Carriage Hills Realty, Inc. Real Estate Terms & Definitions - Servicing Eglin AFB and all the FL panhandle.

Carriage Hills Realty, Inc.
1821 John Sims Parkway
Niceville, FL 32578

(800) 874-8929
(850) 678-5178
FAX 678-5232
realtor@carriagehills.com
Rentals (850) 678-9448

Common Real Estate
Terms and Definitions

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Abstract of Title: A condensed version of the history of title to land as such title is recorded in the county clerk's records.
Abutting: The joining, reaching, or touching of adjoining land. Abutting pieces of land have a common boundary.
Acceleration Clause: A provision in a written mortgage, note, bond or conditional sales contract that, in the event of default, the whole amount of principal and interset may be declared to be due and payable at once.
Accretion: An addition to land through natural causes.
Acknowledgment: A declaration made by a person to a notary public, or other public official authorized to take acknowledgements, that the instrument was executed by him and that it was his free and voluntary act.
Acre: A measure of land equal to 43,560 square feet.
Adjustable Rate Mortgage: A mortgage loan whose interest rate fluctuates according to the movements of an assigned index.
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 Valorem: Designates an assessment of taxes against property. Literally, according to value.
Adverse Possession: The right of an occupant of land to acquire title against the real owner, where possession has been actual, continuous, hostile, visible, and distinct for the statutory period.
Affidavit: Written statement signed and sworn to before some person authorized to take an oath.
Agency: The legal relationship between a principal and an agent. In real estate transactions, usually the seller is the principal, and the broker is the agent: however, a buyer represented by a broker (i.e., buyer as principal is a growing trend. In an agency relationship, the principal delagates to the agent the right to act on his or her behalf in business transactions and to exercise some discretion while so acting. The agent has a fiduciary relationship with the principal and owes to that principal the duties of accounting, care, loyalty, and obedience. Also see Buyer's Broker .
Agent: A licenced representative who assists the buyer or seller with advice, information about current market conditions, and helps to negotiate the sale.
Alienation Clause: A clause in a motgage which gives the lender the right to call the entire loan balance due if the property is sold; due-on-sale clause.
Amenities: Nonmonetary benefits and satisfactions derived from property ownership, such as a pleasant view, pride in home ownership, etc.
Amortization: The operation of paying off indebtedness, such as a mortgage, by installments. The conventional amortization periods are15 or 30 years. (See Term )
Amortized Mortgage: A mortgage which requires periodic paymnets which include both interest and principal. Also see Self Amortized Loan .
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.
Antitrust Laws: Federal and state laws prohibiting, among other things, monopolies, monopolistic practices, restraint of trade, and price fixing.
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 opinion by a licenced appraiser of the fair market value of a property.
Appraised Value: An estimate of the present worth.
Appreciation: An increase in value or worth of property. Opposite of depreciation.
Asking (list) price: The price placed on property for sale.
Assessor: A local government official who determines the value of the property for taxation purposes.
Assignment: Transfer of one's rights to another.
Assumable Mortgage: An existing mortage that can be taken over by the buyer on the same terms given to the original borrower.
Assumption of Mortgage: The transfer of title to property to a grantee wherein he assumes liability for payment of an existing note secured by a mortgage against the property; should the mortgage be foreclosed and the property sold for a lesser amount than that due, the grantee-purchaser who has assumed and agreed to pay the debt secured by the mortgage is personally liable for the deficiency. Before a seller may be relieved of liability under the existing mortgage, the lender must accept the transfer of liability for payment of the note. Also known as simple assumption. Contrast with Subject to Mortgage .
Attachment: Method by which a debtor's property is placed in the custody of the law and held as security pending outcome of a creditor's suit.
Attorney's Opinion of Title: An instrument written and signed by the attorney who examines the abstact of title, stating his opinion as to whether a seller may convey good title.
Auction: A public sale of property to the highest bidder.

Balloon Mortgage

A mortgage where the final payment is considerably larger than the preceding payments. Contrast with Amortized Mortgage .
Balloon Payment: A lump sum payment for the unpaid balance of the loan.
Bill of Sale: A written instrument given to pass title to personal property.
Blanket Mortgage: One mortgage on a number of parcels of real property.
Blockbusting: The illegal practice of inducing panic selling in a neighborhood by making representations of the entry, or prospective entry, of members of a minority group; Panic Peddling . See Fair Housing .
Breach of Contract: Failure, without legal excuse, of one of the parties to a contract to perform according to the contract.
Brokerage: For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.
Building Line: A line fixed at a certain distance from the front and/or sides of a lot beyond which no structure can project. See Set Back .
Bundle of Rights: Ownership in real property implies a group of rights, such as the right of occupancy, use and enjoyment, the right to sell in whole or in part, the right to control the use, the right to bequeath, the right to lease any or all of the rights, the right to the benefits derived by occupancy and use of the property, etc.
Buy Down: A cash payment, usually measured in points, to a lender in order to reduce the interest rate a borrower must pay.
Buyer's Broker: A licensee who has declared to represent only the buyer in a transaction, regardless of whether compensation is paid by the buyer or the listing broker through a commission split. Some brokers conduct their business by representing buyers only.

Calendar Year

A year which uses the actual number of days in each month for a total of 365 days in a year (366 days in a leap year).
Cap: The maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.
Capitalization: The estimation of the value of income producing property by dividing the annual net income by the Capitalization Rate .
Capitalization Rate: The rate of expected return on investment property. A ratio of income to value.
Cash Out: Receiving money back when refinancing your present mortgage.
Ceiling: The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.
Chain of Title: A history of conveyances and encumbrances of a property from some starting point, whereby the present owner derives title.
Channeling: The illegal practice of directing people to, or away from, certain areas or neighborhoods because of minority status; Steering. See Fair Housing .
Chattel: Personal property.
Clear Title: A land title that doesn't have any liens (including a mortgage) against it.
Closing: The conclusion of the sales transaction when the seller transfers title to the buyer in exchange for consideration. These prceedings are usually held at a Title Company .
Closing Costs: Extra expenses beyond the purchase price that are paid at closing. This includes legal fees and mortgage fees.
Closing Statement: A detailed written summary of the financial settlement of a real estate transaction, showing all charges and credits made, and all cash received and paid out.
Cloud on Title: A claim or encumbrance that may effect title to land.
Collateral: Something of value deposited with a lender as a pledge to secure repayment of a loan.
Commingling: The illegal practice of combining or mixing clients' funds with the agent's own funds.
Commission: The compensation paid to a licensed real estate broker or by the broker to the salesman for services rendered. Usually a percentage of the selling price of the property.
Community Reinvestment Act: The federal law which requires federally regulated lenders to describe the geographical market area they serve. Deposits from that area are to be reinvested in that area whenever practical.
Comparables: Properties which are similar to a particular property and are used to compare and establish a value for that property.
Compound Interest: Interest which is computed on the principal and any unpaid accumulated interest. Contrast with Simple Interest .
Condemnation: The act of taking private property for public use, through due process under the right of eminent domain , with compensation to the owner.
Condominium: A form of real estate, usually a dwelling with individual ownership of seperate portions of the building plus shared ownership of the common areas.
Consideration: The price or subject matter which induces a contract; may be in money, commodity, exchange, or a transfer of personal effort.
Contract: A legally enforceable agreement to do, or not to do, a particular thing for a consideration.
Contract for Deed: A contract for the sale of real estate where the deed (title) of the property is transferred only after all the payments have been made. Also known as a land contract, agreement of sale, conditional sales contract, or installment contract.
Contract for Exchange of Real Estate: A contract for the sale of real estate in which the consideration is paid wholly or partly in real property instead of cash.
Contract of Sale: The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.
Conventional Loan: A real estate loan which is not insured by the FHA or guaranteed by the VA.
Conveyance: Written instrument, such as a deed or lease, that evidences transfer of some ownership interest in real property from one person to another.
Cost Approach to Value: An estimate of value based on current construction costs, less depreciation, plus land value. Contrast with the Income Approach to Value and the Market Data Approach to Value .
Counter Offer: An offer made in response to a previous bid.
Credit Limit: The maximum amount that you can borrow under a home equity plan.
Cul-de-Sac: A dead end street which widens sufficiently at the end to permit an automobile to make a "U" turn.

DBA Doing Business As. Business names or aliases filed with the county.

Debenture: Bonds issued without security.
Debt Service: The total amount of credit card, auto, mortgage or other debt upon which you must pay.
Debt-Service Ratio: The measurement of debt payments to gross household income which may include, in addition to the main wage earner's salary, salaries of other wage earners, commisions, bonuses, overtime, etc.
Deceptive Trade Practices Act: Part of the federal Consumer Protection Act originally passed in 1973 and made specifically applicable to real estate in 1975, specifically prohibitting a lengthy number of false, misleading and deceptive acts or practices. The Supreme Court has defined a deceptive trade practice as one "which has the capacity to deceive an average, ordinary person, even though that person may have been ignorant, unthinking, or credulous."
Deed: A written instrument by which title to land is conveyed.
Deed of Trust: The legal instrument used in lieu of a mortgage, in which the property is conveyed in trust to a trustee to be held as security for a loan.
Default: Non-performance of a duty arising under a contract or otherwise.
Defeasanse: A provision or condition in a deed or in a separate instrument which, being performed, renders the instrument void.
Delivery: The actual transfer of the deed, or an act of a seller showing intent to make a deed effective, without which, there is no transfer of title to the property.
Depreciation: A loss in value.
Descent: Acquisition of property through inheritance laws when there is no will (when a person dies Intestate ).
Devise: A transfer of real estate by will or last testament.
Discount Points (or Points): The amount paid either to maintain or lower the interest rate charged. Each point is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000 mortgage would equal $2,000).
Discount Rate: (1) The rate charged member banks who borrow from the Federal Reserve System. (2) The rate used to convert future income into present value.
Dispossess: To oust from land by legal process.
Down Payment: An amount of money the buyer pays which is the difference between the purchase price and the mortgage amount.
Dual Agency: Representing the buyer and the seller in the same transaction by the same agent. Since there is an inherent conflict in fiduciary obligations to two different principals, dual agency, at best, is a risky undertaking. TRELA requires that all parties to a dual agency have full knowledge and consent (Disclosed Dual Agency). Contrast with Intermediary .
Due on Sale: A clause in a mortgage agreement providing that, if the mortgagor (the borrower) sells, transfers, or, in some instances, encumbers the property, the mortgagee (the lender) has the right to demand the outstanding balance in full.
Duress: Forcing action or inaction against a person's will.

Earnest Money

A deposit made by the buyer as evidence of good faith in offering to purchase real estate and to secure performance of the contract. Earnest money is typically held by a title company, in an escrow account, during the period between acceptance of the contract and the closing.
Earnest Money Contract: A contract for the sale or purchase of real estate in which the purchaser is required to tender earnest money to evidence good faith in completing the contractual obligations. Almost every sales contract for real estateis an earnest money contract. Also see Sales Contract and Promulgated Contracts .
Easement: The right to use the land of another for a specific purpose, such as a right of way for utilities.
Economic Obselescence: Loss of value of real property due to external forces or events; eg., a sewer plant is built next door to the subject property. Contrast with Functional Obsolescence .
Effective Interest Rate: The cost of credit on a yearly basis expressed as a percentage. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Useful in comparing loan programs with different rates and points.
Emblements: Annual crops produced by cultivation. They are deemed to be personal property.
Eminent Domain: The right of government to take private property for public use, through court action known as condemnation .
Encroachment: A fixture, or structure, such as a wall or fence, which invades a portion of a property belonging to another.
Encumbrance: A cloud against clear, free title to the prperty which does not prevent conveyance, such as unpaid taxes, easements, deed restrctions, motgage loans, etc.
Endorsement: Writing one's name, either with or without additional words, on a negotiable instrument, or on a paper attached to it.
Equal Credit Oportunity Act: The 1974 federal law (Title VII of the Consumer Credit Protection Act) which requires fairness and impartiality without discrimination on the basis of race, color, religion, national origin, sex or marital status, or receipt of income from public assistance programs in the extension of credit, and good faith exercises of any right under the Consumer Credit Protection Act (eg. the creditor must state reasons for denial of credit).
Equal Treatment/Different Impact: It is possible to be guilty of discrimination even by treating two individuals the same. If the results of the treatment are discriminatory, or tend to exclude or otherwise harm members of a minority group, or have discriminatory impact, they are against the law. For example, an apartment house which rents only to doctors and lawyers, where there are few, if any, minority doctors or lawyers in the area, may be a violation of the Fair Housing Laws .
Equity: The difference in dollars between a house's value and the mortgage amount.
Escalator Clause: The clause in a contract permitting adjustments of the payments.
Escheat: The reversion of property to the state in the event the owner thereof dies without leaving a will ( intestate ) and has no hiers to whom the property may pass by lawful descent .
Escrow: A trust arrangement by which none or more parties deposit things of value with an authorized escrow agent in accordance with the terms of a real estate agreement.
Escrow Account: A third party account that holds money safely while a sale is in progress.
Estimate of Value: An appraisal; the appraised value.
Et Ux: Abbreviation for "et uxor", meaning "and wife".
Exception: As used in the conveyance of real estate, an exception is the exclusion of some part of the property conveyed, with title of that excepted part remaining with the grantor. For example, in most subdivision developments, mineral rights are not conveyed to the purchaser of a lot, but remain the property of the developer. Contrast with Reservation .
Exclusive Agency: A listing agreement which gives the listing agent the right to sell the property for a specified time. The owner reserves the right to sell the property himself without paying a commission to the agent. Brokers run the risk of investing their time, effort, and money in a listing that, even if sold through their marketing efforts, does not produce a commission. Contrast with Exclusive Right to Sell.
Exclusive Right to Sell: A listing agreement which gives the listing agent the right to sell the property for a specified time, with the right to collect a commission if the property is sold by anyone, including the owner, during the listing period. Contrast with Exclusive Agency .
Executor/Executrix: The man/woman appointed in a will to carry out the requests of the will. Contrast with Administrator/Administratrix .

Fair Housing Laws

Federal, state, and local laws, particularly Title VIII of the 1968 Civil Rights Act, Title VI of the Civil Rights Act of 1964, and the Civil Rights Act of 1866, which forbid discrimination because of race, sex, color, religion, or national origin, in the selling or renting of homes or apartments, and in other specified transactions. These laws have been recently been expanded to include familial status (having children) and disabilities (Americans with Disabilities Act).

Fee Simple Estate

The most complete form of ownership of real property; absolute ownership. Commonly used to to denote a property where the owner has undivided title to the land on which the property is situated.

FHA

The Federal Housing Administration which insures mortgage loans made by approved lenders, in accordance with FHA regulations.

Fiduciary

The relationship of trust, honasty and confidence between agent and principal; the faithful relationship owed by an agent to the principal.

First Mortgage

A mortgage which is in first lien position, taking priority over all other liens (which are financial encumbrances).

Fixed Rate Mortgage

A mortgage with an interest rate and monthly payment that doesn't vary for the term of the loan.

Fixture

Personal property which has been attached to real estate so as to become part of the real property. The article must meet atleast one of three conditions:

1. Attached in a permanent manner.

2. Specially adapted to the property. or

3. Intentionally made part of the real property.

Foreclosure

A legal process instituted by a mortgagee or lien creditor after the debtor's default.

Fraud

A misstatement of a material fact made with intent to deceive or made with reckless disregard of the truth, and which actually does deceive.

Front Foot

One linear foot (12 inches) along the street side of a lot.

Functional Obsolescence

Loss of value of real property caused by modernization or changing tastes or standards; eg. single bath, inadequate closet space, etc. Contrast with Economic Obselescence .

General Lien

A lien that includes all the property owned by a debtor, rather than a specific proerty. Contrast with Specific Lien.
General Warranty Deed: A deed in which the grantor fully warrants good and clear title to the property. A general warranty deed offers the most protection of any deed.
Good Faith Estimate: A written estimate of closing costs which a lender must provide you within three days of submitting an application.
Government Survey Method: A system of land description which uses meridians (north and south lines) and base lines (east and west lines). Areas include quadrangles (24 miles on each side), townships (6 miles on each side), and sections (1 mile on each side). Also known as the Rectangular Survey Method. Contrast with Metes and Bounds , and Recorded Plat (Lot and Block Number) method.
Grace Period: A period of time during which a loan payment may be paid after its due date but not incur a late penalty. Such late payments may be reported on your credit report.
Grantee: A person to whom real estate is conveyed; the buyer.
Grantor: A person conveying real estate by deed; the seller.
Gross debt service: The amount of money needed to pay principal, interest and taxes, and sometimes energy costs. If the dwelling unit is a condominium, all or a portion of common fees are excluded, depending on what expenses are covered.
Gross Income: For qualifying purposes, the income of the borrower before taxes or expenses are deducted.
Gross Lease: A lease of property where the landlord pays charges regularly incurred in ownership, such as taxes, insurance, utilities, and repairs. Contrast with Net Lease .

Habendum Clause

The "to have and hold" clause which defines or limits the quantity of the estate granted in the premises of the deed.
Hazard Insurance: A contract between purchaser and an insurer, to compensate the insured for loss of property due to hazards (fire, hail damage, etc.), for a premium.
Hereditaments: Property, personal and real, capable of being inherited.
Highest and Best Use: The particular use of a real property which will produce the greatest financial return. The optimum use of a site as used in appraisal.
Home Equity Loan: A fixed or adjustable rate loan obtained for a variety of purposes, secured by the equity in your home. Interest paid is usually tax-deductible. Often used for home improvement or freeing of equity for investment in other real estate or investment. Recommended by many to replace or substitute for consumer loans whose interest is not tax-deductible, such as auto or boat loans, credit card debt, medical debt, and education loans.
Homestead: Land, and the improvements thereon, designated by the owner as his homestead and, therefore, protested by state law from forced sale by certain creditors of the owner.

Improvements

Valuable additions to the land, such as buildings, fences, roads, etc., which increase the value of the property.

Income Approach to Value

An estimate of value based on the monetary returns that a property can be expected to generate; capitalization. Contrast with the Cost Approach to Value and the Market Data Approach to Value .

Index

A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based.

Inspection Clause

A stipulation in an offer to purchase that makes the sale contingent on the findings of a home inspector.

Insurable Title

A title which a title company will insure.

Interest

(1) The sum paid in return for the use of money; could be considered rent for the use of money. (2) The type and extent of ownership in property.

Interest Rate

The periodic charge, expressed as a percentage, for use of credit.

Intermediary

The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker's obligations as an intermediary. The broker is required to treat each party honestly and fairly. A broker who acts as an intermediary in a transaction:

(1) shall treat all parties honestly;

(2) may not disclose that the owner will accept a price less than than the asking price unless authorized in writing to do so by the owner;

(3) may not disclose that the buyer will pay a price greater than the price submitted in a written offer unless authorized in writing to do so by the buyer; and

(4) may not disclose any confidential information or any information that a party specifically instructs the broker in writing not to disclose unless authorized in writing to disclose the information or required to do so by statute or a court order or if the information materially relates to the condition of the property.

With the parties' consent, a broker acting as an intermediary between the parties may appoint a person who is licensed and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under the Act and associated with the broker to communicate with and carry out instructions of the other party.

Intestate

Legal designation of a person who has died without leaving a valid will.

Intimidation

As defined in the fair housing laws, it is the illegal act of coercing, intimidating, threatening, or interfering with a person in exercising or enjoying any right granted or protected by federal, state or local fair housing laws.

Joint Tenancy

A type of ownership in which two ore more people have an undivided interest in a property, with the right of survivorship. Upon the death of one owner, his/her interest passes to the remaining owners and not to the heirs or the devises of the deceased. Contrast with Tenancy in Common .
Judgement: The official and authentic decision of a court of justice concerning the respective rights and claims of the parties to an action or suit.

Laches

Delay or negligence in asserting one's rights.
Latent Defect: Hidden structural defects and flaws.
Lease: A contract between a landlord and a tenant conveying the use and/or occupation of the landlord's property.
Legal Description: A description of a specific parcel of real estate which is acceptable to the courts in that state, and which will allows an independent surveyor to locate and identify it. Usually it uses one of the following methods; government survey , metes and bounds , or recorded plat (lot and block number).
Less Favorable Treatment: Any time a person is treated differently on the basis of race, sex, religion, color, familial staus, disability, or national origin, either by action or inaction, in the selling or leasing of real property, it is a violation of the Fair Housing Laws . Also known as unequal treatment or different treatment.
Lessee: Tenant leasing property.
Lessor: One who leases property to a tenant.
Leverage: The use of borrowed funds to finance an investment and to magnify the rate of return.
Licensee: A person licenscensed by the Florida Real Estate Commission to engage in real estate brokerage, either as a broker or as a salesman.
Lien: A monetary claim against a property. These should be settled before the sale is finalized.
Life Estate: An interest in property only for the duration of someone's life.
Lis Pendens: A notice indicating that legal action is pending on a property.
Listing Agreement: The legal agreement between the listing agent/broker and the vendor, setting out the services to be rendered, describing the property for sale, and stating the terms of payment.
Lock or Lock In: A commitment you obtain from a lender assuring you a particular interest rate or feature or a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.

Margin

An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.
Marginal Land: Property which is barely profitable to use.
Market Approach to Value: An estimate of value based on the actual sales prices of comparable properties. Contrast with Cost Approach to Value and Income Approach to Value .
Market Value: The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Also known as Fair Market Value.
Mechanic's Lien: Claim for purpose of securing priority payment for work and/or materials furnished in erecting or repairing a building.
Metes and Bounds: A system of land description using distance (metes) and angles/compass directions (bounds), beginning and ending at the same point. Contrast with Government Survey and Recorded Plat Method .
Minimum Payment: The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be "interest only," (simple interest). In other plans, the minimum payment may include principal and interest (amortized).
Minority: As defined in the Civil Rights Act of 1968 as part of the Fair Housing Laws "'minority' means any group, or any member of a group, that can be identified either: (1) by race, color, religion, sex, disability, or national origin; or (2) by any other characteristic (such as familial status) on the basis of which discrimination is prohibited by a federal, state, or local fair housing law.
Misrepresentation: A false statement, or concealment, of material fact with the intention of inducing action of another.
Monument: A fixed object or point, either natural or man-made, used in making a survey.
Mortgage: A contract providing security for the repayment of a loan, registered against property, with stated rights and remedies in the event of default. Lenders consider both the property (security) and financial worth of the borrower (covenant) in deciding on a mortgage loan.
Mortgage Banker: Originates mortgage loans, loaning you their funds and closing the loan in their name.
Mortgage Broker: A person or company having contacts with financial institutions or individuals wishing to invest in mortgages.
Mortgage Loan: A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or Deed of Trust is your agreement to pledge your home or other real estate as security.
Mortgagee: The lender in a mortgage loan transaction.
Mortgagor: The borrower in a mortgage loan transaction.
Multiple Listing Service: A system by which a number of real estate firms share information about homes that are for sale.

Negative Amortization

Amortization in which the payment made is insufficient to fund complete repayment of the loan at its termination. Usually occurs when the increase in the monthly payment is limited by a ceiling. The portion of the payment which should be paid is added to the remaining balance owed. The balance owed may increase, rather than decrease over the life of the loan.
Net Lease: A lease in which the tenant pays such expenses as taxes, insurance, repairs, utilities, etc. Contrast with Gross Lease .
Net Listing: A price, which must be expressly agreed upon, below which the owner will not sell the property and at which the broker will not receive a commission; the broker receives the excess over and above the net listing price as commission. The broker in this type of listing will have a very hard time maintaining his fiduciary responsibilities to his seller since his interests are potentially at odds with the interests of the seller.
Note: A written instrument of credit attesting to a debt and promise to pay.

Obsolescence

A loss in value of real property caused by changes either internal ofr external to the property. See Economic Obsolescence , Functional Obsolescence , and Physical Deterioration .
Open House: An opportunity for prospective buyers to view a house in a low pressure environment.
Open Listing: A listing under which the principal (owner) reserves the right to list his property with other brokers.
Option: The right to purchase property within a definite time at a specified price. There is no obligation to purchase, but the seller is obligated to sell if the option holder exercise the right to purchase. For the option to be valid, it must include consideration.
Origination Fee: A fee charged by lenders, in addition to interest, for services in connection with granting of a loan. Usually a percentage of the loan amount.

Panic Peddling

The illegal practice of inducing panic selling in a neighborhood by making representations of the entry, or prospective entry, of members of a minority group; Blockbusting . See Fair Housing .
Party Wall: Wall erected on line between adjoining properties for the use of both properties.
Percentage Lease: Lease in which all or part of rental is a specified percentage of gross income from total sales made upon the premises.
Person: An individual, a partnership, or a corporation, foreign or domestic.
Personal Property: Property which is tangible, movable, and not fixed to the land. Also called chattel and personalty. Contrast with Real Property .
Personalty: Personal property; chattel. Contrast with Realty .
Physical Deterioration: The loss of value to real property from all causes due to the action of the elements and old age. Physical deterioration can be either curable or incurable.
PITI: Principal, Interest,Taxes and Insurance.
Plat Book: A record of recorded subdivisions of land.
Points: Fees paid to induce lenders to make mortgage loans at a particular interest rate. Each point is equal to one percent (1%) of the loan principal. Same as Discount Points .
Police Power: The authority of a government to adopt and enforce law governing the use of real estate based on the need to promote public safety, health, and general welfare.
Power of Attorney: A written authorization by a person to another person to act for him on his behalf.
Prepayment: Paying off all or part of the mortgage before the scheduled date.
Prepayment Clause in a Mortgage: Statement of the terms upon which the mortgagor (borrower) may pay the entire or stated amount on the mortgage principal at some time prior to the due date.
Prepayment Penalty: A fee paid to the lending institution for paying a loan prior to the scheduled maturity date.
Primary Mortgage Market: Lenders who originate loans and makes funds available directly to the borrowers. Contrast with Secondary Mortgage Market .
Prime Rate: The interest, or discount rate charged by a commercial bank to its largest and strongest customers.
Principal: The amount of money owed to the lender not including interest.
Principle of Conformity: An appraisal principle which holds that the maximum value is realized when a reasonable degree of homogeneity (sameness) exists in a neighborhood.
Private Mortgage Insurance (PMI): Default insurance on convetional loans, normally insuring the top 20%-25% of the loan and not the whole loan.
Promulgated Contracts: The Florida Real Estate Commission has prepared and authorized varios standard contracts which must be used by all licensees when acting as agents in real estate transactions with limited exceptions.
Pro-Rate: To divide or distribute proportionally. At closing, various expenses such as taxes, insurance, interest, rents, etc. are prorated between the seller and buyer.
Puffing: Non-factual or extravagant statements and opinions made to enhance the perceived desirability of a property. The is a fine line between legal puffing and illegal misrepresentation, and puffing is best avoided. An example of puffing would be, "This home has the best view in the city". Also known as Puffery .
Purchase Offer: A document that lists the price, terms and conditions under which a buyer is willing to purchase a property.

Qualify

To meet a mortgage lender's approval requirements.
Qualifying Ratios

Comparisons of a borrower's debts and gross monthly income.

Quit Claim Deed: A deed that conveys whatever title, if any, a grantor has, but contains no warranties of ownership.

Ready, Willing and Able

A buyer who is prepared to buy on the seller's terms and has the financial capacity to do so.
Real Estate: Refers to land and improvments and the rights to own or use them. "A leasehold, as well as any other interest or estate in land, wheter corporeal, incorporeal, freehold, or nonfreehold, and whether the real estate is situated in this state or elsewhere." {TRELA, Section 2(1)} In popular usage, Real Estate is used interchangeably with Real Property and Realty .
Real Estate Board: A non profit organization representing local real estate agents/brokers and salespeople, which provides services to its members and maintains and operates the Multiple Listing Service in the community.
Real Estate Inspector, Licensed: A Licensed Real Estate Inspector is someone who is licensed by TREC who holds himself out to the public as being trained and qualified to inspect property. Formerly known as Registered Real Estate Inspector before January 1, 1996.
Real Property: Refers to the right to own land and improvements. Commonly used interchangeably with Real Estate and Realty. Contrast with Personal Property .
Realty: Refers to land and buildings and other improvements from a physical standpoint. Real Estate and Real Property tend to be used interchangeably with Realty in everyday usage. Contrast with Personalty .
Reciever: Court-appointed custodian who holds property for the court, pending final disposition of the matter before the court.
Recorded Plat: A subdivision map filed with the county recorder's office that shows the location and boundaries (lot and block number) of individual parcels of land. Contrast with Government Survey Method and Metes and Bounds .
Recording: The act of entering in the public records, the written record of title to real property, thereby giving constructive notice to the public.
Redlining: The illegal practice of refusing to originate mortgage loans, or limiting their number, in certain neighborhoods on the basis of racial or ethnic composition. See Fair Housing .
Refinancing: To apply for a new mortgage in order to gain better terms, usually either a lower interest rate or a different principal amount.
Regulation 'Z': Truth in lending law developed by the Federal Reserve System which requires lenders to provide full disclosure of the terms of the loan, including interest rates expressed as an annual percentage rate (APR).
RELA: Real Estate License Act.
Release: To relinquish an interest or claim to a piece of property.
Remainder: The future interest in an estate which takes effect after the termination of another estate, such as a life estate; what is left at the termination of a life estate.
Reservation: A right reserved by a grantor in the sale or lease of a property. In a sale, the title of all property passes to the grantee, but the use may be reserved for the grantor. Contrast with Exception .
RESPA: Real EstateSettlement Procedures Act is a federal law which deals with the procedures to be followed in a real estate closing, and is intended to make borrowers more knowledgeable about possible costs and charges.
Restrictions: Limitations on the use or occupancy of real estate contained in a deed or in local ordinances pertaining to land use.
Riparian Owner: One who owns land bounding upon a river or water course (stream, creek, bayou, etc.).

Sales Contract

A written agreement stating the terms of the sale agreed to by both buyer and seller. TREC promulgated standard contracts must be used by all licensees, with certain limited exceptions. See Earnest Money Contract .
Secondary Mortgage Market: Buying and selling of existing mortgage loans, designed to provide additional liquidity for lenders. Contrast with Primary Mortgage Market .
Security Interest: An interest that a lender takes in the borrower's property to assure repayment of a debt.
Self Amortized Loan: A loan which will retire the debt by systematic payments of principal and interest, so that at the end of the loan period, the balance will be zero.
Servicing a Loan: The ongoing process of collecting your monthly mortgage payment, including accounting for and payment of your yearly tax and/or homeowners insurance bills.
Set Back: The distance a building must be set back from the proerty lines in accordance with local zoning ordinances or deed restrictions.
Simple Interest: Interest computed only on the principal balance. Contrast with Compound Interest .
Special Warranty Deed: A warranty deed which, instead of warranting the title from sovereignty of the soil to the last grantee, merely warrants the title against every person whomsoever lawfully claiming or to claim the same, or any part thereof, by, through or under the grantor.
Specific Lien: A claim that only applies to or affects a certain property or group of proerties. Contrast with General Lien .
Specific Performance: Carrying out of the precise terms agreed upon in a contract. Also see Suit for Specific Perfomance .
Statute of Frauds: The law which requires among other things, that all contracts tranferring real estate, or for the leasing of property for over one year, must be in writing to be enforceable.
Statutory Year: A year composed of twelve months, each with thirty (30) days, for a total of 360 days in a statutory year. Also known as a banker's year. Contrast with Calendar Year .
Steering: The illegal practice of directing members of minority groups to, or away from, certain areas or neighborhoods; Channeling . See Fair Housing .
Subject to Mortgage: The buyer of an already mortgaged property makes the payments, but does not take personal responsibility for the loan. Should the mortgage be foreclosed and the property sold for a lesser amount than is owed, the grantee-buyer is not personally liable for the deficiency, but the grantor-seller is. Contrast with Assumption of Mortgage .
Subpoena: A legal process ordering a witness to appear and give testimony or to present documents under penalty of law. TREC has subpoena powers.
Substitution, Principle of: The principle which states that a buyer will pay no more for a proerty than the cost of an equally desirable alternative property.
Suit for Specific Performance: A legal action brought by either a buyer or a seller to enforce performance of the terms of a contract.

Tenancy in Common

A type of ownership in which two or more people have an undivided interest in property, without the right of survivorship. Upon death of one of the owners, his/her interest passes to his.her heirs or devises. Contrast with Joint Tenancy .
Tenement: Everything that may be occupied under a lease by a tenant.
Term: The actual life of a mortgage, at the end of which the mortgage becomes due and payable unless the lender renews the mortgage.
Time is of the Essence: A clause, whichif included in a contract, makes failure to perform by a specified date a material breach or violation of the contract.
Timeshare: An arrangement under which a purchasr receives an interest in real property and the right to use an accommodation or ammenities, or both, for a specified period and on a recurring basis. Used primarily for selling vacation properties.
Title: The right of ownership of a property.
Title Company: A company that provides title insurance policies. In Florida title companies also act as escrow agents, conduct title searches and hold closings.
Title Insurance: Protection for lenders or homeowners against financial loss resulting from legal defects in the title.
Title Search: Checks all the records relating to the property to determine whether the seller can sell the property, and can do so free of liens.
Title Theory State: The system in which the lender has legal title to the mortgaged property and the borrower has equitable title. Contrast with Lien Theory State .
Torrens System: A system of land registration in which clear title is established with a governmental authority, which issues title certificates to owners.
Townhouse: A dwelling unit usually with two or three floors, and shared walls. It can be individually owned, a condominium, a cooperative, or rental property.
Transaction Fee