Glossary

The person in whose favor an obligation is entered into.

The person who binds himself to another; one who has engaged to perform some obligation; one who makes a bond.

A loss in value resulting from reduced desirability and usefulness of a structure because its design and construction have become outdated; loss due to a structure’s becoming old-fashioned, not in keeping with modern needs, with consequent loss of income.

The use of a residence by dwelling in it. May denote extent of use, as in "year-round occupancy," or ownership, as in "owner-occupancy," or the state of being lived in or empty, as in "occupancy status."

The person or persons dwelling in a residence without reference to their ownership status or legal right to occupy the space.

See agreement of sale.

Marketing event in which a seller or agent allows the public to tour a home for sale to generate purchase offers. Open houses often are held on weekends to maximize attendance.

A listing given to any number of brokers without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing or secures the seller’s acceptance of another offer. The sale of the property automatically terminates all open listings. This type of listing is used frequently for commercial property. Because of smaller commissions, homes are typically listed with a broker’s exclusive listing; brokers would not make efforts to market a home that could be sold by another broker.

A mortgage that has matured or is overdue and is therefore "open" to foreclosure at any time.

A mortgage under which the mortgagor (borrower) may secure additional funds from the mortgagee (lender), usually stipulating a ceiling amount that can be borrowed. A recent development in real estate finance is a line of credit home equity loan, which works the same as the open-end mortgage.

Costs associated with operation of an income-producing property. These include maintenance, management, repairs, utilities, insurance, property taxes and replacement reserves. Income taxes, debt service and expenses associated with remodeling the property are not considered operating expenses.

A lease between the lessee and the sublessee who actually occupies and uses the property. In an operating lease, the lessee runs the property; by contrast, a financing lease is one in which the lessee becomes lessor to the operating tenant.

The right, but not the obligation, to purchase or lease a property upon specified terms within a specified period. An example is the right to buy certain land within 90 days at $5,000 per acre. The property becomes "reserved" for that period.

A verbal agreement. With few exceptions, verbal agreements for the sale or use of real estate are unenforceable. An oral lease for less than one year is valid in many states. One who deals in real estate should be certain that agreements are in writing.

One who holds title to a property.

Also called "seller financing." A note taken by the seller as all or part of the purchase price of a property. The note establishes a debt to the seller and a schedule for repayment. Seller financing may be useful when interest rates are high or mortgage loans are difficult to obtain. It also may allow a sale to someone with no credit rating. When seller financing is used, the terms of the financing are negotiated along with the price. If the terms are favorable to the buyer, the seller may insist on a higher price.

The owner’s household lives in the residence. Most housing is either owner-occupied or rental housing. The ratio of owner-occupied units to total occupied units is the homeownership rate.

Possession, enjoyment, control and disposition of realty.