Glossary

Income from a job that pays a fixed amount per week, for two weeks or one month, regardless of how many hours are worked or how much is produced.

A listed property for which a contract of sale has been written but not yet closed. When a sales contract is signed, a listed property becomes a sale pending until the closing date or the date the listing goes back into inventory.

See agreement of sale and earnest money contract.

One who is licensed to deal in real estate or perform any other act enumerated by state real estate license law, while employed by a broker licensed by the state. A salesperson’s license is required for anyone to sell another’s property. The salesperson must have a sponsoring broker.

The estimated value that an asset will have at the end of its useful life. Real estate improvements, though long lasting, have a limited useful life, at the end of which there may be salvage or scrap value.

Lease held by a lessee who sublets all or part of his or her interest, thereby becoming a lessor. Typically, the sandwich leaseholder is neither the owner of the fee estate nor the user of the property. The sandwich lessee tries to profit from the rent differential of the other leases.

An instrument for recording and acknowledging final payment of a mortgage loan. After a loan has been paid off, the borrower should record a satisfaction of mortgage or satisfaction piece.

A lending institution that specializes in mortgage loans.

Same as a junior mortgage.

A group of large, quasi-governmental agencies and other investors that purchase existing mortgage loans. After a mortgage loan is originated, it can be sold into the secondary market to provide funds for more mortgage originations. This means that mortgage loans can be made across the country regardless of how many deposits local lending institutions contain.

One square mile in the government survey, containing 640 acres. There are 36 sections in a six-mile-square township.

The possession of realty by one who claims to own a fee simple estate or a life estate or other salable interest. Seisin is a covenant needed to transfer ownership to another.

Earning income directly from one’s own business, trade or profession or working on a contract, strict commission or piece work basis rather than as a wage-earning or salaried employee. The self-employed need special proof of income when applying for a loan. Usually, tax returns for the past several years are sufficient.

The person who transfers title to the buyer for a consideration.

Same as owner financing.

The real estate agent who finds the buyer. Homes often are sold under cooperative arrangements, such as the Multiple Listing Service. One agent may be the listing agent for the seller and another agent may be the selling agent who brings a willing buyer to the deal. Both agents may represent the seller or the buyer and share in the commission.

A designation awarded by the Society of Real Estate Appraisers. Many of the most qualified residential appraisers have this designation.

Property acquired by either spouse prior to marriage or by gift or devise after marriage, as distinct from community property. In community property states including Texas, separate property can remain that way; property acquired during marriage by joint effort is community.

The distance from the curb or other established line within which no buildings may be erected. Setbacks must be observed—if violated during construction, the property might be required to be razed.

Same as closing.

See closing statement.

The ownership of real property by an individual as an individual. Severalty is distinguished from joint ownership, whereby two or more persons are owners.

A network of drainage pipes and collection and treatment facilities that dispose of household liquid wastes. Urban and suburban properties usually are connected to a city sewage system. Homeowners pay a monthly fee for this service. Outlying and rural homes have individual septic tank systems.

A collection of retail establishments with common parking facilities and sometimes with an enclosed mall area. Larger centers generally have an anchor tenant — a large department or grocery store that draws customers to the center.

The procedure of searching for a suitable home in the market; includes checking advertising and brokers’ inventory and personal visits to neighborhoods and houses for sale. Because real estate is a significant purchase, care should be exercised in its selection. Homebuying involves satisfying housing needs and desires plus investing in an expensive, durable asset.

Technically, a structure that contains only one housing unit. However, many mortgage loans that are restricted to single-family homes can be used to finance duplexes, triplexes and quadraplexes that contain two, three or four units, respectively, in the same structure. Single-family homes are the most popular form of housing, particularly among homebuyers. Even a large percentage of rental housing is single-family.

A plot of land prepared for or underlying a structure or development.

An assessment made against a property to pay for a public improvement by which the assessed property is considered to be especially benefited. A municipality may install a new sewer line or sidewalk; each owner along the path may be charged a special assessment, in addition to a regular tax.

A deed in which the grantor limits the title warranty given to the grantee to anyone claiming by, from, through or under him or her, the grantor. The grantor does not warrant against title defects arising from conditions that existed before he or she owned the property. The seller does not guarantee title against all claims—just those while he or she was the owner.

A legal action in which the court requires a party to a contract to perform the terms of the contract when he or she has refused to fulfill obligations. Used in real estate because each parcel of land is unique. In other types of property transactions, a court may award compensation as damages in terms of money; by contrast, in real estate the court may insist on specific performance.

A law established by an act of a legislature. Statutes are written laws; laws are also made through judicial interpretation and government administration.

A state law that provides that certain contracts must be in writing to be enforceable. Applies to deeds, mortgages and other real estate contracts, with the exception of leases for periods shorter than one year. The statute of frauds requires that contracts involving real estate must be in writing.

A certain statutory period after which a claimant is barred from enforcing a claim by suit. If a practice continues beyond the statute of limitations, the person who is adversely affected may be barred from trying to prevent it.

See graduated lease.

An important requirement, condition or item within a written contract.

Equal annual reductions in the book value of property. Used in accounting for replacement and tax purposes. Straight-line provides less depreciation in the early years of an asset than does an accelerated method. Most taxpayers prefer accelerated depreciation because it minimizes current taxes. However, for financial reporting purposes, most companies prefer straight-line because it provides a higher net income.

Dividing a tract of land into smaller tracts. Subdividing allows raw acreage to be developed with streets, utilities and other amenities added to result in lots ready for improvements such as houses to be built.

A tract of land divided into lots or plots suitable for home-building purposes. Some states and localities require that a subdivision plat be recorded.

Describes the situation of a buyer taking title to mortgaged real property but not personally responsible for the payment of any portion of the amount due. The buyer must make payments to keep the property; however, if he or she fails to do so, only his or her equity in that property is lost.

A lease from a lessee to another lessee. The new lessee is a sublessee or subtenant. See sandwich lease.

See sublease.

A stipulation or document that permits a mortgage recorded at a later date to take priority over an existing mortgage. Ordinarily, a second mortgage automatically moves up to become a first lien when the first mortgage is retired. If the second mortgage has a subordination clause, it will remain a second mortgage when a first mortgage is refinanced.

Loan designed for high-risk borrowers who generally have lower credit scores. Subprime loans have less favorable terms — higher interest rates, more discount points — than those offered to lower-risk borrowers.

One who guarantees the performance of another; similar to a guarantor. The surety becomes liable for the contract, just as the original principal. The surety is contacted when the principal fails to perform some duty.

The cancellation of a lease before its expiration by mutual consent of the lessor and the lessee. Surrender occurs only when agreed upon by both parties.

A court having jurisdiction over the proof of wills and the settling of estates and of citations. Also called probate court.

The process by which a parcel of land is measured and its area ascertained; also, the blueprint showing the measurements, boundaries and area. A survey is needed to determine exact boundaries and any easements or encroachments.