METROPOLITAN REAL ESTATE - GLOSSARY OF REAL ESTATE TERMS
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Acre
43,560 square feet
Adjustable Rate Mortgage (ARM)
A mortgage in which the interest rate rises or falls depending on prevailing rates
Agency Disclosure
Any statement reqiured by law to be given to prospective sellers and buyers by licensees regarding agency relationship
Agent
A person designated to act for the principal
Amenities
Benefits of a property which make it more desirable
Annual Percentage Rate (APR)
The cost of credit stated as an annual rate, including interest, loan fees, and discount points
Appraisal
An estimate of property value
Appraisal Report
A written estimate, prepared by a licensed appraiser
Appreciation
Increased value of investment
Assessment
Value given a property by a public official as a basis for taxation
Assets
All things of value belonging to a company or individual
Assignment
Transfer of rights under a contract to another
Assumable Mortgage
One that will not become due when the collateral is transferred
Attachment
Siezure of property by court order, usually in anticipation of a judgement in a pending lawsuit
Balloon Note
A loan in which the final payment is larger than the preceding payments
Balloon Payment
The final payment on a balloon note
Bank Commitment
A written statement by a lender as to the terms of a mortgage loan
Bequeath
A gift of real property
Bequest
Personal property recieved under a will
Betterment
A municipal improvement which increases property value
Binder
A receipt for an earnest money deposit of cash or check
Binding Contract
A valid enforceable contract
Blind Advertising
Adverstising which does not indentify the broker
Block Busting
Illegally producing panic selling in a neighborhood for personal gain
Bona Fide
In good faith
Breach of Contract
Failure to fulfill an obligation or perform a duty
Broker
A person licensed by the state to represent others, for a fee, in real estate transactions
Building Code
Ordinances regulating building construction
Building Permit
Governmental permit for construction of new buildings or improvements
Capital Gain
Profit realized from the sale of an investment
Cash Flow
Annual income from investment property
Certificate of Title
Evidence of title issued by land court to registered owner
Chattel
Item of personal property
Chattel Mortgage
Mortgage on personal property
Closed Mortgage
A mortgage which imposes a penalty for pre-payment
Closing
The day the title is conveyed
Closing Statement
An accounting of funds involved in the transaction, given to the parties at the closing
Cloud on Title
Defect in title
Collateral
Property that secures a loan
Commission
Fee or compensation earned in a real estate transaction
Common Area
Area owned and shared by condominium or co-op owners
Common Expenses
Costs shared by owners to maintain a condo or co-op
Common Law
Law that develops from custom and usage
Community Property
Equal ownership of property by spouses
Condemnation
The legal action in eminent domain procedure
Condominium
Individual ownership of property with shared ownership in common elements
Consideration
A lawful act or promise of legal value given in exchange for something
Constructive Eviction
Tenant vacates or terminates a lease because of landlords failure to maintain the premises fit for intended use
Contract
A legally enforceable agreement
Conventional Loan
A mortgage that is not insured by FHA nor guaranteed by the VA
Conversion to Condominiums
The conversion of rental units to private ownership
Cooperative(Co-op)
A building owned by a corporation that leases space to its shareholders
Cooperative Bank
A source of financing
Co-ownership
Ownership by two or more persons or entities
Corporation
A business owned by stockholders
Counter Offer
An offer made in response to an offer
Covenant
A written agreement or promise in a contract
Credit Union
A source of financing
Cul de sac
A street closed at one end with a circular turnaround
Debt Service
Annual payment of principal and interest required to amortize a loan
Deed
A written instrument that when properly executed and delivered conveys title to land
Default
Breach of contract
Deposit
Cash or check with an offer to show good faith
Deposit Receipt
A form used to accept earnest money to bind an offer for the purchase of property
Devise
A gift of real estate by will
Discount Points
Charges made by lender to adjust the effective rate of interest on a mortgage
Down Payment
Cash paid over and above mortgage
Dual Agency
One broker representing both parties in the same transaction
Earnest Money
Cash or check with an offer to show good faith
Effective Gross Income
Annual gross rents less vacancy losses and legal fees
Effective Yield
The return to a lender on an investment over a given period of time
Eminent Domain
The right of the government to take private property for public purposes provided fair compensation is paid
Encroachment
A building or structure which partly or wholly intrudes on anothers land
Equity
Market value of a property less mortgage debt
Equity Mortgage
A line of credit against the equity in a persons home
Escrow
Depositing of funds with a neutral third party
Escrow Account
A separate account for holding clients' and customers' money
Eviction
A legal proceeding to recover possession of real property following a default or breach of condition of a tenancy or lease
Exclusive Agency Listing
A listing given to one broker for a definate time period with the owner reserving the right to sell the property directly without owing a commission
Exclusive Right to Sell
A listing given to one broker, exclusive of everyone, for a definate time period with the agreement the broker is entitled to a commission regardless of who sells the property
Executed Contract
A contract that has been completed
Executory Contract
A contract that has not been completely performed
Fannie Mae
Federal National Mortgage Association
Federal Housing Administration(FHA)
Part of HUD, insures loans
Federal National Mortgage Association(Fannie Mae)
A private corporation buying and selling loans in the secondary mortgage market
First Mortgage
The mortgage loan with the highest priority for repayment in the event of foreclosure
First Refusal
The right to match another offer and buy property
Fixture
An object that has been attached to land so as to become real estate
Foreclosure
Procedure to terminate the borrower's right to redeem after default
Freddie Mac
Federal Home Loan Mortgage Corporation
General Lien
A lien on all of a persons property
Ginnie Mae
Government National Mortgage Association
Good and Marketable Title
Unecumbered title
Government National Mortgage Association(Ginnie Mae)
A government agency that creates a secondary mortgage market by sponsoring mortgage backed securities program and providing low income housing subsidies
Grantee
The person named in the deed who acquires ownership
Grantor
The person named in the deed who conveys title
Gross Income
Total annual income from a fully occupied investment property
Holdover tenant
A tenant who stays beyond the lease
Homeowner Policy
A combined property and liability insurance policy designed for residential use
Homestead Protection
State laws that protect against the forced sale of a persons home
HUD
Department of Housing and Urban Development
Improvements
Any form of land development such as buildings, roads, fences
Inflation
An increase in wholesale and retail prices, while the value of money decreases
Interest
Money paid like rent for the use of borrowed money
Investment
The outlay of money or something of value for income or profit, something in which money is invested for the purpose of making a profit
Investment Property
Real estate purchased for annual income and appreciation
Joint Tenancy
A form of property co-ownership that features the right of survivorship
Judgment
A final determination by a court upon respective rights and claims of the parties to a lawsuit
Judgment Lien
A claim against the assets in favor of the holder of a court ordered judgment
Junior Mortgage
Subordinate in priority to a senior loan
Landlord
The owner of leased property
Lease
A contract conveying the right to use property for a specified period of time, in receipt for payment of rent
Legal Title
Ownership
Lessee
The tenant
Lessor
The landlord
Letter of Commitment
A lenders statement given to a borrower upon approval of a loan
Liability
Claim against assets
License
Revocable permission to use property
Lien
A claim against property
Lien Certificate
A statement issued by the town or city clerk indicating the status of municipal liens against a property
Life Estate
A fee simple determinable estate for the balance of a named persons life
Life Tenant
Owner of a life estate
Liquidated Damages
An amount of money specified in a contract to be paid to the non-defaulting party in case of breach
Lis Pendens
A recorded statement that a suit is pending
Littoral Right
The right of an owner to use and enjoy the water of a lake or sea bordering the owner's land
Loan Application
Contains information for the lender to base a decision to make a loan
Loan Commitment
Written statement to the borrower, approving the loan and describing the repayment term
Loan Fees
Mortgage originators charges for processing a loan
Loan Point
A loan fee equal to one percent of the mortgage
Loan Servicing
The task of collecting monthly payments on a mortgage and day to day handling of delinquencies, taxes, insurance, payoffs, and releases
Loan to Value Ratio
A percentage reflecting what a lender will lend divided by the market value of the property
Maintenance fee
Condominium unit owners fee to cover the cost of upkeep of the common elements
Management
Professional supervision of rental property for a fee
Market Price
The amount paid for a property
Market Value
A sales price of a property reasonably exposed to the market,agreed to between a fully informed buyer and seller, neither being unfairly compelled to act
Master Deed
Required for formation of a condominium project
Materialman's Lien
Protection for those providing building materials for the repair or construction of a building
Mechanic's Lien
Protection for those who perform labor in the erection or repair of a building
Meeting of the Minds
An offer and acceptance and mutual understanding as to the terms of a binding contract
Mile
5,280 feet or 1,760 yards
Mortgage
A document pledging property as security for the repayment of a loan
Mortgage Broker
Arranges loans for a fee but does not service them
Mortgage Commitment
Written statement to the borrower, approving the loan and describing the repayment term
Mortgage Company
A business firm that makes mortgage loans for sale to investors
Mortgagee
Lender
Mortgagor
Borrower
Multiple Listing Service(MLS)
An organization that allows member brokers to share and exchange information on listings
Municipal Lien Certificate
A certificate obtained from the city or town clerk to ascertain the status of real estate taxes and other municipal charges
Mutual Savings Bank
A source of financing
National Association of Realtors
A trade organization for real estate people
Negative Cash Flow
A condition wherein the cash paid out exceeds the cash received
Net Listing
Prohibited by law, A listing in which the commission is the difference between the selling price and a minimum price set by the seller
Nonconforming Use
A permissible use which is inconsistant with current zoning regulations
Notarize
To attest to the validity of signatures
Notary Public
Person commissioned to attest to validity of signatures
Obligee
The person to whom a debt is owed
Obligor
The person responsible for paying the debt
Offer
A written proposal to enter into a sales contract
Offer and Acceptance
Creates a meeting of the minds and a binding contract
Offeree
The party who receives the offer
Offeror
The party who makes the offer
Open Mortgage
A mortgage which may be prepaid without penalty
Operating Expenses
Costs of operating income property
Option
The right at some future time to purchase or lease property at a predetermined price
Optionee
The party receiving the option
Optionor
The party giving the option
Origination Fee
A lender's charge for making a loan
Partnership
A form of ownership for business purposes
Perennials
Trees and shrubs that do not have to be planted annually
Personal Property
All things of value not classified as real estate
PITI payment
A loan payment which includes principal, interest, taxes, and insurance premium
Positive Cash Flow
Occurs when operating expenses and debt service are less than income
Prepaid Items
In prorating adjustments between the buyer and seller, charges which have been paid in advance by the seller
Prepayment Penalty
A fee charged by a lender for prepaying on a mortgage
Principal
Amount due on a loan
Principal and Agent
Two parties in an agency relationship
Promissory Note
A written promise to pay a debt
Property Manager
Person who supervises rental property for a fee
Purchase and Sale Agreement
Written contract for the purchase of real estate
Quiet Enjoyment
The right to the undisturbed use of leased or granted property
Recording
Filing documents with public records or registry of deeds
Registry of Deeds
In Massachusetts, the county recording office
Regulation Z
Another name for the Federal Truth-in-Lending Act
Release
To disharge or give up a claim, such as a mortgage
Rent
Money paid for the use of another's property
Rent Control
Government imposed restrictions on maximum rent and eviction proceedings
Rescission
Legal remedy to terminate a contract
Restrictions
Public or private control of the use of land through zoning or deed limitations
Revocation
The nullification of an offer prior to acceptance
Rider
An annexation to a document made part of the document by reference
Right of First Refusal
The right to match another offer and buy property
Riparian Right
Rights of a land owner bordering a body of water
Sale and Lease Back
Owner/Occupant sells property and then remains as a tenant
Second Mortgage
One which ranks behind the first mortgage in priority
Secondary Mortgage Market
A market where loans can be sold, such as Fannie Mae
Security Deposit
Money held by landlord to assure performance of the lease
Setback
Minimum distance required between structures and the property line
Settlement Statement (HUD)
An accounting statement at closing that shows each item charged or credited, to whom and for how much
Sherman Anti-Trust Act
Prohibits monopolies
6-D Certificate
An affidavit of a condominium association certifying that there are no outstanding assessments or condo fees on a particular unit being sold
Smoke Detector Certificate
A certificate of compliance from the local fire department certifying that all smoke detectors on the property meet current standards
Snob Zoning
Refers to Massachusetts law which allows an aggrieved party to obtain an immediate review of an unfair, arbitrary, or capricious decision of a local appeal board
Special Assessments
Charges levied to provide publicly built improvements that will benefit a limited geographical area
Specific Performance
A court ordered performance of a contract according to the precise terms agreed upon
Statute of Frauds
Law which requires certain contracts to be in writing in order to be enforceable
Steering
The illegal practice of directing minority members to or away from certain neighborhoods
Straight-Line Depreciation
Depreciation in equal amounts each year over the life of the asset
Subdivision
A tract of land divided into lots for residential or business development
Sublease
A lease given by the lessee
Subleasee
The person who rents from a lessee
Sublessor
The person who rents to a sublessee
Sublet
To transfer only a portion of one's lease rights
Survivorship
The right of a surviving co-owner of real estate
Tax
Charge for the cost of operation of government
Tax Abatement
Reduction of property taxes
Tax Shelter
An investment which produces losses that may be used to offest taxes on income from other sources
Tenancy
The nature of a right to hold, possess, or use property as by lease or ownership
Tenancy at Will
Possession for an unspecified period of time with landlord's consent
Tenancy by the Entirety
Co-ownership by husband and wife
Tenancy in Common
Co-ownership of property without the right of survivorship
Tenant
One who holds or posesses property
Time is of the Essence
A phrase meaning that the time limits of a contract must be faithfully observed or the contract is voidable
Title
The right to, or ownership of property; evidence of ownership such as a deed or bill of sale
Title Insurance
Protection of a property owner against losses resulting from defective title
Title Search
Examination of the chain of ownership in the public records to discover possible defects in title
Trust
Ownership by a trustee for the benefit of another
Trust Account
A separate account for hold clients' and customers' money
Trustee
One who holds property in trust for another
Trustor
One who creates a trust
Truth-in-Lending Act
Federal Consumer Credit Act of 1968
Unit Deed
Transfers title to a condominium unit
Valid Contract
A contract that meets all requirements of law and is binding and enforceable in a court of law
Variable Rate Mortgage
A mortgage in which the interest rate rises and falls with changes in prevailing interest rates
Waiver
The act of surrendering or giving up a right
Walk-Through
Buyer's right to inspect the property prior to closing
Writ of Execution
Court order to remove a tenant
Yield
The rate of return expected or earned on an investment
Zoning
Public regulations that control the specific use of land