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Real Estate Glossary (A)
Abstract of title
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.
Abutting
The joining, reaching, or touching of adjoining land. Abutting pieces of land
have a common boundary.
Acceleration clause
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 other
covenant.
Acceptance
An offeree’s consent to enter into a contract and be bound by the terms
of the offer.
Accessed value
Accessed value is the valuation placed on property by a public tax assessor
for purposes of taxation.
Accession
Acquiring title to additions or improvements to real property as a result of
the annexation of fixtures or the accretion of alluvial deposits along the banks
of streams.
Accretion
The increase or addition of land by the deposit of sand or soil washed up naturally
from a river, lake or sea.
Accrued ltecs
On a closing statement, items of expense that are incurred but not yet payable,
such as interest on a mortgage loan or taxes on real property.
Acknowled gement
A formal declaration made before a duly authorized officer, usually a notary
public, by a person who has signed a document.
Acre
A measure of land equal to 43,560 square feet, 4,840 square yards, 4,047 square
meters, 160 square rods or 0.4047 hectares.
Actual eviction
The legal process that results in the tenant's being physically removed from
the leased premises.
Actual notice
Express information or fact; that which is known; direct knowledge.
Additional principal payment
A payment by a borrower of more than the scheduled principal amount due in order
to reduce the remaining balance on the loan.
Adjustable-Rate Mortgage (ARM)
A loan characterized by a fluctuating interest rate, usually one tied to a bank
or savings and loan association cost-of-funds index.
Adjusted basis
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.
Adjustment date
The date on which the interest rate changes for an adjustable-rate mortgage
(ARM).
Adjustment period
The period that elapses between the adjustment dates for an adjustable-rate
mortgage (ARM).
Adjustment interval
On an adjustable rate mortgage, the time between changes in the interest rate
and/or monthly payment, usually one, three or five years
Adjustments
Money that the buyer and sellers credit each other at the time of closing. Often
includes taxes and down payment..
Administrator/Administratrix
A man/woman appointed by a court to settle the estate of a deceased person when
there is no will. Contrast with executor/executrix.
Ad val orem tax
A tax levied according to value, generally used to refer to real estate tax.
Also called the general tax.
Adverse possession
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.
Affidavit of title
A written statement, made under oath by a seller or grantor of real property
and acknowledged by a notary public, in which the grantor
(I) identifies himself or herself and indicates marital status,
(2) certifies that since the examination of the title on the date of the contracts
no defects have occurred in the title and
(3) certifies that he or she is in possession of the property (if applicable).
Affiliate
An entity related to a Seller that is subject to common operating control and
that is operated as part of the same system or enterprise. The Seller typically
owns less than a majority of the voting stock or the Seller and the entity are
subsidiaries of a third party.
Affordability analysis
A detailed analysis of your ability to afford the purchase of a home. An affordability
analysis takes into consideration your income, liabilities, and available funds,
along with the type of mortgage you plan to use, the area where you want to
purchase a home, and the closing costs that you might expect to pay.
Affordable seconds
Subsidized secondary financing or other financial assistance provided under
an established, documented secondary financing or financial assistance program
that has formal procedures in place to provide applicant qualification, loan
processing, and loan program administration on an ongoing basis.
Agency
The relationship between a principal and an agent wherein the agent is authorized
to represent the principal in certain transactions.
Agency coupled with an interest
An agency relationship in which the agent is given an estate or interest in
the subject of the agency (the property).
Agent
An authorized person who manages or transacts business for another. Laws governing
real estate--especially relating to agents--vary considerably from state to
state. While some standardization has been achieved, it is best to check the
particulars in each state.
Agreement of sale
Known by various names, such as contract of purchase, purchase agreement, or
sales agreement according to location or jurisdiction. A contract in which a
seller agrees to sell and a buyer agrees to buy, under specific terms spelled
out in writing and signed by both parties.
Air lot
A designated airspace over a piece of land. An air lot, like surface property,
may be transferred.
Air rights
The right to use the open space above a property, usually allowing the surface
to be used for another purpose.
Alienation
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.
Alienation clause
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.
Allodial system
A system of land ownership in which land is held free and clear of any rent
or service due to the government; commonly contrasted to the feudal system.
Land is held under the allodial system in the United States.
Amenities
Non monetary benefits and satisfactions derived from property ownership, such
as a pleasant view, pride in home ownership, etc.
American Land Title Association (ALTA) policy
A title insurance policy that protects the interest in a collateral property
of a mortgage lender who originates a new real estate loan.
Ammendment
A modification to an existing contract, mutually agreed to by all parties. Examples
might include a change in the pruchase price due to a low appraisal, or a change
in the closing date.
Amortization
The operation of paying off indebtedness, such as a mortgage, by installments.
The conventional amortization periods are15 or 30 years.
Amortization schedule
A timetable for payment of a mortgage loan. An amortization schedule shows the
amount of each payment applied to interest and principal and shows the remaining
balance after each payment is made.
Amortization term
The amount of time required to amortize the mortgage loan. The amortization
term is expressed as a number of months. For example, for a 30-year fixed-rate
mortgage, the amortization term is 360 months.
Amortize
To repay a mortgage with regular payments that cover both principal and interest.
Amortized loan
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.
Amortized mortgage
A mortgage requiring periodic payments that include both interest and principal.
Annual membership
The amount that is charged annually for having a line of credit available. Often
charged regardless of whether or not you use the line.
Annual mortgagor statement
A report sent to the mortgagor each year. The report shows how much was paid
in taxes and interest during the year, as well as the remaining mortgage loan
balance at the end of the year.
Annual Percentage Rate (APR)
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.
Annuity
An amount paid yearly or at other regular intervals, often on a guaranteed dollar
basis.
Anticipation
The appraisal principle that holds that value can increase or decrease based
on the expectation of some future benefit or detriment produced by the property.
Antitrust laws
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).
Application
An initial statement of personal and financial information, which is required
to approve your loan.
Application fee
Fees that are paid upon application. Charges for property appraisal and a credit
report are usually included in the application fee.
Appraisal
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.
Appraised value
An estimate of the present worth.
Appraiser
A person qualified by education, training, and experience to estimate the value
of real property and personal property.
Appreciation
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.
Appurtenance
A right, privilege or improvement belonging to, and passing with, the land.
Appurtenant easement
An easement that is annexed to the ownership of one parcel and allows the owner
the use of the neighbor's land.
ARM (Adjustable Rate Mortgage)
A financing technique in which the lender can raise or lower the mortgage interest
rate according to a set index, such as six-month Treasury bills.
Asking (List) price
The price placed on property for sale.
Assemblage
The combining of two or more adjoining lots into one larger tract to increase
their total value.
Assessed value
The valuation placed on property by a public tax assessor for purposes of taxation.
Assessment
The imposition of a tax, charge or levy, usually according to established rates.
Assessment report
Report that appraisers use to record property values, marketability analyses
and any pertinent comments regarding the subject property. Assessment reports
are classified as appraisal reports or inspection reports.
Assessor
A local government official who determines the value of the property for taxation
purposes.
Asset
Anything of monetary value that is owned by a person. Assets include real property,
personal property, and enforceable claims against others (including bank accounts,
stocks, mutual funds, and so on).
Assignee
A person to whom a property right is transferred. For example, an assignee may
take over a lease from a tenant who wants to permanently move out before the
lease expires. The assignee takes control of the property and assumes all the
legal rights and responsibilities of the tenant, including payment of rent.
However, the original tenant remains legally responsible if the assignee fails
to pay the rent.
Assignment
The transfer in writing of interest in a bond, mortgage, lease or other instrument.
Assumable mortgage
An existing mortgage that can be taken over by the buyer on the same terms given
to the original borrower.
Assumption
The transfer of the seller’s existing mortgage to the buyer. See assumable
mortgage.
Assumption clause
A provision in an assumable mortgage that allows a buyer to assume responsibility
for the mortgage from the seller. The loan does not need to be paid in full
by the original borrower upon sale or transfer of the property.
Assumption fee
The fee paid to a lender (usually by the purchaser of real property) resulting
from the assumption of an existing mortgage.
Assumption of mortgage
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.
Attachment
The act of taking a person's property into legal custody by writ or other judicial
order to hold it available for application to that person's debt to a creditor.
Attorney-in-fact
One who holds a power of attorney from another to execute documents on behalf
of the grantor of the power.
Attorney's opinion of title
An abstract of title that an attorney has examined and has certified to be,
in his or her opinion, an accurate statement of the facts concerning the property
ownership.
Attractive nuisance
Something on a piece of property that attracts children but also endangers their
safety. For example, unfenced swimming pools, open pits, farm equipment and
abandoned refrigerators have all qualified as attractive nuisances.
Auction
A public sale of property to the highest bidder.
Automatic extension
A clause in a listing agreement that states that the agreement will continue
automatically for a certain period of time after its expiration date. In many
states, use of this clause is discouraged or prohibited.
Avulsion
The sudden tearing away of land, as by earthquake, flood, volcanic action or
the sudden change in the course of a stream.
