Real Estate Terms

NATURE AND DESCRIPTION OF REAL ESTATE

  • Fixture- an object that has been attached to land so as to become real estate
  • Improvements– any form of land development such as buildings, roads, fences, pipelines, etc.
  • Personal Property- a right or interest in things of a temporary or movable nature; anything not classed as real property.
  • Real Estate- land and improvements in a physical sense as well as the rights to own or use them

RIGHTS AND INTERESTS IN LAND

  • Easement- the right or privilege one part has to use land belonging to another for a special purpose not inconsistent with the owner’s use of the land
  • Eminent Domain- the right of government to take privately held land for public use provided fair compensation is paid
  • Fee Simple- the largest, most complete bundle of rights one can hold in land; land ownership
  • Lien- a hold or claim which one person has on the property of another to secure payment of a debt or other obligation
  • Title- the right to or ownership of something; also the evidence of ownership, such as a deed or bill of sale

TRANSFERRING TITLE

  • Cloud on the Title- any claim, lien or encumbrance that impairs title to property
  • Deed- a written document that when properly executed and delivered conveys title to land
  • Quitclaim Deed- a legal instrument used to convey whatever title the grantor has; it contains no covenants, warranties nor implication of the grantor’s ownership

RECORDATION, ABSTRACTS, AND TITLE INSURANCE

  • Abstract- a summary of all recorded documents affecting the title to a given parcel of land
  • Acknowledgement- a formal declaration by a person signing a document that he or she, in fact, did sign the document
  • Chain of Title- the linkage of property ownership that connects the present owner and the original source of title
  • Marketable Title- title that is free from reasonable doubt as to who the owner is
  • Quiet Title Suit- court- ordered hearings held to determine land ownership
  • Title Insurance- an insurance policy against defects in title not listed in the title report or abstract

CONTRACT LAW

  • Specific Performance- contract performance according to the precise terms agreed upon

REAL ESTATE SALES CONTRACTS

  • Default- failure to perform a legal duty; such as failure to carry out the terms of a contract
  • Earnest Money Deposit- money that accompanies an offer to purchase as evidence of good faith
  • “Time is of the Essence”- a phrase that means that the time limits of a contract must be faithfully observed or the contract is voidable

MORTGAGE AND NOTE

  • Subordination- voluntary acceptance of a lower mortgage priority than one would otherwise be entitled to.

DEED OF TRUST

  • Deed of Trust- a document that conveys legal title to a neutral third party (a trustee) as security for a debt.

LENDING PRACTICES

  • Amortized Loan- a loan requiring periodic payments that include both interest and partial repayment of principal
  • Balloon Loan- any loan in which the final payment is larger than the preceding payments
  • Loan-to-Value Ratio– a percentage reflecting what a lender will lend divided by the market value of the property

SOURCES AND TYPES OF FINANCING

  • Option– a right for a given period of time; to buy, sell, or lease property at specified price and terms

TAXES AND ASSESSMENTS

  • Assessed Value- a value places on a property for the purpose of taxation
  • Basis- the paid price for property; used in calculating income taxes
  • Capital Gain- the gain (profit) on the sale of an appreciated asset
  • Mill Rate- property tax rate that is expressed in tenths of a cent per dollar of assessed valuation
  • Tax Lien- a charge or hold by the government against property to insure the payment of taxes

TITLE CLOSING AND ESCROW

  • Closing Meeting- meeting at which the buyer pays for the property and receives a deed to it and all other matters pertaining to the sale are conclude
  • Escrow Agent- the person placed in charge of an escrow
  • Escrow Closing- the deposit of documents and funds with a neutral third party along with instructions as to how to conduct the closing
  • Prorating– the division of ongoing expenses and income items between the buyer and the seller

REAL ESTATE LEASES

  • Assignment- the total transfer of the lessee’s rights to another party
  • Gross Lease- tenant pays a fixed rent and the land lord pays all property expenses
  • Net Lease- Tenant pays a base rent plus maintenance, property taxes, and insurance
  • Option- the right at some time in the future to purchase or lease a property at a predetermined price

Forms of Ownership

Forms Of Ownership

Community Property- spouses are treated as equal partners with each owning a one-half interest

Concurrent Ownership- ownership by two or more persons at the same time

Estate in Severalty- owned by one person; sole ownership

Joint Tenancy- a form of property co-ownership that features the right of survivorship

Limited Partnership- composed of general partners who mainly organize and operate the partnership and limited partners who provide the capital

Right of Survivorship- a feature of joint tenancy whereby the surviving joint tenants automatically acquire all the right, title and interest of the decreased joint tenant

Tenancy by the Entirety- a form of joint ownership reserved for married persons; right of survivorship exists and neither spouse has a disposable interest during the lifetime of the other

Tenants in Common- shared ownership of a single property among two or more persons; interests need not be equal and no right of survivorship exists

Undivided Interest- ownership by two or more persons that gives each the right to use the entire property

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