A
42 terms
Abandonment
Giving up possession or ownership of property by not using it, generally indicated through some affirmative act, like removing one's belongings from an apartment.
Abstract of Judgment
Document that summarizes the result of a legal action, which can be filed in any county where the judgment debtor owns a property.
Abstract of Title
Summation of all recorded transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title to show ownership continuity and signify any possible loss to title.
Acceleration Clause
Provision in a real estate financing instrument allowing the lender to declare the full debt due immediately if the borrower breaches any of the provisions of the loan agreement. Also referred to as a call provision.
Acceptance
Agreeing to the terms of an offer and entering into a binding contract. Also: receiving delivery of a deed from the grantor.
Accession
The process of manufactured or natural improvement or addition to property.
Accretion
A steady addition to dry land through the forces of nature, as when waterborne sediments get deposited on waterfront property.
Acknowledgment
Formal declaration made before an authorized person (generally a notary public) by an individual who has executed a written instrument that it has been done voluntarily.
Acquisition Cost
Total amount of money required to acquire title to a property, including the purchase price, closing costs, legal fees, escrow, service charges, title insurance, recording fees and other expenses.
Acre
Area of land measuring 43,560 square feet, or about 208.71 feet square.
Actual Authority
Authority actually given to an agent by the principal, expressly or by implication.
Actual Eviction
Forcing someone physically off real property or preventing someone from re-entering the property using legal action.
ADA
Americans with Disabilities Act — federal law mandating that public facilities must be accessible to disabled people.
Addendum
A page containing additional provisions attached to a purchase agreement or any other contract.
Adjustable-Rate Mortgage (ARM)
Loan in which the interest rate increases or decreases periodically to reflect changes in the cost of money.
Adjusted Basis
Purchase price of property plus cost of specified improvements, minus any depreciation deductions taken.
Ad Valorem
Latin phrase meaning "according to value," referring to taxes assessed on the value of property.
Adverse Possession
A way of acquiring title to real property belonging to someone else by occupying it without permission and fulfilling statutory requirements.
Affidavit
Acknowledged sworn statement in writing made before a notary public or any other official authorized to administer an oath.
Agency
The relationship between a principal and an agent formed by contract, in which the agent is employed by the principal to do certain acts dealing with a third party.
Agency Disclosure Form
Form explaining the duties of a seller's agent, a buyer's agent, and a dual agent, required to be signed by both the buyer and the seller before entering a residential purchase agreement.
Agent
Individual authorized to represent another (known as the principal) in dealings with third parties.
Air Rights
The right to unobstructed use and possession of the air space over a parcel of land.
Alienation
The transfer of ownership or an interest in property from one person to another, in any way.
Alienation Clause
A security instrument provision giving the lender the right to declare the full loan balance due immediately if the borrower sells or transfers the security property; also called a due-on-sale clause.
Alluvion / Alluvium
The increase of soil along the bank of a body of water by natural forces.
ALTA
American Land Title Association — a nationwide organization of title insurance companies.
Amendment
A supplementary agreement that changes one or more terms of a contract; must be signed by all parties.
Amortize
To pay off a debt gradually with installments that include both principal and interest.
Annual Percentage Rate (APR)
All charges paid by the borrower for a loan (including interest, origination fee, discount points, and mortgage insurance costs), expressed as an annual percentage of the amount borrowed.
Anticipatory Repudiation
Action taken by one party to a contract to inform the other party, before the time set for performance, that they do not intend to fulfill the contract.
Apportionment
A division of property or liability into proportionate parts.
Appraisal
An estimate or opinion of the value of a piece of property as of a specific date.
Appreciation
An increase in value; the opposite of depreciation.
Appurtenances
Rights that go along with ownership of a particular piece of property, such as air rights or mineral rights.
ARM
See Adjustable-Rate Mortgage.
Assessment
Property valuation for taxation purposes.
Assignment
Transferring contract rights from one person to another. In case of a lease, the transfer of the entire leasehold estate by the original tenant to another.
Assumption
Action by a buyer to take on personal liability for paying off the seller's existing mortgage or deed of trust.
Attachment
Court-ordered seizure of property belonging to a defendant in a lawsuit, so it will be available to satisfy a judgment if the plaintiff wins.
Attorney In Fact
Someone authorized to represent another by a power of attorney, not necessarily a lawyer.
Avulsion
A sudden tearing away of land by the action of water, or a sudden shift in a water course.
B
12 terms
Bad Debt/Vacancy Factor
A percentage deducted from a property's potential gross income to estimate income that will probably be lost due to vacancies and non-payment of rents.
Balloon Payment
A payment on a loan (usually the final payment) that is substantially larger than the regular installment payments.
Bankruptcy
A court declaration that an individual or firm is insolvent, resulting in assets and debts being administered under bankruptcy laws.
Basis
Figure used in calculating the gain on the sale of real estate for federal income tax purposes; also called the cost basis.
Beneficiary
(a) One for whom a trust is created. (b) The lender in a deed of trust transaction. (c) Someone entitled to receive property under a will.
Betterment
An improvement to real property more extensive than ordinary repair that increases the value of the property.
Bilateral Contract
Contract under which each party promises performance.
Bill of Sale
A document used to transfer title to personal property from a seller to a buyer.
Blanket Mortgage
Mortgage that includes more than one property parcel as security.
Blockbusting
Attempting to lure owners to sell their homes by predicting that members of another race or ethnic group will be moving into the neighborhood. A violation of antidiscrimination laws.
Bona Fide
In good faith; genuine, not fraudulent.
Boot
Something given or received in a tax-free exchange that is not like-kind property.
C
27 terms
Cap
A limit on how much a lender may raise an adjustable rate mortgage's interest rate or monthly payment per year, or over the life of the loan.
Capital Gain
Profit achieved from the sale of a capital asset. Long-term if held more than one year; short-term if held one year or less.
Capitalization Rate (Cap Rate)
A percentage used to convert anticipated net income from a property into its present value estimate.
Cash Flow
The residual income after deducting all operating expenses and debt service from the gross income.
CC&Rs
Declaration of covenants, conditions, and restrictions that places restrictions on all lots within a new subdivision.
Certificate of Occupancy
Document issued by a local government agency verifying that a newly-constructed building complies with all codes and may be occupied.
Chain of Title
Record of encumbrances and conveyances pertaining to a property.
Civil Rights Act of 1968 (Fair Housing Act)
Federal law making discrimination illegal based on race, color, religion, sex, national origin, disability, or familial status in the sale or rental of residential property.
Closing
The final stage of a real estate transaction when the seller receives the purchase money and the buyer receives the deed.
Closing Costs
Expenses incurred while transferring real estate in addition to the purchase price.
Cloud on Title
A claim, encumbrance, or apparent defect that makes the title to a property unmarketable.
Collateral
Anything of value used as security for a debt or obligation.
Commission
Compensation received by a broker for services provided in connection with a real estate transaction, normally a percentage of the sales price.
Community Property
In California and other community property states, property jointly owned by a married couple as distinguished from each spouse's separate property.
Comparable (Comp)
In appraisal, a property similar to the subject property that has been sold recently. Used to estimate the value of the subject property.
Comparative Market Analysis (CMA)
Estimate of property value based on indicators from the sale of comparable properties.
Condemnation
Taking private property for public use via the government's power of eminent domain.
Condominium
A subdivision providing an exclusive ownership interest in the airspace of a particular portion of real property, plus an interest in common areas.
Consideration
Something of value provided to induce entering into a contract. Without consideration, a contract is not legally binding.
Contingency Clause
A provision in a contract making the parties' rights and obligations depend on the occurrence of a particular event.
Contract of Deed / Land Contract
A contract for the sale of real property in which the buyer pays in installments and obtains possession immediately while the seller retains legal title until the full price is paid.
Conventional Loan
Mortgage loan not guaranteed by a governmental agency such as the VA or FHA.
Conveyance
Transfer of title of real property from one person to another through a written document (usually a deed).
Cooperative
Building owned by a corporation in which residents are the shareholders, each receiving a proprietary lease for an individual unit.
Cost Approach to Value
One of the three key appraisal methods. Estimates value by calculating replacement cost of improvements, deducting depreciation, and adding land value.
Counteroffer
Reacting to a contract offer by changing some of the terms as a substitute offer.
Covenant
An agreement or promise to perform or not perform certain acts, generally imposed by deeds.
D
12 terms
Damages
Losses suffered by a person due to a breach of contract or a tort.
Deed
A correctly executed and delivered written instrument that conveys title to real property from the grantor to the grantee.
Deed of Trust
Instrument used to secure repayment of a debt that creates a voluntary lien on real property with a power of sale clause allowing non-judicial foreclosure.
Deed in Lieu of Foreclosure
A deed given to the lender by the borrower who has defaulted, to avoid foreclosure proceedings.
Default
When one of the parties to a contract fails to fulfill one or more obligations as enforced by the contract.
Deficiency Judgment
Court determination that the borrower owes more money when the security for a loan does not completely satisfy a debt default.
Delivery
When a deed is legally transferred from the grantor to the grantee, thus transferring title.
Depreciation
(a) A loss in value due to physical deterioration, functional obsolescence, or external obsolescence. (b) Allocating the cost of an asset over time for income tax deductions.
Discount Points
Percentage of the principal amount of a loan collected by the lender at origination to increase the lender's yield on the loan.
Down Payment
Portion of the purchase price of a property paid in cash by the buyer, generally the difference between the purchase price and the financed amount.
Due-on-Sale Clause
Provision giving the lender the right to declare the full loan balance due immediately if the borrower sells or transfers the property. See: Alienation Clause.
Duress
When someone enters into an agreement as a result of threats of physical violence or mental harassment.
E
12 terms
Earnest Money
Deposit made by a real estate buyer demonstrating good faith. Applied toward the purchase price at closing.
Easement
Right given to another person or entity to use property that is not owned by them.
Easement by Necessity
An easement implied in favor of grantees that have no access to their land except over the grantor's land.
Economic Life
Time period when an improved property yields a return on investment; also called useful life.
Effective Age
Age of a structure as its condition indicates, as opposed to its actual age.
Eminent Domain
Right of the government to take title to real property for public use by condemnation, with just compensation paid to the owner.
Encroachment
Unlawful intrusion onto neighboring property, often due to a mistake regarding boundary location.
Encumbrance
Non-possessory interest in real property, such as a mortgage, lien, easement, or restrictive covenant.
Equity
Difference between the current market value of the property and the total liens against it.
Escrow
Agreement that a neutral third party will hold something of value (money or a deed) until the provisions of a transaction are fulfilled.
Estoppel Certificate
Document that prevents a person who signs it from later asserting facts different from those mentioned in the document.
Eviction
Dispossession through the process of law.
F
8 terms
Fair Housing Act
Federal law making it illegal to discriminate in the sale or rental of housing based on race, color, national origin, religion, sex, familial status, or disability.
Fannie Mae (FNMA)
Federally-sponsored agency that buys and sells residential mortgages, enhancing liquidity in the mortgage market.
FHA (Federal Housing Administration)
Federal agency that insures lenders for the repayment of real estate loans, enabling buyers to purchase with lower down payments.
Fiduciary Relationship
Relationship of trust and loyalty in which one party owes a high level of good faith to someone else. An agent is in a fiduciary relationship with their principal.
Fee Simple
The highest form of estate ownership in real estate, unlimited in duration and freely inheritable.
Fixed-Rate Mortgage
Mortgage with an interest rate that remains the same for the entire term of the loan.
Foreclosure
Legal process by which a lender forces the sale of a property when a borrower defaults on a mortgage loan.
Freddie Mac (FHLMC)
Federally-sponsored agency that buys mortgages on the secondary market, bundles and sells them to investors.
G
4 terms
Grant Deed
The most commonly-used type of deed in California, using the word "grant" in its words of conveyance and holding implied warranties.
Grantee
Person who receives title to real property by deed.
Grantor
Person who conveys title to real property by deed.
Gross Rent Multiplier (GRM)
Figure used to estimate the value of income-producing property by multiplying its gross annual rents by the multiplier.
H
2 terms
Homestead
A legal right that protects a dwelling from being forced to be sold by some types of creditors.
HUD (Department of Housing and Urban Development)
Federal agency responsible for public housing programs, FHA-insured loans, and enforcing the Federal Fair Housing Act.
I
5 terms
Income Approach to Value
Appraisal method that estimates property value by converting anticipated net income into present value using capitalization. Also called the capitalization method.
Index
The interest rate benchmark used to adjust an adjustable-rate mortgage, such as the SOFR or Treasury rate.
Installment Sale
Sale of property in which the seller receives payments over more than one tax year, allowing the seller to spread out capital gains tax.
Interest
Money paid for the use of borrowed money, usually expressed as an annual percentage of the principal.
Intestate
Dying without a valid will. Property passes according to state intestate succession laws.
J
3 terms
Joint Tenancy
Form of ownership by two or more persons who hold equal, undivided shares, with the right of survivorship.
Judgment
Court order declaring that one individual is indebted to another, specifying the amount owed.
Judgment Lien
Lien created by recording a court judgment, which then attaches to all real property of the judgment debtor in that county.
L
6 terms
Landlord
Property owner who rents or leases property to a tenant.
Lease
Agreement between a landlord (lessor) and a tenant (lessee) by which the tenant is given the right to use real property for a set period of time in exchange for rent.
Lien
Non-possessory interest in property, created by contract or by law, that gives the lienholder the right to have a debt paid out of proceeds from the sale of the property.
Lis Pendens
Recorded notice that a lawsuit has been filed that may affect title to real property.
Listing Agreement
Contract by which a seller employs a real estate broker to sell their property, specifying the terms and compensation.
Loan-to-Value Ratio (LTV)
Percentage of a property's appraised value that a lender is willing to finance. Example: an 80% LTV means the lender finances 80% and the buyer puts 20% down.
M
6 terms
Market Value
The most probable price at which a property would sell in a competitive and open market under all conditions requisite to a fair sale.
Mechanic's Lien
Lien created by law that gives contractors, subcontractors, and suppliers the right to place a lien on property where they provided work or materials.
Mello-Roos
Special tax levied on property in a Community Facilities District to fund public improvements such as schools, roads, and parks.
Mortgage
A security instrument pledging real property as security for a debt, in which the borrower (mortgagor) retains possession of the property.
Mortgage Broker
A person or company that arranges real estate loans between lenders and borrowers, earning a fee at closing.
Multiple Listing Service (MLS)
A cooperative system by which member brokers share information about properties for sale, enabling any member to sell any listed property.
N
3 terms
NAR
National Association of Realtors — the largest trade association for real estate professionals.
Net Operating Income (NOI)
Gross income from a property minus vacancy losses and operating expenses (before mortgage debt service).
Note (Promissory Note)
Written promise to repay a debt, specifying the principal amount, interest rate, and repayment schedule.
O
4 terms
Obsolescence
Loss of value due to functional or economic factors. Functional obsolescence results from outdated features; economic obsolescence comes from external factors.
Offer
Proposal to enter into a contract under specified terms.
Open Listing
Listing agreement allowing the seller to employ multiple brokers, with commission only going to the broker who produces a buyer.
Option
A contract giving the holder the right to purchase or lease property at a specified price within a specified time, without obligation to do so.
P
9 terms
PITI
Acronym for Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment.
Plat
Map showing the boundaries of a subdivision and its individual lots.
PMI (Private Mortgage Insurance)
Insurance protecting the lender if the borrower defaults, typically required when the down payment is less than 20%.
Power of Attorney
Legal document authorizing one person (attorney in fact) to act on behalf of another.
Pre-Approval
A lender's written commitment to lend a specific amount to a specific borrower, subject to certain conditions.
Principal
The amount of money borrowed in a loan, separate from interest.
Probate
Legal process by which a deceased person's estate is administered and distributed.
Property Management
The operation and management of income-producing real property on behalf of the owner, including leasing, maintenance, and financial reporting.
Purchase Agreement
Written contract specifying the terms and conditions under which a buyer will purchase real property from a seller.
Q
2 terms
Quiet Title Action
Court proceeding to establish ownership of real property and remove any claims or clouds on title.
Quitclaim Deed
Deed conveying any interest in a property that a grantor may have at the time of executing the deed, without warranties.
R
6 terms
Real Estate Owned (REO)
Property that has been foreclosed on and is owned by a bank or lender.
Realtor
A licensed real estate agent who is a member of the National Association of Realtors and adheres to its code of ethics.
Reconveyance
Transfer of title back to the original owner after a debt has been fully repaid.
Recording
Filing documents related to real property (deeds, liens, easements) in the county recorder's office to give public notice.
Refinancing
Paying off an existing mortgage with a new loan, typically to secure a lower interest rate or better terms.
Right of First Refusal
Contractual right giving a person the opportunity to match any offer for a property before the owner accepts another buyer's offer.
S
7 terms
Sales Comparison Approach
Appraisal method estimating property value by comparing it to similar properties that have recently sold.
Security Deposit
Money deposited by a tenant with a landlord as security against damage to the property or non-payment of rent.
Seller's Market
Market conditions where demand exceeds supply, giving sellers a stronger negotiating position and typically resulting in higher prices and fewer days on market.
Short Sale
Sale of real property in which the proceeds are less than the balance owed on the mortgage, requiring lender approval.
Specific Performance
Court order requiring a party who has breached a contract to fulfill their obligations under it.
Subrogation
Right of one party (such as an insurer) to stand in the place of another party and pursue that party's legal rights or remedies.
Survey
Process of measuring land to determine boundaries, area, and location of improvements.
T
6 terms
Tenancy in Common
Form of co-ownership in which each owner holds an undivided interest in the property, which may be unequal and is inheritable.
Title
The legal evidence of a person's right to ownership of real property.
Title Insurance
Insurance protecting the insured against loss resulting from defects in title to real property not disclosed in the title search.
Title Search
Examination of public records to determine the ownership of a property and any encumbrances against it.
Trust Deed
See: Deed of Trust.
Trustee
Person who holds title to real property on behalf of another (the beneficiary) or manages assets for the benefit of another.
U
3 terms
Underwriting
Process by which a lender evaluates the risk of extending a mortgage loan to a particular borrower.
Unilateral Contract
A contract that is accepted by performance rather than a mutual promise.
Usury
Charging an interest rate higher than the maximum rate permitted by law.
V
4 terms
VA Loan
Mortgage loan guaranteed by the Department of Veterans Affairs, available to eligible veterans and service members, often with no down payment required.
Vesting
The way in which title to real property is held. Examples: joint tenancy, tenancy in common, community property.
Void Contract
An agreement that is not an enforceable contract due to absence of a required element or a defect of any kind.
Voidable Contract
A contract that any of the parties involved may negate without liability, due to lack of capacity or a defect such as fraud or duress.
W
3 terms
Waiver
Voluntarily giving up a right or claim.
Warranty Deed
Deed in which the grantor warrants the title against defects that may have surfaced before or after their period of ownership.
Wraparound Mortgage
A secondary mortgage that "wraps around" an existing mortgage, allowing a buyer to make payments to the seller who continues paying the original lender.
Z
3 terms
Zoning
Laws regulating the use of land and structures within designated areas, dividing jurisdictions into zones for residential, commercial, industrial, or agricultural use.
Zoning, Conditional Use
Authorization for a land use that would otherwise not be allowed by standard zoning ordinances, subject to specific conditions.
Zoning, Variance
An exception to the zoning requirements for a specific property, granted when strict application would cause undue hardship.