Nc Real Estate Broker Pre-Licensing Exam Glossary Terms

Front 1

abstract of title

Back 1

The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Front 2

acceleration clause

Back 2

The clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or another covenant.

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acknowledgment

Back 3

A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.

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acre

Back 4

A measure of land equal to 43,560 square feet. Approximately 1/2 the area of a football field.

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actual notice

Back 5

Express information or fact; that which is known; direct knowledge.

Front 6

adjustable-rate mortgage (ARM)

Back 6

A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.

Front 7

ad valorem tax

Back 7

A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.

Front 8

general tax

Back 8

A tax levied according to value, generally used to refer to real estate tax. Also called the ad valorem tax.

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adverse possession

Back 9

The actual, open, notorious, hostile and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title.

Front 10

agency

Back 10

The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.

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agent

Back 11

One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.

Front 12

agricultural fixture

Back 12

In North Carolina, a fixture used in farming operations that is considered real property rather than personal property.

Front 13

air rights

Back 13

The right to use the open space above a property, usually allowing the surface to be used for another purpose.

Front 14

alienation

Back 14

The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession.

Front 15

alienation clause

Back 15

The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender's option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender's approval.

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amortized loan

Back 16

A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

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annual percentage rate (APR)

Back 17

The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth-in-Lending Act.

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anticipation

Back 18

The appraisal principle that holds that value can increase or decrease based on the expectation of some future benefit or detriment affecting the property.

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antitrust laws

Back 19

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).

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appraisal

Back 20

An estimate of the quantity, quality or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.

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appreciation

Back 21

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.

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appurtenance

Back 22

A right, a privilege or an improvement belonging to, and passing with, the land.

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appurtenant easement

Back 23

An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor's land.

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assessment

Back 24

The imposition of a tax, charge or levy, usually according to established rates.

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assignment

Back 25

The transfer in writing of interest in a bond, a mortgage, a lease or another instrument.

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assumption of mortgage

Back 26

Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.

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attachment

Back 27

The act of taking a person's property into legal custody by writ or another judicial order to hold it available for application to that person's debt to a creditor.

Front 28

attorney's opinion of title

Back 28

An abstract of title that a lawyer has examined and has certified to be, in his or her opinion, an accurate statement of the facts concerning the property ownership.

Front 29

balloon payment

Back 29

A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

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wains

Back 30

A board around the bottom of a wall perpendicular to the floor. Sometimes called baseboard, wainss cover the gap between the floor and the wall, protecting the wall from scuffs and providing a decorative accent.

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basic form (HO-1)

Back 31

An insurance policy covering buildings and personal property against loss or damage from fire, lightning, removal, windstorm, hail, explosion, riot, smoke, vandalism and theft.

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basis

Back 32

The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a 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, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.

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baseboard

Back 33

A board around the bottom of a wall perpendicular to the floor. Sometimes called wains, baseboards cover the gap between the floor and the wall, protecting the wall from scuffs and providing a decorative accent.

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adjusted basis

Back 34

The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a 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, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.

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bench mark

Back 35

A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

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beneficiary

Back 36

(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn.

(2) A lender in a deed of trust loan transaction.

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binder

Back 37

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.

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blanket loan

Back 38

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.

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blockbusting

Back 39

The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.

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branch office

Back 40

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.

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breach of contract

Back 41

The violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

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broad form (HO-2)

Back 42

An insurance policy covering more perils than the basic form. This form also covers falling objects; weight of snow, ice or sleet; collapse of buildings; malfunctioning heating systems; accidental discharge of water or steam; and electrical currents that are artificially generated.

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broker

Back 43

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

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brokerage

Back 44

The bringing together of parties interested in making a real estate transaction.

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broker-in-charge

Back 45

Required for each brokerage firm and each branch office, the person responsible for displaying all licenses properly, notifying the Real Estate Commission of any change of business address or trade name, ensuring that all advertising is done properly, maintaining the trust account and trust account records properly, retaining and maintaining all real estate transaction records properly and supervising all sales people associated with the firm or office.

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building code

Back 46

An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

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building permit

Back 47

Written governmental permission for the construction, alteration or demolition of an improvement, showing compliance with building codes and zoning ordinances.

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bundle of legal rights

Back 48

The concept of land ownership that includes ownership of all legal rights to the land-for example, possession, control within the law and enjoyment.

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business cycle

Back 49

The upward and downward fluctuations in business activities generally characterized by four stages: expansion, recession, depression and revival.

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buydown

Back 50

A financing technique used to reduce the monthly payments for the first few years of a 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.

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buyer-agency agreement

Back 51

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.

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capital gain

Back 52

The profit earned from the sale of an asset

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capitalization

Back 53

A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as capitalization rateThe rate of return a property will produce on the owner's investment.

Front 54

caveat emptor

Back 54

A Latin phrase meaning "Let the buyer beware."

Front 55

ceiling joist

Back 55

Attached to the top plate of a wall, these joists carry the weight of the roof.

Front 56

certificate of reasonable value (CRV)

Back 56

A form indicating the appraised value of a property being financed with a VA loan.

Front 57

certificate of title

Back 57

A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.

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chain of title

Back 58

The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.

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change

Back 59

The appraisal principle that holds that no physical or economic condition remains constant.

Front 60

chattel

Back 60

Items, called chattels, that do not fit into the definition of real property; for example, movable objects.

Front 61

Civil Rights Act of 1866

Back 61

An act that prohibits racial discrimination in the sale and rental of housing.

Front 62

closing statement

Back 62

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.

Front 63

HUD statement

Back 63

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.

Front 64

cloud on title

Back 64

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.

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LOADS

Back 65

An acronym for the agent's specific duties in an agency relationship: loyalty, obedience. accounting, disclosure and service.

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code of ethics

Back 66

A written system of standards for ethical conduct.

Front 67

coinsurance clause

Back 67

A clause in insurance policies covering real property that requires that the policyholder maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.

Front 68

commingling

Back 68

The illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker.

Front 69

commission

Back 69

Payment to a broker for services rendered, as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Front 70

common elements

Back 70

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.

Front 71

common law

Back 71

The body of law based on custom, usage and court decisions.

Front 72

community property

Back 72

A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. A holdover of Spanish law found predominantly in western states; the system was unknown under English common law.

Front 73

comparable

Back 73

Property used in an appraisal report that is substantially equivalent to the subject property.

Front 74

competition

Back 74

The appraisal principle that states that excess profits generate competition.

Front 75

condemnation

Back 75

A judicial or an administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.

Front 76

conditional-use permit

Back 76

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.

Front 77

condominium

Back 77

The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.

Front 78

confession of judgment clause

Back 78

A clause in a contract that permits judgment to be entered against a debtor without the creditor's having to institute legal proceedings.

Front 79

conformity

Back 79

The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value.

Front 80

Conner Act

Back 80

A North Carolina law that states that many types of real estate documents are not valid as to third parties unless the documents are recorded. These documents include deeds, mortgages, purchase contracts, installment land contracts, assignments, options, leases of three years or more, easements and restrictive covenants.

Front 81

consideration

Back 81

(1) That received by the grantor in exchange for his or her deed.
(2) Something of value that induces a person to enter into a contract

Front 82

construction loan

Back 82

Interim financing/Construction loans are associated with financing the construction phase of the project, before the project is completed and ready for occupancy.

Front 83

interim financing

Back 83

Interim financing/Construction loans are associated with financing the construction phase of the project, before the project is completed and ready for occupancy.

Front 84

constructive eviction

Back 84

The 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.

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constructive notice

Back 85

The 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.

Front 86

contingency

Back 86

A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

Front 87

contract

Back 87

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.

Front 88

contribution

Back 88

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.

Front 89

conventional loan

Back 89

A loan that requires no insurance or guarantee.

Front 90

conveyance

Back 90

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.

Front 91

cooperating broker

Back 91

The broker (that representa a buyer), from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.

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cooperative

Back 92

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.

Front 93

co-ownership

Back 93

Title ownership held by two or more persons.

Front 94

cost approach

Back 94

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.

Front 95

counteroffer

Back 95

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.

Front 96

covenant

Back 96

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.

Front 97

covenant of quiet enjoyment

Back 97

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.

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credit

Back 98

On a closing statement, an amount entered in a person's favor-either an amount the party has paid or an amount for which the party must be reimbursed.

Front 99

curtesy

Back 99

A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.

In 1960, dower was abolished along with the husband's curtesy

Front 100

debit

Back 100

On a closing statement, an amount charged; that is, an amount that the debited party must pay.

Front 101

decedent

Back 101

A person who has died.

Front 102

dedication

Back 102

The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.

Front 103

deed

Back 103

A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Front 104

deed in lieu of foreclosure

Back 104

A deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings

Front 105

deed in trust

Back 105

An instrument that grants a trustee under a land trust full power to sell, mortgage and subdivide a parcel of real estate. The beneficiary controls the trustee's use of these powers under the provisions of the trust agreement.

Front 106

deed restriction

Back 106

Clause in a deed limiting the future uses of the property. Deed restrictions may impose a vast variety of limitations and conditions-for example, they may limit the density of buildings, dictate the types of structures that can be erected or prevent buildings from being used for specific purposes or even from being used at all.

Front 107

default

Back 107

The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

Front 108

defeasance clause

Back 108

A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.

Front 109

defeasible fee estate

Back 109

An estate in which the holder has a fee simple title that may be divested upon the occurrence or nonoccurrence of a specified event. Two categories of defeasible fee estates exist: fee simple on condition precedent (fee simple determinable) and fee simple on condition subsequent.

Front 110

Fee Simple Determinable

Back 110

A fee simple determinable is an estate that will end automatically if the condition of the grantor occurs and the interest will revert back to the grantor or the heirs of the grantor. The future interest created with this estate is called a possibility of reverter. Durational language such as, "to A as long as the property is used for a park" creates this type of estate.

Front 111

Fee Simple Subject to Condition Subsequent

Back 111

A fee simple subject to a condition subsequent does not end automatically upon the happening of the condition; the future interest in this estate must be claimed by the holder of the interest. The future interest is called a "right of reentry" or "right of entry." The language used to create this interest is, "to A, but if A sells alcohol on the land, then grantor has the right of reentry."

Front 112

deficiency judgment

Back 112

A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

Front 113

delivery and acceptance

Back 113

The actual delivery of a deed by a grantor and the actual or implied acceptance of the deed by the grantee.

Front 114

demand

Back 114

The amount of goods people are willing and able to buy at a given price; often coupled with supply.

Front 115

density zoning

Back 115

Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision.

Front 116

Department of Housing and Urban Development (HUD)

Back 116

A federal cabinet department officially known as the U.S. Department of Housing and Urban Development; active in national housing programs. Among its many programs are urban renewal, public housing, model cities, rehabilitation loans, FHA subsidies and water and sewer grants.

Front 117

depreciation

Back 117

(1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence and external obsolescence.
(2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.

Front 118

descent

Back 118

The acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.

Front 119

developer

Back 119

A person or company that attempts to put land to its most profitable use through the construction of improvements.

Front 120

devise

Back 120

A gift of real property by will. The donor is the devisor, and the recipient is the devisee.

Front 121

discount point

Back 121

A unit of measurement used for various loan charges; one point equals 1 percent of the amount of the loan.

Front 122

dominant tenement

Back 122

A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.

Front 123

dower

Back 123

The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime, the right is only a possibility of an interest; upon his death, it can become an interest in land.

In 1960, dower was abolished along with the husband's curtesy

Front 124

dual agency

Back 124

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.

Front 125

due-on-sale clause

Back 125

A provision in a mortgage that states that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property.

Front 126

duress

Back 126

The unlawful constraint or action exercised on a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is voidable.

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earnest money

Back 127

Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.

Front 128

easement

Back 128

A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.

Front 129

easement by condemnation

Back 129

An easement created by the government or a government agency that has exercised its right under eminent domain.

Front 130

easement by necessity

Back 130

An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.

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easement by prescription

Back 131

An easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law.

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easement in gross

Back 132

An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner.
For example, a utility easement.

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economic life

Back 133

The number of years during which an improvement will add value to the land.

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emblements

Back 134

Growing crops, such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales.

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eminent domain

Back 135

The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.

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employee

Back 136

Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of the employee. See also independent contractor.

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enabling acts

Back 137

State legislation that confers zoning powers on municipal governments.

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encroachment

Back 138

A building or some portion of it-a wall or fence, for instance-that extends beyond the land of the owner and illegally intrudes on the land of an adjoining owner or on a street or an alley.

Front 139

encumbrance

Back 139

Anything-such as a mortgage, tax or judgment lien; an easement; a restriction on the use of the land; or an outstanding dower right-that may diminish the value or use and enjoyment of a property.

Front 140

Equal Credit Opportunity Act (ECOA)

Back 140

The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status.

Front 141

equitable right of redemption

Back 141

The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.

Front 142

equitable title

Back 142

The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.

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equity

Back 143

The interest or value that an owner has in property over and above any indebtedness

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escheat

Back 144

The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate without heirs capable of inheriting or when the property is abandoned.

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escrow

Back 145

The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.

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escrow account

Back 146

The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction.

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escrow instructions

Back 147

A document that sets forth the duties of the escrow agent as well as the requirements and obligations of the parties when a transaction is closed through an escrow.

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estate in land

Back 148

The degree, quantity, nature and extent of interest a person has in real property.

Front 149

estate (tenancy) at sufferance

Back 149

The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.

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estate (tenancy) at will

Back 150

An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.

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estate (tenancy) for years

Back 151

An interest for a certain, exact period of time in property leased for a specified consideration.

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estate (tenancy) from period to period

Back 152

An interest in leased property that continues from period to period-week to week, month to month or year to year.

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eviction

Back 153

A legal process to oust a person from possession of real estate.

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evidence of title

Back 154

Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, or a Torrens registration certificate.

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exchange

Back 155

A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate).

Front 156

exclusive-agency listing

Back 156

-A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission.
-The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.

Front 157

exclusive-right-to-sell listing

Back 157

A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner's stated terms, for a commission.
The owner must pay the agent, regardless of who finds the buyer. This is the most common agreement used.

Front 158

executed contract

Back 158

A contract in which all parties have fulfilled their promises and thus performed the contract.

Front 159

execution

Back 159

The signing and delivery of an instrument. Also, a legal order directing an official to enforce a judgment against the property of a debtor.

Front 160

executory contract

Back 160

A contract under which something remains to be done by one or more of the parties.

Front 161

express agreement

Back 161

An oral or a written contract in which the parties state the contract's terms and express their intentions in words.

Front 162

external depreciation

Back 162

The reduction in a property's value caused by outside factors (those that are off the property).

Front 163

Fair Housing Act

Back 163

The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status or national origin.

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Fannie Mae

Back 164

A quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.

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Federal Deposit Insurance Corporation (FDIC)

Back 165

An independent federal agency that manages the insurance funds for deposits in commercial banks and savings and loan associations.

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Federal Reserve System

Back 166

The country's central banking system, which controls the nation's monetary policy by regulating the supply of money and interest rates.

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fee simple absolute

Back 167

The maximum possible estate or right of ownership of real property, continuing forever.

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FHA loan

Back 168

A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA's regulations.

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fiduciary

Back 169

One in whom trust and confidence are placed; a reference to a broker employed under the terms of a listing contract or buyer agency agreement.

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fiduciary relationship

Back 170

A relationship of trust and confidence, as between trustee and beneficiary, lawyer and client or principal and agent.

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fixture

Back 171

An item of personal property that has been converted to real property by being permanently affixed to the realty.

Front 172

floor joist

Back 172

A horizontal board laid on edge, resting on the beams that provide the main support for the floor. The subflooring is nailed directly to the joists.

Front 173

footing

Back 173

A concrete support under a foundation, chimney or column that usually rests on solid ground and is wider than the structure being supported. Footings are designed to distribute the weight of the structure over the ground.

Front 174

foreclosure

Back 174

A legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.

Front 175

foundation wall

Back 175

The masonry or concrete wall below ground level that serves as the main support for the frame structure. Foundation walls form the side walls of the basement.

Front 176

fraud

Back 176

A deception intended to cause a person to give up property or a lawful right.

Front 177

Freddie Mac

Back 177

A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market.

Front 178

freehold estate

Back 178

An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

Front 179

front footage

Back 179

The measurement of a parcel of land by the number of feet of street or road frontage.

Front 180

functional obsolescence

Back 180

A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.

Front 181

future interest

Back 181

A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right of reentry.

Front 182

gable

Back 182

The triangular portion of an end wall rising from the level top wall under the inverted V of a sloping roof that aids water drainage. A gable can be made of weatherboard, tile or masonry and can extend above the rafters.

Front 183

gap

Back 183

A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.

Front 184

general agent

Back 184

One who is authorized by a principal to represent the principal in a specific range of matters.

Front 185

general lien

Back 185

The right of a creditor to have all of a debtor's property-both real and personal-sold to satisfy a debt.

Front 186

general warranty deed

Back 186

A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.

Front 187

Ginnie Mae

Back 187

A government agency that plays an important role in the secondary mortgage market. It sells mortgage-backed securities that are backed by pools of FHA and VA loans.

Front 188

girder

Back 188

A heavy wooden or steel beam supporting the floor joists and providing the main horizontal support for the floor.

Front 189

graduated-payment mortgage (GPM)

Back 189

A loan in which the monthly principal and interest payments increase by a certain percentage each year for a certain number of years and then level off for the remaining loan term.

Front 190

grantee

Back 190

A person who receives a conveyance of real property from a grantor.

Front 191

granting clause

Back 191

Words in a deed of conveyance that state the grantor's intention to convey the property at the present time. This clause is generally worded as "convey and warrant," "grant," "grant, bargain and sell" or the like.

Front 192

grantor

Back 192

The person transferring title to or an interest in real property to a grantee.

Front 193

gross income multiplier (GIM)

Back 193

A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property's value.

Front 194

gross lease

Back 194

A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance and operating expenses. Most residential leases are gross leases.

Front 195

gross rent multiplier (GRM)

Back 195

The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property's value.

Front 196

ground lease

Back 196

A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant's rights and obligations continue until the lease expires or is terminated through default.

Front 197

growing-equity mortgage (GEM)

Back 197

A loan in which the monthly payments increase annually, with the increased amount being used to reduce directly the principal balance outstanding and thus shorten the overall term of the loan.

Front 198

highest and best use

Back 198

The possible use of a property that would produce the greatest net income and thereby develop the highest value.

Front 199

hip

Back 199

A pitched roof with sloping sides and ends.

Front 200

holdover tenancy

Back 200

A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant's continued occupancy.

Front 201

home equity loan

Back 201

A loan (sometimes called a line of credit ) under which a property owner uses his or her residence as collateral and can then draw funds up to a prearranged amount against the property.

Front 202

homeowner's insurance policy

Back 202

A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability and other common risks.

Front 203

implied agreement

Back 203

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Front 204

implied warranty of habitability

Back 204

A theory in landlord/tenant law in which the landlord renting residential property implies that the property is habitable and fit for its intended use.

Front 205

improvement

Back 205

(1) Any structure, usually privately owned, erected on a site to enhance the value of the property-for example, a fence or a driveway.
(2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street or sewer.

Front 206

income capitalization approach

Back 206

The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.

Front 207

independent contractor

Back 207

-Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays all expenses and Social Security and income taxes and receives no employee benefits.
-Most real estate salespeople are independent contractors.

Front 208

index method

Back 208

The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs.

Front 209

installment contract

Back 209

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed.

Front 210

contract for deed

Back 210

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed.

Front 211

articles of agreement for warranty deed

Back 211

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which may not be until final payment. Also called a contract for deed or articles of agreement for warranty deed.

Front 212

installment sale

Back 212

A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.

Front 213

installment sale

Back 213

A transaction in which the sales price is paid in two or more installments over two or more years. If the sale meets certain requirements, a taxpayer can postpone reporting such income until future years by paying tax each year only on the proceeds received that year.

Front 214

insulation

Back 214

Pieces of plasterboard, asbestos sheeting, compressed wood-wool, fiberboard or other material placed between inner and outer surfaces, such as walls and ceilings, to protect the interior from heat loss. Insulation works by breaking up and dissipating air currents.

Front 215

interest

Back 215

A charge made by a lender for the use of money.

Front 216

intestate

Back 216

The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent's heirs as provided in the state law of descent.

Front 217

intrinsic value

Back 217

An appraisal term referring to the value created by a person's personal preferences for a particular type of property.

Front 218

investment

Back 218

Money directed toward the purchase, improvement and development of an asset in expectation of income or profits.

Front 219

involuntary lien

Back 219

A lien placed on property without the consent of the property owner.

Front 220

joint tenancy

Back 220

Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. On the death of a joint tenant, the decedent's interest passes to the surviving joint tenant or tenants by the right of survivorship.

Front 221

judgment

Back 221

The formal decision of a court upon the respective rights and claims of the parties to an action or a suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.

Front 222

junior lien

Back 222

An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty.

Front 223

land

Back 223

The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.

Front 224

lease

Back 224

A written or an oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord's real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.

Front 225

leasehold estate

Back 225

A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest.

Front 226

lease option

Back 226

A lease under which the tenant has the right to purchase the property either during the lease term or at its end.

Front 227

lease purchase

Back 227

The purchase of real property, the consummation of which is preceded by a lease, usually long-term; typically done for tax or financing purposes.

Front 228

legal description

Back 228

A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.

Front 229

legally competent parties

Back 229

People who are recognized by law as being able to contract with others; those of legal age and sound mind.

Front 230

leverage

Back 230

The use of borrowed money to finance an investment.

Front 231

levy

Back 231

To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person to satisfy an obligation.

Front 232

liability coverage

Back 232

Insurance providing protection of the property owner against financial claims of others.

Front 233

license

Back 233

(1) A privilege or right granted to a person by a state to operate as a real estate broker or salesperson.
(2) The revocable permission for a temporary use of land-a personal right that cannot be sold.

Front 234

lien

Back 234

A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.

Front 235

lien theory

Back 235

Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.`

Front 236

life cycle costing

Back 236

In property management, comparing one type of equipment with another based on both purchase cost and operating cost over its expected useful lifetime.

Front 237

life estate

Back 237

An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.

Front 238

life tenant

Back 238

A person in possession of a life estate.

Front 239

liquidated damages

Back 239

An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.

Front 240

liquidity

Back 240

The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.

Front 241

lis pendens

Back 241

A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.

Front 242

listing agreement

Back 242

A contract between an owner (as principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission.

Front 243

listing broker

Back 243

The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the cooperating broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the cooperating broker may be the same person.

Front 244

littoral rights

Back 244

(1) A landowner's claim to use water in large navigable lakes and oceans adjacent to his or her property.
(2) The ownership rights to land bordering these bodies of water up to the high-water mark.

Front 245

loan origination fee

Back 245

A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.

Front 246

loan-to-value ratio

Back 246

The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.

Front 247

lot-and-block (recorded plat) system

Back 247

A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.

Front 248

management agreement

Back 248

A contract between the owner of income property and a management firm or an individual property manager that outlines the scope of the manager's authority.

Front 249

mansard

Back 249

An architectural style in which the top floor or floors of a structure are designed to appear to be the roof. Such a roof has two slopes on each of the four sides of the building, with the upper slope less steeply inclined.

Front 250

market

Back 250

A place where goods can be bought and sold and a price established.

Front 251

marketable title

Back 251

A good or clear title, reasonably free from the risk of litigation over possible defects.

Front 252

Marketable Title Act

Back 252

Provides that if a chain of title can be traced back for 30 years without a problem, it becomes a marketable title. The act is designed to eliminate obsolete defects in a chain of title.

Front 253

market value

Back 253

The most probable price property will bring in an arm's-length transaction under normal conditions on the open market.

Front 254

mechanic's lien

Back 254

A statutory lien created in favor of contractors, laborers and materialmen who have performed work or furnished materials in the erection or repair of a building.

Front 255

metes-and-bounds description

Back 255

A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.

Front 256

minor

Back 256

Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.

Front 257

monetary policy

Back 257

Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.

Front 258

month-to-month tenancy

Back 258

A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be month to month.

Front 259

monument

Back 259

A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.

Front 260

mortgage

Back 260

A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.

Front 261

mortgage banker

Back 261

A mortgage loan company that originates, services and sells loans to investors.

Front 262

mortgage broker

Back 262

An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service.

Front 263

mortgagee

Back 263

A lender in a mortgage loan transaction.

Front 264

mortgage lien

Back 264

A lien or charge on the property of a mortgagor that secures the underlying debt obligations.

Front 265

mortgagor

Back 265

A borrower in a mortgage loan transaction.

Front 266

multiperil policy

Back 266

An insurance policy that offers protection from a range of potential perils, such as those of fire, hazard, public liability and casualty.

Front 267

multiple-listing clause

Back 267

A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple-listing organization.

Front 268

multiple-listing service (MLS)

Back 268

A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing and able buyers for their properties more quickly than they could on their own. Most MLSs accept exclusive-right-to-sell or exclusive-agency listings from their member brokers.

Front 269

negotiable instrument

Back 269

A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.

Front 270

net lease

Back 270

A lease requiring that the tenant pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities and repairs.

Front 271

net operating income (NOI)

Back 271

The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses.

Front 272

nonconforming use

Back 272

A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.

Front 273

nonfreehold estate

Back 273

A tenant's right to occupy real estate during the term of a lease, generally considered to be a personal property interest. Also called a leasehold estate.

Front 274

nonhomogeneity

Back 274

A lack of uniformity; dissimilarity. Because no two parcels of land are exactly alike, real estate is said to be nonhomogeneous.

Front 275

North Carolina Condominium Act of 1986

Back 275

Specifies that a condominium is created and established when the developer of the property executes and records a declaration of its creation in the county where the property is located. The declaration must include any covenants, conditions or restrictions on the use of the property. Other requirements include disclosure and other consumer protection measures in connection with new residential condominium unit sales.

Front 276

North Carolina Fair Housing Act of 1983

Back 276

State fair housing law containing similar prohibitions to those of the federal fair housing law. Unlike the federal law, however, the North Carolina law does not exempt owners who are selling their own property, and it does exempt the rental of a unit in a one-unit to four-unit residential building if the owner or one of the owner's family members lives in one of the units.

Front 277

North Carolina Human Relations Council

Back 277

The state agency responsible for enforcing the North Carolina Fair Housing Act of 1983.

Front 278

North Carolina Residential Rental Agreements Act

Back 278

The state act that makes the obligations of the landlord and the tenant mutually dependent. If either the landlord or the tenant fails to fulfill a duty, the other party is no longer responsible for fulfilling his or her equivalent duty.

Front 279

North Carolina Tenant Security Deposit Act

Back 279

The state act that regulates the amount of money that can be required as a security deposit and what the landlord can do with that deposit. The amount of the deposit depends on the term of the tenancy.

Front 280

North Carolina Time Share Act

Back 280

The portion of North Carolina real estate law that defines time-shares and regulates their development and sales.

Front 281

novation

Back 281

Substituting a new obligation for an old one or substituting new parties to an existing obligation.

Front 282

obsolescence

Back 282

The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.

Front 283

occupancy permit

Back 283

A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.

Front 284

offer and acceptance

Back 284

Two essential components of a valid contract;
a "meeting of the minds."

Front 285

offeror/offeree

Back 285

The person who makes the offer is the offeror.
The person to whom the offer is made is the offeree.

Front 286

Office of Equal Opportunity (OEO)

Back 286

The federal agency under the direction of the secretary of the Department of Housing and Urban Development, which is in charge of administering the federal Fair Housing Act.

Front 287

Office of Thrift Supervision (OTS)

Back 287

Monitors and regulates the savings and loan industry. OTS was created by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

Front 288

open-end loan

Back 288

A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.

Front 289

open listing

Back 289

A listing contract under which the broker's commission is contingent on the broker's producing a ready, willing and able buyer before the property is sold by the seller or another broker.

Front 290

option

Back 290

An agreement to keep open for a set period an offer to sell or purchase property.

Front 291

option listing

Back 291

A listing with a provision that gives the listing broker the right to purchase the listed property.

Front 292

package loan

Back 292

A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.

Front 293

parol evidence rule

Back 293

A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be varied or contradicted by prior or contemporaneous oral or written negotiations.

Front 294

partition

Back 294

The division of cotenants' interests in real property when all parties do not voluntarily agree to terminate the co-ownership; takes place through court procedures.

Front 295

payment cap

Back 295

The limit on the amount the monthly payment can be increased on an adjustable-rate mortgage when the interest rate is adjusted.

Front 296

percentage lease

Back 296

A lease, commonly used for commercial property, whose rental is based on the tenant's gross sales at the premises. It usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.

Front 297

percolation test

Back 297

A test of the soil to determine whether it will absorb and drain water adequately to use a septic system for sewage disposal.

Front 298

periodic estate (tenancy)

Back 298

An interest in leased property that continues from period to period-week to week, month to month or year to year.

Front 299

personal property

Back 299

Items, called chattels, that do not fit into the definition of real property; movable objects.

Front 300

physical deterioration

Back 300

A reduction in a property's value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.

Front 301

pier

Back 301

A column, usually of steel-reinforced concrete. Piers are evenly spaced under a structure to support the weight. May also refer to the part of the wall between the windows or other openings that bears the wall weight.

Front 302

planned unit development (PUD)

Back 302

A planned combination of diverse land uses, such as housing, recreation and shopping, in one contained development or subdivision.

Front 303

plat map

Back 303

A map of a town, section or subdivision indicating the location and boundaries of individual properties.

Front 304

point of beginning (POB)

Back 304

In a metes-and-bounds legal description, the starting point of the survey, situated at one corner of the parcel. All metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning.

Front 305

police power

Back 305

The government's right to impose laws, statutes and ordinances, including zoning ordinances and building codes, to protect the public health, safety and welfare.

Front 306

power of attorney

Back 306

A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.

Front 307

prepaid item

Back 307

On a closing statement, an item that has been paid in advance by the seller, such as an insurance premium and some real estate taxes, for which he or she must be reimbursed by the buyer.

Front 308

prepayment penalty

Back 308

A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.

Front 309

primary mortgage insurance (PMI)

Back 309

Insurance coverage used for obtaining conventional loans with higher than normal loan-to-value ratios.

Front 310

primary mortgage market

Back 310

The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings and loan associations and mutual savings banks.

Front 311

principal

Back 311

(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits.
(2) The original amount (as in a loan) of the total due and payable at a certain date.
(3) A main party to a transaction-the person for whom the agent works.

Front 312

prior appropriation

Back 312

A concept of water ownership in which the landowner's right to use available water is based on a government-administered permit system.

Front 313

priority

Back 313

The order of position or time. The priority of liens is generally determined by the chronological order in which the lien documents are recorded. Tax liens, however, have priority even over previously recorded liens.

Front 314

private mortgage insurance (PMI)

Back 314

Insurance provided by a private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.

Front 315

procuring cause

Back 315

The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.

Front 316

promissory note

Back 316

A financing instrument that states the terms of the underlying obligation, is signed by its maker and is negotiable (transferable to a third party).

Front 317

property insurance

Back 317

A policy that provides property owner coverage for the basic structure on that property.

Front 318

property manager

Back 318

Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property and keeping up all accounting.

Front 319

proprietary lease

Back 319

A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder's right as a tenant to an individual apartment.

Front 320

prorations

Back 320

Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.

Front 321

protected class

Back 321

Any group of people designated as such by the Department of Housing and Urban Development (HUD) in consideration of federal and state civil rights legislation; currently includes ethnic minorities, women, religious groups, the handicapped and others.

Front 322

public offering statement

Back 322

The document all prospective time-share purchasers must receive before signing a sales contract. The statement must disclose all material facts about the property, as required by the state.

Front 323

puffing

Back 323

Exaggerated or superlative comments or opinions

Front 324

pur autre vie

Back 324

"For the life of another."
A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.

Front 325

purchase-money mortgage (PMM)

Back 325

A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.

Front 326

quantity-survey method

Back 326

The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction.

Front 327

quiet title

Back 327

A court action to remove a cloud on the title

Front 328

rafter

Back 328

One of a series of sloping beams that extends from the exterior wall to a center ridgeboard and provides the main support for the roof.

Front 329

rate cap

Back 329

The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan.

Front 330

ratification

Back 330

A method of creating an agency relationship in which the principal accepts the conduct of someone who acted without prior authorization as the principal's agent.

Front 331

ready, willing and able buyer

Back 331

One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Front 332

real estate

Back 332

Land; a portion of the earth's surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.

Front 333

Real Estate Commission

Back 333

The state governmental agency whose primary duties include making rules and regulations to protect the general public involved in real estate transactions, granting licenses to real estate brokers and salespeople and suspending or revoking licenses for cause.

Front 334

real estate investment trust (REIT)

Back 334

Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.

Front 335

real estate license law

Back 335

1) The state law enacted to protect the public from fraud, dishonesty and incompetence in the purchase and sale of real estate.real estate mortgage investment conduit (REMIC)
2)A tax entity that issues multiple classes of investor interests (securities) backed by a pool of mortgages.

Front 336

real estate recovery fund

Back 336

A fund established in some states from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.

Front 337

Real Estate Settlement Procedures Act (RESPA)

Back 337

The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.

Front 338

real property

Back 338

The interests, benefits and rights inherent in real estate ownership

Front 339

REALTOR

Back 339

A registered trademark term reserved for the sole use of active members of local REALTORS(r) boards affiliated with the National Association of REALTORS(r).

Front 340

reconciliation

Back 340

The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison, cost and income capitalization approaches to arrive at a final estimate of market value for the subject property.

Front 341

reconveyance deed

Back 341

A deed used by a trustee under a deed of trust to return title to the trustor.

Front 342

recording

Back 342

The act of entering or recording documents affecting or conveying interests in real estate in the recorder's office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.

Front 343

rectangular (government) survey system

Back 343

A system established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines.

Front 344

redemption

Back 344

The right of a defaulted property owner to recover his or her property by curing the default.

Front 345

redemption period

Back 345

A period of time established by state law during which a property owner has the right to redeem his or her real estate from a foreclosure or tax sale by paying the sales price, interest and costs. Many states do not have mortgage redemption laws.

Front 346

redlining

Back 346

The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.

Front 347

registration certificate

Back 347

The document that developers of time-shares in North Carolina must obtain from the Real Estate Commission before they can offer a project's time-shares for sale to the public.

Front 348

Regulation Z

Back 348

Implements the Truth-in-Lending Act requiring credit institutions to inform borrowers of the true cost of obtaining credit.

Front 349

release deed

Back 349

A document, also known as a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.

Front 350

remainder interest

Back 350

The remnant of an estate that has been conveyed, to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.

Front 351

rent

Back 351

A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.

Front 352

rent schedule

Back 352

A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building's estimated expenses, market supply and demand and the owner's long-range goals for the property.

Front 353

replacement cost

Back 353

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.

Front 354

reproduction cost

Back 354

The construction cost at current prices of an exact duplicate of the subject property.

Front 355

restrictive covenant

Back 355

A clause in a deed that limits the way the real estate ownership may be used.

Front 356

revenue stamps

Back 356

Tax stamps required to be affixed to a deed by state or local law. 1$ for each $500. Remember: round up!

Front 357

reverse-annuity mortgage (RAM)

Back 357

A loan under which the homeowner receives monthly payments based on his or her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or upon the death of the owner or the sale of the property.

Front 358

ridgeboard

Back 358

A heavy horizontal board, set on edge at the apex of the roof, to which the rafters are attached.

Front 359

right of first refusal

Back 359

The right of a person to have the first opportunity to either purchase or lease real property. In a lease situation, a right of first refusal might give the tenant the right either to purchase the property, if offered for sale, or to renew the lease or lease adjoining space.

In some condominiums, the association of apartment owners retains the right of first refusal on any sale of a unit.

Front 360

right-of-way

Back 360

The right given by one landowner to another to pass over the land, construct a roadway or use the land as a pathway, without actually transferring ownership.

Front 361

riparian rights

Back 361

An owner's rights in land that borders on or includes a stream, river or lake. These rights include access to and use of the water.

Front 362

roofing felt

Back 362

Sheets of flat or other close-woven, heavy material placed on top of the roof boards to insulate and waterproof the roof.

Front 363

roofing shingle

Back 363

Thin, small sheet of wood, asbestos, fiberglass, slate, metal, clay or other material used as the outer covering for a roof. Shingles are laid in overlapping rows to completely cover the roof surface. Shingles are sometimes used as an outer covering for exterior walls.

Front 364

rules and regulations

Back 364

Real estate licensing authority orders that govern licensees' activities. They usually have the same force and effect as statutory law.

Front 365

R-value

Back 365

The insulation value of materials. The higher the R-value, the more resistant the material is to the transfer of heat.

Front 366

sale and leaseback

Back 366

A transaction in which an owner sells his or her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.

Front 367

sales comparison approach

Back 367

The process of estimating the value of a property by examining and comparing actual sales of comparable properties.

Front 368

salesperson

Back 368

A person who performs real estate activities while employed by or associated with a licensed real estate broker.

Front 369

satisfaction of mortgage

Back 369

A document acknowledging the payment of a mortgage debt.

Front 370

secondary mortgage market

Back 370

A market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are first originated in the primary mortgage market.

Front 371

security agreement

Back 371

Part of the Uniform Commercial Code. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers-the sale of a business as a whole, including all fixtures, chattels and merchandise.

Front 372

security deposit

Back 372

A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.

Front 373

separate property

Back 373

Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage or purchased with separate funds after the marriage.

Front 374

servient tenement

Back 374

Land on which an easement exists in favor of an adjacent property (called a dominant estate); also called a servient estate.

Front 375

setback

Back 375

The amount of space local zoning regulations require between a lot line and a building line.

Front 376

severalty

Back 376

The ownership of real property by one person only; also called sole ownership.

Front 377

severance

Back 377

Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.

Front 378

sharecropping

Back 378

In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale, actually sharing the crop.

Front 379

siding

Back 379

Boards nailed horizontally to the vertical studs, with or without intervening sheathing, to form the exposed surface of the outside walls of the building. Siding may be made of wood, metal or masonry sheets.

Front 380

sill

Back 380

The lowest horizontal member of the house frame, which rests atop the foundation wall and forms a base for the studs. The term can also refer to the lowest horizontal member in the frame for a window or door.

Front 381

sole plate

Back 381

That which connects the studs to the flooring.

Front 382

special agent

Back 382

One who is authorized by a principal to perform a single act or transaction. A real estate broker is usually a special agent authorized to find a ready, willing and able buyer for a particular property.

Front 383

special assessment

Back 383

A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.

Front 384

special warranty deed

Back 384

A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language "by, through or under the grantor but not otherwise."

Front 385

specific lien

Back 385

A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

Front 386

specific performance

Back 386

A legal action to compel a party to carry out the terms of a contract

Front 387

square-foot method

Back 387

The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.

Front 388

statute of frauds

Back 388

That part of a state law that requires that certain instruments, such as deeds, real estate sales contracts and certain leases, be in writing to be legally enforceable.

Front 389

statute of limitations

Back 389

That law pertaining to the period of time within which certain actions must be brought to court.

Front 390

statutory lien

Back 390

A lien imposed on property by statute-a tax lien, for example-in contrast to an equitable lien, which arises out of common law.

Front 391

statutory redemption

Back 391

The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.

Front 392

steering

Back 392

The illegal practice of channeling home seekers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.

Front 393

stigmatized property

Back 393

Property regarded as undesirable because of events that occurred there; also called psychologically impacted property. Some conditions that typically stigmatize a property are murder, gang-related activity, proximity to a nuclear plant and even the alleged presence of ghosts

Front 394

straight (term) loan

Back 394

A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment

Front 395

subagent

Back 395

One who is employed by a person already acting as an agent; typically a reference to a salesperson licensed under a broker (agent) who is employed under the terms of a listing agreement.

Front 396

subdivider

Back 396

One who buys undeveloped land; divides it into smaller, usable lots; and sells the lots to potential users.

Front 397

subdivision

Back 397

A tract of land divided by the owner, known as the subdivider, into blocks, building lots and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.subdivision and development ordinances.

Municipal ordinances that establish requirements for subdivisions and development.

Front 398

subdivision plat

Back 398

A map of a town, section or subdivision indicating the location and boundaries of individual properties.

Front 399

subflooring

Back 399

Boards or plywood sheets nailed directly to the floor joists, serving as a base for the finish flooring. Subflooring is usually made of rough boards, although some houses have concrete subflooring.

Front 400

sublease

Back 400

The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also assignment.

Front 401

subletting

Back 401

The leasing of premises by a lessee to a third party for part of the lessee's remaining term. See also assignment.

Front 402

subordination

Back 402

Relegation to a lesser position, usually in respect to a right or security.

Clause in some mortgages which allows subsequent mortgages on the same property to have higher claim than the current mortgage.

Front 403

subrogation

Back 403

The substitution of one creditor for another, with the substituted party succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue to recover any claims they have paid.

Front 404

substitution

Back 404

An appraisal principle that states that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.

Front 405

subsurface rights

Back 405

Ownership rights in a parcel of real estate to the water, minerals, gas, oil and so forth that lie beneath the surface of the property.

Front 406

suit for possession

Back 406

A court suit initiated by a landlord to evict a tenant from leased premises after the tenant has breached one of the terms of the lease or has held possession of the property after the lease's expiration.

Front 407

suit to quiet title

Back 407

A court action intended to establish or settle the title to a particular property, especially when a cloud on the title exists.

Front 408

supply

Back 408

The amount of goods available in the market to be sold at a given price. The term is often coupled with demand.

Front 409

supply and demand

Back 409

The appraisal principle that follows the interrelationship of the supply of and demand for real estate. As appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace, as is any other commodity

Front 410

surety bond

Back 410

An agreement by an insurance or a bonding company to be responsible for certain possible defaults, debts or obligations contracted for by an insured party; in essence, a policy insuring one's personal or financial integrity. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated

Front 411

surface rights

Back 411

Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).

Front 412

survey

Back 412

The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions and position of a house on a lot, including the determination of any existing encroachments or easements.

Front 413

taxation

Back 413

The process by which a government or municipal quasi-public body raises monies to fund its operation.

Front 414

tax deed

Back 414

An instrument, similar to a certificate of sale, given to a purchaser at a tax sale. See also certificate of sale.

Front 415

tax lien

Back 415

A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

Front 416

tax sale

Back 416

A court-ordered sale of real property to raise money to cover delinquent taxes.

Front 417

tenancy by the entirety

Back 417

The joint ownership, recognized in some states, of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property.

Front 418

tenancy in common

Back 418

A form of co-ownership by which each owner holds an undivided interest in real property as if he or she were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have the right of inheritance.

Front 419

tenant

Back 419

One who holds or possesses lands or tenements by any kind of right or title.

Front 420

tenant improvement

Back 420

Alteration to the interior of a building to meet the functional demands of the tenant.

Front 421

testate

Back 421

Having made and left a valid will.

Front 422

testator

Back 422

A person who has made a valid will. A woman often is referred to as a testatrix, although testator can be used for either gender.

Front 423

time is of the essence

Back 423

A phrase in a contract that requires the performance of a certain act within a stated period of time.

Front 424

time-share

Back 424

A form of ownership interest that may include an estate interest in property and that allows use of the property for a fixed or variable time period.

Front 425

title

Back 425

(1) The right to or ownership of land.
(2) The evidence of ownership of land.

Front 426

title insurance

Back 426

A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects and matters specifically excluded by the policy.

Front 427

title search

Back 427

The examination of public records relating to real estate to determine the current state of ownership.

Front 428

title theory

Back 428

Describing those states that interpret a mortgage to mean that the lender is the owner of mortgaged land. Upon full payment of the mortgage debt, the borrower becomes the landowner.

Front 429

trade fixture

Back 429

An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.

Front 430

transfer tax

Back 430

Tax stamps required to be affixed to a deed by state or local law. $1 per $500 value, rounded up.

Front 431

trust

Back 431

A fiduciary arrangement whereby property is conveyed to a person or an institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.

Front 432

trust deed

Back 432

An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a deed of trust.

Front 433

trust deed lien

Back 433

A lien on the property of a trustor that secures a deed of trust loan.

Front 434

trustee

Back 434

The holder of bare legal title in a deed of trust loan transaction.

Front 435

trustee's deed

Back 435

A deed executed by a trustee conveying land held in a trust.

Front 436

trust funds

Back 436

Those monies received by a real estate licensee while acting as an agent in a real estate transaction. Generally, trust funds include earnest money deposits, down payments, tenant security deposits, rents and monies received from final settlements.

Front 437

trustor

Back 437

A borrower in a deed of trust loan transaction.

Front 438

unenforceable contract

Back 438

A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it. For example, an unsigned contract is generally unenforceable

Front 439

Uniform Commercial Code

Back 439

A codification of commercial law, adopted in most states, that attempts to make uniform all laws relating to commercial transactions, including chattel mortgages and bulk transfers. Security interests in chattels are created by an instrument known as a security agreement. To give notice of the security interest, a financing statement must be recorded. Article 6 of the code regulates bulk transfers-the sale of a business as a whole, including all fixtures, chattels and merchandise.

For example, if a homeowner purchases an item on credit, and gives the creditor a security sgreement, that item remains personal property. On sale of the home, the seller (or creditor, if defaulted) may remove the appliance.

Front 440

Uniform Settlement Statement

Back 440

The standard HUD Form 1 required to be given to the borrower, lender and seller at or before settlement by the settlement agent in a transaction covered under the Real Estate Settlement Procedures Act. The lender must retain its copy for at least two years.

Front 441

unilateral contract

Back 441

A one-sided contract wherein one party makes a promise to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.

Front 442

unit-in-place method

Back 442

The appraisal method of estimating building costs by calculating the costs of all of the physical components in the structure, with the cost of each item including its proper installation, connection, etc.; also called the segregated cost method.

Front 443

unit of ownership

Back 443

The four unities traditionally needed to create a joint tenancy:
unity of title
time
interest
possession

Front 444

usury

Back 444

Charging interest at a higher rate than the maximum rate established by state law.

Front 445

valid contract

Back 445

A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.

Front 446

VA loan

Back 446

A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit the lender's possible loss.

Front 447

value

Back 447

The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities.

Front 448

variance

Back 448

Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances.

Front 449

vendee

Back 449

A buyer, usually under the terms of a land contract.

Front 450

vendor

Back 450

A seller, usually under the terms of a land contract.

Front 451

voidable contract

Back 451

A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.

Front 452

void contract

Back 452

A contract that has no legal force or effect because it does not meet the essential elements of a contract.

Front 453

voluntary lien

Back 453

A lien placed on property with the knowledge and consent of the property owner.

For example, mortgage or deed of trust.

Front 454

wall stud

Back 454

The vertical member to which horizontal pieces are attached. Studs are placed 16 to 24 inches apart and serve as the main support for the roof and the second floor.

Front 455

waste

Back 455

An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.

Front 456

will

Back 456

A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.

Front 457

wraparound loan

Back 457

A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position. The new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount exceeding the existing first mortgage amount without disturbing the existence of the first mortgage

Front 458

zoning ordinance

Back 458

An exercise of police power by a municipality to regulate and control the character and use of property

Front 459

quitclaim deed

Back 459

A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.

Front 460

reversionary interest

Back 460

The remnant of an estate that the grantor holds after granting a life estate to another person.

Front 461

Accretion

Back 461

adding soil to land naturally

Front 462

Reliction

Back 462

Exposure of land due to permanent recision of a body of water

Front 463

Erosion

Back 463

The wearing away of soil.

Front 464

Avulsion

Back 464

One neighbor losing his soil on a neighbors lot

Front 465

Lateral Support or Subjacent Support

Back 465

Right of a land-owner to have the sides of his land supported by his neighbor

Front 466

Spot zoning

Back 466

A small area is rezoned in a different manner thante surrounding area.

Usually illegal & negatively effects neighbors & community.

Front 467

Common home environmental risk:

Back 467

-Lead based paint (pre-1978)
-Radon (uranium from rocks)
-Mold (water damage)
-Buried petroleum tanks (~pre-1960)

Front 468

Adjusted Basis

Back 468

Purchase Price
+ Closing Costs
+ Capital (permanent) Improvments

Front 469

1031 Exchange

Back 469

Like kind exchange. A 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes.

Front 470

Interstate Land Sales Full Disclosure

Back 470

Regulate interstate sale and lease of lots ib subdivisions of 25 or more lots.

Must furnish property report:
-distance over paved roads to nearby communities
-# homes occupied
-soil conditions affectin foundation & septic systems
-type of title a buyer receives
-existence of liens

Must be given 3 days before sales contract signed. 7 days to revoke. 2 years if report not received.

Front 471

Coastal Area Management Act (CAMA)

Back 471

Protect, preserve & give management guidelines in coastal areas.

Must be approved:
-building
-dredging
-filling
-digging
-clearing
-bulkheading

Front 472

Sediment Polution Control Act

Back 472

Handle problems of sedimentation (soil deposited in water) problems.

Prevents development that may disturb topography or vegetation that may cause erosion prolems.

Calls for erosion control devices, sedimentation plans and natural buffer zones.

Front 473

Overide Clause

Back 473

Clause in a listing contract saying seller will pay listing broker commission within a stated number of days after the listing contract expires (and if not relisted with another broker) for any buyer's introduced by the listing broker.

Also called an extender clause.

Front 474

Protection Agreement

Back 474

Agreement an exclusive buyer agent can sign with an unlisted seller to guarantee payment of commission.