| Abandonment |
The voluntary relinquishment of rights of ownership or other
interest(such as an easement) by failure to use the property. coupled with an
intent to abandon (give up interest). |
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| Abatement |
A reduction or decrease. Usually applies to a decrease of
assessed evaluation of ad valorem taxes after the assessment and levy or to a
reduction in rent due to maintenance problems. |
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| Abstract |
A summary; an abridgment. Before the use of photostatic
copying public records were kept by abstracts of recorded documents. |
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| Abstract of Judgement |
A summary of the essential provisions of a court judgment,
which when recorded in the county recorder's office. creates a lien upon the
property of the defendant in that county. both presently owned or after
required. |
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| Abstract of Title |
A summary of the public records relating to the title to a
particular piece of land as such title is recorded in the county clerk's
records. An attorney or title insurance company reviews an abstract of title to
determine whether there are any title defects which must be cleared before a
buyer can purchase clear, marketable, and insurable title. |
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| Abstracter's Certificate |
A certificate contained in an abstract which shows the time
period and scope of the search of public records done by the abstracter. |
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| Abutting |
The joining, reaching, or touching of adjoining land. Abutting
pieces of land have a common boundary. |
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| Acceleration Clause |
A provision in a written mortgage, note, bond or conditional
sales contract that, in the event of default, the whole amount of principal and
interest may be declared to be due and payable at once. |
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| Acceptance |
A buyer's or seller's agreement to enter into a contract and
be bound by the terms of the offer. |
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| Accessibility |
The location of a site in terms of how easily it may be
reached by customers, employees, carriers, and others necessary to the intended
use of the property. May also be defined as the ease of access to structures by
the disabled. |
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| Accord |
An agreement by which one accepts something different
(usually less) from what is owed as full satisfaction. The amount owned may be
in dispute or simply accepted as full satisfaction by the creditor or claimant.
The agreement and acceptance is called "Accord and Satisfaction".
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| Accretion |
An addition to land through natural causes. |
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| Accrued Depreciation |
(1) The amount reserved each year in the accounting system
for replacement of a building or other asset. (2) The useful life of a property
at any given time. |
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| Acknowledgment |
A formal declaration before an authorized official (usually a
notary public) by a person who has executed a document, that he did in fact
execute (sign) the document. |
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| Acquisition Costs |
The cost of acquiring property other than purchase price;
escrow fees, title insurance, lenders fees, etc. |
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| Acre |
A measure, usually of land, equal to 43,560 square feet (or
160 square rods) in any shape; a square area with one side equal to 208.71
lineal feet. |
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| Act of God |
Damage caused by nature (floods, winds etc) rather than
destruction by man. |
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| Action to Quiet Title |
A court action to establish ownership to real property.
Although technically not an action to remove a cloud on a title, the two
actions are usually referred to as "Quiet Title" actions. |
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| Ad Valorem |
Designates an assessment of taxes against property. Literally,
according to value. |
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| Add-On Interest |
A method of charging interest usually used in the financing
of automobiles, but not generally used in real estate financing. Interest is
computed on the total amount borrowed and added on to the principal. Each
payment is then deducted from this total amount. Interest on real estate loans
is usually figured based on the balance owing after each payment is made
(declining in balance). |
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| Addendum |
Something added. Items added to a document, letter, contract,
escrow instructions, etc. |
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| Additional Principal Payment |
A payment made by a borrower of more than the scheduled
principal amount due, in order to reduce the outstanding balance on the loan,
to save on interest over the life of the loan and/or pay off the loan early.
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| Adjustable Rate Mortgage (ARM) |
Stands for Adjustable Rate Mortgage, also referred to as a
Variable Rate Mortgage. They both mean the same thing. An ARM is a mortgage
with an interest rate that adjusts periodically to reflect changes in market
conditions. Your mortgage payments are adjusted up or down (usually on an
annual basis) as the interest rate changes. To protect you in a rising interest
market, rate increases are limited (usually 2 percentage points annually; 6
percentage points over the life of the loan). You may also see ARM's referred
to as AML's or VRM's. |
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| Adjusted Gross Income |
Gross income of a building if fully rented, less an allowance
for estimated vacancies and collection losses.. |
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| Adjustments |
Money that the buyer and sellers credit each other at the time
of closing. Often includes taxes and down payment. |
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| Administrator/Administratrix |
A man/woman appointed by a court to settle the estate of a
deceased person when there is no will. |
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| Advance Fee |
A fee charged by a broker to a seller to cover all or a
portion of the broker's costs of promoting the property. |
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| Adverse Possession |
The right of an occupant of land to acquire title against the
real owner, where possession has been actual, continuous, hostile, visible, and
distinct for the statutory period. |
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| 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 him - or herself and indicates marital status; (2) certifies that
since the examination of the title on the date of the contract no defects have
occurred in the title; and (3) certifies that he or she is in possession of the
property (if applicable) |
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| Affidavit |
Written statement signed and sworn to before some person
authorized to take an oath. |
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| Agency |
An Agency relationship is one in which one person is empowered
to act on behalf of another, subject to the control and consent of the person
being represented. In real estate transactions, usually the seller is the
principal, and the broker is the agent: however, a buyer represented by a
broker (i.e., buyer as principal is a growing trend. In an agency relationship,
the principal delegates to the agent the right to act on his or her behalf in
business transactions and to exercise some discretion while so acting. The
agent has a fiduciary relationship with the principal and owes to that
principal the duties of accounting, care, loyalty, and obedience. |
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| Agent |
A person who acts or has the power to act for another. A real
estate agent acts on behalf of the principal (the buyer or seller) and has a
fiduciary responsibility towards the principal. Buyer's Agent: a agent who
represents the buyer and owes fiduciary duties to the buyer. Seller's Agent: an
agent who represents the seller and owes fiduciary duties to the seller. They
are usually referred to as the listing agent who is authorized by a property
owner to find a buyer or a tenant for the property. |
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| Agreement of sale |
A written agreement by which a buyer agrees to purchase and a
seller agrees to sell according to terms set forth in that agreement. |
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| Alienation Clause |
A clause calling for a debt under a mortgage or deed of trust
to be due in its entirety upon transfer of ownership of the secured property.
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| ALTA (American Land Title Association ) |
Since any lending institution funding a loan for the
acquisition of property wants assurance of good title on the property, there is
a special policy prepared for the benefit of the lender known as ALTA Policy.
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| Amenities |
A feature of real property that enhances its attractiveness
and increases the occupant's or user's satisfaction, although the feature is
not essential to the property's use. Natural amenities include a pleasant or
desirable location near water, scenic views, etc. Man-made amenities include
swimming pools, tennis courts, community buildings, and other recreational
facilities. |
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| Amortization |
The reduction of a debt or principal of a loan based on a
periodic schedule; the gradual repayment of a loan. Mortgage loans are
typically amortized over 15 to 30 years. The monthly mortgage payments remain
the same over the life of the loan, even though the proportion of principal to
interest changes over time. In the early part of the loan period the principal
repayment is very small and interest repayment is very high. At the end of the
loan that relationship is reversed. |
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| Amortization Schedule |
A timetable for payment of a mortgage which shows the amount
of each payment applied to interest and principal and the remaining balance
after each payment is made. |
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| Amortization Term (period) |
The amount of time it takes to pay off the loan. The
amortization term is expressed as a number of months. For example, for a 30
year fixed rate loan, the amortization term is 360 months. |
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| Annual Percentage Rate (APR) |
A term used in Truth-in-Lending Act to represent the
percentage relationship of the total finance charge to the amount of the loan.
The Apr reflects the cost of your mortgage loan as a yearly rate. It will be
higher than the interest rate stated on the note because it includes, the base
interest rate, loan discount points, fees and mortgage insurance. The APR more
accurately reflects what you'll be paying and allows you to compare different
mortgages based on actual costs. |
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| Annual Membership |
The amount that is charged annually for having a line of
credit available. Often charged regardless of whether or not you use the line.
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| Antitrust Laws |
Federal and state laws prohibiting, among other things,
monopolies, monopolistic practices, restraint of trade, and price fixing. |
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| APPEL Loan (Accelerating Payoff Progressive Equity Loan) |
A residential property loan which calls for a payment
increase over the first 6 years. Level payments are made for the remaining
years and the loan paid off during the 15th year. There is no prepayment
penalty and P.M.I is required. |
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| Application (or 1003) |
A form to be completed by a home loan applicant with the
lender's assistance to provide pertinent information about a prospective
borrower's employment, income, assets, debts and other financial information,
about the purpose of the home loan, and about the property securing the home
loan. Lenders also sometimes call it a 1003-the form number of Fannie Mae's
standard application form. |
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| Application Fee |
Often non-refundable, this is the fee charged by the lender to
cover a portion of the costs of processing a loan application. It is used
towards estimated initial mortgage processing expense such as appraisal and
credit report. |
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| Appraisal |
A professional opinion of the market value of a property.
Sometimes, an appraised value may be dependent upon certain improvements or
repairs being made. The maximum amount of the mortgage is usually based on the
appraisal. |
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| Appraisal Methods |
Generally, three major methods of appraisal: Cost Approach,
Income Approach, Market Value (comparables) Approach. |
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| Appraised Value |
The dollar figure for a property's estimated fair market
value, based on an appraiser's knowledge, experience, and analysis of the
property and comparable properties near by. |
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| Appraiser |
A person qualified by education, training, and experience to
estimate the value of real property. |
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| Appreciation |
An increase in the value of a property due to changes in
market conditions or other causes. Inflation, increased demand, home
improvement, and sweat equity are all causes of appreciation. The opposite of
depreciation. |
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| APR (Annual Percentage Rate) |
The total yearly cost of a loan stated as a percentage of the
loan amount: Includes the base interest rate, primary mortgage insurance, and
loan origination fee (points). Use the APR to compare various loan programs, as
all lenders are required to use the same guidelines in determining APR. Not to
be confused with initial interest rate, a teaser rate lenders use to get you
into a loan. |
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| ARM-Adjustable Rate Mortgage |
A loan that allows the interest rate to change periodically up
or down. The interest rate on an ARM is determined by adding a margin or spread
to a specified financial index. Financial indexes include; Treasury,
Certificate of Deposit, Cost of Funds. The margin is the difference between the
index rate and the ARM rate. Adjustment interval is how often the interest rate
is adjusted. A loan that adjusts its interest rate after six months is called a
six-month ARM. Rate caps limit how much your interest rate can move up or down.
Periodic caps limit the change per adjustment period, and a lifetime cap
governs the maximum amount the interest rate can increase or decrease over the
life of the loan. |
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| Arrears |
Payment made after its due is in arrears. Interest is said to
be paid in arrears since it is paid to the date of payment rather than in
advance. |
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| As Separate Property |
Ownership in real property which is to be specifically
excluded from community property. |
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| Asking (list) price |
The price placed on property for sale. |
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| Assessed value |
The value that a taxing authority (tax assessor) places on
real or personal property for the purpose of taxation; the assessed value is
different from the appraised value. |
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| Assessment |
The amount of tax due to local government. May also refer to
the amount due to local government or to common owners of a property (e.g., a
homeowner's association) for a special payment to cover expenses for
improvements or maintenance, such as new sewers, roads or street lights. |
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| Assessment Rolls |
A public record of the assessed value of property in the
taxing jurisdiction. |
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| Assessor |
A local government official who establishes the value of a
property for taxation purposes. |
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| Asset |
Anything of monetary value that is owned by a person. Assets
include real property, personal property, and enforceable claims against others
(including bank accounts, stocks, mutual funds, and so on). |
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| Assignment |
A transfer or making over to another the whole of any
property, real or personal, or of any estate or right therein. To assign is to
transfer. |
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| Assumability |
When a home is sold, the seller may be able to transfer the
mortgage to the new buyer. This means the mortgage is assumable. Lenders
generally require credit review of the new borrower and may charge a fee for
the assumption. Some mortgages contain a due-on-sale clause, which means that
the mortgage may not be transferable to the new buyer. Instead, the lender may
make you pay the entire balance that is due when you sell the home.
Assumability can help you attract buyers if you sell your home. |
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| Assumable Mortgage |
An existing mortgage that can be taken over by the buyer on
the same terms given to the original borrower. |
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| Assumable Loan |
A loan in which the lender is willing to "transfer"
from the previous owner of the home to the new owner, sometimes at the same
interest rate, sometimes at a new rate. An assumable loan can make your home
more attractive to buyers when you want to sell. |
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| Assumption |
The agreement between the buyer and seller where the buyer
takes over the payments on an existing mortgage from the seller. Assuming a
loan can usually save the buyer money since this is an existing mortgage debt,
unlike a new mortgage where closing costs and new, probably higher, interest
rates will apply. |
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| Assumption Fee |
The fee paid to a lender (usually by the buyer) for the
lender's agreement to start collecting payment from the buyer instead of the
original borrower (seller). |
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| Assumption Clause |
A provision in an assumable loan that allows a buyer to assume
responsibility for the home loan from the seller. The loan does not need to be
paid in full by the original borrower (seller) upon sale or transfer of the
property. |
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| Assumption of Mortgage |
The transfer of title to property to a grantee wherein he
assumes liability for payment of an existing note secured by a mortgage against
the property; should the mortgage be foreclosed and the property sold for a
lesser amount than that due, the grantee-purchaser who has assumed and agreed
to pay the debt secured by the mortgage is personally liable for the
deficiency. Before a seller may be relieved of liability under the existing
mortgage, the lender must accept the transfer of liability for payment of the
note. Also known as simple assumption. |
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| Attachment |
Method by which a debtor's property is placed in the custody
of the law and held as security pending outcome of a creditor's suit. |
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| Attorney's Opinion of Title |
An instrument written and signed by the attorney who examines
the abstract of title, stating his opinion as to whether a seller may convey
good title. |
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| Auction |
A public sale of property to the highest bidder. |
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| Average Sq. Ft. of Local Tenant Leases |
Assists in analyzing the strength of the local tenants. This
is the area where tenant fall out is the most prevalent and care should be
taken to control the number of smaller area renters. Refer to lease agreements,
rent rolls, operating statements and proforma. Formula: Total sq.ft. of local
tenant leases / number of local tenants |
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| Average Years Remaining on Local Tenant Leases |
Assists in analyzing the stability of local tenants as well
as projecting future tenant fall out. Refer to lease agreements, lease
summaries and rent rolls. Formula: Total years local tenant leases / total
number of local tenants |
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| Average Years Remaining on Anchor Tenant Leases |
Represents the blend in years remaining on the anchor tenant
leases. Take care to examine each lease term remaining so that one long term
lease does not distort the analysis on the balance of short term leases. Refer
to lease agreements, lease summaries and rent rolls. Formula: Years remaining
on anchor tenant leases / # of anchor tenants |
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| Aviation Easement |
An easement over private property abutting an airport runway,
which limits the height of crops, trees, structures, etc., in the aircraft's
takeoff and landing path. |