Glossary

Delay or negligence in asserting one’s legal rights. If one does not act in a reasonable time to assert one’s rights, he or she may be barred from doing so because of the delay.

The surface of the earth; any part of the surface of the earth. Legal definitions often distinguish land from water.

A real estate installment selling arrangement whereby the buyer may use, occupy and enjoy land, but no deed is given by the seller (so no title passes) until all or a specified part of the sale price has been paid. Compared with a deed, use of a land contract is easier to foreclose if the buyer fails to make the payments.

Document that conveys public land; also, the land conveyed in this manner.

A phrase used in early English law to express all sorts of real estate. This is the most comprehensive description of real estate.

One who rents property to another; a lessor.

A fixed object serving as a boundary mark or reference point for a tract of land. In surveying, a landmark serves as a reference point.

A penalty the borrower must pay if a payment is made after the due date. Late charges are used to encourage timely payment of mortgage, utility and other periodic bills. Chronic late payment not only adds to expense but also may harm an individual’s credit rating.

An attorney at law is referred to as a lawyer; a person who practices law. See attorney.

A measure of approximately three miles.

An essential contract in which, for a consideration called rent, one who is entitled to the possession of real property (lessor) transfers those rights to another (lessee) for a specified period of time. A lease is an essential agreement, allowing an owner to transfer possession to a user for a limited amount of time.

A lease that gives the lessee (tenant) the right to purchase the property at an agreed-upon price under certain conditions. Because the option allows but does not compel the purchase, it gives the tenant time to consider acquisition.

The interest or estate on which a lessee (tenant) of real estate has a lease. A leasehold can be quite valuable when the tenant’s rent is below the market rate, and the lease is long term.

Legally acceptable identification of real estate by (1) the rectangular survey, (2) metes and bounds or (3) recorded plat (lot and block number).

Bank, savings association, mortgage banker or broker, or individual who provides the funds for a loan.

See financial institution.

A person to whom property is rented under a lease; a tenant.

One who rents property to another under a lease; a landlord.

The use of borrowed funds to increase purchasing power and, ideally, to increase the investment’s profitability. If the property increases in value or yields financial benefits at a rate above the borrowed money interest rate, leverage is favorable or positive. But if the rate of property benefits is less than the interest rate, the investor’s losses are increased.

A debt or financial obligation, or the responsibility to make up for potential damages incurred by those using or visiting a property.

1. Permission. 2. A privilege or right granted by a state to an individual to operate as a real estate broker or salesperson. 1. License allows one to use property for a limited time. 2. In Texas, one must be licensed as a broker or salesperson to receive payment for a sale, lease or other transaction.

One who holds a real estate license. In Texas, only licensees are entitled to receive compensation for assisting with a real estate transaction. Education, experience and passing grades on examinations are required for licensure.

A charge against property, making it security for the payment of a debt, judgment, mortgage or taxes; a type of encumbrance. A lien makes the property collateral for a debt. Some liens may allow the property to be sold to satisfy the debt.

A freehold interest in land that expires upon the death of the owner or another specified person. One with a life estate may use the property, but not abuse it, for as long as he or she lives. Then, it reverts to the remainderman.

The period that a loan is outstanding. The period extending from loan origination to the date when the loan is prepaid, retired or foreclosed. The shorter this period, the less total interest paid.

One who is allowed to use property for his or her lifetime or the lifetime of another designated person.

Also called a life of loan cap. The maximum extent, in percentage points, that the interest rate on an adjustable-rate mortgage can vary from its original rate during the life of the loan. A lifetime cap limits the risk taken on by the borrower of an ARM. If the loan originates at 7 percent and has a lifetime cap of 5 percentage points, the rate can never be higher than 12 percent, regardless of how high the index goes.

Ability to convert value into cash. The more "liquid" an asset is, the more readily it can be converted to cash with minimal loss in value. Assets that require a lot of time and expense to sell and those fluctuating in value are not very liquid.

Latin for "suit pending." Recorded notice that a suit has been filed, the outcome of which may affect title to certain land. Title to the property under consideration may be in jeopardy.

A written employment contract between a principal and an agent authorizing the agent to perform services involving the principal’s property. Also, a record of property for sale by a broker who has been authorized by the owner to sell, or the property so listed. In Texas, a listing must be in writing. See open listing, net listing, exclusive agency listing and exclusive right to sell listing.

The act of carrying out a lawsuit.

Part of the shore zone of a large body of water. Littoral rights differ from riparian rights, which pertain to a river or stream.

Money advanced for a specific purpose with the expectation that it will be repaid according to an established schedule.

A charge to help defray the costs of originating a loan. The fee is paid by the borrower at closing as a specific percentage of the of the amount borrowed. See Discount points. Mortgage loan terms often are quoted as "8 percent with 1 plus 2 points." This means that three discount points (equal to 3 percent of the loan amount) will be charged with one of the points considered a loan origination fee. If the origination fee is charged to pay for specific services, such as an appraisal or credit check, it may not be included in tax deductible interest expenses.

The activities required to approve or disapprove a loan. After a loan application is submitted and all supporting documents are included, the information is analyzed to qualify the borrower, credit history is checked and an appraisal ordered. After a loan is processed and approved, the borrower receives a commitment promising a loan at specific terms as long as closing is held within a specific period.

The administration of the loan repayment process. Servicing includes billing and collection, maintenance of escrow accounts with payouts as required and record keeping. The loan servicer, which may or may not own the loan, is the company with which the borrower has active contact. Many servicers operate under contract with the owner of the loan, and the firm servicing the loan may change over time.

The period from loan origination to full repayment. Commonly, mortgage loans have terms of 25 to 30 years. An increasingly popular option is the loan with a 15-year term. Shorter terms reduce the total interest paid but require larger monthly payments.

The amount of outstanding debt divided by the market value of the property. The loan-to-value ratio is used by lenders to measure the risk of default. The higher the LTV, the less equity held by the borrower and the lower any financial attachment to the property. Consequently, the risk is higher. Lenders make home loans with LTV more than 80 percent only if the loan is insured or guaranteed against default.

All the factors related to the site of a property that affect its value. These include its relation to other important locations in the area, the neighborhood, crime, traffic, the street and its surrounding homes. See neighborhood. Location is a primary factor in the property value, as it determines the convenience of accessing other places of interest and how well the property can be used for its intended purpose.

An extended period of time. The exact length of time depends on the context. On loan applications, long-term debts may be defined as those not repaid within six months to a year. A long-term loan is one with more than a ten-year term.

A means of describing land by referring to a recorded plat. An example is Lot 6, Block F of the Sunnybrook Estates, District 2 of Texas City, Texas.

A line bounding a lot as described in a survey of the property. Lot lines mark boundaries. There also may be building setback requirements, or building lines, within a lot.