question

Abandonment

answer

Non-payment of taxes

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Abstract of title

answer

A history of the ownership of parcel of land which lists transfers of title, rights, and liabilities.

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Acceleration Clause

answer

States that upon default, all the principal installments come due to immediately

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Accesion

answer

The idea that the owner of land is entitled to all the soil produces or all that is added to the land either intentionally or by mistake. Trade fixtures not removed are "assessed" by the owner of the property.

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Accretion

answer

Refers to land which is accumulated by the gradual washing or motion of water

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Accrued

answer

An accumulation

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Acknowledgement

answer

A formal declaration made by the grantor conveying the property to the grantee - a necessary element for validity of a deed.

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Acre

answer

A measure of land equal to 43,560 square feet

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Action to quiet Title

answer

The lawsuit filed by a person to remove or clear the claims against property.

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Actual Notice

answer

The actual knowledge that a person has about the existence of a particular fact.

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Ad Valorem

answer

A prefix meaning "based on value". Most local governments levy ad valorem tax on property.

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Adverse Possession

answer

A method of acquiring original title to property by open, notorious, and hostile possession for a statutory period of time; also referred to as prescription. POACH

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Agency

answer

A relationship in which one party (the principle) authorizes another party (the agent) the act as the principle's representative in dealing with third parties

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Agent

answer

One who acts for and in place of a principle for the purpose of affecting the principle's legal relations with third persons.

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Air rights

answer

The eight to use, control and occupy the space above a particular parcel of land

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Alienation Clause

answer

A provision in a mortgage requiring full payment of the debt upon the transfer of the title to the property, due on sale. Prevents loan assumptions.

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Allodial

answer

The free and full ownership of rights in land by individuals, which is the basis of real property in the united states

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Amortization

answer

The repayment of a financial obligation over a period of time in a series of periodic installments. In a level-payment mortgage, this is the portion of the debt service that reduces the principle.

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Amortized Loan

answer

A financial debt that is paid off over a period of time by a series of periodic payments. A loan can be fully amortized of partially amortized requiring a balloon payment to satisfy the debt at the end of the term.

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Annual Percentage Rate (APR)

answer

The yearly cost of credit. interest rate plus finance charge.

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Appraisal

answer

An opinion or estimate of value performed by a person licensed to do so.

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Appreciation

answer

An increase in Value

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Appurtenance

answer

Any right of privilege which belongs to and passes with land.

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Arms-Length Transaction

answer

Occurs between willing buyer and willing seller with each party completely knowledgeable about the market. A purchaser of a property between relatives (father & Son) would not be an "arms length transaction".

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Arrears

answer

Not on time; Late in making payments or completing work. Interest paid in arrears.

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As is

answer

A phrase which disclaims any promises or warranties. A person purchasing real estate "as is" takes it in exactly the condition in which it is found. Seller cannot hide latent defects.

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Assembledge

answer

Bringing two or more lots together under one ownership.

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Assessed Value

answer

The value placed on property, by tax assessor, for the purpose of determining the property tax.

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Assignment

answer

1) the means by which a person transfers contract rights; 2) occurs when the lessee parts with the entire estate, retaining no interest

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Attachment

answer

The process of taking a person's property into legal custody by a court order call writ of attachment. Property is Frozen.

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Attestation

answer

The act of witnessing a person's signing of an instrument by a notary public.

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Attorney in Fact

answer

A person given the authority to act on behalf of another under a power of attorney.

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Attorney's Opinion of Title

answer

A statement issued by an attorney after analyzing an abstract as to quality of title.

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Avulsion

answer

Occurs in cases where there is sudden loss of land through natural influences; i.e Storms

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Bad Title

answer

Title with defects making it unmarketable

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Balloon Payment

answer

The remaining balance, at maturity, on a loan that has not been completely repaid through periodic payments. Once paid, the outstanding balance is Zero. Partially amortized loan.

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Bargain and Sale Deed

answer

An instrument conveying title which recites a valuable consideration and commonly uses the words "bargain and sale" or words of similar import.

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Bench Mark

answer

A bronze disk permanently placed and precisely identified by government survey teams.

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Bilateral Contract

answer

A contract in which a promise is given for the promise of another. It becomes binding when mutual promises are communicated. (A real estate contract)

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Bill of Sale

answer

A document used to transfer ownership of personal property.

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Blanket Mortgage

answer

A mortgage which covers more than one piece of real estate. Often used by a developer in the financing of undeveloped lots. Contains partial release clause.

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Block A

answer

Means of subdividing large tracts of land into smaller sections, each of which is numbered for example, Lot 4, Block 8.

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Blockbusting

answer

Any activity which attempts to drive prices down for the purpose of causing transition from one ethnic group to another. This is a violation of Federal Fair Housing Laws. Also called "panic selling".

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Bounds

answer

Refers to boundaries; used with the word "metes" in the method of land description

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Breach of Contract

answer

A failure to preform, as promised, at the time the performance was due.

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Buffer Zone

answer

A means by which planners use space to separate two adjoining districts which have incompatible uses. A buffer zone consists of uses which are compatible with uses in each adjoining district.

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Building Code

answer

Ordinances passed by local governments with special minimum standards of construction for new buildings. They also apply to major additions to old construction.

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Bundle of Rights

answer

The rights of an owner to possess, control, enjoy, sell, lease, mortgage, and dispose of the property.

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Bylaws

answer

Legal documentation in a condominium regime which provides the establishment of the home-owners association; provides the powers and authority given to the board of directors; indicates various rights and responsibilities of the unit owners.

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Capital Gains

answer

The tax profit realized from the sale of property. (A "tax free" exchange is a deferment of capital gains).

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Capitalization

answer

Used in the income approach to value. To capitalize income means to convert future income into current present (current) value.

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Capitalization Rate

answer

The rate of return considered to be a reasonable return on investment - given the risk.

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Caveat Emptor

answer

Means "Let the buyer beware"

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Certificate

answer

The first thing a veteran should request if attempting to purchase a property using VA eligibility.

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Certificate of Eligibility Certificate

answer

Given to veterans bearing evidence of their qualifications for a VA mortgage loan

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Certificate of Reasonable Value (CPR)

answer

Issued by the Veterans Administration to certify the value of property secured by a VA mortgage Appraisal.

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Certificate of Title

answer

A document given by the title examiner stating the quality of title the seller possesses.

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Chain of Title

answer

A history of ownership affecting title to a parcel of land

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Chattel Mortgage

answer

One in which personal property is pledged to secure a note.

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City Planning

answer

The effort on the part of the city to coordinate, direct and control the type of development taking place, so as to ensure maximum benefits to the populace.

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Civil Rights Act of 1866

answer

A law which prohibits discrimination in all real estate transactions based on race - commercial and residential.

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Closing Costs

answer

The expenses incurred and paid at the time of settlement in the transferring of property.

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Cloud on Title

answer

Any claim affecting the property

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Co-Insurance

answer

Coinsurance is a common clause or provision in building insurance policies under which the insured agrees to maintain insurance on his or her property in an amount equal to at least 80% of the replacement cost. If the property is not insured the that amount and a loss is incurred the insurance company will make the insured share in the loss on a pro-rata basis.

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Collateral

answer

Property which has been pledged as security for a loan.

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Color of Title

answer

Adverse Possession

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Commercial Banks

answer

The largest financial intermediary directly involved in the financing of real estate. Their primary real estate activity involves short-term loans.

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Commingling

answer

Illegally mixing deposits or monies, collected from a client, with one's personal or business account. Taking Money out too soon or putting it into escrow too late (10 banking days).

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Common Elements

answer

Property jointly owned on a pro-rata basis with other unit owners in condominium regime.

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Common Law

answer

(1) a body of legal rules derived from accepted customs and procedures in England. Serves as the foundation for most laws in every state except Louisiana, which uses the system of civil law; (2) system of judge-made law ("case law") as opposed to codified or statutory law.

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Community Property

answer

Any property acquired in certain states by purchase, or as compensation by either spouse during the period of marriage, is considered to be owned in an undivided half interest by each.

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Comparable

answer

Comparable property recently sold which is used in the market data approach

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Comparative Analysis

answer

A method of determining the value of property in which the selling prices of similar properties are used as the basis for estimating the value of subject property.

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Competent Parties

answer

Those who are legally capable of entering into contracts

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Condemnation

answer

The process of exercising eminent domain through court action.

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Consideration

answer

Anything of value offered to induce someone to enter into a contractual agreement. For example, sale price, earnest money, a promise for a promise.

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Constructive Eviction

answer

Occurs when the tenant's use of the premises is substantially disturbed or interfered with by the landlords actions or failure to act where there is a duty to act. The tenant is effectively forced to move out and terminate the lease without further liability for further rent.

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Constructive Notice

answer

The knowledge that the law presumes a person has about about a particular fact irrespective of whether the person knows about the fact or not. (Recording).

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Contract

answer

An agreement resulting from the objective expression of mutual assent by competent parties, which the law recognizes in some way as a duty, and the breach of which the law gives a remedy.

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Contract for a Deed

answer

A means by which the seller passes possession but retains title to the property until the total or substantial portion of the purchase price is paid. Installment contract. The two Parties here are the vendor (owner) and the Vendee (buyer).

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Conveyance

answer

The transfer of title to land from one party to another.

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Cooperative

answer

A form of property ownership in which a corporation is established to hold title in property and to lease the property to shareholders in the corporation. Own stock.

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Cost Approach

answer

A method of estimating value based on the economic principle of substitution; the value of a building cannot be greater than the cost of purchasing a similar site and constructing a building of equal utility without undue delays.

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Counteroffer

answer

A rejection of an offer to buy or sell, by a seller or buyer, with a simultaneous substitute offer.

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Covenant

answer

Included in a deed; a guarantee

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Covenant Against Encumbrances

answer

The assurance that no encumbrances other than those specified in the deed exist.

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Covenant of Further Assurance

answer

A promise that the grantor will preform further acts of reasonably necessary to correct any defects in the title of in the deed instrument

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Covenant of Quiet Enjoyment

answer

A promise that no one has superior or paramount title to that of the grantor; assures the grantee of peaceful possession without fear of being ousted by a person with superior claim to the property.

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Covenant of Seisen

answer

Gives the assurance that the grantor has the exact estate in the quantity and quality which is being conveyed. "I own and have the right to sell it".

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Curable Depreciation

answer

Depreciation is considered curable if the cost of the repair is less than what the repair adds to the value of property

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Curtesy

answer

The rights that a husband acquires in the wife's property upon her death.

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Debit

answer

Money owed. (debt) The opposite of a credit.

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Decree

answer

Court order

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Deed

answer

A written instrument, usually under seal, which contains an agreement to transfer some property in order to eliminate the need for a foreclosure.

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Deed in Lieu of Foreclosure

answer

Used by the mortgage (borrower) who is in default to convey the property to the mortgage (lender) in order to eliminate the need for a forclosure.

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Deed of Release

answer

Given by lien holders, remainder-men or mortgages to relinquish their claims on the property.

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Deed of Trust

answer

A deed to real property, which serves the same purpose as a mortgage, involving three parties instead of two. The third party hold naked title for the benefit of the lender. Beneficiary (lender), Trustor (borrower), Trustee (third party)

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Defeasance Clause

answer

A necessary mortgage clause in title theory states. When the debt is satisfied, this clause causes title to pass automatically back to the borrower. Satisfaction of mortgage; Release from records.

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Defeasible Fee Simple

answer

FEE SIMPLE DEFEASABLE- Ownership with conditional restrictions which, if broken, can result in title to the property reverting back to the grantor or his heirs.

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Defect in Title

answer

Any lien, claim or encumbrance, on a particular piece of real estate, that has been properly recorded in the public records. Recorded defects impair clear title and may result in the title being unmarketable.

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Deficiency Judgement

answer

A personal claim based on judicial order against the debtor. This occurs when the property fails to bring in a price at the foreclosure sale which covers the mortgage amount.

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Depreciation

answer

A decrease in value due to physical deterioration, functional or economic obsolescence.

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Descent

answer

Refers to any passage of title to property, upon intestacy to those heirs, related by blood or marriage, whom the law designates.

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Devise

answer

Transferring title to real property by means of a will

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Discount Points

answer

A fee charged by the lender at settlement that results in increasing the lender's effective yield on the money borrowed. One discount point equals one percent of the loan amount.

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Dominant Estate

answer

The Tract of land in an easement appurtenant which benefits from the easement.

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Dower

answer

The rights that a wife acquires in her husband's fee simple property.

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Down Payment

answer

The amount paid by the purchaser, which when added to the mortgage amount, equals the total sales price. At time of closing this referred to as equity

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Due-on-Sale Clause

answer

A clause, included in many mortgages, permitting the lender to require the borrower to repay the outstanding balance when the property is sold. Prevents loan assumption.

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Duress

answer

Involves the use of force or improper actions, against a person or property, in order to induce a party to enter into a contract.

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Earnest Money

answer

A sum of money given to bind an offer or agreement.

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Easement

answer

A right to limited use or enjoyment by one or more persons in the land of another.

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Easement Appurtenant

answer

An easement created to benefit adjacent land.

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Easement by Implicaation

answer

Occurs because of necessity, such as the conveyance of a land-locked property.

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Easement in Gross

answer

A personal right to use the land of another.

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Economic Life

answer

The time period over which an improvement to land earns more income than the cost incurred in generating the income. Profitability.

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Economic Obsolescence

answer

A loss in value due to factors outside the subject property, such as changes in competition or surrounding land use. Also referred to as External obsolescence.

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Economic Rent

answer

The amount of rental which a building would receive, if set by the market, as opposed to contract rent set by lease.

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Effective Age

answer

The difference between the theoretical economic life of a structure and its actual remaining economic life. Maintaining the property.

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Effective Gross Income

answer

The anticipated income resulting from the estimated potential gross income from a rental property less an allowance for vacancy and bad debts.

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Emblements

answer

Refers to crops which require annual planting.

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Eminent domain

answer

The right of government to acquire property, for public purpose, after paying just compensation.

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Encroachment

answer

The extension of some improvement or object across boundary of an adjoining tract. (off sides)

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Encumbrance

answer

An interest in or claim on, the land of another, which in some manner burdens or diminishes the value of the property.

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Equal Credit Opportunity Act (ECOA)

answer

A federal act, which prohibits discrimination by lenders on the basis of sex or marital status in any aspect of a credit transaction.

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Equitable Lien

answer

Created when justice and fairness would require a court of equity to declare such a lien exists or when conduct of parties would imply that a lien was intended.

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Equity

answer

Value of real estate less any liens against it.

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Escalation Clause

answer

(1) in finance, permits the lender to raise the interest rate upon occurrence of certain stipulated condition, (2) in leasing, permits the lessor to raise lease payments upon the occurrence of certain stipulated condition.

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Escheat

answer

The right of the government to ownership of property, which is left by a deceased property owner who leaves no will, and died without descendants.

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Escrow

answer

The deposit of funds with a neutral third party who is instructed to carry out the provisions of an agreement.

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Estate

answer

A legally recognized interest in the use, possession, control and disposition that a person has in land, and defines the nature, degree, extent, and duration of a person's ownership in land.

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Estate at Sufferance

answer

Retention of possession without the consent of the landlord after the lease has expired; also referred to as tenancy at sufferance.

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Estate at Will

answer

An occupation of space, for an indefinite period, which can be terminated by either the lessor or lessee at any time. Also referred to as tenancy at will.

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Estate for Years

answer

A conveyance of realty for a definite stated period of time. The term may be one year, one month, one week, or even one day. No notice needed to terminate.

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Estate from Period to Period

answer

a leasehold, which is automatically renewed for the same term as in the original lease; also referred to as a periodic tenancy or an estate from period to period. Month to month rental. No notice needed to terminate.

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Estate in Fee

answer

The maximum possible estate one can possess in real property; also referred to fee simple or fee simple absolute.

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Exclusive Agency Listing

answer

The owner employs only one broker but retains the right to personally sell the property, and thereby not pay a commission. However, if any other real estate company sells the property the listing broker is still entitled to the commission stipulated.

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Exclusive Right to Sell Listing

answer

Under this listing arrangement, the broker employed is entitled to a commission no matter who sells the property during the listing period.

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Executed Contract

answer

One in which the obligations have been performed on both sides of the contract and nothing is left to be completed. (Closed Deal)

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Executor

answer

A person appointed in the will to carry out the instructions of the testator, pay the debts of the estate, and dispose of the property as instructed.

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Express Contract

answer

An agreement formed through the oral or written words of the parties.

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Fair Market Value

answer

The price negotiated for a parcel of real estate in a competitive market where both the buyer and seller are free to act under no undue pressure.

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Federal Deposit Insurance Corporation (FDIC)

answer

A federal agency established to insure the deposits in member commercial banks. The current maximum insurance per account is $100,000.00.

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Federal Fair Housing Act of 1968

answer

An act prohibiting discrimination in the sale or rental of housing on the basis of race, color, religion or national origin sex, handicap and familial status.

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Federal National Mortgage Association (FNMA)

answer

Commonly known as "Fannie Mae", this quasi-private corporation is the largest buyer of existing mortgages in the secondary mortgage market.

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Grantor

answer

Owner making conveyance of title or interest in property.

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Gross Income

answer

The actual income received from property before the deduction for any expenses.

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Gross Income Multiplier (GIM):

answer

A method of appraising income-producing property based on a multiple of the annual gross income; also called a gross rent multiplier.

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Gross Rent Multiplier (GRM):

answer

A method of appraising single family or duplexes based on the monthly gross income.

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Housing and Urban Development (HUD)

answer

An agency of the federal government which oversees many federal housing programs.

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Incurable Depreciation

answer

Elements of a structure which are neither physically possible nor economically feasible to correct.

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Independent Contractor

answer

One whose time and effort are regulated by the individual and are not under the direction or control of others.

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Inheritable

answer

An interest in land which can be passed to a relative upon the death of the owner.

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Index Lease

answer

The rental is tied to some commonly agreed to price index such as the Consumer Price Index or the Wholesale Price Index.

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Installment Land Contract

answer

See Land Contract.

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Interest

answer

(1) the sum paid for the use of money (2) the degree of rights in the ownership of land.

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Interest Rate

answer

The cost of using money expressed as a percent per period.

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Intestate

answer

Dying without a will.

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Irrevocable

answer

Irrevocable

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Invalid

answer

Without legal force.

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Joint Tenancy

answer

A form of concurrent ownership, which occurs when two or more persons own a single estate in land, with right of survivorship. Must have equal shares, right to partition.

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Judgment Lien

answer

The charge upon the land of a debtor, resulting from the decree of a court, entered in the judgment docket. Lawsuit

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Joint Venture

answer

An agreement by two or more individuals or entities to engage in a single project or undertaking.

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Junior Lien

answer

An encumbrance, second in priority, to a previously recorded lien or to a lien to which the encumbrance has been subordinated.

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Land Contract

answer

The seller accepts a down payment on a parcel of land but title to the property does not pass until the last principal payment has been received. This is referred to as an installment sales contract or a contract for a deed.

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Landlocked

answer

Completely shut in by adjoining parcels of land with no access to public roads.

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Lease

answer

An agreement by which a landlord gives the right to a tenant to use, and to have exclusive possession, but not ownership of realty, for a specified period of time, in consideration for the payment of rent.

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Latent Defect

answer

A defect which cannot be discovered by ordinary inspection.

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Lease Purchase Agreement

answer

An arrangement whereby part of the rent payment is applied to the purchase price, and when the prearranged total amount has been paid, title is transferred.

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Legal Description

answer

A written description of a parcel of land which locates it precisely and will hold up in court. (Does not include address.)

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Leasehold

answer

The interest that the tenant has created by a lease.

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Less than Freehold Estate

answer

Estates in possession generally referred to as leaseholds. Considered to exist for a definite period of time, or successive periods, of time until terminated by notice; also know as non-freehold estates.

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Lessee

answer

Tenant

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Lessor

answer

Landlord

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Leverage

answer

Using borrowed capital to finance the purchase of real estate or other assets. (No money down)

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License

answer

A personal privilege to go upon the land of another; not considered an interest in land. Permission only to use.

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Lien

answer

A legally recognized right to enforce a claim or charge on the property of another for payment of some debt, duty or obligation.

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Lien Theory State

answer

The mortgage merely creates a lien right on the mortgagee with the mortgagor retaining the title.

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Life Estate Pur Autre Vie

answer

A life estate in one person with another person serving as the measuring life.

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Life Estate

answer

An interest which only lasts for the term of a life, or lives, of one or more persons. Death terminates.

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Life Tenant

answer

The holder of a life estate.

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Limited Partnership

answer

An entity with one or more general partners and one or more passive investors, called limited partners.

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Liquidated Damages

answer

An agreed-to sum, which will be paid if the contract is breached.

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Liquidity

answer

The ease with which an asset may be converted into cash.

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Lis Pendens

answer

A notice filed for he purpose of serving constructive notice that title, or some matter involving particular real property, is in litigation.

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Listing Contract

answer

An employment agreement between an owner and broker defining the duties and rights of both parties. (Unilateral contract)

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Loan-to-Value Ratio

answer

The relationship between the amount borrowed and the appraised value of the property. (Purchase price 100,000-Loan 80,000-LTV 80%)

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Loyalty

answer

The duty owed by an agent, to avoid conflicts of interest or any activity which is detrimental to a principal.

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Lot and Block

answer

A method of land description frequently used after land has been subdivided into building lots; also referred to as the recorded plat method. (Must have a plat map to find the property)

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Management Agreement

answer

An employment contract between the owner of real estate and a property management firm that agrees to oversee the management of the property.

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Market

answer

economic function of bringing buyers and sellers together through the price mechanism.

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Market Value

answer

The price at which a willing buyer and a willing seller will agree upon, where neither is under any undue pressure, and both are negotiating at arms length with complete knowledge of the market.

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Market Data Approach

answer

A means of estimating value by comparing similar properties. Used when there is an active market and where comparables can be identified. Also called comparable sales approach.

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Marketable Title

answer

One which is free from reasonable doubts or objections, and which the courts would compel a purchaser to accept under the terms of a sales contract.

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Master Plan

answer

A program for the future development of a community which serves as the guideline for capital expenditures.

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Metes and Bounds

answer

A method of land description which involves identifying distances and directions and makes use of both the physical boundaries and measurements of the land.

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Mechanic's Lien

answer

A statutory lien levied on property by a person who is wrongfully not compensated after providing labor (mechanic) or material (material-man) for the improvement to land. (Only on the specific property where the work was complete.) Not on personal property.

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Mill

answer

A mill is equal to one-tenth of one cent and is used to state the property tax rate. (.001)

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Minor

answer

An infant; one who has not attained majority in a state and does not have legal capacity to be bound by most contracts. (Voidable contracts)

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Millage Rate

answer

A tax rate stated in tenths of a cent. For example, a millage rate of 150 mills on property assessed at $100,000 would result in a property tax of$1,500 ($100,000 x .150).

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Misrepresentation

answer

An innocent or negligent mis-statement of a material fact, detrimentally relied upon by the other party.

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Month-to-Month Tenancy

answer

A lease which has a term of one month but renewable for successive months at the option of both parties.

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Mortgage

answer

A legal document used to secure the performance of an obligation, in which the borrower or mortgagor agrees to pledge property to secure the debt represented by the promissory note. (A contract).

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Monument

answer

Physical evidence of a point- of- beginning established by surveyors for use in locating parcels of land.

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Mortgage Banker

answer

A financial middleman who, in addition to bringing the borrower and the lender together, makes loans, packages them, and sells the packages to both primary and secondary investors. Also services loans.

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Mortgagee

answer

A lender who receives a pledge of property to secure a debt.

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Mortgage Broker

answer

A person who brings together the user of capital (borrower) and the supplier of capital (lender). For this service, a finder's fee is usually paid by the borrower.

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Mortgagor

answer

A borrower who pledges property through a mortgage to secure a debt.

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Multiple Listing

answer

Marketing service in which many brokers pool all of their listings and establish procedures for sharing commissions.

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Mutual Assent

answer

An offer and acceptance which together form the terms of a contract.

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Net Listing

answer

The broker agrees to sell the property in order to achieve a net price to the owner, and anything which is received above the net price is the broker's commission. A net listing is prohibited by the licensing law in many states.

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Net Income, Net Operating Income

answer

Gross income less all operating expenses. Is used in the income approach to value.

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Non-resident

answer

One whose primary residence is in another state.

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Notary Public

answer

A person with the authority to take oaths and acknowledgments.

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Nonconforming Use

answer

A pre-existing use of land which does not conform to the zoning ordinance but which may legally remain.

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Note

answer

A signed instrument acknowledging the existence of a debt and the promise to pay.

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Null and Void

answer

Invalid and unenforceable.

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Novation

answer

Occurs when the person in a contract, to whom the duty was owed, expressly agrees to substitute the delegate, or new obligor, for a consideration, and agrees to discharge the old obligor from the obligations under the contract. For example, loan assumptions.

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Open Listing

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An agreement between an owner and many brokers. If a broker produces a ready willing, and able buyer, a commission is due. However, the owner still has the right to sell his/her property and is not obligated to pay a commission to anyone.

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Offer and Acceptance

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The necessary elements of mutual assent; for example, an agreement of one party to buy and another party to sell.

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Open-end Mortgage

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A loan containing a clause which allows the mortgagor to borrow additional money without rewriting the mortgage.

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Option

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A right which is given for consideration to a party (optionee) by a property owner (optionor) to purchase or lease property within a specified time, at a specified price and terms. An option is irrevocable by the optionee and will not be extinguished by death or insanity of either party.

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Optionor

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The seller of the option.

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Optionee

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The holder of the option. Buyer

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Ordinance

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A statute enacted by the legislative branch of a local government.

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Outbuilding

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An accessory structure other than the main structure on land.

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Owner's Title Policy

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A policy insuring the owner of real estate against certain defects of title.

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Ownership

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The right to hold, possess, control and dispose of property.

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Ownership in Severalty

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Individual ownership.

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Package Mortgage

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A mortgage, used in the purchase of new residential property which, in addition to real property, covers certain personal property items and equipment. (Washer, dryer, drapes, refrigerator, stove)

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Obsolescence

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A loss in value due to reduced desirability and usefulness of a structure because its design and construction have become obsolete. A loss due to a structure's becoming old fashion, not in keeping with today's standards or needs, with consequential loss of income.

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Situs

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Refers to the economic location of real estate.

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Subrogation

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The substitution of a third person in place of a creditor to whose rights the third person succeeds in relation to the debt. (Title company)

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Sublease

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The transfer when the original lessee retains a reversion. Primary liability remains with the original lessee.

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Subordination Clause

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A clause in which the holder of a mortgage permits a subsequent mortgage to take priority. Subordination is the act of yielding priority.

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Steering

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The channeling of prospective home purchasers or renters, by real estate brokers or salespersons, into racially homogeneous neighborhoods, and actively discouraging them away from neighborhoods of different racial or ethnic composition.

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Straight Note

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A promissory note evidencing a loan in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity. A straight note is usually a nonamoritized note made for a short term, such as two to 4 years, and is renewable at the end of the term. A mortgage that secures a straight note is a term mortgage or straight-term mortgage.

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Statutory Period of Redemption

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The time within which property may be redeemed after a foreclosure sale.

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Tenancy by the Entireties (Entirety)

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A special joint tenancy between a lawfully married husband and wife, which places all title to property (real or personal) into the marital unit, with both spouses having an equal undivided interest in the whole property. In essence, each spouse owns the ENTIRE estate.

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Tenancy at Will

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An occupation of space for an indefinite period which can be terminated by either the lessor or lessee at any time.

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Tenancy at Sufferance

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A tenancy which is created when one is in wrongful possession of realty, even though the original possession may have been legal.

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Syndicate

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An arrangement to raise equity capital for real estate purchases or for other types of investments.

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Tax Base

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The total tax-assessed value of all real property in a particular jurisdiction.

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Taxation

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The rate, normally stated in units of $100, multiplied by the assessed value of property to determine the amount of the property tax due.

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Trade Fixtures

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Personal property used in business which has been annexed to real property and is removable by the owner. (Tenant) If it is not taken by the tenant it becomes the property of the landlord.

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Title Theory States

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States in which a mortgage actually conveys title subject to a condition.

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Topography

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A description of surface features of land.

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Township

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A 6-by-6 mile area containing 36 sections each 1 mile square. A division of land in the rectangular survey method of land description.

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Title

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The legally recognized evidence of a person's right to possess property.

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Title Insurance

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A policy that protects the insured against loss or damage due to defects in title.

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Unity of Title

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States that the joint tenancy interests were created in a single conveying instrument.

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Unities

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Joined in one; for example, in order for a joint tenancy to exist four unities are necessary (1) time, (2) title, (3) interest and (4) possession. (TTIP)

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Unity of Possession

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The right of each tenant to the possession and use of the whole property. (Joint tenants and tenants in common.)

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Unity of Time

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States that the joint tenancy interests of the joint tenants must have been acquired at the same moment.

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Universal Agent

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Has the authority to do all acts that can be lawfully delegated to a representative. (Power of attorney-attorney in fact)

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Unencumbered Property

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Property that is free and clear of any liens.

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Unsecured Loan

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A loan made on the signature and credit of the borrower, not secured by collateral. Credit card. (Debenture)

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Usury

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Charging more than the legal rate of interest for the use of money

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VA mortgage

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(GI Mortgage) Mortgage guaranteed by Veterans Administration.

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Valid Contract

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A binding agreement containing all the essential legal elements.

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Valuable Considerations

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Anything of value offered as an inducement. (money, Ring, Boat)

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Variable Interest Rate Mortgage (VRM)

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The interest rate charged by the lender varies according to some index not controlled by the lender.

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Variance

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A type of safety valve to allow property owner, who is unfairly burdened by zoning restrictions, to find relief.

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Vendee

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Purchaser in a contract for a deed.

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Vendee's Lien

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Held by the purchaser for the purchase paid if the seller defaults on the delivery of the deed.

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Vendor

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Seller in a contract for deed.

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Vendor's Lien

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The amount of the purchase price still due to the seller.

Colorado Law and Practice – PSI REAL ESTATE EXAM – Flashcards

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