What Does It Mean?

Common real estate terms and their meanings (Source: RealEstateU).

Term	Definition
Abstract of Title	A summary or digest of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impair title.
Acceleration Clause	A condition in a real estate finance instrument giving the lender the power to declare all sums owing the lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of the note.
Acceptance	The act of agreeing or consenting to the terms of an offer thereby establishing the “meeting of the minds” that is an essential element of a contract.
Accession	An addition to property through the efforts of man or by natural forces.
Accretion	Accession by natural forces, e.g., alluvium.
Acknowledgment	A formal declaration made before an authorized person, e.g., a notary public, by a person who has executed an instrument stating that the execution was his or her free act.
Actual Eviction	The removal of a tenant by the landlord because the tenant breached a condition of a lease or another rental contract.
Actual Notice	Express or implied knowledge of a fact.
Addendum	Additional pages of material that are added to and become part of a contract.
Adverse Possession	A method of acquiring title to real property through possession of the property for a statutory period under certain conditions by a person other than the owner of record.
Agency	The relationship between principal and the principal’s agent, which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with a third party.
Agent	One who acts for and with authority from another called the principal.
Agreement of Sale	A written agreement or contract between seller and purchaser in which they reach a “meeting of minds” on the terms and conditions of the sale. The parties concur; are in harmonious opinion.
Air Rights	The rights in real property to the reasonable use of the air space above the surface of the land.
Alienation Clause	A clause in a contract giving the lender certain rights in the event of a sale or other transfer of a mortgaged property.
Alluvium	The gradual increase of the earth on a shore of an ocean or bank of a stream resulting from the action of the water.
Amortization	The liquidation of a financial obligation on an installment basis.
Amortized Loan	A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity.
Appraisal	An estimate of the value of property resulting from an analysis of facts about the property. An opinion of value.
Appraiser	One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal process.
Appreciation	Monetary gain resulting from the increase in the market value of an investment, excluding additions of capital. For example, a house which is sold five years after it was purchased for 20% more than the purchase price.
Asbestos	A naturally occurring mineral fiber sometimes found in older homes. It is hazardous to health when a possibility exists of exposure to inhalable fibers. Homeowners should be alert for friable asbestos and always seek professional advice in dealing with it.
Asbestosis	A chronic lung disease caused by inhaling asbestos fibers.
Assessed Value	A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
Assignment	The transfer to another of any property in possession or in action, or of any estate or right therein. A transfer by a person of that person’s rights under a contract.
Assignment of Rents	A provision in a mortgage or deed of trust under which the lender may, upon default by the trustor, take possession of the property, collect income from the property and apply it to the loan balance and the costs incurred by the lender.
Assumption of Mortgage	The taking of a title to property by a grantee wherein the grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against a property, becoming a co-guarantor for the payment of a mortgage or deed of trust note.
Avulsion	A sudden and perceptible loss of land by the action of water as by a sudden change in the course of a river.
Bargain and Sale Deed	Any deed that recites a consideration and purports to convey the real estate; a bargain and sale deed with a covenant against the grantor’s act is one in which the grantor warrants that grantor has done nothing to harm or cloud the title.
Base and Meridian	Imaginary lines used by surveyors to find and describe the location of private or public lands. In government surveys, a base line runs due east and west, meridians run due north and south, and are used to establish township boundaries.
Beneficiary	The lender on the security of a note and deed of trust.
Bilateral Contract	A contract in which each party promises to do something.
Blanket Mortgage	A type of loan used to fund the purchase of more than one piece of real property. A blanket mortgage is often used for subdivision financing.
Building Envelope	A building envelope is the maximum three-dimensional space on a zoning lot within which a structure can be built, as permitted by applicable height, setback and yard controls. One of the main goals of a zoning analysis is to determine the building envelope. A building envelope is also referred to as the “bulk” of a building.
Bundle of Rights	All of the legal rights incident to ownership of property including rights of use, possession, encumbering, and disposition.
Buydown	Obtaining a lower interest rate by paying additional points to the lender.
Buyer Agent	An agent who represents the buyer in a real estate transaction.
Capital Gains	At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long based upon the length of the holding period after acquisition. Usually taxed at lower rates than ordinary income.
Capitalization Rate	The rate of interest which is considered a reasonable return on the investment, and used in the process of determining value based upon net income.
Capitalization Rate	Net Operating Income (NOI) / Purchase Price
Certificate of Occupancy	A document issued by a local government agency after satisfactory inspection of a structure authorizing that the structure can be occupied.
Certificate of Title	A written opinion by an attorney that ownership of a particular parcel of land is as stated in the certificate.
Chain of Title	A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.
Chattel	Goods or every species of property movable or immovable which are not real property. Personal property.
Chloroflouro Carbons (CFCs)	A fluid, containing hydrocarbons, that absorbs heat from a reservoir at low temperatures and rejects heat at higher temperatures. When emitted into the atmosphere, CFCs cause depletion of the stratospheric ozone layer.
Closing	Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds.
Cloud on Title	A claim, encumbrance or condition which impairs the title to real property until disproved or eliminated as for example through a quitclaim deed or quiet title legal action.
Commingling	The illegal mixing of personal funds with money held in trust on behalf of a client.
Commission	An agent’s compensation for performing the duties of agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc.
Common Elements	Refers to the spaces in a building shared by residents of the building. These include lobbies, corridors, stairs, elevators, etc.
Community Property	Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse has equal rights of management, alienation and testamentary disposition of community property.
Comparative Market Analysis	An analysis of the competition in the marketplace that a property will face upon sale attempts.
Condemnation	The act of taking private property for public use by a political subdivision upon payment to owner of just compensation.
Condominium	An estate in real property wherein there is an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map or condominium plan.
Confidentiality	An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold known material facts about the condition of the seller’s property from the buyer, or to misrepresent the property’s condition. To do so constitutes misrepresentation and may impose liability on both the broker and/or the seller.
Consideration	Anything given or promised by a party to induce another to enter into a contract, e.g., money or personal services.
Construction Loan	A loan secured by real estate which is for the purpose of funding the construction of improvements or building(s) upon the property.
Constructive Eviction	Any disturbance of the tenant’s possession of the lease premises by the landlord whereby the premises are rendered unfit or unsuitable for the purpose for which they were leased.
Constructive Notice	Notice of the condition of title to real property given by the official records of a government entity which does not require actual knowledge of the information.
Contract	An agreement to do or not to do a certain thing.
Conventional Loan	A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. This type of loan is customarily made by a bank or savings and loan association.
Conversion	The unlawful appropriation of another’s property, as in the conversion of trust funds.
Cooperative	An apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by purchase of shares of stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building.
Corporation	An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of having certain powers and duties of a natural person. Being created by law, it may continue for any length of time the law prescribes.
Cost Approach	An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.
Counter Offer	A response to an offer to enter into a contract, changing some of the terms of the original offer. A counter offer is a rejection of the offer (not a form of acceptance), and does not create a binding contract unless accepted by the original offeror.
Covenants, Conditions, and Restrictions (CC&Rs)	The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners.
Credit	A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense, or the creation of or addition to a liability or item of equity or revenue.
Debit	That which is due from one person to another.
Deed	A written instrument which when properly executed and delivered conveys title to real property from one person (grantor) to another (grantee).
Deed in Lieu of Foreclosure	A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender.
Deed Restrictions	Limitations in the deed to a property that dictate certain uses that may or may not be made of the property.
Default	Failure to fulfill a duty or promise or to discharge an obligation.
Defeasance Clause	The clause in a mortgage that gives the mortgagor the right to redeem the mortgagor’s property upon the payment of the mortgagor’s obligations to the mortgagee.
Deficiency Judgment	A judgment given by a court when the value of security pledged for a loan is insufficient to pay off the debt of the defaulting borrower.
Demand	The supply of willing and able buyers in the marketplace or lack thereof.
Devise	A gift or disposal of real property by last will and testament.
Devisee	One who receives a gift of real property by will.
Devisor	One who disposes of real property by will.
Discount Points	The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate.
Dominant Tenement	A parcel of real property that has an easement over another piece of property (the servient estate).
Dual Agency	An agency relationship in which the agent acts concurrently for both of the principals in a transaction.
Easement	A right, privilege, or interest limited to a specific purpose which one party has in the land of another.
Easement Appurtenant	An easement that benefits the dominant estate and “runs with the land”. In other words, an easement appurtenant generally transfers automatically when the dominant estate is transferred.
Easement by Condemnation	An easement created by the government or government agency that has exercised its right under eminent domain.
Easement by Grant	The creation of an easement by one party expressly transferring the easement to another party.
Easement by Implication	An easement that is not created by express statements between the parties; but as a result of surrounding circumstances that dictate that an easement must have been intended by the parties.
Easement by Necessity	Parcels without access to a public way may have an easement of access over adjacent land if crossing that land is absolutely necessary to reach the landlocked parcel and there has been some original intent to provide the lot with access.
Easement by Prescription	Implied easements granted after the dominant estate has used the property in a hostile, continuous, and open manner for a statutorily prescribed number of years.
Easement in Gross	An easement that benefits an individual or legal entity, rather than a dominant estate.
Emblements	The crops and other annual plantings considered to be personal property of the cultivator.
Eminent Domain	The right of the government to acquire property for necessary public or quasipublic use by condition; the owner must be fairly compensated.
Encroachment	An unlawful intrusion onto another’s adjacent property by improvements to real property, e.g., a swimming pool built across a property line.
Encumbrance	Anything which affects or limits the fee simple title to or value of property, e.g., mortgages or easements.
Equitable Lien	A lien on property imposed by a court in order to achieve fairness, particularly when someone has possession of property which he/she holds for another.
Erosion	The wearing away of land by the act of water, wind, or glacial ice.
Escalation	The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event.
Escheat	The reverting of property to the State when heirs capable of inheriting are lacking.
Estate at Sufferance	An estate arising when the tenant wrongfully holds over after the expiration of the term. The landlord has the choice of evicting the tenant as a trespasser or accepting such tenant for a similar term and under the condition of the tenant’s previous holding. Also called a tenancy at sufferance.
Estate at Will	The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties.
Estate For Years	An interest in lands by virtue of a contract of a contract for the possession of them for a definite and limited period of time. May be for a year or less. A lease may be said to be an estate for years.
Ethics	Moral principles that govern a person’s or group’s behavior.
Exclusive Agency Listing	A listing agreement employing a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.
Exclusive Right to Sell Agreement	A listing agreement employing a broker to act as agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold during the duration of the listing through another broker or by the owner without the services of an agent.
Executed Contract	A contract in which both parties have completely performed their contractual obligations.
Executory Contract	A contract in which one or both parties have not yet completed performance of their obligations.
Express Agency	An agency relationship created by oral or written agreement between principal and the agent.
Express Contract	A contract that has been put into words, either spoken or written.
Federal Home Loan Mortgage Corporation (FHLMC) (Freddie Mac)	An independent stock company which creates a secondary market in conventional residential loans and in FHA and VA loans by purchasing mortgages.
Federal National Mortgage Association (FNMA) (Fannie Mae)	A New York stock exchange company.  It is a public company that operates under a federal charter and is the nation’s largest source of financing for home mortgages.  Fannie Mae does not lend money directly to consumers, but instead works to ensure that mortgage funds are available and affordable, by purchasing mortgage loans from institutions that lend directly to consumers.
Federal Reserve System	The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.
Fee Simple Absolute	An inheritable estate in land providing the greatest interest of any form of title.
Fee Simple Determinable	An estate that will end automatically when the stated event or condition occurs. The interest will revert to the grantor or the heirs of the grantor.
Fee Simple Estate	The greatest interest that one can have in real property. An estate that is unqualified, of indefinite duration, freely transferable and inheritable.
FHA Insured Loan	A mortgage loan in which payments are insured by the Federal Housing Administration.
Fiduciary	A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency.
Fiduciary Duty	That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure.
Fixtures	Appurtenances attached to the land or improvements, which usually cannot be removed without agreement as they become real property; examples – plumbing fixtures, store fixtures built into the property, etc.
Floor Area Ratio (FAR)	The floor area ratio, also referred to as FAR, is the principal bulk regulation controlling the size of buildings.  FAR is the ratio of total building floor area to the area of the zoning lot.  Each zoning district has a FAR control which, when multiplied by the lot area of the zoning lot, produces the maximum amount of floor area allowable in a building on the zoning lot. For example, on a 10,000 square foot zoning lot in a district with a maximum FAR of 1.0, the floor area of a building cannot exceed 10,000 square feet.
Foreclosure	Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.
Freon	Moderately toxic gases or liquids which have typically been used as refrigerants (in air conditioning units) and as aerosol propellants.
Friable	Easily crumbled or reduced to power. Asbestos is an example of a friable substance.
General Agent	An agent with full authority over one property of the principal, such as a property manager.
General Lien	A lien on all the property of a debtor.
Government National Mortgage Association (GNMA) (Ginnie Mae)	A government corporation within the U.S. Department of Housing and Urban Development (HUD) that guarantees securities backed by mortgages that are insured or guaranteed by other government agencies.  Popularly known as “Ginnie Mae”.
Government Survey	A method of specifying the location of parcel of land using prime meridians, base lines, standard parallels, guide meridians, townships and sections.
Graduated Lease	A lease which provides for a varying rental rate, often based upon a future determination; sometimes rent is based upon the result of periodic appraisals; used largely in long-term leases.
Grant	A technical legal term in a deed of conveyance bestowing an interest in real property to another. The words “convey” and “transfer” have the same effect.
Grant Deed	A limited warranty deed using the word “grant” or like words that assures a grantee that the grantor has not already conveyed the land to another and that the estate is free from encumbrances placed by the grantor.
Grantee	A person to whom a grant is made.
Grantor	A person who transfers his or her interest in property to another by grant.
Gross Lease	A lease in which the lessor pays all costs of operating and maintaining the property and real estate taxes.
Ground Lease	An agreement for the use of land only, sometimes secured by improvements placed on the land by the user.
Group Boycott	An agreement between members of a trade to exclude other members from fair participation in the trade.
Habendum Clause	The “to have and to hold” clause which may be found in a deed.
Hypothecate	To pledge a thing as security without the necessity of giving up possession of it.
Implied Agency	Agency that exists as a result of actions of the parties.
Implied Contract	An agreement that has not been put into words, but is implied by the actions of the parties.
Income (Capitalization) Approach	An appraisal method applied to income producing properties, which involves a three step process. First, the appraiser must find the net annual income. Second, an appropriate capitalization rate or “present worth” factor must be set. Finally, the appraiser must capitalize the income by dividing the net income by the capitalization rate.
Independent Contractor	A person that provides services to another under terms specified in a contract or within a verbal agreement.
Insured Value	The value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting cost of non-insurable items (e.g. land value) from market value.
Interest	The charge in dollars for the use of money for a period of time. In a sense, the “rent” paid for the use of money.
Interest Only Loan	A straight, non-amortizing loan in which the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.
Intestate	A person who dies having made no will, or one which is defective in form, is said to have died intestate, in which case the estate descends to the heirs at law or next of kin.
Investment Value	The specific value of an investment to a particular investor or class of investors based on individual investment requirements; distinguished from market value, which is impersonal and detached.
Involuntary Alienation	The transfer of title to real property as a result of a lien foreclosure sale, adverse possession, the filing of a petition in bankruptcy, or condemnation under power of eminent domain or upon the death of the titleholder, to the State when there are no heirs.
Involuntary Lien	A lien imposed against property without consent of an owner.
Joint Tenancy	Undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship, i.e., the right to share equally with other surviving joint tenants in the interest of a deceased joint tenant.
Judgment Lien	A legal claim on all of the property of a judgment debtor which enables the judgment creditor to have the property sold for payment of the amount of the judgment.
Junior Mortgage	A mortgage recorded subsequently to another mortgage on the same property or made subordinate by agreement to a later recorded mortgage.
Land	The materials of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other substance, and includes free or unoccupied space for an indefinite distance upwards as well as downwards.
Land Trust	A legal agreement where a trustee is appointed to maintain ownership of a piece of real property for the benefit of another party.
Law	The system of rules that a particular country or community recognize as regulating the actions of its members and may be enforced by the imposition of penalties.
Lead	A material used in pipes and paint of many older homes. We now know that lead is hazardous to health. The local environmental protection agency should be consulted for guidelines on handling, removal and applicable laws.
Lease	A contract between an owner and tenant, setting forth conditions upon which the tenant may occupy and use the property and the term of the occupancy.
Leasehold Estate	A tenant’s right to occupy real estate during the term of the lease. This is a personal property interest.
Legal Description	A land description recognized by law; a description by which property can be definitely located by reference to government surveys or approved recorded maps.
Lessee	One who contracts to rent, occupy, and use property under a lease agreement; a tenant.
Lessor	An owner who enters into a lease agreement with a tenant; a landlord.
Letter of Intent (LOI)	Generally an agreement to agree. It outlines the terms between parties who have not formalized an agreement into a contract. LOIs are generally not binding and unenforceable.
Lien	A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation.
Life Estate	An estate or interest in real property, which is held for the duration of the life of some certain person. It may be limited by the life of the person holding it or by the life of some other person.
Life Tenant	The owner of a life estate.
Limited Liability Company (LLC)	“A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.”
Liquidated Damages	A sum agreed upon by the parties to be full damages if a certain event occurs.
Listing	An employment contract between principal and agent authorizing the agent to perform services for the principal involving the latter’s property; listing contracts are entered into for the purpose of securing persons to buy, lease, or rent property. Employment of an agent by a prospective purchaser or lessee to locate property for purchase or lease may be considered a listing.
Littoral Rights	The right of a property owner whose land borders on a body of water, such as a lake, ocean or sea, to reasonable use and enjoyment of the shore and water the property borders on.
Living Trust	An agreement where the trustee holds the legal possession of an asset (e.g. real estate) that belongs to another person, the beneficiary, and it is created while the person is alive.
Loan to Value Ratio (LTV)	The percentage of a property’s value that a lender can or may loan to a borrower.
Lot and Blocks	A legal description of land used for plotted properties, stating the number, lot, and block in a particular sub-division.
Lot Area	The area (in square feet) of a zoning lot.
Lot Coverage	That portion of a zoning lot which, when viewed from above, is covered by a building.
Loyalty	An agent’s duty to place the client’s interest above those of all others, including the agent’s own self-interest.
Market Allocation	An agreement between members of a trade to refrain from competition in specific market areas.
Market Value	The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.
Marketable Title	Title which a reasonable purchaser, informed as to the facts and their legal importance and acting with reasonable care, would be willing and ought to accept.
Master Plan	A long-term planning document. It establishes the framework and key elements of a site reflecting a clear vision created and adopted in an open process. It synthesizes civic goals and the public’s aspirations for a project, gives them form and organization, and defines a realistic plan for implementation, including subsequent approvals by public agencies.
Mechanic’s Lien	A lien created by statute which exists against real property in favor of persons who have performed work or furnished materials for the improvement of the real property.
Metes and Bounds	A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles. Metes (length or measurements) and Bounds (boundaries) description is often used when a great deal of accuracy is required.
Mineral Rights	A landowner’s right to receive a portion of the profits of any minerals that are extracted from the land.
Mobile Home	A structure transportable in one or more sections, designed and equipped to contain not more than two dwelling units to be used with or without a foundation system.
Modular	A system for the construction of dwellings and other improvements to real property through the on-site assembly of component parts (modules) that have been mass produced away from the building site.
Mortgage	An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation.
Mortgage Banker	A person whose principal business is the originating, financing, closing, selling and servicing of loans secured by real property for institutional lenders on a contractual basis.
Mortgage Broker	A broker who arranges a mortgage loan between a lender and a borrower for a fee.
Mortgage Insurance Premium (MIP)	The amount paid by a mortgagor for mortgage insurance on an FHA-insured loan.
Mortgagee	One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; a lender or creditor.
Mortgagor	One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation; a borrower.
Multiple Listing Service	An association of real estate agents providing for a pooling of listings and the sharing of commissions on a specified basis.
Net Lease	A lease requiring a lessee to pay charges against the property such as taxes, insurance and maintenance costs in addition to rental payments.
Net Listing	A listing which provides that the agent may retain as compensation for agent’s services all sums received over and above a net price to the owner.
Novation	The substitution or exchange of a new obligation or contract for an old one by the mutual agreement of the parties.
Obedience	This fiduciary relationship obligates the agent to act in good faith at all times, obeying the client’s instructions in accordance with the contract.
Offer and Acceptance	Elements required for the formation of a legally binding contract. The expression of an offer to contract on certain terms by one person (the “offeror”) to another person (the “offeree”), and an indication by the offeree of its acceptance of those terms.
Open Listing	An authorization given by a property owner to a real estate agent wherein said agent is given the nonexclusive right to secure a purchaser; open listings may be given to any number of agents without liability to compensate any except the one who first secures a buyer ready, willing, and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer.
Opinion of Title	An attorney’s written evaluation of the condition of the title to a parcel of land after examination of the abstract of title.
Ostensible Agency	A person who has been given the appearance of being an employee or acting (an agent) for another (principal), which would make anyone dealing with the ostensible agent reasonably believe he/she was an employee or agent.
Package Mortgage	A method of financing in which the loan that finances the purchase of a home also finances the purchase of personal items such as a washer and dryer, refrigerators, stove, and other specified appliances.
Partition	A division of real or personal property or the proceeds therefrom among co-owners.
Partnership	An arrangement in which two or more individuals share the profits and liabilities of a business venture.
Percentage Lease	Lease on the property, the rental for which is determined by the amount of business done by the lessee; usually a percentage of gross receipts from the business with provisions for a minimum rent.
Periodic Estate	An interest in land where there is no definite termination date but the rental period is fixed at a certain sum per week, month, or year. Also called an estate from period to period.
Personal Property	Any property which is not real property.
Police Power	The right of the State to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.
Pre-Approval	A step above pre-qualification; an evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend.
Pre-Qualification	A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.
Prepayment Penalty	The charge payable to a lender by a borrower under the terms of the loan agreement if the borrower pays off the outstanding principal balance of the loan prior to its maturity.
Price	The amount a purchaser agrees to pay and a seller agrees to accept in an arm’s length transaction.
Price Fixing	Conspiring to establish fixed fees or prices for services or products.
Primary Mortgage Market	The marketplace whereby loans are originated.
Principal	The employer of an agent, such as a buyer or seller.
Principle of Anticipation	Affirms that value is created by anticipated benefits to be derived in the future.
Principle of Change	Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely the result of cause and effect.
Principle of Conformity	Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.
Principle of Contribution	A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment.
Principle of Progression	The worth of a lesser valued residence tends to be enhanced by association with higher valued residences in the same area.
Principle of Substitution	Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution.
Priority of Lien	The order in which liens are given legal precedence or preference.
Private Mortgage Insurance (PMI)	Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan.
Probate	The official proving of a will. The legal process wherein the estate of a decedent is administered.
Promissory Note	Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.
Property Insurance	Provides protection against most risks to property, such as fire, theft and some weather damage.
Proration	Adjustments of interest, taxes, and insurance, etc., on a pro rata basis as of the closing or agreed upon date.
Quitclaim Deed	A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.
Radon	A colorless, odorless gas that is emitted from soils, rocks and water as a result of radioactive decay in certain areas of the country.
Real Estate	Land plus anything permanently attached to land.
Real Estate Broker	A person or an organization acting as the agent for others in negotiating the purchase and sale of real property for a fee.
Real Estate Salesperson	An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
Real Estate Settlement Procedures Act (RESPA)	A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development.
Real Estate Syndicate	An organization of investors usually in the form of a limited partnership who have joined together for the purpose of pooling capital for the acquisition of real property interests.
Real Property	Land, things affixed to land, appurtenances, plus the bundle of rights.
Reasonable Care	The degree of caution and concern for the safety of himself/herself and others an ordinarily prudent and rational person would use in the circumstances. This is a subjective test of determining if a person is negligent, meaning he/she did not exercise reasonable care.
Reconciliation	The final stage in the appraisal process where the appraiser reviews the data and estimates the subject property’s value.
Recording	The process of placing a document on file with a designated public official for public notice. This public official is usually a county officer known as the County Recorder who designates the fact that a document has been presented for recording by placing a recording stamp upon it indicating the time of day and the date when it was officially place on file. Documents filed with the Recorder are considered to be placed on open notice to the general public of that county.
Redemption	Buying back one’s property after a judicial sale.
Redlining	An illegal lending policy of denying real estate loans on properties in older, changing urban areas, usually with large minority populations, because of alleged higher lending risks without due consideration being given by the lending institution to the credit worthiness of the individual loan applicant.
Remainder	An estate which takes effect after the termination of the prior estate, such as a life v
Remainderman	A person who inherits or is entitled to inherit property upon the termination of the estate of the former owner.
Rescission	The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.
Reversionary Interest	The interest which a person has in lands or other property, upon the termination of the preceding estate. A future interest.
Right of Survivorship	The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant; the distinguishing feature of a joint tenancy.
Riparian Rights	The right of a landowner whose land borders on a stream or watercourse to use and enjoy the water which is adjacent to or flows over the owner’s land provided such use does not injure other riparian owners.
Sales Comparison Approach	A valuation method which compares a subject property’s characteristics with those of comparable properties which have recently sold in similar transactions.
Satisfaction of Mortgage (Release of Mortgage)	The discharge of a mortgage from the records upon payment of the debt.
Scarcity	A lack of supply.
Secondary Mortgage Market	The market where lenders sell their loans to the large secondary marketing agencies (FNMA, FHLMC, and GNMA) or to other investors.
Section	Section of land is established by government survey, contains 640 acres and is one mile square.
Servient Tenement	A parcel of real property that is encumbered by an easement of a dominant estate.
Severalty Ownership	Real property that is owned by only one person. Sole ownership.
Sheriff’s Deed	A deed given by court order in connection with the sale of a property to satisfy a judgment.
Sherman Anti-Trust Act	Federal legislation including imposition of civil and punitive damages for anti-trust activities.
Short Sale	A seller’s attempt to sell the real estate whereby the liens are greater than the value of the property.
Single Agent	An agent who works only for the buyer or the seller.
Special Agent	An agent with limited authority to act on behalf of the principal, such as created by a listing contract.
Special Warranty Deed	A deed in which the grantor warrants or guarantees the title only against defects arising during the grantor’s ownership of the property and not against defects existing before the time of the grantor’s ownership.
Specific Lien	A lien that attaches to one specific property only.
Specific Performance	An action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission.
Statute of Frauds	A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforceable at law, e.g., contracts for the sale of real property, contracts that are not performed within one year.
Statute of Limitations	A statute prescribing a period of limitations for the bringing of certain kinds of legal actions.
Statutory Lien	A charge or claim upon property that arises by virtue of specific statutes that address the relationship between the property owner and the party given the ability to place the lien.
Steering	The practice in which real estate brokers guide prospective home buyers towards or away from certain neighborhoods based on their race. Steering is highly illegal.
Straight Line Depreciation	A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement.
Straight Note	A note in which a borrower repays the principal in a lump sum at maturity while interest is paid in installments or at maturity.
Subagent	A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent’s principal.
Subdivision Regulations	The control of the division of a tract of land into individual lots by requiring development according to specific standards and procedures adopted by local ordinances.
Sublease	A lease given by a lessee.
Subordinate	The make subject to, or junior or inferior to.
Subordination Agreement	An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property.
Supply	The amount of a certain good or service that is available in the market.
Survey	The process by which a parcel of land is measured and its area is ascertained; also the blueprint showing the measurements, boundaries and area.
Tax	Enforced charge extracted of personal, corporations and organizations by the government to be used to support government services and programs.
Tax-Deferred Exchange	The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade.
Tax Lien	A lien imposed by law upon a property to secure the payment of taxes.
Tenancy by the Entireties	Under certain state laws, ownership of property acquired by a husband and wife during marriage, which property is jointly and equally owned. Upon death of one spouse it becomes the property of the survivor.
Tenancy in Common	Co-ownership of property by two or more persons who each hold an undivided interest, without right of survivorship; interest need not be equal.
Testamentary Trust	A trust which arises upon the death of the testator, and which is specified in his or her will.
Testate	Having made a valid will before one dies.
Testator	One who makes a will.
Testers	Volunteers from state or private agencies who enforce fair housing by claiming to be home seekers, thereby finding out if brokers deal fairly with all clients/customers.
Tie-in Arrangement	A contract where a transaction depends upon another.
Time is of the Essence	A condition of a contract expressing the essential nature of performance of the contract by a party in a specified period of time.
Time-Share	A form of subdivision of real property into rights to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, on an annual or some other periodic basis, for a specified period of time.
Title Insurance	Insurance to protect a real property owner or lender up to a specified amount against certain types of loses, e.g., defective or unmarketable title.
Townships	In the survey of public lands of the United States, a territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square, located between two range lines and two township lines.
Trade Fixture	Articles of personal property annexed by a business tenant to real property which are necessary to the carrying on of a trade and are removable by the tenant.
Transferability	The ability to transfer ownership of property from one person to another.
Trust	A legal relationship under which title to property is transferred to a person known as a trustee.
Trustee	The third party under a deed of trust; A person who holds title to property for the benefit of another called a beneficiary.
Trustor	One who borrows money from a trust deed lender, then deeds the real property securing the loan to a trustee to be held as security until the trustor has performed the obligation to the lender under terms of a deed of trust; A person who conveys title to a trustee.
Truth-in-Lending Act (TILA)	The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to ensure that prospective borrowers and purchasers of credit receive credit cost information before entering into a transaction.
Underground Storage Tank	A tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground.
Underwriter	An individual at a lending institution who determines credit worthiness in order to qualify an applicant for a loan.
Underwriting	The criteria with which a lender determines the credit worthiness in order to qualify them for the loan.
Uniform Commercial Code	Establishes a unified and comprehensive method for regulation of security transactions in personal property, superseding the existing statutes on chattel mortgages, conditional sales, trust receipts, assignment of accounts receivable and others in this field.
Unilateral Contract	A contract in which one party promises to do something if the other party performs a certain act, but the other party does not promise to perform it; the contract is formed only if the other party does perform the requested act.
Universal Agent	The agent who has complete authority over any activity of the principal; for example, power of attorney.
Urea Formaldehyde Foam Insulation (UFFI)	A type of foamed in-place insulation that releases formaldehyde gas. It was banned by the Consumer Public Safety Commission in 1982 from use in residences and schools. Holding that the risks had not been proven, a Federal Court lifted the ban in 1983. The local consumer and/or environmental protection agency should be consulted for additional information on this type of insulation.
Usury	On a loan, claiming a rate of interest greater than that permitted by law.
Utility	The ability to give satisfaction and/or excite desire for possession.
VA Guaranteed Loan	A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran’s Affairs guarantees the lender payment of the mortgage.
Valid	Having force, or binding force; legally sufficient and authorized by law.
Value	Present worth of future benefits arising out of ownership to typical users/investors.
Variance	The authorization to improve or develop a particular property in a manner not authorized by zoning.
Void	To have no force or effect; that which is unenforceable.
Voidable	That which is capable of being adjudged void, but is not void unless action is taken to make it so.
Voluntary Alienation	Transfer of title to an asset with the consent of the owner.
Voluntary Lien	Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.
Warranty Deed	A deed used to convey real property which contains warranties of title and quiet possession, and the grantor thus agrees to defend the premises against the lawful claims of third persons.
Wrap-around Mortgage	A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property.
Yard Setbacks	A required open area along the property lines of a zoning lot, which must be unobstructed from the lowest level to the sky.  Yard setbacks ensure light and air between buildings.
Yield	The interest earned by an investor on an investment (or by a bank on money it has loaned). Also, called return.
Zoning	The separation or division of a city or town into districts, the regulation of buildings and structures in such districts in accordance with their construction and the nature and extent of their use, and the dedication of such districts to particular uses designated to serve the general welfare.
Zoning District	A mapped residential, commercial, or manufacturing district with similar use, bulk and density regulations.
Zoning Maps	Maps that indicate the location and boundaries of zoning districts within a municipality.
Zoning Ordinance	A statement setting forth the type of use permitted under each zoning classification and specific requirements for compliance.