Agent: A person who acts for and in the place of another, called a principal, for the purpose of affecting the principal’s legal relationship with third persons

Option: A right which is given for consideration to a party (optionee) by a property owner (optionor) to purchase or lease property within a specified time, at a specified price and terms. An option is irrevocable by the optionor and will not be extinguished by death or insanity of either party.

Lessor: Landlord; property owner

Estate: A legal interest in land that defines the nature, degree, extent, and duration of a person’s ownership in land

Demand: The desire to buy or obtain a commodity

Legacy: A gift of personal property by will (see bequest)

Assumption Clause: A buyer takes over the existing loan and agrees to be liable for the repayment of the loan

Goodwill: An intangible, salable asset arising from the reputation of a business; the expectation of continued public patronage

Accrued Depreciation: The difference between the cost to replace the property and the property’s current appraised value

Section: An area of land, used in the U.S. Public Land Survey method of land description; a land area of one square mile, or 640 acres; 1/36 of a township

Notice of Trustee’s Sale: Notice given, and published, that a trustee’s sale will be held to sell a property to satisfy a debt

Redlining: The use of a property’s location to deny financing

Offeree: The party receiving an offer

Brokerage: The occupation of a broker. A real estate brokerage is the business of selling real estate through a broker who negotiates the sale for a commission

ALTA Policy: American Land Title Association policy of extended title insurance policy; can be purchased by lender or buyer

Abstract of Title: A full summary of all consecutive grants, conveyances, wills, records and judicial proceedings affecting title to a specific parcel of real estate

Assignor: The person transferring a claim, benefit, or right in property to another

Arm’s Length Transaction: A transaction, such as a sale of property, in which all parties involved are acting in their own self-interest and are under no undue influence or pressure from the other parties

Easement: The right to use another’s land for a specified purpose; sometimes known as right-of-way

Proration: The division and distribution of expenses and/or income between the buyer and seller of property as of the date of closing or settlement

Price: What is paid for something

Baseline: A survey line running east to west, and used as a reference when mapping land

Mutual Consent: Agreement to the provisions of a contract by the parties involved; a mutual willingness to enter into a contract

Principle of Anticipation: The market anticipates the future benefits that are to be derived from the property.

Unilateral Contract: An agreement in which one party promises to pay consideration for the performance of an act by another party. The party promising to pay consideration is not legally obligated to act unless the party promising to perform does so.

Puffing: Exaggerated comments or opinions not made as representations of facts and thus not grounds for misrepresentations

Scarcity: Less availability of a commodity in the marketplace resulting in increased value when demand exceeds supply.

Or More Clause: A clause in a promissory note that allows a borrower to pay a loan off early without penalty

Cul-de-Sac Lot: A lot on a dead-end street

Timely Manner: An act must be performed within certain time limits as described in a contract

Agency: A relationship in which one party (principal) authorizes another party (agent) to act as the principal’s representative in dealing with third parties

Principal: Someone who directs or authorizes another to act in his or her place in regard to relations with third persons; buyer or seller

Interest: The charge for the use of money

Ratified: Approved

“DUST”: The 4 elements that create value: Demand, Utility, Scarcity, Transerability

Fiscal Year: A year as reckoned for taxing or accounting purposes

Unlawful Detainer Action: A lawsuit filed with the court against a tenant who remains in unlawful possession of rental property after breaching the terms of a lawful lease

Beneficiary: The lender under a deed of trust

Reconveyance Deed: Conveys title to property from a trustee back to the borrower (trustor) upon payment in full of the debt secured by the trust deed

Mobile Home: A factory-built home fabricated prior to June 15, 1976, constructed on a chassis and wheels

Avulsion: The sudden washing or tearing away of the land by action of water

Legal Title: Title that is complete and perfect in regard to the right of ownership; can be held by a trustee

Usury: The act of charging a rate of interest in excess of that permitted by law

Intermediation: The process of transferring capital from those who invest funds to those who wish to borrow

Open End Loan: A loan in which the borrower is given a pre-approved limit up to which may be borrowed, such as a credit card, with each advance secured by the same contract

Residential Rental Property: Property from which 80% or more of the gross rental income is income from dwelling units

Equitable Title: The interest held by the trustor or vendee

Real Property: Land; anything affixed to the land; anything appurtenant to the land; anything immovable by law

Offeror: The party making an offer

Definite and Certain: Precise acts to be performed are to be clearly stated

Condition Subsequent: A condition which, if it occurs at some point in the future, can cause a property to revert to the grantor: for example, a requirement in a grant deed that a buyer must never use the property for anything other than a private residence

Holder: The party to whom a promissory note is made payable; the person holding the note

Subdivision: A plot of land divided into smaller portions for the purpose of building

Present Interest: An interest in real property that can be exercised today.

Request for Notice: A notice that is sent, upon request, to any parties interested in a mortgage or deed of trust informing them of a default

Straight Note: A promissory note in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity; May also be a note with no payments on either principal or interest until the entire sum is due

License holder: Someone who holds a real estate license issued by a state licensing agency.

Freehold Estate: An estate in real property which continues for an indefinite period of time

Action: A lawsuit brought to court

Valuable Consideration: Each party to a contract must give up something to make the agreement binding

Chattel: Personal property

Retaliatory Eviction: An act whereby a landlord evicts a tenant in response to some complaint made by the tenant

Sheriff’s Deed: A deed given to a buyer when property is sold through court action in order to satisfy a judgment for money or foreclosure of a mortgage

Condemnation: A common name for eminent domain, or the right of the government to take private property from an owner for public use, paying fair market value

Listing: A contract by which a principal employs an agent to do certain things for the principal

Margin: A fixed percentage rate that is added to an index to determine the fully indexed interest rate of an adjustable rate mortgage (ARM)

Alienation Clause: A clause in the loan document that allows the lender to call the entire loan due upon the sale of the property; a type of acceleration clause

Index: A publically published number used as the basis for adjusting interest rates of adjustable-rate mortgages (ARMS)

Linear Foot: A measurement meaning one foot or twelve inches in length as contrasted to a square foot or a cubic foot

CC&Rs: Restrictions are placed on certain types of real property and limit the activities of owners

Subagent: An agent of a person who is already acting as an agent for a principal

Valid: Legally binding

Prepayment Clause: A clause in a trust deed that allows a lender to collect a certain percentage of a loan as a penalty for an early payoff

Sales Comparison Approach: An appraisal method using the principles of substitution to compare similar properties

Standard Policy: A policy of title insurance covering only matters of record

Swing Loan: A short-term loan used to enable the purchaser of a new property to buy that property on the strength of the equity from the property the purchaser is now selling

Trade Association: A voluntary, nonprofit organization of independent and competing business units engaged in the same industry or trade, and formed to aid in the industry problems, promote its progress, and enhance its service

Truth in Lending Act (Regulation Z): A federal law that requires borrowers to be informed about the cost of borrowing money

Liquid Damages: Sets in advance a specified amount of money as a penalty in the event of a breach of contract

Agreement of Sale: A contract for the sale of real property in which the seller gives up possession but retains the title until the purchase price is paid in full; also known as a contract of sale or land contract

Grace Period: An agreement upon time after the payment of a debt is past due during which a party can perform without being considered in default; usually 10 to 15 days

Public Grant: The transfer of title by the government to a private individual

Estate for Years: A leasehold estate with a definite end date; must be renegotiated; commonly used for commercial leases

Mortgagor: The borrower under a mortgage

Revocation: The canceling of an offer to contract by the person making the original offer

Encroachment: The placement of permanent improvements on adjacent property owned by another

Home Inspection: A home inspector examines the readily accessible physical structure, systems, and condition of a home and describes them in a written report

Beneficiary Statement: A statement of the unpaid balance of a loan and the condition of the debt

Specific Performance: An action brought in a court to compel a party to carry out the terms of a contract

Effective Gross Income: The anticipated income resulting from estimated potential gross income from a rental property less an allowance for vacancy and bad debts

Replacement Cost: The cost of replacing improvements with modern materials and techniques

Demise: A conveyance of an estate in real property to someone for a certain length of time, as in a lease

Cap Rate: A term sometimes used to refer to capitalization rate

Axial Growth: City growth that occurs outward along main transportation routes; usually star shaped

Monument: A fixed landmark used in a metes and bounds land description

Execute: To perform or complete; to sign

Emancipated Minor: Someone who is legally set free from parental control/supervision

Revoke: Recall and make void

Marketable Title: Good or clear salable title reasonably free from risk of litigation over possible defects

Executed Contract: A contract in which the obligations have been performed on both sides of the contract and nothing is left to be completed

Escrow: The deposit of funds or documents with a neutral third party who is instructed to carry out the provisions of an agreement

Judgment: The final legal decision of a judge in a court of law regarding the legal rights of parties to a dispute

Market Rent: The rent a property should bring in the open market

Estate at Will: Possession of real estate belonging to another, with their permission, for an indefinite period of time; can be terminated by either the lessor or lessee; either party must give 30 days notice before ending the tenancy

Leverage: The use of borrowed money to purchase property

Emblements: Annual crops produced for sale by a tenant using or occupying the property

Quitclaim Deed: Transfer any interest the grantor may have at the time the deed is signed with no warranties of clear title

Manufactured Home: A home built in a factory after June 15, 1976 and must conform to the federal Manufactured Home Construction and Safety Standards

Vacancy Factor: Lost income because of a vacant unit

Land Contract: A contract for the sale of real property in which the seller gives up possession but retains the title until the purchase price is paid in full; also known as a contract of sale or agreement of sale

Alluvial Deposit: Sand or mud carried by water and deposited on land

Vendor: The seller under a contract of sale (land contract)

Life Estate: An estate that is limited in duration to life of its owner or the life of some other chosen person

Lessee: Tenant; renter

Littoral: Land bordering a lake, ocean, or sea as opposed to a land bordering a stream or river (running water)

Fully Amortizing Note: A promissory note that is fully repaid at maturity by periodic reduction of the principal; usually paid in equal monthly installments

Functional Utility: The combined factors of usefulness with desirability

Execution: Completion of an act or process

Bequest: A gift of personal property by will (see legacy)

Possessory Interest: Present right to physically occupy land and to exclude others from that same land

Title: Evidence of ownership of land

Equity: Value remaining in a property after payment of all liens; the difference between the amount that is owed and the fair market value

Doctrine of Correlative User: Owners may use only a reasonable amount of the total water supply for beneficial use

Actual Notice: Notice given by possession of property

Real Estate Associate Licensee: A person with a real estate license who is employed or sponsored by a real estate broker

Security Interest: The interest of a creditor (lender) in the property of a debtor (borrower)

Economic Age: Age of a building determined by its condition and usefulness

Settlement Statement: A complete breakdown of all cash received, all charges and credits made, and all costs involved in the transaction

Abrogation: The revocation, rescission, or annulling of a contract by mutual consent of the parties to the contract, or for cause by either party to the contract

Intestate: Dying without leaving a will

Deed of Trust: A security instrument in which title to a property is transferred to a third party trustee as security for a debt owed by the trustor (borrower) to the beneficiary (lender)

Acceleration Clause: A clause in the loan document describing certain events that would cause the entire loan to be due

Undivided Interest: That interest a co-owner has in property, which carries with it the right to possession and use of the whole property, along with the co-owners

Front Footage: The width of a property along the street

Closing: The act of finalizing the transaction in which the deed is delivered to the buyer, the title is transferred, and all costs are paid

Codicil: A change in a will before the maker’s death

Statute of Limitations: A statute limiting the period of time during which legal action may be taken on a certain issue

Indirect Costs: Development costs not related to the land or structure, such as legal and architectural fees, financing, and insurance costs during construction

Subject to Clause: A buyer takes over the existing loan payments but assumes no personal liability for the loan

Principal: The original amount borrowed

Fee Simple Defeasible: An estate in which the holder has a fee simple title that is subject to return to the grantor if a specified condition occurs; also known as fee simple qualified

Real Estate Law: The law that affects the licensing and conduct of real estate agents

Market Value: The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller

Condition Precedent: A condition which requires something to occur before a transaction becomes absolute and enforceable: for example, a sale that is contingent on the buyer obtaining financing

Blockbusting: Causing panic selling by telling people that values in the neighborhood will decline because of a specific event, such as the purchase of homes by minorities

Acceptance: An unqualified agreement to the terms of an offer

Steering: The illegal practice of only showing clients property in certain areas

Loan Estimate: Disclosure statement created by the Consumer Financial Protection Bureau to provide borrowers with good-faith estimates of credit costs and transaction terms

Ethics: A set of principles or values by which an individual guides his or her own behavior and judges that of others

Trade Fixture: An article of personal property affixed to leased property by the tenant as a necessary part of business; may be removed by tenant as personal property upon termination of the lease

Recission: Legal action taken to repeal a contract either by mutual consent of the parties or by one party when the other party has breached a contract

Title Commitment: A contract to issue a title insurance policy

Gross rent multiplier (GRM): A figure which, when multiplied by the monthly rental income, equals the property’s market value

Holographic Will: Written in the maker’s own handwriting, dated, and signed by the maker

Security Instrument: Evidence of obligations to pay money, such as a deed of trust or mortgage

Improvements: Any buildings or structures on a lot

Equity of Redemption: The right of the debtor, before a foreclosure sale, to reclaim property that had been given up due to mortgage default; also known as right of redemption

Estate at Sufferance: A tenancy created when one is in wrongful possession of real estate even though the original possession may have been legal

Grantor: The person conveying or transferring the property

Assessed Value: Value placed on property by a public tax assessor as a basis for taxation

Misrepresentation: An innocent or negligent misstatement of a material fact which causes someone loss or harm

Counteroffer: The rejection of an original offer that becomes a new offer

Trustor: The borrower under a deed of trust

Corner Lot: A lot found at the intersection of two streets

Graduated Payment Adjustable Mortgage: A loan with low initial monthly payments which gradually increase over a specified timeframe

Forbearance: Refraining from action by a creditor against the debt owed by a borrower after the debt has become due

Life Tenant: A person to whom a life estate conveys

Lis Pendens: A recorded notice that indicates pending litigation on a property that prevents a conveyance or any other transfer of ownership

Express Contract: The parties declare the terms and put their intentions in words, either oral or written

Estate in Fee: A freehold estate that is the most complete form of ownership of real property; also known as a fee, fee simple, or fee simple absolute. It is an estate of inheritance.

Reverse Annuity Loan: A loan that enables elderly homeowners to borrow against the equity in their homes by receiving monthly payments, from a lender, that are needed to help meet living costs; due upon a specific date or upon the occurrence of a specific event, such as the sale of the property or the death of the borrower

Variance: An exception granted to existing zoning regulations for special reasons

Operating Expenses: Expenditures necessary to the operation of an income-producing building

Sandwich Lease: A lease agreement created when a tenant sublets the property to another person, thus creating a sublessor-sublessee relationship. The person in the “sandwich” is a lessee to one party and a lessor to another

Third Party Originator (TPO): Person who takes mortgage applications from borrowers, but does not underwrite or fund loans

Title Plant: The storage facility of a title company which holds and stores the complete title records of properties in its area

Unilateral Rescission: Legal action taken to repeal a contract by one party when the other party has breached a contract

Partition Action: A court action to divide a property held by co-owners

Constructive Notice: Public notice given by recording a document with the county recorder

Cost: Represents expenses in money, labor, material, or sacrifices in acquiring or producing something

Meridian: A survey line running north and south, used as a reference when mapping land

Bill of Sale: A written agreement used to transfer ownership in personal property

Patent Deed: A deed given by the government to a private individual as evidence of transfer of title from government to the public person

Eminent Domain: The right of the government to take private property from the owner, for public use, and paying for the fair market value

Servicemembers Civil Relief Act: A federal law designed to protect persons in military service from loss of property when their ability to make the payment has been affected by their entering military service

Principle of Substitution: The market value of a property is affected by the cost of obtaining an equally desirable and valuable property as a substitute

Breach of Contract: A failure to perform on part or all of the terms and conditions of a contract

Convey: To transfer ownership of title

Vesting: The way title will be taken

Severalty: Ownership of real property by one person or entity

Less-Than-Freehold Estate: A leasehold estate that is considered to exist for a definite period of time or successive periods of time until termination

Witnessed Will: One prepared by an attorney, that is typed and signed by the maker and two witnesses

Release Clause: A provision found in many blanket loans enabling the borrower to obtain a partial release of specific parcels from the loan

Partially Amortizing Note: A promissory note with repayment that is not sufficient to amortize the loan over its term; usually contains a balloon payment at the end

Fixture: Personal property that has become affixed to real estate

Void: An agreement which is totally absent of legal effect

Utility Value: The usefulness of the property

Escrow Instructions: Written directions, signed by a buyer and seller, detailing the procedures necessary to close a transaction and directs the escrow agent in how to proceed

Multiple Listing Service: A cooperative listing service conducted by a group of brokers for the purpose of marketing listings

Trustee’s Deed: A deed given to a buyer of real property at a trustee’s sale

Reinstate: Bring current and restore

Guarantee of Title: An assurance of clear title

Land Grant: A grant of public lands by the government usually for roads, railroads, or agricultural colleges

Consideration: Something of value, such as money, a promise, property, or personal services

Environmental Impact Report: A study of how a development will affect the ecology of its surroundings

Contract for Deed: A contract for the sale of real property in which the seller gives up possession of the property but retains title until the total of the purchase price is paid off

Personal Property: Anything movable that is not real property

Deficiency Judgment: A judgment against a borrower for the balance of a debt owed when the security for the loan is not sufficient enough to pay a debt

Collateral: Something of value given as security for a debt

Impound Account: A trust account set up for funds set aside for future, recurring cost relating to a property

Pledge: The transfer of property to a lender as a security for re-payment of a debt. The lender takes possession of the property.

Effective Demand: The desire coupled with purchasing power.

Conversion: The appropriation of property belonging to another.

Reproduction Cost: The current cost of building a replica of the subject structure using similar quality materials; refers to exact duplication of the buildings; usually costs more than replacement costs

Business Opportunity: Any type of business for lease or sale

Grant Deed: A type of deed in which the grantor warrants that he or she has not previously conveyed the property being granted, that he or she has not encumbered the property except disclosed, and that he or she will convey to the grantee any title to the property acquired later

Calendar Year: This starts on January 1 and continues through December 31 of the same year.

Leasehold or Lease: An agreement, written or unwritten, transferring the right to exclusive possession and use of real estate for a definite period of time

Actual Age: The real age of a building

Power of Attorney: A written instrument giving a person legal authority to act on behalf of another person

Client: The person who employs an agent to perform a service for a fee

Minor: Someone under 18 years of age

Judicial Foreclosure: Foreclosure by court action

Appreciation: An increase in value

Earnest Money: Down payment made by a purchaser of real estate as evidence of good faith; or a deposit or partial payment

Foreclosure: A legal procedure by which mortgaged property in which there has been default on the part of the borrower is sold to satisfy the debt

Ratification: The approval of a previously authorized act, performed on behalf of a person, which makes the act valid and legally binding

Voidable: An agreement which is valid and enforceable on its face, but may be rejected by one or more of the parties

Hard Money Loan: The evidence of a debt given in exchange for cash

Contract Rent: The amount of rental income due from the tenant as agreed in the lease agreement

Capital Improvements: Any permanent improvement made to real estate for the purpose of increasing the useful life of the property or increasing the property’s value

Mortgage Loan Originator (MLO): A natural person who takes a residential mortgage loan application or negotiates terms of a residential mortgage loan for compensation

Financing Statement: A written notice filed with the county recorder by a creditor who has extended credit for the purchase of personal property; establishes the creditor’s interest in the personal property, which is security for the debt

Devise: A gift of real property by will

Fee Simple Qualified: An estate in which the holder has a fee simple title that is subject to return to the grantor if a specified condition occurs

Trustee: Holds bare legal title to property as a neutral third party where there is a deed of trust used as a security for a loan

Foreclosure Sale: A sale during which property is sold to satisfy a debt

License: Permission to use a property which may be revoked at any time

Undue Influence: Using unfair advantage to get agreement in accepting a contract

Administrator/Administratrix: A person appointed by the court to handle the affairs of a deceased person when there is no one mentioned in the will

Economic Life: The estimated period over which an improved property may be profitably used to yield a return

Assignment: The transfer of a claim, benefit, or right in property from one person to another person

Property: The rights or interests an owner has in something owned

Sublease: Transfer less than the entire leasehold, with the original lessee being primarily liable

Fiduciary: A relationship that implies a position of trust or confidence

Notice of Default: A notice to a defaulting party that there has been a nonpayment of debt

Commingling: To deposit client funds in the broker’s personal account

Love and Affection: The consideration used in a gift deed

Menace: Using a threat of violence to get agreement in accepting a contract

Rollover Mortgage: A loan that allows the rewriting of a new loan at the termination of the prior loan

Blind Advertising: Advertising that fails to disclose that the party is a licensee acting as an agent

Deferred Maintenance: Negligent care of a building

Closing Disclosure: Settlement statement created by the Consumer Financial Protection Bureau that must be used for any conventional residential mortgage loans that will be sold to Fannie Mae or Freddie Mac, or that are subject to RESPA

Holder in Due Course: A person who has obtained a negotiable instrument (promissory note, check) in the ordinary course of business before it is due, in good faith and for value, without knowledge that it has been previously dishonored and without notice of any defect or setoff at the time it is negotiated

Net Lease: A lease where the tenant pays such costs as taxes, insurance, and repairs, as well as a set amount for rent. A triple net lease is one in which the tenant pays all expenses of operating the property as well as a set amount for rent.

Range: A land description used in the U.S. Public Land Survey System (PLSS) consisting of a strip of land located every six miles east of each principle meridian

Testator/Testatrix: A person who has made a will

PITI: Abbreviation for principal, interest, tax, and insurance

Trustee’s Sale: The forced sale of real property, by a lender, to satisfy a debt

Reversionary Rights: The lessor (landlord) grants the right of possession to the lessee (tenant) but retains the right to retake possession after the lease’s term has expired

Balloon Payment: Under an installment loan, a final payment that is substantially larger than the other payments and repays the debt in full

Statute of Frauds: A state law which requires that certain contracts must be in writing and contain certain essential elements in order to be enforceable

Security Agreement: The device commonly used to secure a loan on personal property

Executor/Executrix: A person named in the will to handle the affairs of a deceased person

Gross Income Multiplier (GIM): A figure which, when multiplied by the annual gross income from all sources, not just annual rent, equals the property’s market value.

Landlord: Lessor; property owner

Power of Sale: A clause in a trust deed or mortgage that gives the holder the right to sell the property in the event of default by the borrower

Private Grant: The granting of private property to other private persons

Ad Valorem: A Latin prefix meaning according to value. Local governments levy real property tax based on the assessed value. Property taxes are known as ad valorem taxes.

Estate from Period to Period: A leasehold estate that is automatically renewed for the same term; a conveyance for an indefinite period of time; does not need to be renegotiated upon each renewal; commonly a month-to-month rental

Novation: The substitution by agreement of a new obligation for an existing one

Estoppel: A legal doctrine which prevents a person from denying something to be true or a fact, if the denial is contrary to previous statements or actions made by that same person

Equal Credit Opportunity Act: A federal law that requires lenders to assure that credit is available with fairness, impartiality, and without discrimination

Chain of Title: A chronological history of a property’s ownership

Bilateral Contract: A contract in which each party to the contract promises to perform some act or duty in exchange for the promise of the other party

Easement in Gross: An easement that is not appurtenant to any one parcel, for example, public utilities

Chattel Real: An item of personal property which is connected to real estate, for example, a lease

Blanket Loan: A loan that is secured by several properties

Appraisal: An act or process of developing an opinion of value

Accession: The acquisition of title to additional land or to improvements as a result of the annexation of fixtures or as a result of alluvial deposits along the banks of streams by accretion

Assignee: Party to whom a lease is assigned or transferred

Cost Approach: An appraisal method that estimates replacement cost of the improvements, deducts estimated accrued depreciation, and then adds market value of the land.

Alienate: Transfer ownership or sell

Homeowner Equity Loan: A cash loan made against the equity in the borrower’s home.