Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the hypothecated mortgaged property itself.
  • combination trust:
    A trust that participates in real estate investments as both financier and investor.
  • combustion gases
    The gasses that are emitted from a flame upon the combustion of a flammable material.
  • commercial acre:
    A commercial acre is that portion of an acre of newly subdivided land remaining after dedication for streets, sidewalks, parks and so on.
  • commercial bank:
    A financial institution designed to act as a safe depository and lender for many commercial activities (usually short-term loans or lines of credit). Commercial banks rely heavily on demand deposits–checking accounts–for their basic supply of loanable funds, although they also receive capital from savings accounts, loans from other banks, short-term loan interest and the equity invested by their owners. (See line of credit)
  • Commercial Investment Real Estate Institute (CIREI):
    A professional organization of real estate practitioners specializing in commercial real estate. CIREI, affiliated with the National Association of REALTORS®, confers the designation CCIM (Certified Commercial Investment Member).
    *   CCIM Commercial Real Estate Network
  • commercial leasehold insurance:
    Insurance that covers payment of rent in the event the insured (tenant) cannot pay it.
  • commercial real estate/property:
    A classification of real estate that includes income-producing property such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, parking lots and stores. Public accommodations.
  • commercial waste:
    All solid waste from businesses. This category includes but is not limited to, solid waste originating in stores, markets. office buildings, restaurants, shopping centers, and theaters.
  • commingling:
    The illegal act of mixing deposits or monies belonging to a client (trust funds) with one’s personal money. By law brokers are required to maintain a separate trust or escrow account for other parties’ funds held temporarily by the broker. (See trust funds)
  • 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.
  • commitment:
    1. A pledge to do a certain act, such as a promise by a lender to loan a certain amount of money at a specific rate of interest to a qualified borrower, provided the loan is made by a certain date. 2. Also refers to an agreement by a title insurance company to issue a policy in favor of a proposed insured upon acquisition of a specific property.
  • common areas:
    Land or improvements in a condominium development designated for the use and benefit of all residents, property owners and tenants. Common areas frequently include such amenities as corridor or hall areas, elevators, parks, playgrounds and barbecue areas, which are sometimes called green belts. In shopping centers, the common areas are parking lots, malls and traffic lanes.
  • 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. (See condominium ownsership)

  • common interest:
    The percentage of undivided ownership in the common elements belonging to each condominium apartment, as established in the condominium declaration.
  • common interest subdivision:
    A subdivision in which the owners own or lease a separate lot or unit together with an undivided interest in the common areas of the subdivision. (See common areas, subdivision)
  • common law:
    The body of law based on custom, usage and court decisions. (See civil law, constitutional law, stare decisis, statutory law)
  • 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. This system stemmed from germanic tribes and, through Spain, came to the Spanish colonies of North and South America.

    In states that maintain a community property system, such as California and other states with laws of Spanish origin, there are two classifications of property - separate property and community property. Separate property is property that either the husband or wife owned at the time of marriage or that was acquired by one spouse during marriage by inheritance, will or gift. Separate property is considered all community property and is automatically owned equally by each spouse regardless of whose name the record title is held under.

  • Community Reinvestment Act of 1977 (CRA):
    Community reinvestment refers to the responsibility of financial institutions to help meet their communities’ needs for low- and moderate-income housing. In 1977, Congress passed the Community Reinvestment Act of 1977 (CRA). Under the CRA, financial institutions are expected to meet the deposit and credit needs of their communities, participate and invest in local community development and rehabilitation projects, and participate in loan programs for housing, small businesses and small farms.
    *   Community Reinvestment Act of 1977—Full Text
  • company dollar:
    The term “company dollar” is the amount left over after all commissions have been paid out.
  • comparables:

    Properties that are substantially equivalent to the subject
    property.

  • comparative market analysis (CMA):
    This is a term often used by real estate brokers in preparing a report for prospective sellers and buyers, indicating market trends in various neighborhoods, based on computer statistics generated from multiple-listing service data. Generally, these analyses are used for clients to determine a listing price for the sale of a home or for buyers to determine if a list price is reasonable for a given location.
  • compensating factors:
    Positive factors in an individual’s credit history which offset negative factors. “Compensating factors” increase the possiblity that a borrower’s loan application will be approved. (See credit score)
  • compensation:

    The source of compensation does not determine agency. An agent does not necessarily represent the person who pays his or her commission. In fact, agency can exist even if no fee is involved (called a gratuitous agency). Buyers and sellers can agree, whichever way they choose, to compensate the broker, regardless of which is the agent’s principal. For instance, a seller could agree to pay a commission to the buyer’s agent. The written agency agreement should state how the agent is being compensated and explain all the alternatives available.

  • compensatory damages:
    Monetary damages paid to compensate an injured party for a loss. (See exemplary damages, nominal damages)
  • competition:
    The appraisal principle that states that excess profits generate competition. (See appraisal)
  • completion bond:
    A surety bond posted by a landowner or developer that guarantees a proposed development will be completed according to specifications and free of mechanic’s liens.
  • Comprehensive Environmental Response, Compensation and Liability Act (CERCLA):
    A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to cleanup toxic sites, bringing legal action against responsible parties and funding the abatement of toxic sites. (See Superfund)
    *   EPA—CERCLA Overview
  • comprehensive zoning:

    A broad zoning plan over a large area. (See general plan, zoning)

  • compound interest:
    Interest computed on the principal sum plus accrued interest. At the beginning of the new interest period, all interest is added to the principal, forming a new principal figure on which interest is then calculated. This process repeats itself each interest period—interest may be compounded daily, monthly, semiannually or annually.
  • computerized loan origination (CLO) system:
    An electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers.
  • concession:
    Discount given to prospective tenants by landlords to induce them to sign a lease. Concessions are frequently encountered in commercial leases, where landlords may give the first two months’ rent free or provide an allowance to the tenant for renovating or customizing the demised space. A purchaser of a commercial or income-producing property should check all existing leases to see if there are any lease concessions that would reduce the amount of rent receivable in the future (such as free cable TV or one month’s free rent per year for the term of the lease). If so, the value of these concessions should be computed to reduce the amount of contract rent specified. An estoppel certificate should also be obtained from the tenant. Some state laws require concessions to be noted on a lease by special wording. Concessions are negotiable points in a lease that are resolved in favor of the prospective tenant. Another example in leasing a new office building is the owner’s assumption of the lessee’s remaining obligation under the lessee’s existing lease in another building.
  • concurrent ownership:
    Ownership by two or more persons at the same time, such as joint tenants, tenants by the entirety, tenants in common or community property owners. (See joint tenancy, tenants in common)

  • concurrent performance:

    Occurring simultaneously; real estate exchanges often must be recorded concurrently.

  • 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. (See eminent domain).
  • condition precedent:
    A condition that requires a certain action or a specified event to take place before an estate granted can take effect. For example, most installment real estate sales contracts require all payments to be made by the time specified before the buyer can demand transfer of title.
  • condition subsequent:

    A fee simple estate, may be qualified by a condition subsequent. This means that the new owner must not perform some action or activity. The former owner retains a right of reentry so that if the condition is broken, the former owner can retake possession of the property through legal action. Conditions in a deed are different from restrictions or covenants because of the grantor’s right to reclaim ownership, a right that does not exist under private restrictions. (See fee simple, restrictive covenant).

  • conditional public report:
    An interim report that allows a subdivider to enter into a binding contract with a buyer prior to the issuance of the final public report.
  • 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. (See zoning)
  • condominium:
    A subdivision providing an exclusive ownership interest in the airspace of a particular portion of real property, as well as an interest in common in a portion of that property.
  • condominium ownership:
    An estate in real property consisting of an individual interest in an apartment or commercial unit and an undivided common interest in the common areas in the condo project such as the land, parking areas, elevators, stairways, exterior structure and so on. Each condominium unit is a statutory entity that may be mortgaged, taxed, sold or otherwise transferred in ownership, separately and independently of all other units in the condo project. Units are separately assessed and taxed based on the combined value of the individual living unit and the proportionate ownership of the common areas. The unit also can be separately foreclosed upon, in case of default on the mortgage note or other lienable payments. In effect, the condominium permits ownership of a specific horizontal layer of airspace as opposed to the traditional view of vertical property ownership from the center of the earth to the sky. Typically, the unit, the percentage of common interest and the limited common elements are appurtenant to each other and cannot be sold or transferred separately.
  • conduits:
    A party that purchases loans from one lender and resells the loans to investors.
  • confession of judgment clause:

    Permits judgment to be entered against a debtor without the creditors needing to institute legal proceedings.

  • conforming loan:
    A mortgage loan that meets all Fannie Mae and Freddie Mac underwriting guidelines. (See Fannie Mae, Freddie Mac)
  • conformity:
    The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value. (See appraisal)
  • conservator:
    A guardian, protector, preserver or receiver appointed by a court to administer the person and property of another (usually an incapable adult) and to ensure that the property will be properly managed. A conservator may not need a real estate license to sell the protected real estate, although the sale does require court approval.
  • consideration:
    An act or the promise thereof, which is offered by one party to induce another to enter into a contract; that which is given in exchange for something from another; also the promise to refrain from doing a certain act, like filing a justifiable lawsuit (the forbearance of a right). Consideration, which distinguishes a contractual obligation from a gift, is usually something of value, such as the purchase price in and paid for a promise or it may be a return promise. Thus, the mere promise to pay money is sufficient consideration, so an earnest money deposit is not necessary for purposes of creating a binding contract.
  • constitutional law:
    Law set forth in federal or state constitutions. (See civil law, common law, statutory law)
  • construction loan:
    See interim financing.
  • 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. (See eviction, actual eviction, lease)
  • constructive fraud:
    Breach of a legal or equitable duty that the law declares fraudulent because of its tendency to deceive others, despite no showing of dishonesty or intent to deceive. A broker may be charged with constructive fraud for failing to disclose a known material fact when the broker had a duty to speak—for example, if a listing broker failed to disclose a known major foundation problem not readily observable upon an ordinary inspection. (See material fact)
  • 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 possession has an interest in the property.
  • constructive receipt:
    Control of the cash proceeds in a delayed exchange without actual physical possession by the exchanger or his or her agent.
  • 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.
  • continuing education:
    A requirement in most states that real estate and appraiser licensees complete a specified number of educational offerings as a prerequisite to license renewal or reinstatement.
  • 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 parties to the instrument are legally bound to act as prescribed. (See valid contract)

    *   FindLaw Contract Law Web Guide

  • contract for deed:
    The contract for deed is used extensively in many areas, where it may be called a land contract, agreement of sale, installment contract, articles of agreement, conditional sales contract, bond for deed or real estate contract.

    • A contract for deed is an agreement between the seller (vendor) and buyer (vendee) for the purchase of real property in which the payment of all or a portion of the selling price is deferred. The purchase price may be paid in installments (of either principal and interest or interest only) over the period of the contract, with the balance due at maturity. When the buyer completes the required payments, the seller must deliver good legal title to the buyer by way of a deed or assignment of lease (if the property is leasehold property). Under the terms of the contract for deed, the buyer is given possession of the property and equitable title to the property, while the seller holds legal title and continues to be primarily liable for payment of any underlying mortgage. The features of the buyer’s equitable title and obligation to purchase are what distinguishes a contract for deed from a lease-option.

    The contract for deed document usually contains the names of the buyer and seller, the sales price, the terms of payment, a full legal description and a lengthy statement of the rights and obligations of the parties, similar to those under a mortgage, including use of premises, risk of loss, maintenance of premises, payment of taxes and insurance and remedies in case of default. Specific rights, such as acceleration or the right to prepay without penalty, must be expressly written into the agreement. The contract is usually signed by both parties, acknowledged and recorded.

    In a dynamic and rapidly appreciating real estate market, the contract for deed enables buyers to purchase property on reasonable financial terms and thereby benefit from the appreciation of the property values. Many buyers then sell the property at a profit before their final payment becomes due. In a tight money market where it is difficult to qualify prospective buyers for conventional financing, the contract for deed is frequently the best method to sell or purchase a property. Especially benefited by the contract for deed are young couples, who would have difficulty qualifying for a bank loan at the time of entering into the contract for deed, but whose incomes will increase before maturity of the agreement, enabling them to refinance and pay off the contract for deed.

    Some sellers prefer to sell on a contract for deed because it can create an installment sale, which will enable them to defer payment of a portion of tax. In addition, if the buyer defaults the seller can sue for strict foreclosure, something he or she cannot do with a mortgage. However, a seller who chooses this remedy is rescinding the contract and cannot seek a deficiency judgment for the unpaid balance.

    Some contracts for deed provide that seller and/or buyer can convert the contract into a conventional security transaction. For example, upon payment of 40 percent of the purchase price, the seller may be required to deliver a deed and take back a purchase-money mortgage from the buyer for the balance of the purchase price.

    Use of a contract for deed is not without some disadvantages.

    From the buyer’s viewpoint:

    1. Because the seller need not deliver good marketable title until the final payment, the buyer must, at the risk of default, continue to make payments even when there may be a doubt whether the seller will be able to perform when all payments are made. This can be especially serious when the seller is a corporation, because its directors and shareholders have only limited liability. Some attorneys try to minimize this problem by inserting a clause to the effect that “the property is to be conveyed free and clear of all encumbrances except (those specified herein) and to remain free and clear except for the above-stated encumbrances.” The seller is then discouraged from placing further mortgages and encumbrances on the property during the period of the contract for deed.
    2. The buyer may have difficulty getting the seller to deed the property upon satisfaction. By withholding a large enough final payment, the buyer often can persuade a seller to pay the costs of drafting the deed. In addition, at the time of final payment, the seller might be suffering a legal disability or may be missing, or may be bankrupt or dead. The property might then be tied up in probate.
    3. The buyer might be restricted from assigning his or her interest in the contract for deed by covenants against assignment.
    4. Liens that arise against the seller could cloud the title.
    5. Unless a collection account is used, problems could arise if the seller does not apply the buyer’s payments to the underlying mortgage.

    From the seller’s viewpoint:

    1. If the buyer defaults, the process of clearing record title may be time consuming and costly, especially if the buyer is under a legal disability or is bankrupt, is a nonresident or has created encumbrances in favor of persons who might have to be joined in any quiet title action.
    2. The seller’s interest in the contract for deed is less salable than a mortgagee’s interest would have been had the seller sold under a purchase-money mortgage.
    3. By its very nature, the contract for deed is a contract, and all contracts are subject to differing interpretations with the possibility of disputes and litigation.
  • contract of sale:
    A contract for the purchase and sale of real property in which the buyer agrees to purchase for a certain price and the seller agrees to convey title by way of a deed or an assignment of lease (for leasehold property). In addition to binding the parties to the purchase and sale of the property during the period of time required to close the transaction, the contract frequently serves as the initial directions to the closing agent or escrow company to process the mechanics of the transaction. In essence, the contract of sale is an executory contract to convey property, serving as the vehicle to get to the deed, which finally conveys title; it is the blueprint for the entire transaction. Some of the many names for this contract are sales contract, purchase agreement, deposit receipt, offer and acceptance, agreement of sale, offer to lease or purchase and sale agreement.
  • contract rent:
    The rental income as stipulated by the parties in a lease.
  • 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. (See appraisal)
  • controlled business arrangements:
    As defined under the Real Estate Settlement Procedures Act (RESPA), an arrangement or combination in which an individual or a firm has more than a 1 percent interest in a company to which the individual or firm regularly refers business. Such arrangement is permitted provided that written disclosure of the affiliation is made; an estimated charge for the service is provided; consumers are free to obtain the services elsewhere; and referral fees are not exchanged among the affiliated companies. (See Real Estate Settlement Procedures Act (RESPA))
  • conventional life estate:
    A conventional life estate is created intentionally by the owner. It may be established either by deed at the time the ownership is transferred during the owner’s life or by a provision of the owner’s will after his or her death. The estate is conveyed to an individual who is called the life tenant. The life tenant has full enjoyment of the ownership for the duration of his or her life. When the life tenant dies, the estate ends and its ownership passes to another designated individual or returns to the previous owner. (See life estate)
  • conventional loan:
    A loan made with real estate as security and not involving government participation in the form of insuring (FHA) or guaranteeing (VA) the loan. The mortgagee can be an institutional lender or a private party. The loan is conventional in the sense that it conforms to accepted standards and the lender looks solely to the credit of the borrower and the security of the property to ensure payment of the debt. Conventional loans include those loans insured by private mortgage insurance companies.

    • Because the lender is not subject to the more stringent government regulations of the FHA and VA, conventional loans are frequently more flexible with respect to terms and interest rates, although they do reflect a higher interest rate and larger down payment requirements due to the higher risk involved. Nonconventional loan interest rates (VA loans) are fixed by federal regulation. Conventional loans are subject to institutional regulation, which may be statutory (federal, state) or self-created. (See FHA, VA loan)

  • conversion:
    The appropriation of property belonging to another. The conversion may be illegal (as when a broker misappropriates client funds), or it may be legal (as when the government condemns property under the right of eminent domain). (See eminent domain)
  • convertible loan:
    An adjustable-rate loan that the borrower can convert to fixed-rate at any time during the life of the loan. (See adjustable-rate mortgage, hybrid financing)
  • converted-use properties:
    Factories, warehouses, office buildings, hotels, schools, churches and other structures that have been converted to residential use. Developers often find renovation of such properties more aesthetically and economically appealing than demolishing a perfectly sound structure to build something new. An abandoned warehouse may be transformed into luxury loft condominium units, a closed hotel may reopen as an apartment building, and an old factory may be recycled into a profitable shopping mall.
  • 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. (See title)
  • cooperating broker:
    A broker who assists another broker in the sale of real property. Usually the cooperating broker is the selling broker who found a buyer for the listing broker. (See listing broker)
  • cooperating broker fee agreement
    An agreement between brokers specifying the commission split should the cooperating broker sell a property listed by the listing broker. (See cooperating broker, listing broker)
  • cooperative:
    A residential multiunit 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 possessing a proprietary lease.
  • co-ownership:

    Title ownership held by two or more persons.

  • coping:
    1. The tile around the outer edge of a swimming pool at the water line. 2. The flat portion at the top of a parapet wall rising above the roof line of a building.
  • 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.
  • corporation franchise tax lien:
    State governments generally levy a corporation franchise tax on corporations as a condition of allowing them to do business in the state. Such a tax is a general statutory involuntary lien on all real and personal property owned by the corporation.
  • 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 range lines are measured and corrected to a full six miles. Range lines are only parallel in theory. Due to the curvature of the earth, range lines gradually approach each other. If they are extended northward, they eventually meet at the North Pole. The fact that the earth is not flat, combined with the crude instruments used in early days, means that few townships are exactly six-mile squares or contain exactly 36 square miles.
  • correlative water rights:
    A modern law in some states that holds that a riparian owner who has rights in a common water source is entitled to take only a reasonable amount of the total supply for the beneficial use of land (such as irragation). (See appropriative water rights, riparian rights)
  • correspondent:
    A mortgage banker. (See mortgage banker)
  • corrosion:
    The dissolving and wearing away of metal caused by a chemical reaction such as between water and the lead pipes or solder in a home’s plumbing.
  • corrosive:
    A substance that eats or wears away materials gradually by chemical action.
  • cosigners:
    Additional signers of a financial agreement that add their personal guarantees to that of the borrower.
  • 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. (See appraisal)
  • cost basis:
    A cost basis of real property is usually based on the purchase price of the property plus the buyer’s capitalized closing costs. (See closing costs)
  • cost recovery:
    An Internal Revenue Service term for depreciation.
  • cost-plus:
    A method of paying construction contractors when the contractor is paid the actual costs of the job plus a percentage for profit. (See fixed-fee)
  • 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 against encumbrances:
    The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed. Encumbrances generally include mortgages, mechanics’ liens and easements. If this covenant is breached, the grantee may sue for the cost of removing the encumbrances. (See encumbrances, liens)
  • covenant of further assurance:

    The grantor promises to obtain and deliver any instrument needed to make the title good. For example, if the grantor’s spouse has failed to sign away dower rights, the grantor must deliver a quitclaim deed (discussed later) to clear the title.

  • 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. The grantor guarantees that the grantee’s title will be good against third parties who might bring court actions to establish superior title to the property. If the grantee’s title is found to be inferior, the grantor is liable for damages.
  • covenant of seisin:
    The grantor warrants that he or she owns the property and has the right to convey title to it (”seisen” simply means “possession”).
  • covenant of warranty forever:
    The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future. These covenants in a general warranty deed are not limited to matters that occurred during the time the grantor owned the property: they extend back to its origins. The grantor defends the title even against himself/herself and all those who previously held title.
  • covenants that run with the land:
    Convenants that become part of the property rights and benefit or bind successive owners of the property.
  • crawl space:
    1. The space between the ground and the first floor, often found in homes with no basement. 2. The space found between the top floor and the roof, often found in the place of an attic.
  • creative financing:

    Structuring the financing of a real estate transaction based on the cash positions of the buyer and seller. It involves working in conjunction with the existing financing to create a financing package that enables the buyer to purchase the property at better interest rates or terms than a conventional loan.

  • credit:
    1. Obligations that are due or are to become due to a person. 2. In closing statements, that which is due and payable to either the buyer or seller–the opposite of a charge or debit. The credit appears in the right-hand column of the accounting statement.
  • credit loan:
    A mortgage issued upon the financial strength of a borrower, without regard for collateral.
  • credit rating:
    The Dun & Bradstreet credit rating system. Rating the financial strength of commercial and industrial companies.
    *