Dictionary / Glossary / Directory
of Real Estate Terminology
Definitions & Commonly Used
Real Estate Terms
Confused & overwhelmed by the overwhelming number of real estate terms and words? Every person working in real estate or planning to buy or sell real estate can benefit by using
this dictionary directory glossary of real estate terminology, definitions and commonly used terms.
Real Estate Terminology Definitions & Commonly Used Terms
In Alphabetical Order
- The express or implied giving up of a legal right. For example, a partner may lose his status as a co-owner by abandoning the partnership through neglect, absence or other conduct. Or, an easement owner may
lose his property rights to access by abandoning, or neglecting, the easement for a long period. Or, a tenant may lose possession of his apartment by abandoning, or vacating it. Usually the principle of abandonment
requires proof of an intent to abandon in addition to mere absence or nonuse.
- Temporary suspension of a tenantís duty to pay rent because the rented premises have become uninhabitable. As a practical matter, abatement of rent is not an effective remedy for a tenant unless a court judgment
is obtained. Landlords, both commercial and residential, may be expected to commence eviction proceedings upon any default in rent, whether for ďabatement pending repairsĒ or otherwise.
Abatement of Nuisance:
- A legal proceeding to terminate a nuisance. A nuisance is a land use that reduces nearby property values. A court will only abate illegal or improper (unreasonable) uses, not every use of property that tends to
reduce other property values. The persistent failure to close a ďdrug houseĒ will justify its abatement by court order
- The annual rate at which available office or other space is being utilized, that is, rented. The absorption rate of a prior year often is used to predict the space needs for next year. Commercial real estate brokers
may limit their use of the term to the rate at which new space is being utilized. Developers, investors, and economists may be more interested in the rate at which all space, new and old, is being absorbed, or utilized.
A net absorption rate takes into consideration any vacancy created by a tenant transferring from one office to another within the same metropolitan area. A gross absorption rate measures only the consumption of new
space. Absorption rates are applicable to all real estate sub-markets - not just office space.
Abstract of Judgment :
- A short form document used to represent a complete judgment. A brief summary of essential provisions of a money judgment. A judgment is a court decision upon recordation of which a lien (that is, a claim) is
created on the judgment debtor's real property located in the county in which the abstract is recorded. If the abstract of judgment is not recorded, it does not create a specific lien against specific real property.
- A provision usually included in a promissory note that advances the due date of an installment loan to the present upon the happening of a specified event, such as default. That is, on default by the debtor, the
entire unpaid balance of the loan becomes immediately due and payable. Acceleration clauses typically are contained in promissory notes, but may be repeated in deeds of trust as well. Acceleration may be declared
by the creditor because of default in payment of an installment; because of default in any other obligation of the debtor, (for example, default in paying taxes or insurance); because the debtor sells the collateral (this is
called a due-on-sale clause), or because of further encumbrance (another loan on the property) by the debtor. Acceleration cannot defeat the debtor's right of reinstatement during foreclosure proceedings.
See reinstatement. That is, even if the unpaid balance is accelerated and is thus due, the debtor can cure the default by simply bringing the loan payments current within the time prescribed by law, usually any time up
to the date of private foreclosure sale. Acceleration upon any basis is possible only when it is authorized by the terms of the note. Assumable loans do not authorize acceleration, and specifically permit sale of the
collateral and assumption of the loan by the purchaser/debtor.
- The unconditional assent by a seller of real property to all the terms contained in an offer to buy. (The prospective seller may reject an offer prior to its acceptance unless an independent contract, an option, exists
to keep the offer open.) If the offer is accepted, a contract of sale is created. Typical deposit receipts (offers to buy) contain a printed acceptance and space for the sellerís signature. If the sellerís acceptance varies in
any material way from the offer, it is considered a counter-offer. The acceptance is considered effective when it is communicated (delivered) to the buyer.
- The legal right of ingress and egress to and from real property. Landowners whose property borders public roads and streets have a right of access. Generally there is no right to direct access (for example, a
median may necessitate an indirect automotive route to an abutting landownerís property). Whenever access is severed by a government, a compensable taking of a property right is involved. (That is, the Constitution
requires the payment of Just Compensation when private property is taken or damaged for a public purpose.) Mere impairment of access, as by construction of a median in a street, is usually not compensable. The
right of access may be created by contiguity; by easement; or by contract.
- A person who cosigns a promissory note to assist another person to obtain credit. The cosigner is fully liable for the debt in the event the primary debtor becomes unable or refuses to pay.
- An estimate to account for the passage of time when the replacement cost method of appraisal is used. That is, it refers to the difference between an appraised value and an estimated cost of replacement. Accrued
depreciation only applies to depreciable improvements (not land). Accrued depreciation is not the depreciation used with respect to income taxation.
- A formal declaration before a notary public that the person signing a document is performing a free act and that the signature is genuine. A document affecting real property cannot be recorded (see recordation) unless it is acknowledged. On the other hand, acknowledgement is not required to make a document legal.
- A legal action, or lawsuit. Lawyers may include more than one "cause of action" within a lawsuit. For example, a lawsuit might include one cause of action for fraud, and another for rescission. What constitutes a
proper legal action in a given real estate transaction is a matter of procedural law, called "lawyer's law" because of its esoteric rules, applications, and complexities all of which take time and money. See judicial
Act of God:
- An act of nature, such as rain, lightning, tides, mud slides, floods, and earthquakes. Casualty insurance may not cover such damage unless a special form of coverage is purchased. Most contractors disclaim
responsibility for construction delays caused by an act of God.
Synonym: Actual Notice:
- A legal concept that assesses responsibility on the basis of information either known specifically to a person, or information that should have been known to the person because of its nature, or obviousness. For
example, tire ruts across land give actual notice to the observer of the possible existence of an easement. Such an observer cannot purchase the land and thereafter recover damages on the basis that the recorded
easement did not appear on his title insurance policy. See constructive knowledge.
- A contract, usually preprinted on a long and complicated form, which is entered into between parties of unequal bargaining power. A contract between a national corporation and an individual consumer usually
leaves the consumer, who did not draft the document, at a great disadvantage. Courts may refuse to strictly enforce an adhesion contract on the grounds that it is oppressive and unfair. An apartment lease may be
construed as such a contract in some situations. A deed of trust also may be construed an adhesion contract by a court. Under principles of managerial law, the standardized fee agreements used by most, if not all,
attorneys should be considered adhesion contracts. Courts may interpret adhesion contracts against their drafters on the basis of public policy.
Adjustable Rate Mortgage ( ARM ):
- A mortgage with an interest rate that changes periodically, in unison with an index, with monthly payments that go up or down accordingly. An ARM can be less expensive than a fixed-rate mortgage if interest rates
remain steady or decline. But if interest rates increase they drive the monthly payments higher. In essence, an ARM offers a lower initial rate in exchange for assuming more risk. There is an adjustment period of time
between a change in the interest rate and a change in the monthly payments. Common indexes to which the ARMs' rates are tied are one, three, and five year treasury notes, averages of costs of funds to thrifts, and
privately prepared indexes. Lenders add a few percentage points to the index rate to establish the rate the mortgagor pays. This add-on is called the margin or spread.
Some lenders offer "teaser" or discounted rates for a few initial years. These will be less than the index rate plus spread. However, when discounted rates are offered, lenders often charge several points and demand
extra high interest following the teaser period. Sometimes a seller will "buy down" the rate of interest by paying a lump sum of cash to the lender as a sales inducement. However, this may result in a higher price on
Many ARMs have "caps" that protect the mortgagor from extreme changes in either interest rates or monthly payments. The interest rate caps may be periodic caps, which limit the amount of change from period to
period, or overall caps, which limit changes over the life of the loan. Payment caps limit the amount by which the monthly payment may increase. However, they do not limit interest rate changes. If interest rates go up,
but the monthly payment is capped, negative amortization may occur. Some ARMs specifically put a cap on negative amortization.
ARMs typically begin at below market rates. They often require a special prepayment fee or penalty to guard against refinancing when interest rates rise. Some provide for conversion into a fixed rate mortgage, but
then often require payment of a special conversion fee. ARMs are also called variable rate mortgages, VRMs, or adjustable mortgage loans. ARMs are usually assumable, but lenders often require payment of an
ARMs are available for both residential and commercial loans.
Adjusted Tax Basis:
- The cost of property as decreased by accumulated tax depreciation (often called writeoff) and increased by the accumulated cost of all improvements. Maintenance expenditures are not considered improvements.
- Based on value. Real property taxes, being based on the value of real property, are an ad valorem tax. An ad valorem tax is levied in proportion to value.
- A loan draw. Advances include extra payments under an open-end mortgage or deed of trust and payments of installments due on a higher priority secured loan (a first deed of trust, or mortgage) by the holder of a
lower priority (third deed of trust). A salesperson may receive an advance against future commissions. A progress payment by a lender to a builder, as work progresses, also is called an advance or draw on the
- The jurisprudential system in which the parties to a legal dispute are opponents. Their attorneys advocate a great variety of theories of benefit to the cause of their clients both before and during the trial, and on
any appeal. The adversary system does not require the attorneys to make a search for the truth. The combative nature of this system is thought by many to be the best method of eliciting the truth and producing a just
result. There is substantial contrary opinion.
- A written statement sworn or affirmed to, under penalty of perjury, before an authorized officer. The person making the sworn affidavit is called the affiant. The purpose is to support a statement with the threat of
the crime of perjury.
- Ownership subsequently acquired by a person who previously had transferred the property away. The law declares that after-acquired ownership automatically follows the earlier conveyance. For example, A
intends to buy Greenacre from B, and immediately to sell it to C. In escrow, the deed from A to C is inadvertently recorded before A receives title. When A receives title from B, his after-acquired title automatically
passes to C just as intended.
After-Tax Cash Flow:
- The amount of cash a real estate investment will produce each year after payment of all operating expenses and debt service, plus all income tax savings.
- The relationship between a principal and agent based on a contract. The contract may be expressed (written or oral) or be implied by conduct. The agent is employed by the principal to do certain acts with
customers, called third parties. Generally, under the law of agency, a principal is liable for contracts and torts entered into or caused by the agent who is acting in the scope of his duties. An apartment manager is an
agent for the apartment owner. In real estate, a common relationship of agency exists between a real estate broker (the principal) and a licensed salesperson (the agent). An agency relationship also exists between a
real estate broker and the employing property owner. The seller's agent (listing broker) also may be held responsible as an agent of the buyer, that is, as a dual agent, in negotiating a sale of real property. Some
agents have the authority to sign a binding contract on behalf of his or her principal. A travelling sales agent often has such authority. A real estate sales agent typically does not have the authority to bind his or her
principal to a contract of sale. A power of attorney usually empowers an agent to sign contracts that bind his or her principal.
- A person who represents the principal, in dealing with third parties. A principal does not control the day to day activities of an agent. An employer, on the other hand, usually does control the day to day activities of
- A tour of sales agents through properties for the purpose of familiarization with their features. Listing agents promote their new listings with other agents by conducting tours hoping that agents on tour will show the
listed homes to their prospective buyers.
Age Segregated Community:
- A large community project that limits buyers to persons of minimum age 50 and/or above. These communities include all services.
Agricultural Land ( AG Land ):
- Land that is zoned to permit production of livestock or cultivation for crops as well as limited residential, and sometimes recreational, uses. Land that is suitable only for grazing nonetheless will be zoned AG or
- The right of owners to use airspace above their lands. Like mineral rights, airspace rights can be conveyed separately from surface rights. Ownership extends to the heavens subject only to easements given by
law to the public for such necessities as air travel and use of the airways.
There are limitations upon these public easements, for example, as to the minimum height of air travel and as to the maximum of noise
Synonym: Due on Sale Clause
- A variety of acceleration clause that triggers the due date of a loan upon sale of the collateral. Found in a promissory note, it calls for the immediate payment of the unpaid balance of the loan, at the beneficiary's
option, in the event of a sale or transfer of the real property to a third person. An alienation clause (or Due-on-Sale clause) diminishes the free transferability of any interest in real estate. Alienation is a legal term that
describes the act of transferring an ownership interest in real property. Since historical legal principles prohibit restraints against alienation, or sale, contracts that unreasonably inhibit the free transferability of property
interests are not ordinarily enforceable in court. Because of that principle, many states declare alienation clauses to be unenforceable as against public policy. But, since most mortgage loans are from federally
licensed lenders, the federal laws that permit alienation clauses supersede state laws. See also Acceleration Clause.
- An unproved contention of fact. A plaintiff's allegations are contained in a document called a complaint. A defendant's responsive allegations (usually of denial) are contained in another document called an answer,
or perhaps in a cross-complaint or counterclaim. Allegations may or may not be made under oath and may or may not be true or accurate. Allegations are composed by lawyers and are stated in legalese. Accusatory
terms such as fraud, misrepresentation, conspiracy, and so forth are often used. However, allegations are only contentions until finally proven in a court of law. Allegations that are contained in the documents of civil
litigation are available to the public at county courthouses. These public records are a valuable source of information for managers.
Allegations of Fact:
- Plaintiffís statement of alleged facts, contained in the complaint that serves to commence a civil action. Defendants make allegations of facts in their answers to complaints, or in cross-complaints.
- Any investment with a negative cash flow. An alligator investment "eats" equity because it lives on a diet of principal, interest, and property tax payments but does not produce adequate income to service those
demands. Raw land is an example of an alligator investment, as is any income property with a negative cash flow.
All Inclusive Note & Deed of Trust:
Synonym wraparound mortgage, creative financing & seller financing.
- To be more descriptive, the phrase should be called an "all-inclusive note secured by a deed of trust." It is also commonly called simply an "all-inclusive", or "wraparound" mortgage or deed of trust. It is best
described with an example. Assume that an owner sells Greenacre for $100,000. The property is subject to an existing loan of $60,000 at 8%, secured by a deed of trust held by Savings & Loan. The buyer pays
$10,000 cash and gives an "all-inclusive" note to the seller, secured by a second mortgage for $90,000 with interest at 10%. As the buyer makes monthly payments, based on 10%, to the seller, the seller continues to
make payments based on 8% to the Savings & Loan. Note in this example that:
Due to the variations and complexities involved in the use of all-inclusive notes and deeds of trust, great care ought to be exercised. Confusion especially prevails where transactions are "wrapped around" several
times. For example, the buyer in the example above may one day become a seller and sell the property for $125,000. Let's say he takes a cash payment of $10,000 and an all-inclusive for $115,000. This all-inclusive
is wrapped around the first wraparound, which is still owed to the initial seller. In other words, the recent seller is now the holder of a third priority deed of trust. In effect, somewhat of a paper empire has been created
with the last purchaser supporting all the intermediate paper. Wraparounds are sometimes called overlapping mortgages.
- The buyer pays interest of ten percent on $90,000 instead of 8% on $60,000 plus interest on $30,000, at the market rate, of, say, 13%, which would have been the case if the first loan had been assumed.
- The seller's security is a second priority deed of trust because the priority of the Savings and Loan has been unaffected.
- The seller has increased his interest income by obtaining the "extra" 2% interest on the $60,000 owing the Savings and Loan.
- The buyer has purchased "subject to" an existing encumbrance, and has avoided qualification for a new institutional purchase money mortgage.
- The buyer is in possession while the seller retains liability for any deficiency judgment.
American Land Title Association ( ALTA ):
- An extended coverage policy of title insurance favored by lenders. It may include encroachment, easement and boundary dispute protection, as well as guarantee that official records have been properly searched. It
is contrasted to the California Land Title Association (CLTA) version.
Alternative Dispute Resolution ( ADR ):
- A term that describes various methods of resolving disputes through means other than the judicial process. Arbitration and mediation are the two most common forms of ADR ( Alternative Displute Resolution ).
- The quality of real property that gives satisfaction, rather than money income, to its owner. A swimming pool is an amenity, as may be a nearby park. Amenities are more important to owner-occupants than to
investors, who focus on rental income. One personís amenity, such as a swimming pool, may be anotherís nightmare.
- The gap between the amenities found in older housing and those found in new construction. Older homes may be "out-amenitied" by the newer.
American Arbitration Association:
- Private nonprofit organization that provides education, training, and administrative assistance to parties who use nonjudicial methods-that is, alternative dispute resolution (ADR) for resolving disputes. The AAA is
involved primarily with binding arbitration and mediation.
- The repayment of a mortgage loan. Most mortgage loans require monthly payments of both principal and interest over a specified term. Amortization occurs whenever a portion of the payment is applied to reduce
the unpaid balance of the loan. A non-amortizing loan is an interest-only loan. Amortization tables and pocket calculators are widely used to determine the necessary monthly payments to amortize a particular loan. A
loan may be amortized at a long-term rate, say, forty years, but carry a balloon payment in, say, five years. This creates low monthly payments for the five-year period.
- To repay a note secured by mortgage through agreed upon payments of principal and interest over the life of the loan. A mortgage loan amortizes very slowly during early years of its term because most of each
monthly payment represents interest on the borrowed money. As the unpaid balance decreases, however, increasing amounts of each monthly payment are allocable to principal reduction (because less money is
increasingly owed) and amortization thusly increases at an increasing rate.
Synonym: prime tenant
- The key tenant in a shopping center or other commercial project whose presence or commitment justifies the development.
- A change in jurisdiction. For example, an area of a county may be annexed to and thereby become part of a city. In this connection, the annexation involves a change in the jurisdiction of government, from county
to city. Annexation ordinarily requires the consent of the city, the county, and a majority of the inhabitants of the land.
- The sum of one year's payments on a mortgage expressed as a percentage of the loan amount. Thus, if the sum of one year's payments is $15,000, and the loan balance is $150,000, the constant is 10%. The
lower the constant, the less net operating income is required for debt payment. Investors are often more concerned about the constant in a proposed acquisition than in the interest rate in the financing.
Annualized Percentage Rate ( APR ):
- The rate of interest a borrower pays, taking into consideration certain costs and expenses common to real estate loans. The computation of the APR is required by federal law to guarantee that consumers are
informed of the real rate of interest involved. The APR will exceed the rate of interest expressed in the promissory note because the note disregards such additional fees (included within the APR) as points, appraisal
fees, and recording fees.
- The periodic receipt of income over a period of time extending into the future. In one sense, an investment property produces a flow of income in the future, and is, thus, an annuity. In present value concepts, each
future payment is discounted to a present value, using a selected discount rate of interest. The sum of those values is the present value of the annuity. Present value tables and pocket calculators are widely used to
determine the present value of annuities.
- A document containing a defendantís allegations of fact, usually amounting to a denial of the plaintiffís allegations.
Synonym: NonRecourse Loan
- A real estate loan in which the lender cannot obtain a deficiency judgment following foreclosure. A deficiency exists whenever proceeds from foreclosure sale are less than the unpaid mortgage debt. Under these
circumstances, the creditor desires to obtain a personal judgment for the difference. In many states, including California, non-judicial foreclosure (by Trustee's Sale) precludes recovery of any deficiency by the
foreclosing lender. Judicial foreclosures, on the other hand, can result in deficiency judgments except against borrowers of purchase-money mortgages.
- Formal request to a higher court to review any action of a lower court.
- The party who appeals to a higher court for review of lower court rulings.
- Court that reviews decisions of prior courts for substantive and procedural correctness. The court has authority to affirm, modify, or reverse rulings of the lower court. Also known as an appeals court.
Applicable Federal Rate ( AFR ):
- An index published by the U.S. Department of the Treasury, based on various U.S. government securities. The AFR is used to set minimum interest rates in seller-financed mortgages and other types of loans. The
IRS does not recognize interest-free loans, but will accept loans with an interest rate equal to or above the AFR.
- The appropriate allocation of income and expenses between seller and buyer. What is appropriate is left to the agreement of the parties, or to custom. The calculation is usually performed by an escrow or title
company as part of its escrow service. Examples of items typically subject to apportionment include prepaid rental income, accrued expenses (including deposits), taxes, insurance, continuing employee wages, and
- An opinion of the market value of real property as of a specified date. An estimate of value. A formal appraisal should be in writing and include the information (such as market data) on which the opinion of value is
based. Professional appraisal associations have requirements concerning the contents of an appraisal.
- A person qualified by education, experience, and membership in a professional association to estimate the market value of real or personal property.
- The accumulated increase in market value of an ownerís property. Appreciation is the opposite of depreciation in value.
- Belonging to. Buildings and improvements are appurtenant to and accompany conveyances of land, even if not mentioned in their deeds. The benefit of an easement is appurtenant to the dominant tenement (i.e.,
the contiguous land whose owner has the right to use the easement).
- A process to resolve a disagreement. Binding arbitration is a substitute for court action. Parties to a contract can agree to various terms of arbitration, such as, for example, the majority vote of three arbitrators.
Sophisticated business persons may negotiate tailored arbitration clauses in their contracts that create advantages if a dispute arises in the future, as for example, the authorization of specified discovery procedures.
Most arbitrators follow the rules of the American Arbitration Association which makes available a standard clause for inclusion in contracts.
- An Arbitrator is a private person selected by parties who are in conflict to hear and decide their dispute. Arbitrators are usually selected because of their expertise in the subject area of the dispute.
Arm's Length Transaction :
- Any transaction in which all parties act as if they were strangers. For example, a transaction between father and son is suspect of not being at armís length. If a transaction is not at armís length, the IRS may
reconstruct it for income tax purposes, or it may be set aside by a court in order to achieve a more equitable or proper outcome. A comparable sale between related persons may be adjusted by an appraiser to make its
price more accurately reflect an armís-length sale.
Articles of Incorporation:
- The legal documents filed with a state government giving life and purpose to a corporation, according to the applicable provisions of state law.
- An inspection of a structure, to determine whether or not it contains asbestos insulation or other specified materials. Asbestos inspections are required by some lenders and by some investors prior to making loan
and purchase commitments. Economic feasibility of an acquisition may be affected by the future cost of asbestos removal or future liability for personal injury to occupants of the building.
- The words intended to absolve the seller of real property from any and all lingering guarantees or warranties. The term is in disfavor with the law, and is often summarily discharged by courts as being virtually
meaningless. Nonetheless, the term persists and, in some instances, serves to minimize the responsibilities of the seller. Some responsibilities are imposed on a seller by law and are not capable of waiver. An
example would be the intentional concealment of a known latent defect. The buyer of a property on an ďas isĒ basis cannot later complain about the existence of defects that were visible at the time of purchase.
- The price a seller initially asks for property held for sale. By custom, an asking price may imply a willingness to negotiate, that is, to entertain offers in amounts less than the Asking Price.
American Society of Real Estate Counselors :
- An association of professional real estate counselors who act as advisors and consultants to the general public. Members identify themselves by the designation CRE.
- The combination of two or more parcels into a single larger parcel. The purpose may be to improve the highest and best use of the parcels. Appraisers describe increases in value from assemblage as "Plottage".
- The value assigned to a parcel of real estate by the county tax assessor for purposes of computing the amount of property tax. Historically, the assessed value was intentionally set at some ratio or percentage of
market value. California follows the modern practice of using full cash value, not some lesser percentage, as the assessed value. Full cash value essentially is market value. The assessed values of all properties
within a county are listed on an assessment roll. Periodically, assessors reappraise taxable real estate and adjust its assessed value. Home improvements may increase a home's assessed value. In some states,
such as California, laws place a cap on how large an overall increase may be made in assessed values each year. Increases in total assessed values in a county can result in increased property tax revenues resulting
in a larger budget for that local government.
- A charge of money for a specified purpose. For example, a condominium owner may receive an assessment for a proportionate share of a project expense. In municipal finance, an assessment district (i.e. a sewer
assessment district) may be formed to allocate the cost of an improvement that benefits an area to each parcel in proportion to the share of benefit received. The total cost of such improvements may be financed by
issuance of tax exempt bonds which are serviced by monthly collections from the owners of the properties benefitted.
Synonym: tax assessor
- A county official who is responsible for determining the assessed value of all taxable property in a county. The assessor maintains parcel maps that are available to the public and assigns a number to each parcel.
Once a year the assessor estimates the general increase in all property values as a result of inflation and, together with appraisal data of specific properties, determines the total valuation of all taxable property in that
county. The tax assessor does not ordinarily collect property taxes.
Asset Backed Securities:
- A code number assigned to every parcel of land by each county assessor. It is used in the assessment and collection of ad valorem property taxes, and as a short form of property description.
Assessorís Parcel Number ( APN ) :
- A code number assigned to every parcel of land by each county assessor. It is used in the assessment and collection of ad valorem property taxes, and as a short form of property description.
- The transfer of a contractual right or benefit from one person (the assignor) to another (the assignee). Contractual benefits are normally assignable without the consent of the other party to the contract. For example,
the holder of an option (which is a benefit) can assign (transfer) it to another without the consent (or knowledge) of the owner of the land. Notes receivable (secured by a deed of trust) are always assignable. Thus, a
debtor does not have control over who ultimately will receive his monthly payments.
Personal contractual benefits (such as loan commitments, leaseholds, and listings) are not assignable without the consent of the other party. In some instances, however, consent may not be arbitrarily withheld since
the law favors the free transferability of contractual benefits.
Assignment of Lease:
- The transfer by a tenant of the entire unexpired term of the lease to another tenant who becomes primarily liable for the payment of rent to the owner. A sublease is the transfer of less than the unexpired term of the
Assignment of Rents Clause:
- A provision in a deed of trust or mortgage on commercial property authorizing the lender, following default, to collect rent pending completion of foreclosure. The clause becomes operative on recordation of a formal
notice of default; it may be specifically enforced in court. Without such a clause, a defaulting owner could continue to collect rent during the foreclosure period of the income producing property--and purposefully neglect
to make any further payments to the lender.
- A group of professional persons who join together for professional reasons, such as education or maintenance of professional ethics, or management of property. A bar association is an example.
may be a nonprofit corporation (although sometimes an association may be unincorporated) organized to manage common areas and facilities that are part of a planned development or condominium project, example:
Homeowners' Association, ( HOA ).
- An agreement to take over another party's mortgage loan. A buyer may wish to assume the seller's existing, low interest rate mortgage loan. Or, the buyer may not be able to qualify for a new loan. The assumption
is accomplished by signing a formal assumption agreement with the lender. Often the seller, whose loan is being assumed by the buyer, will seek a release from his loan effective at the close of escrow. Following a
release, the lender cannot seek recourse from the seller, if the buyer, who has assumed the loan should default. A non-assuming purchaser takes "subject to" an existing mortgage or deed of trust.
- A lender's charge for processing new records for a buyer of real property who is assuming the seller's existing mortgage loan. The fee is paid in cash, like other so-called garbage fees, at the close of escrow.
Attached Single Family Home:
Synonym: Paired Condominium
- A duplex, triplex or four-plex with special design features to assure privacy. There is separate ownership of each building and the land beneath.
Attorney at Law:
- A person licensed in a state to practice law who also is called a lawyer, attorney, counsel, or counselor. In England such a person is called a solicitor; or a barrister if engaged in conducting trials.
Attorney Client Privilege:
- The right of a client to keep communications with his or her attorney confidential and free from disclosure. The attorney has no reciprocal privilege.
Attorney In Fact:
- A person authorized by a power of attorney to perform certain acts for another person. Some acts, such as the making of a last Will, cannot be delegated in this manner. However, most real estate transactions can
be consummated by a person acting under the authority of a power of attorney.
- The transfer of rights and obligations of existing tenants to the new owner of real property. Attornment clauses exist in long-term land leases in which tenants construct improvements.
- A legal doctrine that the owner or possessor of real property owes a duty to protect children from dangerous conditions, especially those that traditionally attract them, such as a pool, a dirt pile, or a tractor.
Construction sites are considered attractive nuisances. The duty to protect requires that reasonable steps be taken to reduce or eliminate the risk. Contractors, for example, frequently place portable chain-link fences
around the perimeter of a construction site in response to this duty to protect.
- A term used to indicate that a relationship may expire at any time by choice of either party. For example, an employment contract at will may be terminated at any time by either the employee or the employer
without any liability (beyond payment for services rendered up to the time of departure or discharge).
- An agreement to sell real estate by auction. The seller usually pays all the expenses of the auction in advance, at the time the auction listing is signed. The listing may provide for an absolute auction (the seller
must accept the high bid), or an auction with reserve (the seller reserves the right to reject all bids), or an absolute auction with buy-out (the seller can reject the high bid but must pay a buy-out fee to the disappointed
high bidder). Auctions have become popular devices to dispose of distressed properties or real estate owned (called REOs) by lenders who have previously foreclosed.
Authorization to Sell:
- A phrase found in preprinted listing forms. The term is actually a misnomer because a listing is an employment contract in which the owner of real property employs a real estate agent to find a buyer. The listing
does not confer the right to sell anything, because it is not and does not purport to be a power of attorney. However, the term lingers on.
- The final decision of an arbitrator or other nonjudicial officer in the resolution of a dispute.
Axial Growth Theory:
- A theory of development that urban growth occurs first in close proximity to transportation systems, such as freeways, light rail, etc.
Real Estate Terminology Definitions & Commonly Used Terms
In Alphabetical Order
While great care has been undertaken to provide accurate explanations and definitions for real estate terms and words in our real estate terms dictionary glossary dirctory, no real estate vocabulary dictionary cannot
be completely accurate in all jurisdictions. Any / all definitions are for general purposes only and should not be used for any legal purpose. By use of this dictionary glossary directory of real estate terms, you agree to
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