Glossary

In the government survey land description, lines parallel to the principal meridian, marking off the land into six-mile strips known as ranges; they are numbered east or west of the principal meridian.

Same as cap.

An agreement by a lender to make a loan at a specified rate during a specified period pending approval of the loan application. It is common practice for home mortgage lenders to lock in the terms of the loan, including the interest rate, at the time of application. The lock-in can not be changed for a certain period, generally, the time required for loan approval. The lock-in protects the borrower from an unexpected increase in interest rates while the loan is being processed. When the loan is approved, the borrower receives a commitment letter fixing the terms of the loan for a stated period.

The percentage yield of an investment. Specifically, rate of return is the percentage of invested cash that is returned in cash income, increased market value or both during the holding period. Rate of return is over and above the return of the invested capital.

Land and all attachments that are of a permanent nature; same as realty. Real estate is distinguished from personal property. At one time real estate was the sole source of wealth, and thus achieved a special place in the law because of its importance.

See agent.

A lawyer who specializes in real estate. Most lawyers can explain the standard real estate contract, but a specialist is called for in most real estate disputes as well as to help arrange nonstandard transactions.

A governmental body charged with enforcing the laws of real estate agency in a state. Members of the public may lodge complaints about the conduct of licensed agents with the commission.

A real estate mutual fund, allowed by income tax laws to avoid the corporate tax. It sells shares of ownership and must invest in real estate or mortgages. A REIT allows small investors to participate in the ownership of large, potentially profitable, real estate projects.

Real property held as an asset on the books of a lender, mortgage investor, insurer or guarantor. Most of this inventory has been acquired in the course of foreclosing mortgage loans. Inventories of REO can be a good place to find properties for sale. They often are sold at favorable prices and sometimes with lower interest rates. The terms depend on the type of institution holding the property and how aggressively they want to reduce the inventory.

Someone whose business is real estate, most often brokers and salespersons. See agent.

Federal law enacted in 1974 that requires buyer and seller to have knowledge of closing costs. Applies to first mortgage loans on one- to four-family homes. Information provided includes: 1. The booklet Settlement Costs and You, to be given to potential borrowers, 2. Good faith estimate of closing costs, 3. Use of a uniform settlement statement, 4. Availability of settlement statement for review one day before closing with whatever figures are known, 5. Prohibition against kickbacks.

See ad valorem taxes.

The right to use real estate as (1) fee simple estate, (2) life estate or (3) leasehold estate. Sometimes defined as real estate.

Designation given a professional in real estate who subscribes to a strict code of ethics as a member of the local and state boards and of the National Association of Realtors. Less than half of those licensed to sell real estate are Realtors. In many areas, one must be a Realtor to participate in the predominant Multiple Listing Service.

Same as real estate.

A lease in which the rental level is periodically reviewed and reset by independent appraisers. The landlord and tenant can agree on a long-term lease knowing that the rent will be fair throughout the term because of the reappraisal clauses in the lease.

The act of entering in a book of public record instruments affecting the title to real property. Recording in this manner gives notice to the public of the facts involved.

Charges, usually nominal, required to record a document in the public records at the county courthouse. Real estate deeds, mortgage liens and other claims to ownership are publicly recorded to provide an official title record.

The right to reacquire property after default and possibly after foreclosure. In Texas, redemptive rights are narrowly construed.

A document in which the mortgagee (lender) acknowledges the sum due on the mortgage loan. Used when mortgaged property is sold, and the buyer assumes the debt.

To change the loan structure without selling the mortgaged property. Mortgage loans are refinanced most often when lower cost financing is available, and the owner can reduce the monthly payment amount with a new loan. An adjustable loan might be refinanced with a fixed-rate loan to lock in a currently low interest rate.

The act by which some claim or interest is surrendered. Release clauses frequently are used when a mortgage covers more than one property (blanket mortgage), so that a particular parcel can be released upon some payment.

A mortgage clause that gives the owner of the property the privilege of paying off a portion of the mortgage indebtedness, thus freeing a portion of the property from the mortgage.

Gradual subsidence of waters, leaving dry land. Ownership of land beneath a lake, for example, can become more important as reliction occurs.

An estate that takes effect after the termination of a prior estate, such as a life estate. The remainderman owns the property outright upon the death of the life tenant.

The person who is to receive possession of the property after the death of a life tenant. Many people wish to allow a surviving spouse to occupy property for the rest of the spouse’s life, with a child being the remainderman.

The compensation paid for the use of real estate. Rent is the most important portion of a lease. Rent may be paid in money, services or other valuable property.

Someone who lives in a housing unit subject to a lease; a rental tenant; a lessee.

The period arranged to repay the loan principal; same as mortgage term.

The cost of erecting a building to take the place of or serve the functions of a previous structure. See reproduction cost. Replacement cost often sets the upper limit on value; it is often used for insurance purposes.

The cost, using current technology, of producing a structure with the same utility as the subject property. The structure does not have to be a perfect reproduction but an acceptable replacement for the subject. Hazard insurance should be carried in an amount to cover the replacement cost of the home. If the home is completely destroyed, the insurance would allow a replacement to be built on the site.

The normal cost of exact duplication of a property as of a certain date. Reproduction cost differs from replacement cost in that replacement requires the same functional utility for a property, whereas reproduction is an exact duplicate, using the same materials and craftsmanship.

Money accumulated for a specified future purpose.

The dwelling where someone lives, either as a homeowner or a renter. The residence may be a principal residence or a second home. See principal residence.

A limitation placed upon the use of property, contained in the deed or other written instrument in the chain of title. If buying property with restrictions, one should determine its suitability for the uses required.

See restriction.

The right of a lessor to possess leased property upon the termination of a lease. A lease is valid for an established term, after which the lessor receives the reversion.

The interest a person has in property upon the termination of the preceding estate. A lessor’s interest in leased property is a reversionary interest.

An act of recalling a power of authority conferred, such as a revocation of a power of attorney, a license, an agency and so forth. Those with the authority to convey may also have authority to revoke, with reason.

A set of qualifying conditions attached to a contract. An insurance policy may have one or more riders that apply special conditions to the coverage of glass or protection from water damage. A mortgage contract may have a rider to allow interest rate adjustments.

The right of a surviving joint tenant to acquire the interest of a deceased joint owner; the distinguishing feature of joint tenancy and tenancy by the entirety. The right of survivorship is often used where the joint tenants are closely related.

The right to use a particular path for access or passage; a type of easement. Also, the areas of subdivisions dedicated to government for use as streets and other public access to lots.

One who owns land bounding a lake, river or other body of water.

Rights pertaining to the use of water on, under or adjacent to one’s land. In most states, riparian rights provide that property owners cannot alter the flow of water to their downstream neighbors.

The probability that the outcome of an investment venture will deviate from the expected. Most investments involve some type of risk. Some investment risk may be reduced by diversifying the types of assets owned. Other risks may be reduced by purchasing insurance.