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
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