letter-# §1031 cooperation provision A statement in purchase agreements putting the seller and buyer on notice they are able to avoid profit reporting on the transaction and provides cooperation when a §1031 exemption is intended on the sale or purchase of a property.
letter- §1031 transaction A sales transaction in which sales proceeds are reinvested by the acquisition of a replacement like-kind property, the profits on the sale deferred until the investment is cashed out. [See RPI Form 354 and 355]
letter-# 10-year Treasury Note A leading indicator of the direction of future fixed rate mortgage (FRM) rates. Influenced by worldwide demand for the dollar and anticipated future domestic consumer inflation.
letter-# 1-year Treasury Bill One of several indices referenced by lenders to adjust the rate of an adjustable rate mortgage. This index is one of the most volatile.
letter-# 20-day preliminary notice Notification of a subcontractor's right to record and foreclose a mechanic's lien against property when they are not paid.
letter-# 5/1 ARM A common type of adjustable rate mortgage with an introductory fixed rate period of five years followed by an annually-adjusted interest rate for the life of the mortgage.
letter-# 80-10-10 financing A first mortgage recorded concurrent with a seller carryback for 10% of the price on a 10% down payment by the buyer, a private piggyback financing arrangement.
letter-# 91-Day Treasury Bill The rate used by sellers to impute and report interest when a seller is not paid interest on their §1031 monies.
letter-A abandonment The termination of an easement when the easement holder's actions demonstrate a clear intent to permanently abandon all future use of the easement. [See RPI Form 581]
letter-A abatement of nuisance Extinction or termination of a nuisance.
letter-A Abenomics An economic plan introduced by Japanese Prime Minister Shinzo Abe to revive their 20 years of stagnant economy through aggressive fiscal stimulus, monetary easing from the central bank and employment reforms.
letter-A ability-to-repay (ATR) rules A federal standard for determining an applicant’s ability to repay a consumer mortgage.
letter-A absentee buyers A group composed of speculators, buy-to-let investors and renovation contractors.
letter-A absolute assignment of rents A present transfer of all the owner’s rights, title and interest in the rents generated by the real estate. Compare with conditional assignment of rents.
letter-A absolutely privileged publication Any statement made as part of a legislative, judicial or other official proceeding authorized by law, barring a slander of title action.
letter-A absorption rate The estimated time required to sell or lease property within a designated area at its fair market value.
letter-A abstract of judgment A condensed written summary of the essential holdings of a court judgment.
letter-A abstract of title A representation issued by a title company as a guarantee to the named person, not an insurance policy, listing all recorded conveyances and encumbrances affecting title to the described real estate.
letter-A abstraction A method of valuing land. The indicated value of the improvement is deducted from the sale price.
letter-A accelerated cost recovery system (ACRS) The system for figuring depreciation (cost recovery) for depreciable real property acquired and placed into service after January 1, 1981.
letter-A accelerated depreciation A method of cost write-off in which depreciation allowances are greater in the first few years of ownership than in subsequent years. This permits an earlier recovery of capital and a faster tax write-off of an asset.
letter-A acceleration A demand for immediate payment of all amounts remaining unpaid on a mortgage or extension of credit by a lender or carryback seller.
letter-A acceleration clause A condition in a real estate financing instrument giving the lender the power to declare all sums owing lender immediately due and payable upon the happening of an event, such as sale of the property, or a delinquency in the repayment of the note.
letter-A acceptance The act of agreeing or consenting to the terms of an offer thereby establishing the meeting of the minds that is an essential element of a contract.
letter-A access right The right of an owner to have ingress and egress to and from the owner's property over adjoining property.
letter-A accession An addition to property through the efforts of man or by natural forces.
letter-A accommodation party An individual who signs a note to include liability for a debt evidenced by the note and receives no direct benefit from the debt.
letter-A accretion Accession by natural forces, e.g., alluvium.
letter-A accrual note An installment note calling for payments to be credited first to accrued interest with the remainder to principal. [See RPI Form 420]
letter-A accrued depreciation The difference between the cost of replacement new as of the date of the appraisal and the present appraised value.
letter-A accrued items of expense Those incurred expenses which are not yet payable. The seller's accrued expenses are credited to the purchaser in a closing statement.
letter-A acknowledgment A formal declaration made before an authorized person, e.g., a notary public, by a person who has executed an instrument stating that the execution was his or her free act. In this state an acknowledgment is the statement by an officer such as a notary that the signatory to the instrument is the person represented to be.
letter-A acoustical tile Blocks of fiber, mineral or metal, with small holes or rough-textured surface to absorb sound, used as covering for interior walls and ceilings.
letter-A acquisition The act or process by which a person procures property.
letter-A acre A measure of land equaling 160 square rods, or 4,840 square yards, or 43,560 square feet, or a tract about 208.71 feet square.
letter-A active license A license status which allows an individual California Bureau of Real Estate (CalBRE) licensee to perform mortgage loan originator (MLO) services as an employee of a Department of Business Oversight (DBO) MLO.
letter-A activity sheet A control sheet documenting all the activity within the broker's office due to the existence of a property listing or buyer listing to locate property. [See RPI Form 520]
letter-A actual authority Authority expressly given by the principal or given by the law and not denied by the principal.
letter-A actual fraud An act intended to deceive another, e.g., making a false statement, making a promise without intending to perform it, suppressing the truth.
letter-A actual money losses Monetary losses recovered for injury to the real estate, lost use of the property, personal injury or injury to the occupant's personal property, also called damages.
letter-A actual notice Express or implied knowledge of conditions which exist on a property.
letter-A ad valorem Real estate taxes imposed on property based on its assessed value. [See RPI Form 552-2 §5.1]
letter-A addendum An attachment to a contract, rental or lease agreement for incorporating any provision agreed to but not included in the boilerplate provisions of the agreement. [See RPI Form 250]
letter-A additional contributions provision A provision in the limited liability company (LLC) operating agreement authorizing the member manager to request additional capital contributions from the contributing members when operating conditions produce a cash operating deficit. [See RPI Form 372-2 §2.1b]
letter-A add-on note A note in which interest is charged on the original loan amount for the entire term of the loan, then added to the original loan amount to set the total amount of principal and interest to be paid over the life of the note, payable in equal monthly installments.
letter-A adhesion contract An agreement in which one party has dramatically superior bargaining strength, forcing the weaker party to either accept or reject all the agreement’s stated terms, a dynamic present to some degree in all lender/borrower relationships.
letter-A adjustable rate mortgage (ARM) A note with an interest rate that varies based on a chosen index figure plus a set margin, the rate usually adjusting on an annual basis subject to annual and lifetime ceiling and floor rate limitations. [See RPI Form 320-1]
letter-A adjusted basis The cost basis of a property after the application of additions for further improvements and deductions for destruction of improvements and depreciation.
letter-A adjusted gross income (AGI) The total of the taxpayer's reportable income and losses from all three income categories.
letter-A adjustment interval The predetermined period of time after which the interest rate and payment amount on an adjustable rate mortgage (ARM) or other variable rate mortgage is recast.
letter-A adjustments In appraising, a means by which characteristics of a residential property are regulated by dollar amount or percentage to conform to similar characteristics of another residential property.
letter-A administrative agencies A government entity created by the state or federal legislature and local governing bodies to oversee specialized matters. Most have legislative, executive and judicial authority.
letter-A administrator A person appointed by the probate court to administer the estate of a deceased person who died intestate. (Administratrix, the feminine form.)
letter-A adobe Also known as clay, adobe soil is a naturally occurring heavy material which readily cracks and is composed primarily of fine-grained minerals.
letter-A advance Transfer of funds from a lender to a borrower in advance on a loan.
letter-A advance commitment The institutional investor's prior agreement to provide long-term financing upon completion of construction; also known as a take-out loan commitment.
letter-A advance cost sheet An itemization of the costs incurred to properly market a property for sale which are to be paid by the owner. [See RPI Form 107]
letter-A advance costs Deposits handed to a broker to cover out-of-pocket costs incurred on behalf of the depositor while performing brokerage services.
letter-A advance fee A fee paid in advance of any services rendered.
letter-A adverse action notice A disclosure notifying the applicant a negative action has been taken on their consumer mortgage application due to an unfavorable credit history, as required by the Fair Credit Reporting Act (FCRA).
letter-A adverse possession A method of acquiring title to real estate owned by another by openly maintaining exclusive possession of the property for a period of five years and paying all property taxes.
letter-A advertising Communication of marketing materials by licensees, such as property fliers, classified ads or first-contact brochures.
letter-A affiant One who makes an affidavit or gives evidence.
letter-A affidavit A statement or declaration reduced to writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.
letter-A affidavit of title A statement, in writing, made under oath by seller or grantor, acknowledged before a Notary Public in which the affiant identifies himself or herself and affiant's marital status certifying that since the examination of title on the contract date there are no judgments, bankruptcies or divorces, no unrecorded deeds, contracts, unpaid repairs or improvements or defects of title known to affiant and that affiant is in possession of the property.
letter-A affiliated business arrangement (ABA) A business arrangement in which a broker may lawfully profit from referring a client to a service provider the broker owns; requires the broker to make a disclosure of their ownership interest to the client. [See RPI Form 205 and 519]
letter-A affirm To confirm, to aver, to ratify, to verify. To make a declaration.
letter-A affirmative covenant A recorded restriction limiting the use of a property to a specific purpose.
letter-A affirmative duty An agent’s obligation to voluntarily undertake an advisory activity when in a fiduciary relationship.
letter-A affirmative fraud Intentionally and knowingly misrepresenting information to someone.
letter-A agency The relationship between principal and the principal's agent which arises out of a contract, either expressed or implied, written or oral, wherein the agent is employed by the principal to do certain acts dealing with third parties. [See RPI Form 305]
letter-A agency confirmation provision A provision in all purchase agreements and counteroffers disclosing the agency of each broker in the transaction.
letter-A agency disputes Disputes between an agent and their client which arise during the marketing period, in escrow or after closing.
letter-A agency duty The fiduciary duty a broker owes a client to use diligence in attaining the client's real estate goals. [See RPI Form 305]
letter-A Agency Law Disclosure Restatement of agency codes and cases which establish the conduct of real estate licensees. It is delivered to all parties in targeted sales and leasing transactions. [See RPI Form 305]
letter-A agency relationship The scope of activities imposed on the broker by law as arising out of the representation authorized by the employment. [See RPI Form 102 and 103]
letter-A agent One who is authorized to represent another, such as a broker and client or sales agent and their broker.
letter-A agent turnover rate The rate at which a broker loses and replaces agents.
letter-A agent-for-service clause A section in the property management agreement which appoints the owner's agent-for-service. [See RPI Form 590 §11.3]
letter-A agent-for-service process An individual who acts on behalf of the owner, accepting service of legal documents and notices initiated by tenants.
letter-A aggrieved person Any person who claims to have been injured by a discriminatory housing practice.
letter-A agreed-boundary doctrine When owners of adjacent properties uncertain over the true boundary agree to establish the location of their common lot line and acquiesce to the boundary line for at least five years.
letter-A agreement An exchange of promises, a mutual understanding or arrangement; a contract.
letter-A agreement of sale A written agreement or contract between seller and purchaser in which they reach a meeting of minds on the terms and conditions of the sale. The parties concur; are in harmonious opinion.
letter-A air rights The rights in real property to the reasonable use of the air space above the surface of the land.
letter-A alienation The sale, further encumbrance or lease (for a period exceeding one year) of a property.
letter-A alienation clause A trust deed clause limiting the rights of the owner of the mortgaged property to freely transfer their interest in the property by sale, lease or further encumbrance.
letter-A alkaline A soil with a pH level above 7.
letter-A all-inclusive trust deed (AITD) A note entered into by a buyer in favor of the seller to evidence the amount remaining due on the purchase price after deducting the down payment, an amount inclusive of any specified mortgage debts remaining of record with the seller retaining responsibility for their payment. Also referred to as a wraparound mortgage or overriding mortgage. [See RPI Form 421]
letter-A allodial tenure A real property ownership system where ownership may be complete except for those rights held by government. Allodial is in contrast to feudal tenure.
letter-A allonge An attachment to a note occurring between preparation of the note and closing the transaction providing information necessary to update entries on the note at the time it becomes effective. [See RPI Form 250]
letter-A alluvium The gradual increase of the earth on a shore of an ocean or bank of a stream resulting from the action of the water.
letter-A Alquist-Priolo Maps Maps which identify earthquake fault areas available from the State Mining and Geology Board and the city or county planning department.
letter-A ALTA owner's policy An owner's extended coverage policy that provides buyers and owners the same protection the ALTA policy gives to lenders.
letter-A ALTA title policy (American Land Title Association) A type of title insurance policy issued by title insurance companies which expands the risks normally insured against under the standard type policy to include unrecorded mechanic's liens; unrecorded physical easements; facts a physical survey would show; water and mineral rights; and rights of parties in possession, such as tenants and buyers under unrecorded instruments.
letter-A amanuensis An individual who has the oral authority of the grantor to sign a grant deed by their own hand on behalf of the grantor.
letter-A amendment clause A clause contained in covenants, conditions and restrictions (CC&Rs) establishing a procedure for modifying the CC&Rs.
letter-A amenities Hedonistic benefits derived from a property whose existence increase the property's value or desirability. Amenities are both tangible, such as property fixtures, or intangible, such as proximity to schools or desirable businesses.
letter-A American Dream policy The government's push to increase the homeownership rate from the historical 64% to 70%.
letter-A Americans with Disabilities Act (ADA) Federal regulations prohibiting an employer from discriminating against a qualified person based on a disability.
letter-A amortization The reduction in principal-liquidation-of a mortgage obligation on an installment basis.
letter-A amortization table A tabular schedule detailing the apportionment of principal and interest on each periodic payment due on an amortizing loan.
letter-A amortized loan A loan to be repaid, interest and principal, by a series of regular payments that are equal or nearly equal, without any special balloon payment prior to maturity. Also called a Level Payments Loan.
letter-A anchor tenant A large, well-branded retailer strategically situated in a multi-unit shopping complex to draw foot-traffic and consumers for the general benefit of all tenant occupants in the complex.
letter-A annual percentage rate (APR) The relative cost of credit as determined in accordance with Regulation Z of the Board of Governors of the Federal Reserve System for implementing the Federal Truth in Lending Act.
letter-A Annual Property Operating Data sheet (APOD) A worksheet used when gathering income and expenses on the operation of an income producing property, to analyze its suitability for investment. [See RPI Form 352]
letter-A annuity A sum of money received at fixed intervals, such as a series of assured equal or nearly equal payments to be made over a period of time, or it may be a lump sum payment to be made in the future. The installment payments due to the landlord under a lease is an annuity. So are the installment payments due to a lender.
letter-A anticipation, principle of Affirms that value is created by anticipated benefits to be derived in the future.
letter-A anticipatory breach When a buyer or seller repudiates the purchase agreement by their words or conduct before closing.
letter-A anti-competition clause A provision in the nonresidential lease agreement stating the landlord will not lease space in a commercial complex to competitors of the tenant.
letter-A anti-deficiency A limitation placed on a mortgage lender’s ability to recover losses on default when the secured property’s value is insufficient to satisfy the mortgage debt.
letter-A anti-deficiency law California legislation limiting a mortgage holder’s ability to recover losses on a default when the mortgaged property’s value is insufficient to satisfy the mortgage debt.
letter-A anti-trust State and federal regulations that are designed to promote fair competition in the marketplace.
letter-A appellant A party appealing a court decision or ruling.
letter-A appellate courts Courts which review trial court decisions to determine whether the proper rules of law were correctly applied.
letter-A Applicable Federal Rate (AFR) A rate set by the Internal Revenue Service and used by carryback sellers to impute and report as minimum interest income when the note rate on the carryback debt is a lesser rate.
letter-A applicant screening fee A nonrefundable fee charged to the tenant to reimburse the landlord for the cost to obtain the tenant's credit report.
letter-A appraisal An opinion estimating a property’s value on a specific date resulting from an analysis of facts about the property.
letter-A appraisal report Documentation of an appraiser’s findings, including the purpose and scope of the appraisal.
letter-A appraised value The fair market value (FMV) arrived at by an appraiser.
letter-A appreciable asset A collectible, such as real estate. The value of this asset may increase with time beyond the rate of consumer inflation.
letter-A appreciation An increase in property value at an annual rate greater than the rate of inflation as the result of favorable economic conditions, such as increased demand for a location or increased wealth of the local population.
letter-A appreciation-adjusted rent provision A rent provision found in a nonresidential lease agreement which adjusts rent every several years to reflect an increase in the rental value of a property exceeding the rate of inflation brought about by local demographics. [See RPI Form 552 §4.5e]
letter-A appriser One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes.
letter-A appropriation The action of taking something for one's own use, such as water from a stream.
letter-A appropriation of water The taking, impounding or diversion of water flowing on the public domain from its natural course and the application of the water to some beneficial use personal and exclusive to the appropriator.
letter-A appropriation right The right to divert water from a river or watercourse to real estate for reasonable use.
letter-A appurtenance A right belonging to a property, affect title to other property; all those rights, privileges, and improvements which belong to and pass with the transfer of the property, but which are not a part of the property. Appurtenances to real property pass with the real property to which they are appurtenant, unless a contrary intention is manifested. Typical appurtenances are rights-of-way, eaements, water rights, and use of improvements located on other property.
letter-A appurtenant Belonging to; adjunct; appended or annexed to. For example, the garage is appurtenant to the house, and the common interest in the common elements of a condominium is appurtenant to each apartment. Appurtenant items pass with the land when the property is transferred.
letter-A appurtenant easement A type of easement which is incidental to the ownership and belongs to the property which benefits from its use.
letter-A appurtenant rights Incidental property rights which are not located on a parcel of real estate nor reflected on its title, including the right of ingress and egress across adjoining properties.
letter-A arbitration A form of dispute resolution voluntarily agreed to in contracts authorizing a third-party arbitrator to issue a binding award which cannot be reviewed and corrected by a court of law.
letter-A arbitrator A neutral third-party appointed to hear a dispute who is authorized to make a final decision awarding judgment in favor of one of the parties.
letter-A architectural style Generally the appearance and character of a building's design and construction.
letter-A area The amount of space within the boundaries of a parcel of real estate.
letter-A arms' length transaction A transaction in which both parties act only in their own self-interest and are not subject to any pressure from the other party due to a pre-existing relationship.
letter-A Articles of Incorporation An instrument setting forth the basic rules and purposes under which a private corporation is formed.
letter-A artificial market Illusive housing market activity dominated primarily by speculators buying up homes to flip; few end-users are present in this kind of market.
letter-A as-is clause An unenforceable provision stating the buyer accepts the property without a full disclosure of known conditions. Properties are sold "as-disclosed," never "as-is."
letter-A assemblage The combining of land parcels to create a value higher than the sum of their parts.
letter-A assessed valuation A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
letter-A assessment The valuation of property for the purpose of levying a tax. Also, payments made to a common interest subdivision homeowners' association for maintenance and reserves.
letter-A assessor The official who has the responsibility of determining assessed values.
letter-A asset A valuable item which can be converted to cash by its owner.
letter-A asset deflation The increase of the purchasing power of money in relation to asset prices, such as real estate and stocks.
letter-A asset price inflation A rise in the price of assets, such as stocks, bonds and real estate.
letter-A assignment A transfer of rights held under a mortgage or other agreement from one person to another.
letter-A assignment (landlord/tenant) A tenant’s sublease of a portion of the leased premises. [See RPI Form 550 §5.5 and 552 §9.2]
letter-A assignment of rents provision A trust deed clause which creates a lien on unpaid rents as additional security to the real estate described in the trust deed.
letter-A assignor One who assigns or transfers the rights or interests they hold in personal or real property.
letter-A assigns/assignees Those to whom property or interests therein shall have been transferred.
letter-A associate licensee A sales agent employed by a broker.
letter-A assumption A promise to pay the debt of another, typically a mortgage, given by a buyer of property.
letter-A assumption agreement A promise given by a buyer to the seller or an existing mortgage holder to perform all the terms of the mortgage taken over by the buyer on the sale. [See RPI Form 431 and 432]
letter-A assumption fee A lender's charge for changing over and processing new records for a new owner who is assuming an existing loan.
letter-A assumption of mortgage The taking of a title to property by a grantee wherein grantee assumes liability for payment of an existing note secured by a mortgage or deed of trust against the property, becoming a coguarantor for the payment of a mortgage or deed of trust note.
letter-A attachment The process by which real or personal property of a party to a lawsuit is seized and retained in the custody of the court for the purpose of acquiring jurisdiction over the property, to compel an appearance before the court, or to furnish security for a debt or costs arising out of the litigation.
letter-A attest To affirm to be true or genuine; an official act establishing authenticity.
letter-A attorney fee provision A provision in an agreement permitting the prevailing party to a dispute to receive attorney fees when litigation arises due to the agreement. [See RPI Form 552 §23.2]
letter-A attorney in fact One who is authorized by another to perform certain acts for another under a power of attorney; power of attorney may be limited to a specific act or acts or be general. [See RPI Form 447]
letter-A attornment clause A lease agreement provision which allows an owner-by-foreclosure to unilaterally avoid the automatic elimination of a junior leasehold interest by a foreclosure sale and become a substitute landlord under the tenant's lease agreement. [See RPI Form 552-8 §3]
letter-A authorization-to-extend provision A purchase agreement provision granting authority to extend performance dates before the transaction may be cancelled.
letter-A automatic homestead The dollar amount of equity in a homeowner's principal dwelling the homeowner is automatically qualified to exempt from creditor seizure. Also known as a statutory homestead exemption.
letter-A average prime offer rate An annual percentage mortgage interest rate derived from average interest rates, points and other pricing terms offered by lenders on consumer mortgages which have low-risk pricing characteristics and are used to fund a higher-priced mortgage loan. These rates are published weekly by the Consumer Financial Protection Bureau (CFPB).
letter-A avulsion A sudden and perceptible loss of land by the action of water, such as by a rapid change in the course of a river.
letter-B b.t.u. British thermal unit. The quantity of heat required to raise the temperature of one pound of water one degree Fahrenheit.
letter-B Baby Boomers The post-WWII generation responsible for a sharp increase in the U.S. population. Their collective activities have a sizeable effect on the market.
letter-B back-end debt-to-income ratio (DTI) The percentage of monthly gross income that goes towards paying non-mortgage debt.
letter-B backfill Evacuated material used to fill in trenches around a property, such as against its foundation.
letter-B bad faith waste Reckless or malicious injury to property causing a drop in its fair market value.
letter-B balance sheet An itemized, dollar-value presentation for setting an individual’s net worth by subtracting debt obligations (liabilities) from asset values. [See RPI Form 209-3]
letter-B balancing hardships The awarding of money to an owner to compensate for lost use of their property burdened with an encroachment.
letter-B balancing of the rights A determination of whether a nuisance exists when an activity is not classified as a nuisance per se.
letter-B balloon payment Any final payment on a note which is greater than twice the amount of any one of the six regularly scheduled payments immediately preceding the date of the final/balloon payment. [See RPI Form 418-3 and 419]
letter-B balloon-payment qualified mortgage A type of qualified mortgage which allows small lenders to include a balloon feature.
letter-B bankruptcy, Chapter 13 A proceeding in which the homeowner's financial obligations are restructured, allowing them to repay their debts over a three-to-five period.
letter-B bankruptcy, Chapter 7 A proceeding in federal court liquidating the homeowner's assets by sale to pay off their debts.
letter-B bargain and sale deed Any deed that recites a consideration and purports to convey the real estate; a bargain and sale deed with a covenant against the grantor's act is one in which the grantor warrants that grantor has done nothing to harm or cloud the title.
letter-B base and meridian Imaginary lines used by surveyors to find and describe the location of private or public lands. In government surveys, a base line runs due east and west, meridians run due north and south, and are used to establish township boundaries.
letter-B base rent The minimum monthly rent due under a nonresidential lease agreement. [See RPI Form 552 §4.3]
letter-B basis 1) Cost Basis. 2) The cost basis after the application of certain additions for improvements, etc., and deductions for depreciation, etc.
letter-B bearing wall A wall or partition which supports a part of a building, usually a roof or floor above.
letter-B beige book Written reports compiled by the Manager of the System Open Market Account detailing the current and prospective economic environment each bank district is encountering.
letter-B bench mark A monument used to establish the elevation of the point, usually relative to Mean Sea Level, but often to some local datum.
letter-B beneficiary The holder of a note secured by a trust deed and entitled to the performance of the provisions in the trust deed.
letter-B beneficiary statement A written disclosure made by a mortgage holder regarding the condition of a debt owed to them, usually evidenced by a trust deed note. [See RPI Form 415]
letter-B bequeath To give or hand down by will; to leave by will.
letter-B bequest Personal property given by the terms of a will.
letter-B best effort obligation Obligations under an open listing requiring the agent to take reasonable steps to achieve the objective of the client but requiring no affirmative action until a match is located at which point due diligence is required.
letter-B betterment An improvement upon property which increases the property value and is considered as a capital asset as distinguished from repairs or replacements where the original character or cost is unchanged.
letter-B bi-lateral contract A promise for a promise, such as a purchase agreement or a listing agreement.
letter-B bilateral employment agreement A written exclusive employment agreement obligating the broker to exercise due diligence to fulfill the client's real estate objectives in exchange for the promise to pay a fee under various circumstances.
letter-B bilateral rescission An agreement by a buyer and a seller mutually agreeing to terminate their purchase agreement.
letter-B bill of sale A written instrument given to pass title of personal property from vendor to the vendee. Compare with a grant deed. [See RPI Form 408]
letter-B binder A written commitment of a title insurer to issue a title insurance policy in the future, usually acquired by a buyer intending to resell the described property.
letter-B blanket mortgage A single trust deed which describes more than one parcel of real estate as security for the referenced debt. [See RPI Form 450]
letter-B blighted area A district affected by detrimental influences of such extent or quantity that real property values have seriously declined as a result of adverse land use and/or destructive economic forces; characterized by rapidly depreciating buildings, retrogression and no recognizable prospects for improvement. However, renewal programs and changes in use may lead to resurgence of such areas.
letter-B blind pool investment program An investment which involves receipt of investor contributions in a group investment program before the syndicator identifies and discloses the real estate interest the investors’ funds will be used to acquire, an activity controlled by securities law.
letter-B blockbusting The prohibited practice of a real estate licensee inducing a property owner to list their property for sale in response to a change taking place in the neighborhood demographics.
letter-B bona fide In good faith; without fraud or deceit; authentic.
letter-B bona fide lease agreement A lease agreement with a fair market rent held by a residential tenant when ownership of the property is transferred by a foreclosure sale. [See RPI Form 550 and Form 552]
letter-B bona fide purchaser (BFP) A buyer other than the mortgage holder who purchases a property for value at a trustee’s sale without notice of title or trustee’s sale defects.
letter-B bond Written evidence issued by an insurer or guarantor of its obligation to pay the debt of another on a default in a promised performance.
letter-B book value The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
letter-B boot Receipt of an item not of like-kind property, such as cash or mortgage relief, in a tax deferred exchange.
letter-B boundary dispute When owners of neighboring property cannot agree on the location of the dividing property line.
letter-B breach The failure to perform when required on an agreement, or failure of a duty owed another, either by omission or an act.
letter-B bridge loan A short-term mortgage arranged for a buyer to fund the purchase of a property but encumbering other real estate owned by the buyer, pending the arrangement of long-term financing or the sale of the other real estate as the source of funds for its repayment.
letter-B broker A person employed for a fee by another to carry on any of the activities listed in the license law definition of a broker.
letter-B broker cooperation provision A clause in employment agreements entered into by brokers and their clients enabling brokers, when acting on behalf of their clients in a transaction, to share fees between themselves at the brokers' discretion.
letter-B broker fee provision A provision contained in a listing agreement in which an owner agrees to pay the broker a fee if their property is sold, exchanged or optioned during the listing period.
letter-B broker price opinion (BPO) An agent's opinion of a property's fair market value based on comparable sales.
letter-B broker-associate A California Bureau of Real Estate (CalBRE)-licensed broker who works in the employment of another CalBRE broker.
letter-B brokered loan A private lender loan made or arranged by a real estate broker.
letter-B broker-salesperson relationship agreement A written agreement required by the regulations of the Real Estate Commissioner setting forth the material aspects of the relationship between a real estate broker and each salesperson and broker performing licensed activities in the name of the supervising broker. [See RPI Form 505]
letter-B bubble recovery A post-recessionary period resembling a recovery, but artificially manufactured by unstable speculation and financial deregulation. Often leads to a vicious market cycle, causing yet another bubble that is bound to burst.
letter-B building code A series of regulations for construction of buildings within a municipality established by ordinance or law.
letter-B building envelope The doors, windows, foundation, roof and walls of a property. Sealing these areas can dramatically reduce the cost of cooling and heating the property.
letter-B building inspectors Individuals employed by municipalities to ensure properties comply with local building codes,ordinances, zoning regulations and contract specifications.
letter-B building line A line set by law a certain distance from a street line in front of which an owner cannot build on owner's lot. A setback line.
letter-B building permit Permits issued by a city or county building department authorizing commencement of construction in accordance with building codes and safety standards.
letter-B building restrictions Zoning, regulatory requirements or provisions in a deed limiting the type, size and use of a building.
letter-B building, market value of The sum of money which the presence of that structure adds to or subtracts from the value of the land it occupies. Land valued on the basis of highest and best use.
letter-B bulk sale The transfer of more than one-half the inventory of a business' materials or goods to a person other than the business' customers.
letter-B bumpy plateau recovery A recovery characterized by a prolonged pattern of short-term increases followed by short-term decreases in home sales volume and pricing, resulting in little or no long-term recovery trend, called secular stagnation.
letter-B bundle of rights All of the legal rights incident to ownership of property including rights of use, possession, encumbering and disposition.
letter-B bureau of land management A federal bureau within the Department of the Interior which manages and controls certain lands owned by the United States.
letter-B business activity report A report notifying the California Bureau of Real Estate (CalBRE) of an employing broker’s mortgage activities during the fiscal year.
letter-B business goodwill The earning power of a business.
letter-B business model A plan establishing the means and manner by which listings are produced and serviced, and how purchase agreements are negotiated and closed by a broker's agents.
letter-B business mortgage A debt incurred for other than personal, family or household (consumer) purposes and secured by any type of real estate.
letter-B business opportunity The assets for a business enterprise including its goodwill. The term includes the sale or lease of the business and goodwill of an existing business enterprise or opportunity.
letter-B business trust A type of business entity which is not recognized in California; out-of-state business trusts are required to first qualify as a corporate entity with the Department of Business Oversight (DBO) before doing business in California.
letter-B buy phase The ideal moment to buy property, characterized by low prices, low interest rates and few willing buyers.
letter-B buy-back/put-back The process of requiring originating lenders to re-purchase non-eligible mortgages sold to Fannie Mae or Freddie Mac.
letter-B buyer mortgage capacity A buyer’s ability to make mortgage payments based on their debt-to-income ratios (DTI).
letter-B buyer occupant A buyer who purchases property for use as shelter for their family or business, and retains the property as a store of their wealth for as long as it serves the purposes of their occupancy.
letter-B buyer purchasing power A homebuyer’s ability to purchase property funded by a purchase-assist mortgage based on 31% of their gross income for the buyer’s mortgage payment at current interest rates.
letter-B buyer's agent An agent representing the buyer. Also known as a selling agent. [See RPI Form 103]
letter-B buyer's cost sheet A worksheet used when estimating the total expenditures for acquiring a property and the amount of funds needed to close, including the source of the funds. [See RPI Form 311]
letter-B buyer's market A real estate market characterized by low homebuyer demand and high housing inventory.
letter-B buyer-seller assumption agreement A promise given by the buyer to the seller to perform all the terms of a mortgage taken over by the buyer on the property purchased.
letter-B buyout provision A provision in a limited liability company (LLC) operating agreement which, on termination of a member's interest, grants the remaining members the right to buy out the terminated member's interest in the LLC or dissolve the LLC. [See RPI Form 372 §7]
letter-B buy-to-let investment Long-term income property investment.
letter-B bylaws Rules for the conduct of the internal affairs of corporations and other organizations.
letter-C California Bureau of Real Estate (CalBRE) A government agency which oversees, regulates, administers and enforces California real estate law as practiced by licensees.
letter-C California Fair Employment and Housing Act (FEHA) Legislation which prohibits landlords from using discriminatory rental policies to avoid renting to a tenant based on familial status.
letter-C California Home Energy Rating System (HERS) California state system used to create a standard rating for energy efficiency and certify professional raters.
letter-C California Housing Finance Agency (CalHFA) An independent California state agency that makes low-rate housing loans through the sale of taxable and tax exempt bonds.
letter-C California Land Title Association (CLTA) title policy The standard title insurance policy.
letter-C call A mortgage holder’s demand for the balance of the loan to be immediately paid in full. [See RPI From 418-3]
letter-C call option An agreement giving a buyer the right to buy property within a specified time or upon an event at a specified price with terms for payment. [See RPI Form 161]
letter-C call provision A provision in a note giving the mortgage holder the right to demand full payment at any time or after a specified time or event, also called an acceleration clause. [See RPI From 418-3]
letter-C CalVet A program administered by the State Department of Veterans Affairs for the direct financing of farm and home purchases by eligible California veterans of the armed forces.
letter-C Canadian rollover Generally refers to an adjustable rate mortgage. Named for the standard Canadian home loan which adjusts every few years, with no cap on the rate adjustment.
letter-C cancellation provision A lease agreement provision permitting the tenant to terminate their occupancy and rent obligation by paying a set sum of money.
Letter-C capable parties Parties who can be held responsible for the performance of their obligations under a contract. One of the essential elements needed to form a contract.
letter-C capital assets Assets of a permanent nature used in the production of an income, such as land, buildings, machinery and equipment, etc. Under income tax law, it is usually distinguishable from inventory which comprises assets held for sale to customers in ordinary course of the taxpayer's trade or business.
letter-C capital gain Taxable profits from the sale of an asset.
letter-C capitalization In appraising, determining value of property by considering net income and percentage of reasonable return on the investment. The value of an income property is determined by dividing annual net income by the Capitalization Rate.
letter-C capitalization approach An appraisal method used by an appraiser to arrive at a property’s value based on the present worth of a property’s future net operating income.
letter-C capitalization (cap) rate The annual rate of return on invested capital based on net operating income (NOI) produced by the operations of an income property. The cap rate is calculated by dividing the NOI by the property’s price.
letter-C carcinogen A substance which causes cancer in human beings.
letter-C carryback financing A note and trust deed executed by a buyer of real estate in favor of the seller for the unpaid portion of the sales price on closing, also known as an installment sale, credit sale or seller financing.
letter-C carryback mortgage A note and trust deed executed by a buyer of real estate in favor of the seller for the unpaid portion of the sales price on closing, also known as an installment sale, credit sale or seller financing.
letter-C carrying cost The cost of holding and maintaining inventory.
letter-C carryover provision An adjustable rate note provision allowing the lender to apply any margin exceeding a periodic rate cap on a given adjustment to the next scheduled rate adjustment.
letter-C casement windows Frames of wood or metal which swing outward.
letter-C cash collateral In Chapter 11 Bankruptcy, cash or cash equivalents from the sale of property in which the lender has an interest.
letter-C cash flow The net income generated by a property before depreciation and other noncash expenses.
letter-C cash is king An expression referring to the importance of cash flow during recessionary periods.
letter-C cash-on-cash return Spendable income stated as a percentage of total member contributions to equity capital, represented by operating income remaining after all expenses and mortgage payments have been paid and before depreciation deductions or income taxes.
letter-C casitas/granny flat Attached, freestanding, or over-the-garage apartments that have no direct access to the main house.
letter-C cause of action Facts which are the basis for a claim in a court action.
letter-C caveat emptor A Latin expression meaning, "Let the buyer beware."
letter-C certificate of clearance A document certifying a property has been cleared of all infestations and all repairs necessary to prevent infestations have been completed.
letter-C certificate of eligibility Issued by Department of Veterans Affairs - evidence of individual's eligibility to obtain VA loan.
letter-C certificate of reasonable value (CRV) The Federal VA appraisal commitment of property value.
letter-C certificate of sale A certificate issued to the successful bidder on the completion of a judicial foreclosure sale.
letter-C certificate of taxes due A written statement or guaranty of the condition of the taxes on a certain property made by the County Treasurer of the county wherein the property is located. Any loss resulting to any person from an error in a tax certificate shall be paid by the county which such treasurer represents.
letter-C certificate of title A written opinion by an attorney that ownership of the particular parcel of land is as stated in the certificate.
letter-C certified CID manager A non-required professional designation certifying an individual has met legislated educational
requirements specific to managing common interest developments.
letter-C chain A unit of measurement used by surveyors. A chain consists of 100 links equal to 66 feet.
letter-C chain of title A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in the current owner.
letter-C change, principle of Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely result of cause and effect.
letter-C changed circumstances Extraordinary events defined by federal mortgage law which may be the basis for the costs provided in the Loan Estimate.
letter-C characteristics Distinguishing features of a (residential) property.
letter-C charging order An attachment device used by a creditor to place a lien on the ownership interest in a limited liability company (LLC) held by the individual member for the payment of a money judgment, and either appoint a receiver to hold the debtor member's share or foreclose on the member's interest in the LLC.
letter-C chattel mortgage A claim on personal property (instead of real property) used to secure or guarantee a promissory note. (See definition of Security Agreement and Security Interest.)
letter-C chattel real An estate related to real estate, such as a lease on real property.
letter-C chattels Goods and every variety of personal property, movable or immovable, which are not real property. Personal property.
letter-C choice-of-law provision A clause which sets the state law applicable in the event of a dispute. [See RPI Form 552 §23.4]
letter-C chose in action A personal right to something not presently in the owner's possession, but recoverable by a legal action for possession.
letter-C circuit breaker 1) An electrical device which automatically interrupts an electric circuit when an overload occurs; may be used instead of a fuse to protect each circuit and can be reset. 2) In property taxation, a method for granting property tax relief to the elderly and disadvantaged qualified taxpayers by rebate, tax credits or cash payments. Usually limited to homeowners and renters.
letter-C civil law A Spanish legal system in which an elaborate system of statutes address permissible conduct of the people in advance of disputes.
letter-C Civil Rights Act A federal law which provides broad protections to numerous classes of individuals in the United States against discriminatory activities.
letter-C claim of right A claim of ownership made without any documentation, except possession and payment of taxes.
letter-C class action An action against a person brought by or on behalf of all similarly situated claimants.
letter-C classified risk Improper activity or activity leading to a lack of proper performance which may impose liability for losses the activity may cause to others.
letter-C client file A physical file established at the beginning of a listing to house information and document all the activity which arises within the broker’s office due to the existence of the employment. 
letter-C clients Members of the public who retain brokers and agents to perform real estate related services.
letter-C closed-end mortgage A mortgage in which the funds are disbursed once and paid off over time.
letter-C closing The process by which all the parties to a real estate transaction perform their obligations in the sale or mortgage of the property, including the execution of documents and distributions of funds.
letter-C closing costs The miscellaneous expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the price paid and received for the property.
letter-C Closing Disclosure A disclosure of the buyer’s final settlement charges and mortgage terms handed to the buyer on a standard form within three business days before mortgage closing.
letter-C closing statement An accounting of funds made to the buyer and seller separately, made at the completion of real estate sales and mortgage transactions. [See RPI Form 402]
letter-C cloud on title A claim, encumbrance or condition which impairs the title, not possession, to real estate until eliminated by a release of recorded document, quitclaim deed or a quiet title action.
letter-C coercion The act of persuading someone to do something against their will by the use of force or threat.
letter-C collateral Tangible assets securing a loan which are worth more than the principal balance of the loan.
letter-C collateral assignment An agreement providing additional, cumulative and concurrent security for a debt, in the form of personal property, to additionally secure the property owner’s performance under the debt. [See RPI Form 437 and 446]
letter-C collateral security A separate obligation attached to contract to guarantee its performance; the transfer of property or of other contracts, or valuables, to insure the performance of a principal agreement.
letter-C collusion An agreement between two or more persons to defraud another of rights by the forms of law, or to obtain an object forbidden by law.
letter-C color of title Title that has the appearance of validity but has a fatal defect and is ineffective.
letter-C commercial acre A term applied to the remainder of an acre of newly subdivided land after the area devoted to streets, sidewalks and curbs, etc., has been deducted from the acre.
letter-C commercial communication Anything written or spoken used to attract homeowners to a service.
letter-C commercial facility Property owned, leased or operated by a private entity whose operation affects commerce.
letter-C commercial loan A personal loan from a commercial bank, usually unsecured and short term, for other than mortgage purposes.
letter-C commercial paper Negotiable instruments such as promissory notes, letters of credit and bills of lading. Instruments developed under the law of merchant.
letter-C commingling The mixing of personal funds with client or third-party funds held in trust.
letter-C commission An agent's compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.
letter-C commitment A pledge or a promise or firm agreement to do something in the future, such as a loan company giving a written commitment with specific terms of mortgage loan it will make.
letter-C commodity A marketable good or service.
letter-C common area An entire common interest subdivision except the separate interests therein.
letter-C common area maintenance charge Property operating expenses incurred by a commercial landlord and paid by the tenant as rent in additonal to the base rent, adjustments and percentages. [See RPI Form 552 §6]
letter-C common boundary improvement An improvement which acts as a demarcation of the property line.
letter-C common boundary trees Shrubbery or trees with trunks which stand partly on the land of two adjacent properties belonging to the adjacent owners.
letter-C common description Description of real estate by its street address. Also known as a common address.
letter-C common interest development (CID) Condominium projects, cooperatives or single family residences in a planned unit development. [See RPI Form 135]
letter-C common law An English legal system in which disputes are decided on a case-by-case basis before a judge applying codes and prior cases.
letter-C common stock That class of corporate stock to which there is ordinarily attached no preference with respect to the receipt of dividends or the distribution of assets on corporate dissolution.
letter-C community banks Small and local banks not tied to the "too big to fail" Wall Street banks.
letter-C community property All property acquired by husband or wife during a marriage when not acquired as the separate property of either spouse.
letter-C compaction Whenever extra soil is added to a lot to fill in low places or to raise the level of the lot, the added soil is often too loose and soft to sustain the weight of the buildings. Therefore, it is necessary to compact the added soil so that it will carry the weight of buildings without the danger of their tilting, settling or cracking.
letter-C comparable market analysis A worksheet used by an agent to prepare an estimate for review with an equity purchase (EP) investor of the value of property for sale based on the price recently paid for similar properties. [See RPI Form 200-1]
letter-C comparable property A recently sold or listed property which has characteristics similar to the subject property being evaluated.
letter-C comparable sales Sales of properties recently sold which have similar characteristics as the subject property being evaluated and are used for analysis in the appraisal of the subject property.
letter-C comparative advantage The advantage a person who produces a product at a greater margin of profit has over a competitor.
letter-C comparative cost analysis A comparison of the costs a tenant will incur to occupy and operate in a particular space against the costs to operate in other available space. [See RPI Form 562]
letter-C comparative market analysis (CMA) An appraisal method used by an appraiser to arrive at a property’s value based on the current selling prices of similar properties.
letter-C comparative negligence An injured person's share of the negligence causing their injury when the injured person's lack of care for themselves contributes to the injury.
letter-C comparison approach A method for comparing a given property with similar or comparable surrounding properties; also called market comparison.
letter-C compensating factors Positive factors which compensate for a high debt load.
letter-C compensation Any financial or economic incentive, including salaries, fees or commissions for rendering a service.
letter-C competent Legally qualified.
letter-C competition, principle of Holds that profits tend to breed competition and excess profits tend to breed ruinous completion.
letter-C competitive advantage Increasingly drastic lending measures motivated by the desire for ever greater earnings and strategic advantage over one's rivals.
letter-C compliance-with-laws clause A provision in a nonresidential lease agreement controlling the conduct of tenant activities on the property to conform with public laws, building ordinances or tenant association rules. [See RPI Form 552 §7.3]
letter-C compound interest Interest paid on original principal and also on the accrued and unpaid interest which has accumulated as the debt matures.
letter-C compounded base rent Rent that adjusts yearly by a certain percentage of the prior year's rent.
letter-C compounding The adding of accrued and unpaid interest to principal which thereafter accrues interest as principal at the note rate.
letter-C compounding on default An interest provision triggered by a delinquency in a payment causing interest to accrue on the amount of interest contained in the delinquent installment at the note rate until the delinquent payment is paid, a type of late charge. [See RPI Form 418-1]
letter-C computation period For impound account analysis, the 12-month period beginning on the date of the initial impound deposit during which monthly deposits, disbursements and any applicable interest occur.
letter-C conclusion The final estimate of value, realized from facts, data, experience and judgment, set out in an appraisal. Appraiser's certified conclusion.
letter-C condemnation The act of taking private property for public use by the government with payment to owner to compensate for the taking, or the government declaration that a structure is unfit for use.
letter-C condition In contracts, a future and uncertain event which must happen to create an obligation or which extinguishes an existent obligation. In conveyances of real property conditions in the conveyance may cause an interest to be vested or defeated.
letter-C condition concurrent A provision in an agreement calling for the performance of an activity by a buyer or seller without concern for the performance of the other person.
letter-C condition precedent A provision in an agreement calling for the occurrence of an event or performance of an act by another person before the buyer or seller is required to further perform.
letter-C condition subsequent A condition attached to an already-vested estate or to a contract whereby the estate is defeated or the contract extinguished through the failure or non-performance of the condition.
letter-C conditional assignment of rents A trust deed provision which creates a lien on all rents in favor of the lender. The rents become additional security to the real estate which is also liened by the trust deed. Compare with absolute assignment of rents.
letter-C conditional commitment A commitment of a definite loan amount for some future unknown purchaser of satisfactory credit standing.
letter-C conditional estate Usually called, in California, Fee Simple Defeasible. An estate that is granted subject to a condition subsequent. The estate is terminable on happening of the condition.
letter-C conditional sale contract A contract for the sale of property stating that delivery is to be made to the buyer, title to remain vested in the seller until the conditions of the contract have been fulfilled. (See definition of Security Interest.)
letter-C conditionally privileged publication A lawsuit or dispute over a right or interest in real estate made in good faith and without malice, barring a slander of title action.
letter-C condominium An estate in real property wherein there is an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map or condominium plan. The areas within the boundaries may be filled with air, earth, or water or any combination and need not be attached to land except by easements for access and support.
letter-C condominium declaration The document which establishes a condominium and describes the property rights of the unit owners.
letter-C confession of judgment An entry of judgment upon the debtor's voluntary admission or confession.
letter-C confirmation of sale A court approval of the sale of property by an executor, administrator, guardian or conservator.
letter-C confiscation The seizing of property without compensation.
letter-C conflict of interest When a broker or agent has a positive or negative bias toward a party in a transaction which is incompatible with the duties owed to their client. [See RPI Form 527]
letter-C conforming loan A conventional mortgage with terms, conditions and a maximum principal amount set by Fannie Mae and Freddie Mac.
letter-C conformity, principle of Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.
letter-C conservation The process of utilizing resources in such a manner which minimizes their depletion.
letter-C conservation easement A voluntary conveyance of the right to keep land in its natural or historical condition to a conservation organization or government agency.
letter-C consideration Anything given or promised by a party to induce another to enter into a contract. It may be a benefit conferred upon one party or a detriment suffered by the other.
letter-C constant The percentage which, when applied directly to the face value of a debt, develops the annual amount of money necessary to pay a specified net rate of interest on the reducing balance and to liquidate the debt in a specified time period. For example, a 6% loan with a 20 year amortization has a constant of approximately 8 1/2%. Thus, a ,000 loan amortized over 20 years requires an annual payment of approximately 0.00.
letter-C construction lender A lender that originates a mortgage which funds the construction or development of real estate.
letter-C construction loan A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses.
letter-C construction starts Building permits issued before builders may begin construction.
letter-C constructive delivery Delivery of a deed occurring when the deed is understood by the grantor and grantee to be delivered by agreement, or when the deed is accepted by a third-party for the benefit of the grantee.
letter-C constructive eviction A termination of the tenant's right of possession and cancellation of the lease agreement on vacating due to the landlord's failure to maintain the premises as stated in the lease. [See RPI Form 552 §6]
letter-C constructive fraud A breach of duty, as by a person in a fiduciary capacity, without an actual fraudulent intent, which gains an advantage to the person at fault by misleading another to the other s prejudice. Any act of omission declared by law to be fraudulent, without respect to actual fraud.
letter-C constructive notice To be charged with the knowledge of conditions existing on the property by recorded documents or an occupancy of the property at the time of a transaction.
letter-C constructive trust An involuntary, court-created trust imposed on the ownership of real estate held by an owner who acquired it through fraud or other wrongful action.
letter-C consultation fee A fee the broker charges for the time spent locating rental property if the tenant decides not to lease space during the exclusive authorization period. [See RPI Form 111 §4.2]
letter-C consumer confidence An economic indicator measuring the current level of optimism consumers feel about their personal financial situation and the present state of the broader economy.
letter-C Consumer Financial Protection Bureau (CFPB) An independent federal agency fathered by the Dodd-Frank Act responsible for regulating consumer protection with regards to lending products and services.
letter-C consumer mortgage A debt incurred primarily for personal, family, or household purposes and secured by a parcel of real estate containing one-to-four residential units.
letter-C consumer mortgage application A consumer mortgage application is a request for an offer of consumer mortgage terms.
letter-C Consumer Price Index (CPI) The CPI measures and tracks the rate of consumer inflation. This is presented as an index of fluctuations in the general price of a wide selection of consumable products -- goods and services.
letter-C consumer price inflation An increase in the general price level of all goods and services consumed in the economy.
letter-C consumer purpose A primarily personal, family or household use.
letter-C consumer reporting agency Companies that compile debt information from credit bureaus and other credit sources and sell credit reports to consumers or lenders.
letter-C contiguous Adjoining lots which share a common border.
letter-C Continental An early form of currency issued by congress after the start of the Revolutionary War.
letter-C contingency A condition that needs to be met before escrow can proceed to closing.
letter-C contingency fee An incentive bonus paid upon successfully completing or hitting certain benchmarks, or received as compensation on the occurrence of an event.
letter-C contingency fee clause A provision in an offer-to-lease which states the broker's fee is payable on the transfer of possession to the tenant. [See RPI Form 556 §15]
letter-C contingency fee provision A provision in purchase agreements and escrow instructions calling for a specific event to occur or act to be performed before the broker's fee is payable. [See RPI Form 150 §15.1]
letter-C continuing nuisance An ongoing nuisance that can be entirely eliminated by those adversely affected by the activity or condition.
letter-C contour The surface configuration of land. Shown on maps as a line through points of equal elevation.
letter-C contract An agreement to do or not to do something. Four essential elements are needed to be valid: parties capable of contracting, consent of the parties, a lawful object, and consideration. A contract for sale of real property must also be in writing and signed by the parties to be charged with performance.
letter-C contract collection The collection and accounting for payments on a promissory note for a fee.
letter-C contractionary monetary policy An effort to decrease the amount of money in circulation.
letter-C contractor Anyone who constructs, alters, repairs, improves or demolishes any building, road, project,
development or improvement.
letter-C contribution, principle of A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment.
letter-C conventional financing A mortgage securing a loan made by institutional lenders without governmental underwriting, i.e., which is not FHA insured or VA guaranteed.
letter-C conventional mortgage A mortgage that is not made, insured or guaranteed by the federal government.
letter-C conversion The unlawful appropriation of another’s property, as in the conversion of trust funds.
letter-C conversion adjustable rate mortgage (ARM) An adjustable rate mortgage (ARM) which may be converted to a fixed rate mortgage (FRM) during the mortgage term.
letter-C conveyance A transfer of an interest in title to property from one person to another, such as is effected by a deed or a trust deed.
letter-C cooperating broker A broker or their agent acting as a subagent of the seller's broker with specific affirmative duties of care owed the seller, but not the buyer.
letter-C cooperative (apartment) An apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by purchase of shares of the stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building. In California, this type of ownership is called a stock cooperative.
letter-C corner influence table A statistical table that may be used to estimate the added value of a corner lot.
letter-C corporate resolution A document from a corporation's board of directors which gives the officers of a corporation the
authority to sign and bind the corporation to a lease.
letter-C corporate securities risks A risk of loss of investor funds that arises due to investment discretion when a syndicator acquires investor funds before identifying and disclosing an existing asset to be purchased.
letter-C corporation An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person. Being created by law it may continue for any length of time the law prescribes.
letter-C corporeal rights Possessory rights in real property.
letter-C correction lines A system for compensating inaccuracies in the Government Rectangular Survey System due to the curvature of the earth. Every fourth township line, 24 mile intervals, is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a full 6 miles.
letter-C correlation A step in the appraisal process involving the interpretation of data derived from the three approaches to value (cost, market and income) leading to a single determination of value. Also frequently referred to as reconciliation.
letter-C correlative rights The sharing of water between riparian land owners based on a tiered variety of priority and subordinate uses across the entire group of riparian owners.
letter-C co-signer A second party who signs a promissory note together with the primary borrower.
letter-C cost approach An appraisal method used by an appraiser to arrive at a property’s value based on the present cost of constructing the present improvements and acquisition of the land.
letter-C cost basis The cost incurred to acquire and improve an asset subject to adjustments for destruction and depreciation, used primarily for tax reporting.
letter-C cost of funds The interest rate a lender pays on money it uses to fund loans.
letter-C Cost of Funds Index One of several indices referenced by lenders in adjustable rate mortgage notes to adjust the note's interest rate. This index is one of the steadiest.
letter-C cotenancy Ownership of an interest in a particular parcel of land by more than one person; e.g. tenancy in common, joint tenancy.
letter-C counteroffer An alternative response to an offer received consisting of terms different from those of the offer rejected. [See RPI Form 180]
letter-C covenant An agreement or promise to do or not to do a particular act such as a promise to build a house of a particular architectural style or to use or not use property in a certain way.
letter-C covenant of quiet enjoyment An implied lease provision which prohibits the landlord from interfering with the tenant's agreed use and possession of a property.
letter-C covenants, conditions and restrictions (CC&Rs) Recorded restrictions against the title to real estate prohibiting or limiting specified uses of the property.
letter-C cpm Certified Property Manager, a designation of the Institute of Real Estate Management.
letter-C cramdown The reduction of the principal balance of a mortgage debt to the value of the mortgaged real estate.
letter-C crawl hole Exterior or interior opening permitting access underneath building, as required by building codes.
letter-C credit A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense, or the creation of or addition to a liability or item of equity or revenue.
letter-C credit application A document prepared by a prospective tenant which includes a provision authorizing the investigation and receipt of information on the applicant's creditworthiness. [See RPI Form 302]
letter-C credit repair A service purporting to raise credit scores and remove bad credit.
letter-C credit repair organization A person or company that offers to improve a buyer’s credit history, record or rating in exchange for a fee.
letter-C Credit Repair Organization Act (CROA) A federal law protecting credit repair consumers from fraud perpetrated by credit repair organizations.
letter-C credit report A compilation of a buyer’s collected credit history.
letter-C credit reporting agency A private agency which collects and reports information regarding an individual's credit history.
letter-C credit score A numerical representation of a borrower’s creditworthiness, based on credit information obtained by a credit bureau.
letter-C credit score disclosure A disclosure of a consumer’s credit score information as required by the Fair Credit Reporting Act (FCRA).
letter-C credit score exception notice A risk-based pricing notice disclosure provided to the consumer to fulfill the credit score disclosure and the Notice to Home Loan Applicant under the Fair Credit Reporting Act (FCRA).
letter-C creditworthiness An individual’s ability to borrow money, determined by their present income and previous debt payment history.
letter-C cross-collateralization The use of one trust deed to describe multiple parcels of real estate or a UCC-1 financing statement encumbering personal property together with a trust deed as additional security for payment of a debt. [See RPI Form 436]
letter-C curable breach A breach of the lease agreement which can be remedied by action from the tenant.
letter-C curable depreciation Items of physical deterioration and functional obsolescence which are customarily repaired or replaced by a prudent property owner.
letter-C current index With regard to an adjustable rate mortgage, the current value of a recognized index as calculated and published nationally or regionally. The current index value changes periodically and is used in calculating the new note rate as of each rate adjustment date.
letter-C curtail schedule A listing of the amounts by which the principal sum of an obligation is to be reduced by partial payments and of the dates when each payment will become payable.
letter-C custodian An individual whose primary duty is to administer and manage an individual retirement account (IRA) on the IRA owner's behalf.
letter-D damages The indemnity recoverable by a person who has sustained an injury, either in his or her person, property, or relative rights, through the act or default of another. Loss sustained or harm done to a person or property.
letter-D data plant An appraiser's file of information on real estate.
letter-D date-down search A further search of the public records performed by a title insurer after preparing a preliminary title report and immediately prior to issuance of a policy of title insurance.
letter-D dead cat bounce An initial brief rebound in home prices following a crash in property pricing; not indicative of the beginning of a true recovery.
letter-D dealer property Real estate held for sale to customers in the ordinary course of an owner’s trade or business, where the earnings on the sales of the properties are taxed as business inventory at ordinary income rates.
letter-D debenture Bonds issued without security, an obligation not secured by a specific lien on property.
letter-D debit A bookkeeping entry on the left side of an account, recording the creation of or addition to an asset or an expense, or the reduction or elimination of a liability or item of equity or revenue.
letter-D debt Money due from one person or another; obligation, liability.
letter-D debt overhang Excess mortgage debt on a negative equity property.
letter-D debt service The amount of principal and interest paid on a debt periodically, also referred to as the loan payment amount.
letter-D debtor A person who owes money to another.
letter-D debt-to-income ratio (DTI) The percentage of monthly gross income that goes towards paying debt.
letter-D deciduous A tree that loses its leaves each year.
letter-D declaration of default and demand for sale A document delivered to the trustee under a power of sale provision by the mortgage holder instructing the trustee to initiate foreclosure on the secured real estate by recording a notice of default (NOD).
letter-D declaration of forfeiture provision A lease or rental agreement provision declaring a tenant's failure to cure a breach of the agreement constitutes a forfeiture of the tenant's right of possession. [See RPI Form 575 §5]
letter-D declaration of homestead A document signed by a homeowner and filed with the county recorder's office to shield the owner-occupant's homestead equity from seizure by creditors. [See RPI Form 465]
letter-D declaratory relief An action seeking a judicial declaration of the rights and obligations of parties to a disputed situation.
letter-D declining balance depreciation A method of accelerated depreciation allowed by the IRS in certain circumstances. Double Declining Balance Depreciation is its most common form and is computed by using double the rate used for straight line depreciation.
letter-D decree of foreclosure Decree by a court ordering the sale of mortgaged property and the payment of the debt owing to the lender out of the proceeds.
letter-D dedication The giving of land by its owner to a public use and the acceptance for such use by authorized officials on behalf of the public.
letter-D deed Written instrument which when signed and delivered (executed) conveys title to real property from one person (grantor) to another (grantee).
letter-D deed restrictions Limitations in the deed to a property that dictate certain uses that may or may not be made of the property.
letter-D deed-in-lieu of foreclosure A grant deed conveying the mortgaged real estate to a mortgage holder which is accepted from the property owner in exchange for cancelling the mortgage debt to avoid foreclosure. [See RPI Form 406]
letter-D defacing When a document is modified on its face, usually by striking copy and interlineation, after it is signed by one or both parties.
letter-D default Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform a promised act.
letter-D default rate provision A note provision increasing the note rate on the remaining principal when the final/balloon payment becomes delinquent.
letter-D default remedies provision A lease agreement provision authorizing the landlord on termination of the tenant's lease due to the tenant's default to collect rents for the remaining unexpired lease term. [See RPI Form 550 §3.1 and 552 §2.1]
letter-D defeasance clause The clause in a mortgage that gives the mortgagor the right to redeem mortgagor's property upon the payment of mortgagor's obligations to the mortgagee.
letter-D defeasible fee Sometimes called a base fee or qualified fee; a fee simple absolute interest in land that is capable of being defeated or terminated upon the happening of a specified event.
letter-D defendant A person against whom legal action is initiated for the purpose of obtaining criminal sanctions (criminal defendant) or damages or other appropriate judicial relief (civil defendant).
letter-D deferred maintenance Existing but unfulfilled requirements for maintenance, repairs and replacements. Postponed or delayed maintenance causing decline in a building's physical condition.
letter-D deferred payment options The privilege of deferring income payments to take advantage of statutes affording tax benefits.
letter-D deficiency Losses experienced by a mortgage holder at a foreclosure sale due to insufficient value of the mortgaged property to satisfy the mortgage debt.
letter-D deficiency judgment A money award obtained by a mortgage holder to recover money losses experienced when the value of the mortgaged property is less than the remaining mortgage debt at the time of the judicial foreclosure sale.
letter-D deflation A fall in the pricing of goods or property (the opposite of inflation).
letter-D delegation of powers The conferring by an agent upon another of all or certain of the powers that have been conferred upon the agent by the principal.
letter-D delinquency A tenant or borrower's failure to pay the agreed amounts on or before the due date or expiration of any
grace period.
letter-D delinquent taxes Property taxes not paid prior to becoming delinquent.
letter-D demand The amount of housing inventory desired by buyer occupants.
letter-D Department of Fair Employment and Housing The state agency designated to protect Californians from discrimination in housing, employment and public
letter-D Department of Housing and Urban Development (HUD) The federal agency responsible for the administration of U.S. government housing and urban development programs.
letter-D deposit receipt A term used by the real estate industry to describe the written offer to purchase real property upon stated term and conditions, accompanied by a deposit toward the purchase price, which becomes the contract for the sale of the property upon acceptance by the owner.
letter-D depreciation Loss of property value brought about by age, physical deterioration or functional or economic obsolescence. The term is used to account for the annual tax-free return of capital inveted in improvemenst over the life of the improvements, as a reduction in the property's cost basis.
letter-D depth table A statistical table that may be used to estimate the value of the added depth of a lot.
letter-D designated officer The individual who is the licensed officer qualifying a corporation for a corporate broker license.
letter-D desist and refrain order An order directing a person to stop from committing an act in violation of the Real Estate Law.
letter-D desk review A second appraiser’s review of an appraisal report to verify and evaluate the findings.
letter-D Desktop Underwriter (DU) Fannie Mae’s automated underwriting (AU) system.
letter-D destruction provision A provision in a lease agreement in which a tenant agrees to pay for any destruction to the premises caused by the tenant, covered by the tenant's insurance or required by other lease provisions. [See RPI Form 552 §16]
letter-D determinable fee An estate which may end on the happening of an event that may or may not occur.
letter-D devise A gift or disposal of real property by last will and testament.
letter-D devisee One who receives a gift of real property by will.
letter-D devisor One who disposes of real property by will.
letter-D directional growth The location or direction toward which the residential sections of a city are destined or determined to grow.
letter-D disabled person Anyone who has a physical or mental impairment which significantly limits major life activities, has a record of disability, or is regarded as being disabled.
letter-D discharge-of-indebtedness income Reportable income resulting from a mortgage holder’s discount on a payoff of a mortgage debt. Called a short pay.
letter-D disclosure A fact that is made known, such as informing a buyer or tenant about a property's condition.
letter-D discount To sell a promissory note before maturity at a price less than the outstanding principal balance of the note at the time of sale. Also an amount deducted in advance by the lender from the nominal principal of a loan as part of the cost to the borrower of obtaining the loan.
letter-D discount points The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate.
letter-D discount rate The interest rate the Federal Reserve charges banks and thrifts who borrow funds directly from the Fed to maintain reserve requirements.
letter-D discretionary powers of agency Those powers conferred upon an agent by the principal which empower the agent in certain circumstances to make decisions based on the agent's own judgment.
letter-D discriminatory practices Unequal treatment given to members of a protected class of individuals.
letter-D disequilibrium An extreme imbalance in supply and demand which prevents the market from reaching equilibrium in pricing.
letter-D disintermediation The relatively sudden withdrawal of substantial sums of money savers have deposited with savings and loan associations, commercial banks and mutual savings banks. This term can also be considered to include life insurance policy purchasers borrowing against the value of their policies. The essence of this phenomenon is financial intermediaries losing within a short period of time billions of dollars as owners of funds held by those institutional lenders exercise their prerogative of taking them out of the hands of these financial institutions.
letter-D disposable income The after-tax income a household receives to spend on personal consumption.
letter-D dispossess To deprive one of the use of real estate.
letter-D disregarded entity A sole proprietorship separate from its owner for liability purposes, such as a single member limited liability company (LLC) or limited partnership (LP), where the owner reports business income on their personal tax returns, also called a pass-through entity.
letter-D dis-saving The act of cashing in savings and liquidating assets to spend on goods and services.
letter-D distribution in kind Distribution of a limited liability company's (LLC's) real estate on dissolution to members as a return of their capital contributions.
letter-D diversification Varying the types and areas of investment in a portfolio to mitigate risk.
letter-D documentary transfer tax A tax imposed on a recorded document when real estate is transferred.
letter-D documents Legal instruments such as mortgages, contracts, deeds, options, wills, bills of sale, etc.
letter-D Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) A federal consumer protection law which created minimum standards and oversight for consumer mortgage origination.
letter-D dominant tenement The property benefitting from an easement on a servient tenement.
letter-D donee A person who receives a gift.
letter-D donor A person who makes a gift.
letter-D double escrow An EP investor resale arrangement used to flip a property prior to closing their purchase escrow and acquiring title, by which the investor opens a second escrow for the resale of the property to another buyer.
letter-D double-dip A second decrease following closely after an initial decrease and a short recovery; indicative of market weakness. Usually refers to recessions.
letter-D double-end When the seller's agent receives the entire fee in the real estate transaction, there being no buyer's agent for fee splitting.
letter-D dragnet clause A provision in a trust deed that purports to use the mortgaged real estate as security for all debts between the parties to the security agreement.
letter-D draw Usually applies to construction loans when disbursement of a portion of the mortgage is made in advance, as improvements to the property are made.
letter-D draw period The time period during which the homeowner may draw on the funds in a home equity line of credit (HELOC).
letter-D dual agency The agency relationship that results when a broker represents both the buyer and the seller in a real estate transaction. [See RPI Form 117]
letter-D dual agent A broker who represents both parties in a real estate transaction. [See RPI Form 117]
letter-D due date The date provided in the rental or lease agreement on which rental payments are due. [See RPI Form 550 §4.1 and 552 §4.1]
letter-D due diligence The concerted and continuing efforts of an agent employed to meet the objectives of their client, the agent's promise given in exchange for the client's promise to pay a fee.
letter-D due process A constitutional guarantee of fair dealings between the government and property owners.
letter-D due-on clause A trust deed provision used by mortgage holders to call the debt due and immediately payable, a right triggered by the owner’s transfer of any interest in the real estate, with intra-family exceptions; also called an alienation clause.
letter-D duress An unlawful constraint imposed by one on an individual which forces the indicidual to act against their will.
letter-D dwelling AA building or personal property occupied or designed to be occupied as a residence by one or more families.
letter-E early termination clause A provision which assures payment of the broker's fee if the owner withdraws the property from
the market during the listing period. [See RPIForm 110 §3.1c and 102 §3.1c]
letter-E early-termination fee A fee paid to the landlord by the tenant to cancel the lease agreement in exchange for returning possession. [See RPI Form 587 §2.2]
letter-E earned income Wages received with respect to employment, including wages, salary, tips, commissions and bonuses.
letter-E earnest money Down payment made by a purchaser of real estate as evidence of their good faith intent to buy. A deposit or partial payment.
letter-E easement The right to use another's property for a specific purpose.
letter-E easement by necessity An easement providing access to a landlocked property.
letter-E easement for ingress and egress A type of easement granting one property owner the right to traverse a portion of another's land to access the property.
letter-E easement in gross An easement which belongs to an individual and is not appurtenant to a property.
letter-E easy money When there is too much cash in circulation causing excessive inflation, rectified by the Federal Reserve increasing short-term interest rates.
letter-E economic driver An economic factor which has the power to determine, by its performance, the strength and direction of an economy.
letter-E economic life The period of time over which a property will yield a return on capital invested to own it.
letter-E economic obsolescence A loss in value of a property due to external factors and not the condition of the property itself.
letter-E economic rent The reasonable rental expectancy if the property were available for renting at the time of its valuation.
letter-E effective age The physical age of a property based on the condition of the structure, distinct from its chronological age.
letter-E effective date of value The specific day the conclusion of value applies.
letter-E effective interest rate The percentage of interest that is actually being paid by the borrower for the use of the money, distinct from nominal interest.
letter-E effective yield The actual rate of interest received by the mortgage holder as a result of leveraging, discounts and bonuses, distinct from the interest rate charged on the mortgage, also known as the effective rate of return.
letter-E ejectment A civil action to recover possession or title to land from someone wrongfully in possession.
letter-E elements of value Factors that must be present for real estate to have value: demand, utility, scarcity and transferability.
letter-E eligible non-borrowing spouse A non-borrowing spouse eligible to defer repayment of a home equity conversion mortgage (HECM) and remain on the property after the borrower’s death.
letter-E embezzlement The dishonest act of converting a client's assets for personal use.
letter-E emigration The act of leaving a country or state for another.
letter-E eminent domain The right of the government to take private property for public use. The government pays the owner the fair market value of the property taken.
letter-E employer of last resort The U.S. government as the employer of those who cannot find work in the private sector.
letter-E employment relationship The scope of activities the broker and the broker's agents are to undertake in the employment of a client.
letter-E encroachment An improvement on one parcel of real estate which extends onto real estate owned by another.
letter-E encumbrance A claim or lien on title to a parcel of real estate, such as property taxes, assessment bonds, trust deeds, easements and covenants, conditions and restrictions (CC&Rs).
letter-E end of draw (EOD) period The time period following the draw period during which the home equity line of credit (HELOC) resets and the homeowner begins making monthly payments of principal and interest.
letter-E end user A buyer who will occupy the property as their residence or own it as income property for long-term investment purposes.
letter-E energy efficiency Using building materials, appliances or other methods to reduce the amount of energy used by the homebuyer , thereby reducing their energy costs.
letter-E Energy Efficient Mortgage (EEM) A Federal Housing Administration (FHA) mortgage which finances energy-efficient improvements.
letter-E enforceable contract An agreement which meets minimum elemts needed to be enforceable in court.
letter-E entire agreement clause A clause in a lease agreement which limits the tenant's ability to imply terms into the lease based on oral statements made before entering into the lease. [See RPI Form 552 §23.5]
letter-E entitled person The original borrower on a note and trust deed, their successor-in-interest or an authorized agent of either who may request, in writing, a beneficiary statement or payoff demand statement.
letter-E entrepreneurial spirit Individuals exhibiting creativity and ingenuity. Willing to adopt new, innovative techniques to succeed.
letter-E environmental hazards Noxious or annoying man-made conditions which are injurious to health or interfere with an individual's sensitivities.
letter-E Equal Credit Opportunity Act (ECOA) A federal law which prohibits discriminatory and unfair lending practices.
letter-E equal protection A constitutional guarantee that similarly-situated persons be treated similarly under the law.
letter-E equitable easement An easement granted to a neighbor allowing them to maintain an improvement encroaching on another owner's property.
letter-E equitable indemnity When one party takes on the obligation to pay for a loss incurred by another party.
letter-E equitable owner A person who purchased a property and has not yet received legal ownership placing title in their name, such as occurs under a purchase agreement, land sales contract or lease-option sales agreement.
letter-E equitable remedies Non-money remedies based on issues of fairness.
letter-E equity 1) The interest or value an owner has in real estate over and above the liens against it. 2) Branch of remedial justice providing relief to litigants in courts of equity.
letter-E equity buildup The process of mortgage reduction through amortized mortgage payments and any additional payoff of principal.
letter-E equity financing Down payment funds solicited from cash investors by a syndicator for the purchase of an income-producing investment property to be co-owned by a group of investors. Contrast with mortgage financing.
letter-E equity of redemption The right to redeem property during the foreclosure period, such as a mortgagor's right to redeem within either 3 months or 1 year as may be permitted after foreclosure sale.
letter-E equity participation A mortgage transaction in which the lender, in addition to receiving a fixed rate of interest on the loan acquires an interest in the borrower's real property, and shares in the profits derived from the real property.
letter-E equity purchase (EP) The acquisition of an owner-occupied, one-to-four unit residential property in foreclosure for rental, investment or dealer purposes.
letter-E equity purchase (EP) agreement The document used to negotiate the sale of an owner-occupied residence-in-foreclosure to an investor. [See RPI Form 156]
letter-E equity purchase (EP) investor A person who acquires title to a seller-occupied, one-to-four unit residential property in foreclosure for dealer, investment or security purposes.
letter-E equity purchase transaction A sales transaction in which a one-to-four unit residential property in foreclosure, occupied by the owner as their principal residence, is acquired for dealer, investment or security purposes by an investor. [See RPI Form 156]
letter-E erosion The wearing away of land by the act of water, wind or glacial ice.
letter-E errors and omissions (E&O) insurance An insurance policy protecting brokers and agents from negligent conduct when acting as a licensee.
letter-E escalation The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event.
letter-E escalator clause A clause in a contract providing for the upward or downward adjustment of certain items to cover specified contingencies, usually tied to some index or event. Often used in long-term leases to provide for rent adjustments, to cover tax and maintenance increases.
letter-E escheat The reverting of property to the State when heirs capable of inheriting are lacking.
letter-E escrow The depository process employed to facilitate the gathering of instruments and funds for use to transfer real estate interests between two persons.
letter-E escrow agent The neutral third party holding funds or something of value in trust for another or others.
letter-E escrow instructions Directives an escrow officer undertakes, as given by buyer and seller, or lender and borrower to coordinate the closing on a purchase agreement or mortgage origination. [See RPI Form 401]
letter-E escrow officer An individual licensed and employed as an agent of an escrow company or other escrow service provider to perform escrow services.
letter-E essential elements of a contract Four conditions required to form a legal contract: capable parties, acceptance, legal object and consideration.
letter-E estate The ownership interest a person may hold in real estate.
letter-E estate at sufferance Unlawfully retaining possession to property when the tenant holds over and does not vacate on the expiration of the term of their tenancy. Also called a tenancy at sufferance.
letter-E estate at will The occupation of lands and tenements by a tenant for an indefinite period with the payment of rent, terminable by either the tenant or the landlord at will. The landlord's ongoing acceptance of rent creates a periodic tenancy.
letter-E estate for life A freehold estate in land held by a person who is entitle to use of the property for the duratio of their life or the life of another. Also called a life estate, it terminates and is eliminated on death of the controlling life.
letter-E estate for years An interest in propety granting possesion for a limted period of time such as a periodic tenancy or a lease agreement for a fixed term.
letter-E estate from period to period An interest in land where there is no definite termination date but the rental period is fixed at a certain sum per week, month, or year. Also called a periodic tenancy.
letter-E estate of inheritance An estate which may descend to heirs. All freehold estates are estates of inheritance, except estates for life.
letter-E estimate Prediction of future amounts which have not yet actually occurred.
letter-E estimated remaining life The period of time (years) it takes for the improvements to become valueless.
letter-E estoppel A legal theory barring a person from later asserting or denying a condition based on the person's previous acts or statements.
letter-E et ux Abbreviation for et uxor. Means and wife.
letter-E ethics The branch of fiduciary science concerning the duties which a member of a profession or craft owes to the public, client or partner, and to professional brethren or members. Accepted standards of right and wrong.
letter-E event-occurence contingency provision A purchase agreement provision requiring an event or activity to take place which is not subject to the approval of the buyer or seller. [See RPI Form 150 §11.1]
letter-E eviction An unlawful detainer action filed to physically remove a tenant from actual possession.
letter-E exception Any encumbrances affecting title and any observable on-site activities which are listed as risks assumed by the insured and not covered by a policy of title insurance under Schedule B.
letter-E exchange A trading between two or more owners of their equities in different properties.
letter-E exchange rate The fluctuating rate at which one currency is converted to another, such as for the purpose of purchasing in a foreign market.
letter-E excluded debt Extensions of credit by sellers of real estate creating a debt obligation in sales transactions which avoid usury laws.
letter-E exclusion Risks of loss not covered under a policy of title insurance, comprised of encumbrances arising after the transfer or known to or brought about by the insured.
letter-E exclusive agency listing An agreement employing a broker as the sole agent for the seller of real property in which the seller promises to pay the broker a fee if the property is sold unless the sale is by the owner acting without the services of any agent. [See RPI Form 102]
letter-E exclusive agent An agent who is acting exclusively on behalf of only one party in a transaction.
letter-E exclusive authorization to lease A written agreement between a broker and client employing the broker to render services in exchange for a fee on the leasing the property to a tenant located by anyone. Also known as a listing. [See RPI Form 110]
letter-E exclusive authorization to locate space An employment agreement by a broker and a prospective tenant which authorizes the broker to act as the tenant's leasing agent to locate suitable space and negotiate a lease agreement. [See RPI Form 111]
letter-E exclusive right-to-buy listing agreement A written employment agreement by a broker and a prospective buyer of real estate employing and entitling the broker to a fee when property is purchased during the listing period. [See RPI Form 103]
letter-E exclusive right-to-collect clause A provision which assures payment of the broker's fee if anyone procures a tenant on the terms in the listing, or on terms the landlord accepts. [See RPI Form 110 §3.1a]
letter-E exclusive right-to-sell listing An agreement employing a broker to act as agent for the seller of real property in which the seller promises to pay the broker a fee if the property is sold during the period of the employment, whether by the broker, through another broker or by the efforts of the owner. [See RPI Form 102]
letter-E exculpatory clause A provision in a note secured by a trust deed which converts a recourse debt into nonrecourse debt to bar recovery by a money judgment against the borrower. [See RPI Form 418-5]
letter-E execute To complete, to make, to perform, to do, to follow out; to execute a deed, to make a deed, including especially signing, sealing and delivery; to execute a contract is to perform the contract, to follow out to the end, to complete.
letter-E execution The signing and delivery of a document, as occurs on a seller's acceptance of an offer to buy real estate by signing and delivering the signed document to the buyer.
letter-E executive branch The branch of government which polices the law and establishes regulations to carry out the administration of government as established by the legislature.
letter-E executor A man named in a will to carry out its provisions as to the disposition of the estate of a deceased person. (A woman is executrix.)
letter-E executory contract A contract in which something remains to be done by one or both of the parties.
letter-E exempt debts Private party transactions exempt from usury laws involving the origination of a loan secured by real estate and made or arranged by a real estate broker. See non-exempt lender.
letter-E existing rental property The category of property most prudent for real estate investment groups to own consisting of existing residential and nonresidential income-producing properties.
letter-E expansionary monetary policy An effort to increase the amount of money in circulation.
letter-E expansive Soils that expand when water is added then shrink when they dry out. Such continuous change in soil condition can cause property built on this soil to settle unevenly and crack.
letter-E expenses Certain items which appear on a closing statement in connection with a real estate sale.
letter-E expungement A court order removing from title to real estate the effect of a recorded lis pendens regarding litigation asserting a claim to title or possession of the property.
letter-E extend-and-pretend The lender practice of granting a short-term loan modification as a means of buying time while relying on market momentum to give the modified terms long-term sustainability.
letter-E extraordinary expense An emergency situation lifting the limits placed on the amount an HOA may charge for regular and special assessments.
letter-F facade The front of a building, often used to refer to a false front and as a metaphor.
letter-F fact An existing condition which is presently known or readily knowable by the agent.
letter-F Fair Credit Reporting Act (FCRA) A federal law controlling the collection and use of consumer credit reports, including the delivery of disclosures to credit consumers.
letter-F fair housing laws A collection of laws designed to prevent discrimination in the access to housing based on an occupant's inclusion in a protected class. Title VIII of the 1968 Civil Rights Act.
letter-F fair market value (FMV) The price a reasonable, unpressured buyer and seller would agree to for property on the open market, both possessing symmetric knowledge of material facts.
letter-F fair value hearing The court proceeding at which a money judgment is awarded for any deficiency in the secured property’s fair market value (FMV) at the time of the judicial foreclosure sale to fully satisfy all debt obligations owed the mortgage holder.
letter-F familial status A status which indicates a household includes individuals under the age of 18.
letter-F Fannie Mae A government-sponsored entity operating in the secondary mortgage market.
letter-F FARM A real estate marketing campaign designed to build awareness of a licensee’s real estate services that are offered within a targeted neighborhood or community. 
letter-F farmers home administration An agency of the Department of Agriculture. Primary responsibility is to provide financial assistance for farmers and others living in rural areas where financing is not available on reasonable terms from private sources.
letter-F Federal Deposit Insurance Corporation (FDIC) Agency of the federal government which insures deposits at commercial banks, savings banks and savings and loans.
letter-F Federal Fair Housing Act (FFHA) A collection of policies designed to prevent discrimination in the access to housing based on an occupant's inclusion in a protected class.
letter-F federal funds Overnight funds lent to banks with insufficient reserves by the Federal Reserve and other banks with excess reserves.
letter-F Federal Home Loan Bank Board (FHLBB) The Depression-era regulatory body established to fund savings and loan associations (S&Ls) and provide mortgage market liquidity. The FHLBB became the Office of Thrift Supervision in 1989, and then dissolved in 2011 shifting its duties to the Consumer Financial Protection Bureau (CFPB) and other federal agencies.
letter-F federal home loan mortgage corporation An independent stock company which creates a secondary market in conventional residential loans and in FHA and VA loans by purchasing mortgages.
letter-F Federal Housing Administration (FHA) An agency of the federal government that insures private mortgage loans for financing of new and existing homes and home repairs.
letter-F Federal Housing Administration (FHA)-insured mortgage A mortgage originated by a lender and insured by the FHA, characterized by a small down payment requirement, high loan-to-value (LTV) ratio and high mortgage insurance premiums (MIPs), typically made to first-time homebuyers.
letter-F federal land bank system Federal government agency making long-term loans to farmers.
letter-F Federal National Mortgage Association (FNMA) Called Fannie Mae, is a quasi-public agency whose primary function is to buy, own and sell mortgages in the secondary market.
letter-F Federal Open Market Committee (FOMC) Consists of five rotating Federal Reserve District Bank presidents and the seven members of the Board of Governors. The FOMC discusses future monetary policy and establishes goals to meet those policies.
letter-F Federal Reserve (the Fed) The central bank in control of regulating the U.S. monetary system and charged with maintaining proper employment levels and managing inflation.
letter-F Federal Reserve Board of Governors The governmental aspect of the Federal Reserve which decides future monetary policy, consisting of seven members who each serve one fourteen year term.
letter-F Federal Reserve District Bank The 12 branches of the "central" bank.
letter-F federal tax lien A lien recorded attaching to the title of real estate owned by a taxpayer who owes the Internal Revenue Service (IRS) unpaid taxes.
letter-F federalism A form of government in which individual states share powers with a national or central government.
letter-F federally registered mortgage loan originator (MLO) A mortgage loan originator (MLO) employed by a federally regulated bank, credit union or financial company.
letter-F federally related mortgage A consumer mortgage made, insured, guaranteed, assisted or otherwise connected to the federal government, controlled by the Real Estate Settlement Procedures Act (RESPA).
letter-F fee An estate of inheritance in real property.
letter-F fee estate An indefinite, exclusive and absolute legal ownership interest in a parcel of real estate.
letter-F fee simple The absolute ownership of possessory rights in real estate for an indefinite duration.
letter-F fee simple defeasible An estate in fee subject to the occurrence of a condition subsequent whereby the estate may be terminated.
letter-F fee simple estate The greatest interest that one can have in real property. An estate that is unqualified, of indefinite duration, freely transferable and inheritable.
letter-F fee-sharing agreement An agreement, written or oral, between different brokerage operations to share fees earned on a transaction which are typically paid by the property owner.
letter-F fee-splitting When fees made to a broker are split vertically with employed agents or split horizontally among other brokers.
letter-F feudal tenure A real property ownership system in which ownership rests with a sovereign who may grant lesser interests in return for service or loyalty. This is in contrast to allodial tenure.
letter-F fiat money A form of currency controlled by a central bank and backed by the national government. It has no direct tie to an underlying commodity or other store of wealth.
letter-F fictitious business name The name under which a business or operation is conducted, also known as a d.b.a. (“doing business as...”).
letter-F fidelity bond A security posted for the discharge of an obligation of personal services.
letter-F fiduciary A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency.
letter-F fiduciary duty That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over their principal by the slightest misrepresentation, concealment, duress or undue influence.
letter-F field review A second appraiser’s independent visual inspection of the property to verify and evaluate the findings of the original appraisal report.
letter-F filtering The process whereby higher-priced properties become available to lower income buyers.
letter-F final inspection An inspection of the premises conducted by the landlord within 21 days after a residential tenant vacates the property. [See RPI Form 585]
letter-F final payment Any final payment on a note which is greater than twice the amount of any one of the six regularly scheduled payments immediately preceding the date of the final/balloon payment. [See RPI Form 418-3 and 419]
letter-F financial accelerator The cyclical phenomenon of increasingly larger loan amounts based on increasingly inflated prices of the same collateral.
letter-F financial analysis The consideration of the durability, quantity and quality of income and expenses generated and incurred by an income-producing property.
letter-F financial atrophy The continuing inability to qualify for purchase-assist financing due to outstanding consumer debt.
letter-F financial calculator An electronic calculator preprogrammed to perform advanced financial functions needed in real estate transactions.
letter-F financial capacity An investor's general financial strength based on their assets and liabilities and their ability to absorb losses of their own funds or borrowed funds without major personal disruption. [See RPI Form 350]
letter-F financial crisis An economic downturn resulting from the failure of banking and government agencies to regulate and adjust to developing market conditions.
letter-F Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) Federal legislation enacted in 1989 in the wake of the savings and loan (S&L) crisis to strengthen regulations on lenders and appraisers and improve the availability of mortgage funds.
letter-F financial intermediary Financial institutions such as commercial banks, savings and loan associations, mutual savings banks and life insurance companies which receive relatively small sums of money from the public and invest them in the form of large sums. A considerable portion of these funds are loaned on real estate.
letter-F financial services representatives (FSRs) Bona fide employees of brokers who generate business for their employing broker.
letter-F financing process The systematic 5 step procedure followed by major institutional lenders in analyzing a proposed loan, which includes filing of application by a borrower; lender's analysis of borrower and property; processing of loan documentation; closing (paying) the loan; and servicing (collection and record keeping).
letter-F financing statement The instrument which is filed in order to give public notice of the security interest and thereby protect the interest of the secured parties in the collateral. (See definition of Security Interest and Secured Party.) [SeeRPI Form 436-1]
letter-F finder An unlicensed individual who solicits, identifies and refers potential clients to brokers, agents or principals in exchange for the promise of a fee. [See RPI Form 115]
letter-F finder's fee The fee paid to an individual who solicited, identified or referred a client to a broker, agent or principal. [See RPI Form 115]
letter-F first mortgage A legal document pledging collateral for a loan (See mortgage) that has first priority over all other claims against the property except taxes and bonded indebtedness. That mortgage superior to any other.
letter-F first trust deed A legal document pledging collateral for a loan (See trust deed) that has first priority over all other claims against the property except taxes and bonded indebtedness. That trust deed superior to any other.
letter-F first-point-of-contact materials Materials used to solicit or create a client relationship with prospective mortgage borrowers.
letter-F first-time homebuyer A buyer of a home who has not previously owned their shelter. Typically aged 25-34.
letter-F fiscal controls Federal tax revenue and expenditure policies used to control the level of economic activity.
letter-F fiscal year A business or accounting year as distinguished from a calendar year.
letter-F five-business-day right to cancel An owner-occupant seller of a one-to-four unit residential property in foreclosure on entering into a purchase agreement with an investor is entitled to cancel the agreement during a five-business-day period commencing on receipt of notice of the right to cancel. [See RPI Form 156, page 6]
letter-F fixed payment ratio A debt-to-income ratio (DTI) used to determine eligibility for an FHA-insured mortgage limiting the buyer’s total fixed payment on all debts to 43% of the buyer’s gross income, also called the DTI back-end ratio.
letter-F fixed-rent lease A lease agreement with monthly rent payments set at a specific dollar amount for the life of the lease. [See RPI Form 550 and 552]
letter-F fixed-term tenancy A leasehold interest which lasts for the specific lease period set forth in a lease agreement. A fixed term tenancy automatically terminates at the end of the lease period. [See RPI Form 550 and 552]
letter-F fixity of location The physical characteristic of real estate that subjects it to the influence of its surroundings.
letter-F fixture Personal property permanently attached to real estate and conveyed with it.
letter-F flashing Thin pieces of impervious material such as sheet metal installed to prevent water seepage into a structure from a joint.
letter-F flipper A speculator who purchases real estate at perceived below-market prices and depends on market momentum to sell at a profit.
letter-F flipping Buying and quickly reselling a property to obtain a large profit, the basis of speculation.
letter-F floor rent A minimum rent rate the landlord receives throughout the lease term. [See RPI Form 552 §4.4]
letter-F forbearance agreement An agreement by a mortgage holder to temporarily forego exercise of their rights on a default while the property owner takes steps to bring the mortgage payments current.
letter-F forcible entry The unlawful entry of any individual into a rented property without permission, prior notice or justification.
letter-F forecast Analysis of anticipated changes in circumstances influencing the future income, expenses and use of a property.
letter-F foreclosure A mortgage holder's remedy on a default in their mortage by initiaing a procedue noticing the sale of the mortgaeg property to pay the debt.
letter-F foreclosure consultant An individual offering services which claim to aid homeowners with mortgage-related issues, for a fee.
letter-F foreclosure decree Decree by a court ordering the sale of mortgaged property and the payment of the debt owing to the lender out of the proceeds.
letter-F foreign investor An overseas investor who purchases dollar-denominated assets in the United States.
letter-F forfeiture 1) The termination of an easement when the easement holder exceeds their authorized use of the easement by placing an excessive burden on the property encumbered by the easement. 2) Loss of money, rights or anything of value due to failure to perform, a remedy abhorred by the courts.
letter-F forfeiture of possession The termination of the tenant's right of possession triggered by a declaration of forfeiture in a notice to quit. [See RPI Form 575 §5]
letter-F formal assumption A buyer’s promise to perform all the terms of the mortgage, given to the mortgage holder on the buyer’s takeover of an existing mortgage, typically involving a modification of the interest rate and payments and an assessment of points and fees. Compare with a subject-to transaction.
letter-F for-sale-by-owner A property owner's method of marketing property for sale without the use of a CalBRE-licensed broker or agent to locate a buyer.
letter-F fractionalizing Selling a share of interest in one note to multiple investors.
letter-F franchise A license granted by a franchise company to an individual or corporate broker to market their services in a specific territory under the anme and oversight of the franchise company.
letter-F Frannie A collective term for Fannie Mae and Freddie Mac.
letter-F fraud The intentional use of deception to induce another person to act against their best interests resulting in the loss of property or money.
letter-F fraudulent conveyance A property transfer made for the purpose of avoiding creditors without receiving fair value on the transfer which is voidable.
letter-F Free Banking Era 1837-1862. No central banking system existed during this time. States chartered their own banks and held their own reserves.
letter-F freehold estate An estate of indeterminable duration, e.g., fee simple or life estate.
letter-F freeze A prohibition against additional extensions of credit under a home equity line of credit (HELOC).
letter-F front foot Property measurement for sale or valuation purposes; the property measured by the front linear foot on its street line - each front foot extending the depth of the lot.
letter-F front money The minimum amount of money necessary to initiate a real estate venture, to get the transaction underway.
letter-F frontage A term used to describe or identify that part of a parcel of land or an improvement on the land which faces a street. The term is also used to refer to the lineal extent of the land or improvement that is parallel to and facing the street, e.g., a 75-foot frontage.
letter-F front-end debt-to-income ratio (DTI) The percentage of monthly gross income that goes towards paying mortgage debt.
letter-F frostline The depth of frost penetration in the soil. Varies in different parts of the country. Footings should be placed below this depth to prevent movement.
letter-F full credit bid The maximum amount the foreclosing mortgage holder may bid at a trustee’s sale without adding cash, equal to the debt secured by the property being sold, plus trustee’s fees and foreclosure expenses.
letter-F full employment When employees receive income for full, 40-hour work weeks.
letter-F full listing offer A buyer's or tenant's offer to buy or lease on terms substantially identical to the employment terms in the owner's listing agreement with the broker. [See RPI Form 556]
letter-F full-service gross lease A commercial lease specifying that the landlord retains the responsibility for payment of all costs of care and maintenance, unless modified, including the tenant's utilities and janitorial services. [See RPI Form 552 and 552-1]
letter-F fully stepped-up cost basis The tax basis of community property a surviving spouse receives on the death of a spouse is stepped up to the property's fair market value (FMV) on the date of death.
letter-F fully indexed rate The highest rate possible on the adjustable rate mortgage (ARM) during the first five years of its term.
letter-F functional obsolescence A loss of value due to adverse factors within the structure which affect the utility of the structure, and thus its value and marketability.
letter-F further encumbrance A claim or lien on a parcel of real estate, such as junior trust deeds, CC&Rs, easements, taxes or assessments.
letter-F further-approval contingency provision A provision in an agreement calling for the further approval of an event or activity as a condition precedent to the further performance or cancellation of the transaction by the persons benefiting from the provision. [See RPI Form 185 §9 and 279 §2]
letter-F further-improvements provision A commercial lease provision which allows a landlord to retain tenant improvements or require the restoration of the property to its original condition upon expiration of the lease. [See RPI Form 552 §11.3]
letter-F future advances clause A trust deed provision authorizing a mortgage holder to advance funds for payment of conditions impairing the mortgage holder’s security interest in the mortgaged property, such as delinquent property taxes, assessments, improvement bonds, mortgage insurance premiums or elimination of waste. [See RPI Form 450 §2.5]
letter-F future benefits The anticipated benefits the present owner will receive from the property in the future.
letter-F future subordination clause A lease agreement provision in which the tenant agrees to subordinate their leasehold interest in property to a trust deed to be recorded in the future. [See RPI Form 552 §17]
letter-G gable roof A pitched roof with sloping sides.
letter-G gain A profit, benefit or value increase.
letter-G gambrel roof A curb roof, having a steep lower slope with a flatter upper slope above.
letter-G Garn-St. Germain Federal Depository Institutions Act of 1982 A federal law which preempts state-level limitations on a mortgage holder’s enforcement of the due-on clause contained in mortgages.
letter-G general ability-to-repay (ATR) rules A consumer mortgage conforming to the federal ability-to-repay (ATR) rules, without a qualified mortgage (QM) safe harbor or rebuttable presumption status.
letter-G general account A broker or agent's personal or business account, not to be commingled with trust funds.
letter-G general adjustment A type of rent adjustment under rent control which uniformly adjusts rents for all rental units. [See RPIForm 552 §4.4 and 4.5]
letter-G general agency duties The duty of a licensee acting as an agent in a real estate transaction owed to all parties in the transaction to be honest and avoid deceitful conduct. [See RPI Form 305]
letter-G general damages Money losses by a buyer or seller due to their expenditures and loss of value directly related to a failed property sales transaction.
letter-G general duty The duty a licensee owes to non-client individuals to act honestly and in good faith with up-front disclosures of known conditions which adversely affect a property's value. [See RPI Form 305]
letter-G general ledger Bookkeeping records of funds in an overall trust account.
letter-G general lien A lien on all the property of a debtor.
letter-G general plan Development policies for acceptable land uses within a jurisdiction.
letter-G general qualified mortgage A type of qualified mortgage (QM) which meets the definition of a qualified mortgage under Regulation Z (Reg Z) and has a debt-to-income ratio (DTI) of 43% or less, other than a balloon-payment QM, small lender QM and temporary QM.
letter-G Generation Jones The younger half of the Baby Boomers, named for their desire to "keep up with the Joneses." Also called the Joneses for short.
letter-G Generation Y The forthcoming generation of first-time homebuyers, consisting of individuals born in the 1980s and 1990s.
letter-G gift deed A deed for which there is no consideration.
letter-G Glass-Steagall Act A section of the Banking Act of 1933 regulating the ability of commercial banks to speculate in financial markets with their depositors' money for their own profit. Repealed by the 1999 Gramm-Leach-Bliley Act and re-enacted in part by the Dodd-Frank Act.
letter-G going negative The Federal Reserve's charging of interest on the excess reserves of lenders, stimulating lending activity.
letter-G good faith Acting innocently and without knowledge of negative effects to someone else.
letter-G good faith deposit A money deposit made by a buyer to evidence their good faith intent to buy when making an offer to acquire property. Also known as earnest money. [See RPI Form 401 §1.1]
letter-G good faith estimate of costs (GFE) An estimate of a buyer's settlement charges and mortgage terms handed to the buyer on a standard form within three business days following the lender's receipt of the mortgage application. [See RPI Form 204-5]
letter-G good faith interference A mortgage holder's interference in the transfer of property ownership based on a genuine concern for the impairment of their security interest or increased risk of default.
letter-G goodwill The intangible image or opinion held about a property which affects its earning power.
letter-G government loan programs State and federal programs designed to facilitate homeownership, such as Federal Housing Administration (FHA)-insured loans, U.S. Department of Veterans' Affairs (VA)-guaranteed loans, and the California Housing Finance Agency (CalHFA).
letter-G government monitoring information (GMI) Demographic information collected from mortgage applications used to monitor lenders’ compliance with anti-discrimination laws.
letter-G government national mortgage association An agency of HUD, which functions in the secondary mortgage market, primarily in social housing programs. Commonly called by the acronymic nickname Ginnie Mae (GNMA).
letter-G government survey A method of specifying the location of parcel of land using prime meridians, base lines, standard parallels, guide meridians, townships and sections.
letter-G government-related mortgage A mortgage that is made, insured or guaranteed by the federal government.
letter-G government-sponsored enterprise (GSE) Privately held corporations chartered by the federal government with the purpose of stimulating lending and borrowing in a given sector of the economy by insuring or guaranteeing financial arrangements with the implicit backing of the U.S. government. Fannie Mae and Freddie Mac are GSEs.
letter-G grace period The time period for the mortgage holder’s receipt of a payment following its due date after which the missed payment is delinquent and subject to a late charge. [See RPI Form 550 §4.3 and 552 §4.7]
letter-G grade Ground level at the foundation.
letter-G graduated lease Lease which provides for a varying rental rate, often based upon future determination; sometimes rent is based upon result of periodical appraisals; used largely in long-term leases.
letter-G graduated payment mortgage (GPM) A mortgage providing for installment payments to be periodically increased by predetermined amounts to accelerate the payoff of principal.
letter-G graduated rent provision A rent provision in a nonresidential lease agreement which periodically increases the initial monthly rent in pre-set increments over the term of the lease. [See RPI Form 552 §4.4]
letter-G granny flat A separate, self-contained additional dwelling on a property zoned to accommodate only one unit.
letter-G grant The transfer of an interest in title to real estate.
letter-G grant deed A document used to pass a fee simple interest in real estate from the grantor to another individual, unless a lesser interest is stated. [See RPI Form 404]
letter-G grantee An individual acquiring an interest in title to real estate.
letter-G grantor A individual capable of conveying an interest in real estate.
letter-G gratuitous agent A person not paid by the principal for services on behalf of the principal, who cannot be forced to act as an agent, but who becomes bound to act in good faith and obey a principal's instructions once he or she undertakes to act as an agent.
letter-G Great Confluence The convergence of retiring Baby Boomers and Generation Y on the same urban real estate.
letter-G Great Recession A period of global economic decline lasting roughly, in the U.S., from early 2008 through 2009, attributed chiefly to imprudent lending practices and the proliferation of unstable financial instruments in the mortgage-backed bond market.
letter-G greater fool theory The erroneous belief that an ever-increasing number of buyers will always be willing to pay ever-increasing prices for real estate.
letter-G Greenspan Put The practice of lowering the Federal Funds Rate to encourage investing during recessionary periods, with an implicit guarantee of continuing interest rate stimulus to keep profits up. Implemented by Fed Chairman Greenspan from 1987 to 2000.
letter-G grid A chart used in rating the borrower risk, property and the neighborhood.
letter-G gross domestic product (GDP) The market value of all goods and services produced within a county calculated over a set period of time.
letter-G gross income Total income from property before any expenses are deducted.
letter-G gross lease A nonresidential lease specifying that the tenant pays for their utilities and janitorial fees, but unless modified is not responsible for any other care, maintenance or carrying costs of the property. [See RPI Form 552 and 552-1]
letter-G gross margin With regard to an adjustable rate mortgage, an amount expressed as percentage points, stated in the note which is added to the current index value on the rate adjustment date to establish the new note rate.
letter-G Gross National Product (GNP) The total value of all goods and services produced in an economy during a given period of time.
letter-G gross operating income (GOI) The actual income received from all sources that property operations is expected to generate over a 12-month period, from which expenses are paid, mortgage payments made and reserves set aside, any remaining cash being spendable income.
letter-G gross rate A method of collecting interest by adding total interest to the principal of the loan at the outset of the term.
letter-G gross rent multiplier A factor which, when multiplied by the gross income of a property, produces an estimate of the property's value.
letter-G gross revenue multiplier (GRM) Sale price divided by annual rents. A rule of thumb used to initially evaluate the price of a property.
letter-G ground lease A leasehold interest for which rent is based on the rental value of the land, whether the parcel is improved or unimproved.
letter-G ground rent Earnings of improved property credited to earnings of the ground itself after allowance is made for earnings of improvements; often termed economic rent.
letter-G guarantee An assurance that events and conditions will occur as presented by the agent.
letter-G guarantee agreement An agreement to be obligated to pay the debt or perform on a contract of another person if that person defaults or does not perform. [See RPI Form 439]
letter-G guaranteed sale listing A variation of the exclusive right-to-sell listing in which the broker agrees to buy the property if the property does not sell during the listing period.
letter-G guarantor A person who agrees to pay a money obligation owed by another to a mortgage holder or a landlord under a lease agreement on a default in the obligation and demand for the sums remaining unpaid. [See RPI From 439 and 553-1]
letter-G guaranty entitlement The portion of a veteran’s mortgage guaranteed by the U.S. Department of Veterans Affairs (VA).
letter-G guest occupying agreement The written document which sets the terms of a transient occupancy. [See RPI Form 593 ]
letter-H habendum clause The "to have and to hold" clause in a deed.
letter-H habitability defense A residential tenant's pursuit of a legal remedy due to a landlord's failure to maintain habitable conditions on the rented premises.
letter-H habitable condition The minimum acceptable level of safety, utility and sanitation permitted in a residential rental.
letter-H hard money mortgage Real estate mortgages made by private lenders.
letter-H hardship letter A statement detailing a distressed homeowner's financial situation, delivered to the lender to determine if the homeowner qualifies for a short sale. [See RPI Form 217-1]
letter-H hazard insurance provision A trust deed provision granting the mortgage holder the option to retain and apply any insurance proceeds to the loan balance or release the proceeds to the owner of the building to reconstruct the damaged structure. [See ft Form 450 §2.2]
letter-H hazardous waste Any products, materials or substances which are toxic, corrosive, ignitable or reactive.
letter-H heir One who inherits property on the death of the owner.
letter-H heirs, assigns and successors clause A clause in a lease agreement which binds those who later take the position of landlord or tenant
to the existing agreement. [See RPI Form 552 §23.3]
letter-H high-cost consumer mortgage (Section 32 mortgage) A class of Regulation Z (Reg Z) consumer mortgage characterized by an annual percentage rate (APR) charge which exceeds the average prime offer rate for a comparable mortgage by various percentage spreads set by the mortgage’s priority on title and principal balance, and subject to consumer protection rules.
letter-H highest and best use An appraisal phrase addressing the use of a property which is most likely to produce the greatest net return on the land and/or buildings over a given period of time.
letter-H hip roof The roof of a property that slopes on all four sides.
letter-H hit-and-run buyers Flippers who purchase real estate with the intent to quickly resell it at a profit produced by market momentum, not fundamentals.
letter-H hold harmless clause A provision in an agreement that shifts liability between parties.
letter-H hold period A period in which investors hold onto their cash and property, which occurs twice during a real estate cycle: after a purchase in the buy phase and after a sale in the sell phase.
letter-H hold phase A period in which investors hold onto their cash and property, which usually occurs twice during a real estate cycle: after a purchase in the buy phase and after a sale in the sell phase.
letter-H holder in due course One who has taken a note, check or bill of exchange in due course.
letter-H holdover rent Rent owed by a holdover tenant for the tenant's unlawful detainer of the rented premises as a tenant-at-sufferance. [See RPI Form 550 §3.3]
letter-H holdover rent provision A rental or lease agreement provision which sets the rent rate during a tenant holdover period. [See RPI Form 550 §3.3 and 552 §2.3]
letter-H holdover tenant A tenant who retains possession of the rented premises after their right of possession has been terminated, called a tenant-at-sufferance.
letter-H Home Affordable Foreclosure Alternatives A government program aimed at assisting homeowners to avoid foreclosures by offering incentives for homeowners and lenders to complete short sales.
letter-H Home Affordable Modification Program A government program aimed at assisting homeowners to receive a loan modification in lieu of foreclosure.
letter-E energy audit An inspection which pinpoints a home’s energy-efficient improvements and features in need of energy-efficient improvements.
letter-H home energy score A rating system established by the Department of Energy quantifying the energy performance of a home.
letter-H home equity conversion mortgage (HECM) program The Federal Housing Administration (FHA)’s reverse mortgage program.
letter-H home equity line of credit (HELOC) A mortgage loan enabling a homeowner to borrow against their home’s wealth, as an ATM.
letter-H home equity mortgage A junior mortgage encumbering the value in a home remaining after deducting the principal on the senior mortgage from the market value of the home.
letter-H Home Equity Sales Contract Act An equity purchase scheme established to protect homeowners whose residence is in foreclosure from deception and unfair dealing by investors.
letter-H home inspection A non-invasive examination of the mechanical, electrical and plumbing systems of a dwelling, as well as the components of the structure, such as the roof, ceiling, walls, floors and foundations.
letter-H home inspection report (HIR) A report prepared by a home inspector disclosing defects in improvements on a property and used by the seller's agent to complete a TDS and assure prospective buyers about a property's condition.
letter-H home inspector A professional employed by a home inspection company to inspect and advise on the physical condition of property improvements in a home inspection report for reliance by the seller, the seller's agents and the buyer as a warranty of the condition of improvements.
letter-H Home Mortgage Disclosure Act (HMDA) A federal law mandating data collection on mortgage originations and applications of lenders who meet Home Mortgage Disclosure Act (HMDA) threshold requirements.
letter-H homeowner vacancy rate The percentage of unoccupied homeowner housing units.
letter-H homeowners' association (HOA) An organization made up of owners of units within a common interest development (CID) which manages and operates the project through enforcement of conditions, covenants and restrictions (CC&Rs).
letter-H homeownership gap The portion of homeowners with a negative equity whose status is economically that of a tenant in possession due to the principal on their mortgage exceeding the property's value.
letter-H homestead The dollar amount of equity in a homeowner's principal dwelling the homeowner qualifies to shield as exempt from creditor seizure. [See RPI Form 465]
letter-H homestead (exemption) A statutory protection of real property used as a home from the claims of certain creditors and judgments up to a specified amount.
letter-H household formation Individuals who acquire their own property, such as adult children leaving parents' households or singles leaving shared housing.
letter-H housing financial discrimination act of 1977 (holden act) California Health and Safety Code Section 35800, et seq., designed primarily to eliminate discrimination in lending practices based upon the character of the neighborhood in which real property is located. (See Redlining.)
letter-H housing wage The hourly wage needed for a worker to qualify for an average-priced residence.
letter-H hundred percent location A city retail business location which is considered the best available for attracting business.
letter-H hybrid adjustable rate mortgage (ARM) A type of adjustable rate mortgage (ARM) which features a fixed rate for an introductory period and thereafter a periodically adjusted interest rate based on a predetermined formula.
letter-H hypothecation The pledging of something as security without the necessity of giving up possession to it. [See RPI Form 242]
letter-I illiquid asset An asset that cannot be converted into cash quickly without a loss.
letter-I impairment The act of injuring or diminishing the value of an interest held by another in real estate.
letter-I impasse notice A notice advising the tenant the lease will expire and no modification of the lease will be entered into.
letter-I imperative necessity Circumstances under which an agent has expanded authority in an emergency, including the power to disobey instructions where it is clearly in the interests of the principal and where there is no time to obtain instructions from the principal.
letter-I implicit discrimination Actions which are not openly discriminatory but yield discriminatory results.
letter-I implicit rent The value of an owner’s use of their property to house themselves or their business.
letter-I implied covenant An implied warrant the grantor has not previously conveyed or encumbered their interest in the real estate.
letter-I implied covenant of good faith and fair dealing A legal presumption that parties to an agreement will deal equitably with one another by abiding by the terms of the agreement and timely performing their obligations.
letter-I implied easement An easement created by the conduct of parties without prior agreement.
letter-I implied promise The presumption that a buyer or seller entering into an agreement will in good faith fulfill their obligation to close the transaction.
letter-I implied warranty of habitability An unwritten provision, included by statute, in all residential lease agreements requiring the landlord to provide safe and sanitary conditions in the rental unit.
letter-I impound account A money reserve funded monthly by the property owner and maintained by the mortgage holder to pay annual recurring ownership obligations.
letter-I impound account provision A trust deed provision establishing a reserve of the owner’s funds for the payment of annually recurring ownership expenses.
letter-I impounds A trust type account established by lenders for the accumulation of borrowers funds to meet periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums, required to protect their security. Impounds are usually collected with the note payment. The combined principal, interest, taxes and insurance payment is commonly termed a PITI payment.
letter-I improvement bonds Obligations of the seller which may be assumed by the buyer in lieu of their payoff by the seller.
letter-I imputed interest rate The applicable federal rate (AFR) set by the Internal Revenue Service (IRS) for carryback sellers to impute and report as minimum interest income a portion of principal when the note rate on a carryback debt is a lesser rate.
letter-I inaccessible areas Areas of a structure which cannot be inspected without opening the structure or removing the objects blocking the opening, such as attics or areas without adequate crawl space.
letter-I income approach The use of a property’s rental income to set its value.
letter-I income inequality The uneven distribution of wealth across the population.
letter-I income producing property Residential or commercial income property held by the ownership for the long-term to earn income through leasing operations and price appreciation.
letter-I incompetent One who is mentally incompetent, incapable; any person who, though not insane, is, by reason of old age, disease, weakness of mind, or any other cause, unable, unassisted, to properly manage and take care of self or property and by reason thereof would be likely to be deceived or imposed upon by artful or designing persons.
letter-I incorporeal rights Nonpossessory rights in real estate arising its ownership, such as rents.
letter-I increment An increase. Most frequently used to refer to the increase of value of land that accompanies population growth and increasing wealth in the community. The term unearned increment is used in this connection since values are supposed to have increased without effort on the part of the owner.
letter-I incurable breach Nonmonetary defaults in leases or mortgages that cannot be cured or undone. [See RPI Form 577]
letter-I indemnity agreement An agreement by the maker of the document to repay the addressee of the agreement up to the limit stated for any loss due to the contingency stated on the agreement.
letter-I indenture A formal written instrument made between two or more persons in different interests, such as a lease.
letter-I independent contractor A salesperson employed by a broker under an employment arrangement which avoids income tax withholding and unemployment benefit payments by the broker.
letter-I index A regularly issued composite market interest rate for an investment such as Treasury Securities or inter-bank loans used to set the basis for periodic interest rate adjustments.
letter-I individual adjustment A type of rent adjustment sought by a landlord when the general adjustment established by local rent control ordinances fails to provide a fair return on their residential property.
letter-I individual mortgage loan originator (MLO) A natural person who meets the definition of a mortgage loan originator (MLO) .
letter-I individual taxpayer identification number (ITIN) A nine digit, tax processing number issued by the Internal Revenue Service to individuals who don't have a social security number.
letter-I indorsement The act of signing one's name on the back of a check or note, with or without further qualification.
letter-I infill development The development of vacant land located within existing urban areas to add value by making improvements.
letter-I inflation The price changes over time in consumer goods and services, quantified in the consumer price index.
letter-I inflation-adjusted rent provision A rent provision in a nonresidential lease which calls for periodic rent increases based on changes in inflation index figures during the period. [See RPI Form 552 §4.5]
letter-I influences on value An aspect of the principle of change, recognizing the effect of physical, economic, government and social changes on real estate value.
letter-I ingress and egress Access to a property by its owner directly from publicly dedicated streets or by using their right to traverse a portion of another's land using an easement.
letter-I initial conference The first meeting between a licensee and prospective attorney conducted prior to entering into a retainer agreement where the licensee discusses their real estate dispute and interviews the attorney to determine their professional background, qualifications and compatibility.
letter-I initial interest rate cap A limit on the amount the interest rate may change on the first adjustment of an adjustable rate mortgage (ARM).
letter-I initial note rate With regard to an adjustable rate mortgage, the note rate upon origination. This rate may differ from the fully indexed note rate.
letter-I initial rate discount As applies to an adjustable rate mortgage, the index value at the time of loan application plus the margin less the initial note rate.
letter-I injunction A writ or order issued under the seal of a court to restrain one or more parties to a suit or proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding.
letter-I installment note A note calling for periodic payments of principal and interest, or interest only, until the principal is paid in full by amortization or a balloon payment. [See RPI Form 420, 421 and 422]
letter-I installment reporting A method of reporting capital gains by installments for successive tax years to minimize the impact of the totality of the capital gains tax in the year of the sale.
letter-I installment sale Financing provided by a seller when extending a buyer credit for deferred payment, typically payable monthly with accrued interest, of a portion of the price paid for real estate, also known as carryback financing.
letter-I installment sales contract Commonly called contract of sale or land contract. Purchase of real estate wherein the purchase price is paid in installments over a long period of time, title is retained by seller, and upon default by buyer (vendee) the payments may be forfeited.
letter-I institutional lender A lender which pools deposits and invests them by making mortgages, e.g. a bank, credit union or insurance company.
letter-I instrument A document which formally express the rights of the parties, for the purpose of creating, modifying or terminating a right. A mortgage lender's basic instruments are promissory notes, deeds of trust, with some sellers using installment sales contracts; landlord instruments include lease agreements.
letter-I inter vivos (living) trust A title holding arrangement used as a vesting by a property owner for probate avoidance on death. Also known as a living trust. [See RPI Form 463]
letter-I interest A portion, share or right in something. Partial, not complete ownership. The charge in dollars for the use of money for a period of time. In a sense, the rent paid for the use of money.
letter-I interest extra loan A loan in which a fixed amount of principal is repaid in installments along with interest accrued each period on the amount of the then outstanding principal only.
letter-I interest only loan A straight, non-amortizing loan in which the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.
letter-I interest rate The percentage rate charged for the use or the delay in payment of money. Rent or charge paid for use of money, expressed as an annual percentage of the sum borrowed.
letter-I Interest Rate Reduction Refinance Loan (IRRRL) A U.S. Department of Veterans Affairs (VA)-guaranteed refinance that lowers the interest rate of an existing VA-guaranteed mortgage.
letter-I interest-only adjustable rate mortgage (ARM) A type of adjustable rate mortgage (ARM) which features an initial period of interest-only payments.
letter-I interim loan A short-term, temporary loan used until permanent financing is available, e.g., a construction loan.
letter-I interlineation The process of modifying an instrument or document by inserting additional language between the lines to clarify a particular provision, usually adding something that was omitted.
letter-I intermediation The process of pooling and supplying funds for investment by financial institutions called intermediaries. The process is dependent on individual savers placing their funds with these institutions and foregoing opportunities to directly invest in the investments selected.
letter-I interpleader A court proceeding initiated by the holder of money or other property, often an escrow company, who claims no proprietary interest in it, for the purpose of deciding who among claimants is legally entitled to the property.
letter-I interstate commerce The flow of goods and services between and within states.
letter-I interval ownership A form of timeshare ownership. (See Timeshare Ownership.)
letter-I intestate A person who dies having made no will, or whose will is defective in form, is said to have died intestate, in which case the estate descends to the heirs.
letter-I introductory interest rate The initial rate of interest on an adjustable rate mortgage (ARM), typically lower than the fully-indexed note rate and lasting for a set introductory period, allowing for a greater loan amount to be borrowed. Also nown as a teaser rate.
letter-I inventory Properties available on the market for sale or lease published through the multiple listing service (MLS).
letter-I inverse condemnation A government taking of privately held real estate interests which does not constitute eminent domain and for which the property owner seeks compensation.
letter-I invested capital The total amount of cash and mortgage principal an owner has used to acquire and improve a property.
letter-I investment circular (IC) A disclosure prepared by a syndicator and presented to potential investors explaining the nature of the investment program, significant features of the property selected for acquisition and the risks and financial consequences of the group investment, also known as a prospectus or memorandum. [See RPI Form 371 ]
letter-I investor A purchaser who holds a property long-term on a buy-to-let basis as an income producing investment. Contrast with a speculator who buys a property to flip it for profit on a sale, rather than earn annual income from continued ownership.
letter-I involuntary lien A lien imposed against property without consent of an owner; example taxes, special assessments, federal income tax liens, etc.
letter-I irrational exuberance The tendency to disregard clear warning signs of economic danger during boom times (such as the real estate pricing bubble). Coined by Alan Greenspan.
letter-I irrevocable Incapable of being recalled or revoked, unchangeable.
letter-I irrevocable license The right to enter and use property when the specific activity granted by the license is maintained by the licensee's on-going expenditure of money or equivalent labor, and remains feasible.
letter-I irrigation districts Quasi-political districts created under special laws to provide for water services to property owners in the district; an operation governed to a great extent by law.
letter-I itemized deductions Deductions taken by a taxpayer for allowable personal expenditures which, to the extent allowed, are subtracted from adjusted gross income (AGI) to set the taxable income for determining the income tax due, called Schedule A.
letter-I itemized statement of deduction A document accounting for the tenant's security deposit, delivered by the landlord to a residential tenant after the tenant vacates. [See RPI Form 585 §4.3]
letter-J John Maynard Keynes An economist well-known for his stance that governments should smooth out the effects of expansion and contraction in the business cycle through fiscal and monetary policy.
letter-J joint note A note signed by two or more persons who have equal liability for payment.
letter-J joint pre-expiration inspection An inspection conducted by a residential landlord or the property manager to advise a tenant of the repairs the tenant needs to perform to avoid deductions from their security deposit. [See RPI Form 567-1]
letter-J joint protection (JP) policy A title insurance policy which enables one or more individuals or entities to be named as insured, usually the buyer and the new mortgage holder.
letter-J joint tenancy An ownership interest in property concurrently received by two or more individuals who share equally and have the right of survivorship.
letter-J joint venture Two or more individuals or firms joining together on a single project as partners.
letter-J joist A horizontal support running between a property's foundations, walls, or beams to support its ceiling or floor.
letter-J judgment The final determination of a court on a matter presented to it; money judgments provide for the payment of claims presented to the court.
letter-J judgment lien A money judgment against a person recorded as an abstract and attaching to the title of real estate they own.
letter-J judicial branch The branch of government which settles disputes and issues case opinions regarding the application of the codes, cases and regulations.
letter-J judicial foreclosure The court-ordered sale by public auction of the secured property. Also known as a sheriff’s sale.
letter-J jumbo mortgage A conventional mortgage with a principal amount exceeding the conforming or super-conforming loan limits set by Fannie Mae and Freddie Mac.
letter-J junior mortgage A mortgage recorded second in time to another mortgage encumbering the same property or made subordinate by agreement to a later recorded mortgage.
letter-J jurisdiction The power of a court to hear a dispute and rule on a legal issue.
letter-K kickback A fee improperly paid to a transaction agent (TA) who renders no service beyond the act of referring when the TA is already providing another service in the transaction for a fee.
letter-L laches An unreasonable delay which bars pursuit of a claim.
letter-L land The material of the earth, whatever may be the ingredients of which it is composed, whether soil, rock, or other substance, and includes free or unoccupied space for an indefinite distance upwards as well as downwards.
letter-L land and improvement loan A loan obtained by the builderdeveloper for the purchase of land and to cover expenses for subdividing.
letter-L land sales contract A contract used in a sale of real estate when the seller retains title to the property until all or a prescribed part of the purchase price has been paid.
letter-L landlord One who rents their property to another. The lessor under a lease.
letter-L landlord-initiated disposition procedure The process of a landlord mailing a notice of the right to reclaim personal property to a tenant who vacated and left personal property on the premises. [See RPI Form 581 and 584]
letter-L late charge A fee imposed as an additional charge under a provision in a promissory note, lease or rental agreement when payments are not received by their due date or during a grace period.
letter-L late charge notice A landlord's written notice demanding payment of a late charge on a delinquent rent payment. [See RPI Form 568]
letter-L late charge provision A provision in a promissory note which calls for an additional charge if payments are not received when due or during a grace period.
letter-L late payment clause A provision in a rental or lease agreement establishing the landlord's right to demand and receive a late charge when a rent payment becomes delinquent. [See RPI Form 550 §4.3 and 552 §4.7]
letter-L later date order The commitment for an owner's title insurance policy issued by a title insurance company which covers the seller's title as of the date of the contract. When the sale closes the purchaser orders the title company to record the deed to purchaser and bring down their examination to cover this later date so as to show purchaser as owner of the property.
letter-L lateral support The support which the soil of an adjoining owner gives to a neighbor's land.
letter-L lead-based paint Any surface coating containing at least 1.0 milligram per square centimeter of lead, or 0.5% lead by weight. [See RPI Form 313]
letter-L lead-based paint hazard Any condition that causes exposure to lead from lead-contaminated dust, soil or paint which has deteriorated to the point of causing adverse human health effects. [See RPI Form 313]
letter-L lease A contract between owner and tenant, setting forth conditions upon which tenant may occupy and use the property and the term of the occupancy. Sometimes used as an alternative to purchasing property outright, as a method of financing right to occupy and use real property.
letter-L lease agreement The written document which sets the terms of a fixed-term tenancy. [See RPI Form 550 and 552 -- 552-4]
letter-L lease guarantee An agreement committing a person other than the tenant to pay all monies due the landlord under the lease agreement. [See RPI Form 553-1]
letter-L leasehold estate The right to possess a parcel of land, conveyed by a fee owner (landlord) to a tenant.
letter-L lease-purchase sale A sales transaction characterized by a purchase agreement containing a provision for the present transfer of possession on a lease and buildup of equity in ownership by the tenant over the term of the lease before closing the sale by crediting the purchase price with a portion of the buyer's lease payments.
letter-L leasing agent A broker who markets the availability of space to rent and locates and negotiates the terms of a lease with suitable tenants.
letter-L left expentancy set-aside A lender-mandated portion of a home equity conversion mortgage (HECM) set aside for the payment of property charges.
letter-L legal description The description used to locate and set boundaries for a parcel of real estate.
letter-L legislative branch The branch of government which enacts the codes and statutes which regulate most aspects of real estate interests.
letter-L lender overlay Lender-imposed standards on consumer mortgages to be met by applicants in addition to standards set by mortgage insurers and investors.
letter-L lender subordination clause A lease agreement provision which gives a lender with a trust deed interest senior to the tenant's leasehold interest the right to unilaterally subordinate the lender's trust deed to the tenant's leasehold by written notice to the tenant. [See RPI Form 552-8 §2]
letter-L lender-paid mortgage insurance (LPMI) Default mortgage insurance provided by private insurers in which the lender pays the mortgage insurance premium and recovers the cost through a higher interest rate.
letter-L lessee One who contracts to rent, occupy, and use property for the payment of rent under a lease agreement; a tenant.
letter-L Lesser Depression The period from 2009-2016 following the Great Recession and financial crisis of 2008, characterized by persistent slow job growth and a low, flat annual home sales volume.
letter-L lessor An owner who enters into a lease agreement with a tenant; a landlord.
letter-L letter of credit A commitment made by a bank to a mortgage holder assuring payment of a stated amount on presentation to the bank, used by mortgage holders as a supplemental security device to avoid anti-deficiency laws.
letter-L letter of intent A non-binding proposal signed and submitted to a property owner to start negotiations to rent or buy a property. [See RPI Form 185]
letter-L level-payment mortgage A loan on real estate that is paid off by making a series of equal (or nearly equal) regular payments. Part of the payment is usually interest on the loan and part of it reduces the amount of the unpaid principal balance of the loan. Also sometimes called an amortized mortgage or installment mortgage.
letter-L leverage The use of debt financing to aquire property to maximize the return on cash invested, the loan-to-value ratio.
letter-L leveraging The concept in real estate finance that a mortgage either increases the return on their investment or increases the owner’s risk they will lose the property (and their investment) to foreclosure.
letter-L levying officer A court-appointed receiver or sheriff who conducts a judicial foreclosure sale.
letter-L liability A financial debt or obligation owed to others.
letter-L liability limitation provision A purchase agreement provision limiting the dollar amount of seller losses the syndicator is liable for in the event the syndicator breaches the agreement. [See RPI Form 159 §10.8]
letter-L license The personal, unassignable right held by an individual to the non-exclusive use of property owned by another.
letter-L licensed activities Dealing with members of the public to offer, contract for and render brokerage services for compensation.
letter-L lien Interests in real estate which secure payment or performance of a debt or other monetary obligation.
letter-L life estate An interest in a parcel of real estate lasting the lifetime of the life tenant.
letter-L life of loan cap (cap rate) With regard to an adjustable rate mortgage, a ceiling the note rate cannot exceed over the life of the loan.
letter-L lifetime interest rate cap A limit on the amount the interest rate can increase over the life of an adjustable rate mortgage (ARM).
letter-L limitations, statute of The commonly used identifying term for various statutes which require that a legal action be commenced within a prescribed time after the accrual of the right to seek legal relief.
letter-L limited liability company An entity formed for the purpose of holding title and operating real estate for a group of investors. The members of an LLC are not liable for the LLC's debts and obligations.
letter-L limited partnership A partnership consisting of a general partner or partners and limited partners in which the general partners manage and control the business affairs of the partnership while limited partners are essentially investors taking no part in the management of the partnership and having no liability for the debts of the partnership in excess of their invested capital.
letter-L line of credit payment A home equity conversion mortgage (HECM) payment option in which the homeowner may choose when and how much money to withdraw from their line of credit until they reach their principal limit.
letter-L lintel A horizontal board that supports the load over an opening such as a door or window.
letter-L liquidated damages provision A provision stating the maximum money losses a buyer owes a seller in the event the seller incurs losses on a buyer’s breach.
letter-L liquidity Holdings in or the ability to convert assets to cash or its equivalent. The ease with which a person is able to pay maturing obligations.
letter-L liquidity trap A condition in which injections of cash into the banking system by the Federal Reserve (the Fed) fail to stimulate lending and economic growth. In the instance of California’s current crisis, cheap cash is sitting in lenders’ reserves and not being lent to prospective buyers.
letter-L lis pendens A notice recorded for the purpose of warning all persons that the title or right to possession of the described real property is in litigation.
letter-L listing An employment contract between principal (owner) and agent authorizing the agent to perform services for the principal involving the sale of property; listing contracts are entered into for the purpose of locating persons to buy, lease, or mortgage property. Employment of an agent by a prospective purchaser or lessee to locate property for purchase or lease is also considered a listing.
letter-L listing agreement An employment agreement used by brokers and agents when a client retains a broker to render real estate transactional services as the agent of the client. [See RPI Form 102 and 103]
letter-L litigation guarantee A title insurance policy which lists all parties with a recorded interest in a property and their addresses of record, ensuring that all persons with a recorded interest in a property are named and served in litigation.
letter-L littoral rights Rights to shorefront land held by landowners whose property borders large, navigable lakes and oceans.
letter-L livery of seisin (seizin) The appropriate ceremony at common law for transferring the possession of lands by a grantor to a grantee.
letter-L loan administration Also called loan servicing Mortgage bankers not only originate loans, but also service them from origination to maturity of the loan through handling of loan payments, delinquencies, impounds, payoffs and releases.
letter-L loan application The loan application is a source of information on which the lender bases a decision to make the loan; sets out the amount and repayment terms of the mortgage sought, identifies the borrower, place of employment, salary, bank accounts, assets, personal debts and expenses and credit references, and describes the real estate that is to be mortgaged. [See RPI Form 202]
letter-L loan assumption When a buyer takes over an existing mortgage and becomes primarily responsible for payment on the debt.
letter-L loan brokerage The business of originating mortgages for lenders or selling existing mortgages to investors.
letter-L loan closing When all conditions have been met, the loan officer authorizes the recording of the trust deed or mortgage. The disbursal procedure of funds is similar to the closing of a real estate sales escrow. The borrower can expect to receive less than the amount of the loan, as title, recording, service, and other fees may be withheld, or can expect to deposit the cost of these items into the loan escrow. This process is sometimes called funding the loan.
letter-L loan commitment Lender's contractual commitment to make a loan based on the appraisal and underwriting.
letter-L Loan Estimate An estimate of a buyer’s settlement charges and mortgage terms handed to the buyer on a standard form within three business days following the lender’s receipt of the mortgage application. [See RPI Form 204-5]
letter-L loan level price adjustment Adjusted interest rates or fees based on the risk of default a mortgage poses.
letter-L Loan Prospector (LP) Freddie Mac’s automated underwriting (AU) system.
letter-L Loan/Application Register (LAR) The electronic form used to collect Home Mortgage Disclosure Act (HMDA) data.
letter-L loan-to-value ratio (LTV) A ratio stating the outstanding mortgage balance as a percentage of the mortgaged property’s appraised value.
letter-L lock-in clause A promissory note provision limiting repayment to no more than the regularly scheduled installment amount, in contrast to an “or more” clause.
letter-L long-term investor A buyer who purchases a property with the intent of renting it to tenants to produce a steady income flow.
letter-L long-term rate An interest rate fixed for the duration of the mortgage.
letter-L loss mitigation A lender strategy to lessen the amount of their loss due to a default on a mortgage.
letter-L lot line adjustment When adjacent property owners move an existing property line.
letter-L lump sum option A home equity conversion mortgage (HECM) payment option in which the homeowner receives one payment after closing.
letter-L luxury vs. necessity Housing as a consumer good that enhances one's social status versus housing as a solution to one's basic need for shelter.
letter-M managing agent A broker who manages membership, common areas and accounting for a common interest development.
letter-M mandatory improvement An improvement required to be made by the tenant under the terms of the rental or lease agreement.
letter-M mandatory obligation The costs associated with originating and closing a home equity conversion mortgage (HECM).
letter-M margin The interest points added to an index by a lender as profit on the adjustment of an adjustable rate mortgage (ARM).
letter-M margin of security The difference between the amount of the mortgage loan(s) and the appraised value of the property.
letter-M marginal land Land which barely pays the cost of working or using.
letter-M market comparison An appraisal method used by an appraiser to arrive at a property's value by a comparison of recent sales prices of similar properties, adjusted for differences in the properties.
letter-M market price The price paid regardless of pressures, motives or intelligence.
letter-M market value The highest price in terms of money which a property will bring in a competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.
letter-M marketable title Title which a reasonable purchaser, informed as to the facts and their legal importance and acting with reasonable care, would be willing and ought to accept.
letter-M marketing package A property information package handed to prospective buyers containing disclosures compiled on the listed property by the seller's agent.
letter-M mark-to-management A method of valuing loans set by bank management.
letter-M mark-to-market A method of valuing loans based on the market price of the properties securing the mortgages.
letter-M masked security device Alternative documentation for a carryback sale, substituted for a note and trust deed in a deceptive attempt to avoid due-on enforcement, Regulation Z (Reg Z), reassessment for property taxes, profit reporting and the buyer’s right of reinstatement or redemption on default. [See RPI Form 300-1 and 300-2]
letter-M master lease A leasehold interest granted to a master tenant with the right to sublease the property in exchange for rent paid to the fee owner.
letter-M material breach Failure to perform significant obligations called for in an agreement, such as a promissory note.
letter-M material defect Information about a property which might affect the price and terms a prudent buyer is willing to pay for a property.
letter-M material fact Information about a listed property which may affect the property’s value or alter a client’s decision to purchase or sell the property and, thus, needs to be disclosed.
letter-M material participant A rental property owner who participates in real estate rental operations or a real estate profession on a regular, continuous and substantial basis.
letter-M maximum claim amount The ceiling amount for how much the homeowner is responsible for repaying once a home equity conversion mortgage (HECM) becomes due.
letter-M mean price trendline A reflection of consumer inflation, to which property prices cyclically return.
letter-M mechanic's lien A lien entitling a contractor or subcontractor to foreclose on a job site property to recover the amount due and unpaid for labor and materials they used.
letter-M median age The midway point between the older half of a population and the younger half.
letter-M mediation An informal, non-binding dispute resolution voluntarily agreed to in which a third-party mediator works to bring the disputing parties to their own decision to resolve their dispute.
letter-M medicare tax Under the 2013 health care law, this is an additional tax on earned income exceeding a threshold amount.
letter-M Mello-Roos The Mello-Roos Community Facilities Act of 1982 authorizes the formation of community facilities districts; the issuance of bonds, and the levying of special taxes thereunder to finance designated public facilities and services.
letter-M merger The termination of an easement when one owner acquires fee title to both the property benefitting from and the property burdened by an easement.
letter-M meridians Imaginary north-south lines which intersect base lines to form a starting point for the measurement of land.
letter-M mesne profits Profit from land use accruing between two periods as for example moneys owed to the owner of land by a person who has illegally occupied the land after the owner takes title, but before taking possession.
letter-M metes and bounds A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles. Metes (length or measurements) and Bounds (boundaries) description are used when accuracy as to the exact location of the line is required.
letter-M metropolitan statistical area (MSA) A large region connected by common economic ties, considered as a unit for statistical purposes.
letter-M mile 5,280 feet.
letter-M Millennium Boom The years 2000-2007 leading up to the 2008 economic recession, characterized by loose lending practices and unsustainably high real estate sales volume and prices.
letter-M minor A person under 18 years of age.
letter-M minor breach Failure to pay late charges, interest penalties, bad check charges or security deposits.
letter-M misdemeanor A lesser crime punishable by a fine and/or county jail sentence.
letter-M misplaced improvements Improvements on land which do not conform to the most profitable use of the site.
letter-M misrepresentation A false or misleading statement or assertion given to another to induce them to do something.
letter-M mixed collateral transaction A transaction which is evidenced by one note and secured by both real estate (using a trust deed) and personal property (using a UCC-1 Form).
letter-M mixed-use property An urban real estate development which combines residential and commercial uses.
letter-M MLO organization An entity performing mortgage loan origination services.
letter-M mobilehome Property designed to be used as a dwelling, classified as either personal or real property depending on the method of attachment to a parcel of real estate. Also known as a manufactured home.
letter-M modification A mutual agreement between a mortgage holder and a property owner to alter, add or rescind one or more of the terms of a mortgage.
letter-M modular A system for the construction of dwellings and other improvements to real property through the on-site assembly of component parts (modules) that have been mass produced away from the building site.
letter-M moldings Usually patterned strips used to provide ornamental variation of outline or contour, such as cornices, bases, window and door jambs.
letter-M momentum traders Buyers relying on the emotion of frenzied market participants, rather than property price inflation, to profit from buying and reselling property.
letter-M monetarist economic view An economic view which holds it is the role of the government to control the amount of money in circulation, not a commodity or other currency. In the U.S., this is performed by the Federal Reserve (the Fed) and the U.S. Treasury.
letter-M monetary breach A tenant's failure to timely pay rent or other money obligation due.
letter-M monetary controls Federal Reserve tools for regulating the availability of money and credit to influence the level of economic activity, such as adjusting discount rates, reserve requirements, etc.
letter-M monetary policy The Federal Reserve's use of short-term interest rates and other infusions and withdrawals of dollars in circulation to control pricing and employment in the economy.
letter-M money action Litigation which seeks to recover future rents and any previously unpaid rent earned but not included in an unlawful detainer judgment.
letter-M money illusion The illusion that a property's past dollar value and the amount a current homebuyer will pay are the same.
letter-M money judgment An award for money issued by a court resulting from a lawsuit for payment of a claim.
letter-M money judgment (on foreclosure) An award for any unpaid balance remaining after a judicial foreclosure sale due to the secured property’s insufficient fair market value (FMV) on the date of the sale to satisfy the debt owed, also called a deficiency.
letter-M money multiplier effect The rapid expansion of the money supply dictated by lenders' ability to lend. It is calculated by dividing the total deposits held by lenders by the reserve requirement.
letter-M monument A fixed object and point established by surveyors to establish land locations.
letter-M moral hazard An investment situation in which the risk of loss is borne primarily by a group of investors, not the syndicator, strutured to discourage the syndicator from working for results that exceed minimum performance standards and motivate the syndicator to take unacceptable risks.
letter-M moral risk The existence of an overly permissive attitude towards debt which leads to a greater risk of default by other debtors.
letter-M moratorium The temporary suspension, usually by statute, of the enforcement of liability of debt. Temporary suspension of development or utilities connections imposed by local government.
letter-M mortgage A security device by which real estate is hypothecated to secure the payment of a debt; in the event of a default on the mortgage, a notice procedure for foreclosure is established by statute.
letter-M Mortgage Acts and Practices — Advertising A federal law governing consumer mortgage advertisements.
letter-M Mortgage Assistance Relief Services (MARS) rule A federal regulation protecting homeowners by controlling the activities of mortgage assistance relief providers.
letter-M mortgage banker A person whose principal business is the originating, financing, closing, selling and servicing of loans secured by real property for institutional lenders on a contractual basis.
letter-M mortgage call report A quarterly report on consumer mortgage data provided to the Nationwide Mortgage Licensing System (NMLS), used to enhance regulatory oversight.
letter-M mortgage commitment A lender’s commitment to make a mortgage, enforceable only when written, unconditional and signed by the lender for consideration.
letter-M mortgage contracts with warrants Warrants make the mortgage more attractive to the lender by providing both the greater security that goes with a mortgage, and the opportunity of a greater return through the right to buy either stock in the borrower's company or a portion of the income property itself.
letter-M mortgage guaranty insurance Insurance against financial loss available to mortgage lenders from private mortgage insurance companies (PMICs).
letter-M mortgage insurance premium (MIP) Default insurance premiums required on a Federal Housing Administration (FHA)-insured mortgage, paid both up-front and annually.
letter-M mortgage interest deduction (MID) An itemized deduction for income tax reporting allowing homeowners to deduct interest and related charges they pay on a mortgage encumbering their primary or second homes.
letter-M mortgage investment company A company or group of private investors that buys mortgages for investment purposes.
letter-M mortgage loan activity notification A report notifying the California Bureau of Real Estate (CalBRE) when a licensee commences offering mortgage loan originator (MLO) services.
letter-M Mortgage Loan Disclosure Statement (MLDS) A California disclosure provided to a borrower by a mortgage broker who negotiates a mortgage on the borrower’s behalf. [See RPI Form 204]
letter-M mortgage loan originator (MLO) An individual who receives fees to arrange a consumer mortgage.
letter-M mortgage loan originator (MLO) broker A mortgage loan originator (MLO) who is other than a natural person, such as a corporate broker.
letter-M mortgage package A collection of documents required to process a mortgage application and sent to a mortgage
underwriting officer for review after receipt of the appraisal on the property offered as security.
letter-M mortgage payment ratio A debt-to-income ratio (DTI) used to determine eligibility for an FHAinsured mortgage limiting the buyer’s mortgage payment to 31% of the buyer’s gross effective income.
letter-M mortgage processing The receipt of a mortgage application and the organization, preparation and confirmation of supporting documentation by the lender’s mortgage processor for submission to the lender.
letter-M mortgage shopping worksheet A worksheet designed for use by buyers when submitting applications for a consumer mortgage to compare mortgages offered by different lenders based on a list of all the variables commonly occurring as costs at the time of origination and over the life of the mortgage. [See RPI Form 312]
letter-M mortgage steering A mortgage loan originator (MLO) practice of directing a homebuyer to a consumer mortgage with less favorable terms in order to obtain greater compensation.
letter-M mortgage-backed bond (MBB) An asset-backed security representing a claim on the cash flows from payments received on a mortgage.
letter-M mortgage-backed loan (MBL) A loan secured by the assignment of an existing note and trust deed.
letter-M mortgagee An investor who originates a mortgage with a borrower (mortgagor) to secure a loan th elender funds; a lender or creditor.
letter-M mortgagee-in-possession A lender who possesses a property, receiving any income it produces, and is obligated to operate or manage the property.
letter-M mortgage-in-fact A grant deed given by an owner for the sole purpose of securing the performance of an obligation owed a creditor, such as payment of a debt.
letter-M mortgagor One who encumbers their property with a mortgage to secure a loan; a borrower.
letter-M multiple listing A listing, usually an exclusive right to sell, taken by a member of an organization composed of real estate brokers, with the provisions that all members will have the opportunity to find an interested buyer; a cooperative listing insuring owner property will receive a wider market exposure.
letter-M multiple listing service (MLS) An association of real estate agents pooling and publishing the availability of their listing properties.
letter-M mutual consent A meeting of the minds between the parties to a transaction. One of the four essential elements of a contract.
letter-M mutual savings banks Financial institutions owned by depositors each of whom has rights to net earnings of the bank in proportion to his or her deposits.
letter-M mutual water company A water company organized by or for water users in a given district with the object of securing an ample water supply at a reasonable rate; stock is issued to users.
letter-N narrative report A summary of all factual materials, techniques and appraisal methods used by the appraiser in establishing the value of a property. This is the most thorough type of appraisal report.
letter-N Nationwide Mortgage Licensing System (NMLS) The national registry of consumer mortgage loan originators (MLOs).
letter-N Nationwide Mortgage Licensing System (NMLS) identification number (ID) A unique number identifying a consumer mortgage loan originator (MLO) in the Nationwide Mortgage Licensing System (NMLS).
letter-N Natural Hazard Disclosure Statement (NHD) A report provided by a local agency or NHD vendor and used by sellers and seller's agents to disclose natural hazards which exist on a property held out for sale. [See RPI Form 314]
letter-N natural hazards Risks to life and property which exist in nature due to a property's location.
letter-N negative amortization The addition of unpaid interest to the principal balance of a mortgage due to insufficient monthly interest payments.
letter-N negative covenant A recorded restriction prohibiting identified uses of a property.
letter-N negative equity The condition of a property owner owing more on a mortgage than the current fair market value of the encumbered property.
letter-N negative fraud Deceitfully withholding or failing to disclose information to someone.
letter-N negligence The failure to behave with the level of care that someone of ordinary prudence would have exercised under the same conditions.
letter-N negotiable Capable of being negotiated, assignable or transferable in the ordinary course of business.
letter-N net income The money remaining after expenses are deducted from income; the profit.
letter-N net income multiplier (NIM) The property's price as a multiple of the net operating income (NOI).
letter-N net investment income Pre-tax income received from investment assets. For real estate investors, this includes income, profits and losses from the operations and sales of rental property, interest income and profits on land held for resale.
letter-N net lease A commercial lease which transfers to the tenant the obligation, unless modified, to pay all of the costs of ownership in addition to utilities and janitorial services. [See RPI Form 552-2 and 552-3]
letter-N net listing A type of listing in which the agent's fee is set as all sums received exceeding a net price established by the owner.
letter-N net operating income (NOI) 1) The net revenue generated by an investment property before mortgage payments. It is calculated as the sum of a property’s gross operating income less the property’s total operating expenses. [See RPI Form 352 §4] 2) The net revenue generated by an agent's employment, calculated by subtracting business operating costs from the expected income from fees generated from sales, leasing or financing transactions.
letter-N net sales proceeds The seller's receipts on closing a sale of their property after all costs of the sale and mortgage payoffs have been deducted from the gross proceeds.
letter-N no-investor policy HUD policy which restricts a defaulting seller from selling their FHA-insured single family residence (SFR) to an investor.
letter-N nominal demand A measure of demand which includes the illusory demand created by speculator activity artificially driving up sales volume and prices.
letter-N nominal interest rate The interest rate agreed to between the homebuyer and the lender as stated on the promissory note.
letter-N nominal money losses Monetary recovery when no injury has occurred.
letter-N nominal rate of return The interest rate agreed to between the buyer and the mortgage holder as stated on the promissory note, also called the note rate.
letter-N non-conforming loan A conventional loan with a loan amount greater than the loan amount limits set by Fannie Mae and Freddie Mac. Non-conforming loans are also known as jumbo loans.
letter-N nondelegable duty A duty which cannot be transferred or assumed by another person. In the case of a landlord, a nondelegable duty cannot be assumed by a property manager or contractor.
letter-N nondisturbance agreement An agreement with mortgage lender providing for the tenant's lease agreement to remain in effect for its full term after the leasehold is subordinated to a new mortgage.
letter-N nondisturbance clause A lease agreement provision which is coupled with the future subordination clause to allow a tenant's junior leasehold interest to remain unaffected by a lender's foreclosure under a senior trust deed. [See RPI Form 552-8]
letter-N non-exempt lender A lender subject to usury limitations when making a loan.
letter-N non-exempt private lender A lender subject to usury limitations when making a loan.
letter-N nonjudicial foreclosure When property is sold at a public auction by a trustee as authorized under the power-ofsale provision in a trust deed.
letter-N nonmonetary breach A tenant's breach of any obligation other than an obligation to pay money.
letter-N nonrecourse debt A debt recoverable on default solely through the value of the security interest in the secured property.
letter-N nonrecourse mortgage A mortgage subject to anti-deficiency laws which do not permit the mortgage holder (lender or carryback seller) to pursue a borrower to collect any loss due to a deficiency in the value of the secured property on foreclosure or a short payoff.
letter-N nonrecurring deposits or charges One-time costs for which the tenant is responsible. [See RPI Form 550 §2]
letter-N non-targeted transaction A transaction type excluded from a particular legal code or regulation and not subject to its rules.
letter-N nontraditional credit Accounts other than traditional mortgage, loan, credit card and bank accounts, used to analyze a consumer’s ability to repay debt.
letter-N nonwaiver of rights provision A nonresidential rental or lease agreement provision containing the landlord's reservation of rights. [See RPI Form 552 §20]
letter-N nonwaiver provision A provision in the lease agreement that states a landlord's waiver of a tenant's breach is not a waiver of similar or future breach. [See RPI Form 550 §7.4 and 552 §20.1]
letter-N notary public An appointed officer with authority to take the acknowledgment of persons executing documents, sign the certificate and affix official seal.
letter-N note A document given as evidence of a debt owed by one person to another, sometimes called a promissory note. [See RPI Form 421 and 424]
letter-N note rate The interest rate agreed to between the homebuyer and the lender on the promissory note. Contrast with real interest rate.
letter-N notice 1) Actual Notice - Express or implied knowledge of a fact. 2) Constructive notice - A fact, imputed to a person by law, which should have been discovered because of the person's actual notice of circumstances and the inquiry that a prudent person would have been expected to make. 3) Legal Notice - Information required to be given by law.
letter-N notice of action taken A notice disclosing to the applicant the specific reasons for a denial of credit, as required by the Equal Credit Opportunity Act (ECOA).
letter-N Notice of Cancellation A notice from either the buyer or seller given to the other party cancelling the transaction. [See RPI Form 181]
letter-N notice of change in rental terms Written notice served on the tenant noting changes in the terms or conditions of a month-to-month rental agreement. [See RPIForm 570 and 574]
letter-N Notice of Default (NOD) The notice recorded to begin the nonjudicial foreclosure process.
letter-N Notice of Delinquency (NODq) The notice sent by a mortgage holder to a person who requested the notice within 15 calendar days after four consecutive months of unpaid and delinquent monthly installments on their mortgage.
letter-N notice of entry A document served on a tenant giving them advance notice of a landlord's intent to enter a tenant's unit to perform maintenance, make repairs or inspect. [See RPI Form 567]
letter-N notice of incompleteness A notice requesting additional information to complete a mortgage application, as required by the Equal Credit Opportunity Act (ECOA).
letter-N notice of intent to vacate A tenant's notice to the landlord signifying their intent to vacate the leased property. [See RPI Form 571 and 572]
letter-N notice of nonresponsibility A notice used by an owner to declare they are not responsible for any claim arising out of the improvements their tenant is constructing on their property. [See RPI Form 597]
letter-N notice of rescission Notice given by a seller-in-foreclosure to an equity purchase (EP) investor to exercise the seller's two-year right to rescind the sale and be restored to title of the property sold.
letter-N notice of right to reclaim personal property A landlord's notice mailed to a former tenant informing the tenant of their right to reclaim or abandon personal property remaining on the premises. [See RPI Form 583 and 584]
letter-N notice of right to rescind A disclosure notifying a homeowner of their right to cancel a non-purchase money consumer mortgage secured by their principal residence, the circumstances allowing the homeowner to cancel and the effects of the rescission.
letter-N notice of trustee's sale (NOTS) The notice recorded, posted and mailed to evidence an impending trustee’s sale to the property owner and potential bidders.
letter-N Notice to Home Loan Applicant A disclosure of the consumer’s right to credit score disclosures and how consumer credit scores are used, as required by the Fair Credit Reporting Act (FCRA).
letter-N notice to landlord to surrender personal property A written request submitted by a former tenant to a landlord for the return of personal property left in the vacated unit. [See RPI Form 582]
letter-N notice to pay rent or quit A notice served on a tenant by the landlord which states the amount of delinquent rent and any other delinquent amounts owed the landlord under a rental or lease agreement. [See RPI Form 575 and 575-1]
letter-N notice to perform or quit A notice requiring a tenant to perform an action to remedy a curable nonmonetary breach of the lease agreement. [See RPI Form 576]
letter-N notice to quit A notice to vacate served on a tenant for an incurable breach of a rental or lease agreement or due to a statutory breach of the tenancy. [See RPI Form 577]
letter-N notice to vacate A written document used by a tenant or a landlord to terminate a periodic tenancy. [See RPI Form 569 and 569-1]
letter-N novation An agreement entered into by a mortgage holder, buyer and seller to shift responsibility for a mortgage obligation to the buyer by an assumption and release the seller of liability.
letter-N novation agreement An agreement entered into by a mortgage holder, buyer and seller to shift responsibility for a mortgage obligation to the buyer by an assumption and release the seller of liability.
letter-N nuisance An action which is injurious to health, offensive to the senses, or obstructs the use and enjoyment of surrounding property. [See RPI Form 550 §6.7 and 552 §7.3]
letter-N nuisance per se Any activity specifically declared by statute to be a nuisance, such as construction of fences of excessive height or the illegal sale of controlled substances.
letter-N null and void Of no legal validity or effect.
letter-O obsolescence Loss in value due to reduced desirability and usefulness of a structure because its design and construction become obsolete; loss because of becoming old-fashioned and not in keeping with modern needs, with consequent loss of income. May be functional or economic.
letter-O offer to lease A document which sets forth all crucial elements typically negotiated to bring the landlord and tenant together in final leasing arrangements. [See RPI Form 556]
letter-O offer to purchase A proposal made by a potential buyer to acquire property on the stated terms, which the property owner may accept or reject. [See RPI Form 185]
letter-O office manager A licensee hired by a broker to fulfill the supervisory responsibility of reviewing documents and maintaining office files. [See RPI Form 510]
letter-O offset statement Statement by owner of property or owner of lien against property setting forth the present status of liens against said property. [See RPI Form 414]
letter-O off-site improvements Improvements not located on the lots being sold which add value to the development, such as access roads, street lighting and sidewalks.
letter-O one-action rule The prohibition of more than one action to recover a mortgage debt, requiring the mortgage holder to first resort to foreclosure on the real estate before pursuing other collection remedies. The enforcement of the assignment of rents provision by collecting rents does not bar a mortgage holder from later foreclosing on the real estate and, if a recourse mortgage, seeking a deficiency judgment.
letter-O open housing law Congress passed a law in April 1968 which prohibits discrimination in the sale of real estate because of race, color, or religion of buyers.
letter-O open listing An employment entered into by a broker to render real estate services on a best-efforts basis under which a fee is due to the broker if they achieve the client's objective of the employment before the client or another broker separately first meet the objective, such as the sale or locating of a property.
letter-O open-end mortgage A mortgage which gives the borrower the ability to withdraw funds in a line of credit.
letter-O operating agreement A form used by syndicators when setting up a limited liability company (LLC) to establish the procedures for operating the LLC and the rights and duties of its members. [See RPI Form 372]
letter-O operating expenses The total annual cost incurred to maintain and operate a property for one year. [See RPI Form 352 §3.21]
letter-O opinion A statement by an agent concerning an event or condition which has not yet occurred based on readily available facts.
letter-O opinion of title An attorney's written evaluation of the condition of the title to a parcel of land after examination of the abstract of title.
letter-O opportunity cost The cost of an action that is forgone in choosing to take an alternative action, usually a consideration when making one investment over another.
letter-O oppression When no real negotiations occur between an equity purchase investor and a seller-in-foreclosure and are not realistic due to a take it or leave it environment created by the EP investor's abuse of the inequality in bargaining power.
letter-O option A right given for a consideration to another by a property owner, to purchase or lease a property as agreed within a specified time without obligating the person who receives the right to exercise the right.
letter-O option adjustable rate mortgage (ARM) An adjustable rate mortgage (ARM) giving the borrower the choice of a full monthly payment, an interest-only payment, and a minimum payment typically less than the interest due.
letter-O option listing A variation of the exclusive right-to-sell listing in which the seller grants the broker an option to buy the property at a predetermined price, if the property does not sell during the listing period. [See RPI Form 102 §10]
letter-O option money Consideration given by a buyer to a seller for granting the buyer an option to purchase the property.
letter-O option period The time period during which an optionee/buyer may exercise their right to buy under an option agreement. [See RPI Form 161 §4]
letter-O option to buy An agreement granting an irrevocable right to buy property within a specific time period. [See RPI Form 161]
letter-O option to extend An agreement granting a tenant the right to extend possession under their lease agreement on terms set out in the option to extend. [See RPI Form 565]
letter-O option to renew An agreement granting a tenant the right to continue in possession upon expiration of the existing lease under a new lease agreement on the same conditions as the expiring lease agreement on terms for payment of rent set out in the option to renew. [See RPI Form 565]
letter-O oral contract A verbal agreement; one which is not reduced to writing.
letter-O orientation Placing a structure on its lot with regard to its exposure to the rays of the sun, prevailing winds, privacy from the street and protection from outside noises.
letter-O origination charge A charge for lender-performed services integral to the administrative process of originating a mortgage.
letter-O ostensible authority That authority which a third person reasonably believes an agent possesses because of the acts or omissions of the principal.
letter-O overage A surplus amount in a trust account exceeding the amount of trust funds held in all the subaccounts for individuals.
letter-O overimprovement An improvement which is not the highest and best use for the site on which it is placed by reason of excess size or cost.
letter-O overlying right The right of a real estate owner to take the ground water below the surface of their land.
letter-O overriding rent The amount the current market rent rates exceed the rents set in the lease agreement, attainable by the tenant on a sublease to a successor tenant.
letter-O owner-by-foreclosure The winning bidder at a trustee's sale who takes title to the property sold by a trustee's deed.
letter-O owner's statement An accounting on the status, expenditure and location of negotiable trust funds provided to the owner of those funds.
letter-O ownership The right of one or more persons to possess and use property to the exclusion of all others. A collection of rights to the use and enjoyment of property.
letter-P package mortgage A type of mortgage used in home financing covering real property, improvements, and movable equipment/appliances.
letter-P panic selling As with blockbusting, the prohibited discriminatory practice of a real estate licensee inducing a property owner to list a property for sale by suggesting that a change in neighborhood demographics will cause a loss in property values.
letter-P par interest rate The interest rate for a mortgage in the secondary mortgage market without the addition of a yield spread premium or discount points.
letter-P par rate The lender's base interest rate without any positive or negative adjustments for profit.
letter-P par value Market value, nominal value.
letter-P paramount title Title which is superior or foremost to all others.
letter-P parcel A three-dimensional portion of real estate identified by a legal description.
letter-P parity distribution An equal sharing between all members in a limited liability company (LLC) of earnings in the form of spendable income and proceeds of a sale or refinance.
letter-P parol evidence A rule that prevents a party to a written contract from presenting outside evidence that clarifies the written terms of a contract that appears to be whole.
letter-P partial payment agreement An agreement for receipt of partial rent, specifying the amount of deferred rent remaining unpaid and the date for its payment. [See RPI Form 558 and 559]
letter-P participation Sharing of an interest in a property by a lender. In addition to base interest on mortgage loans on income properties, a percentage of gross income is required, sometimes predicated on certain conditions being fulfilled, such as a minimum occupancy or percentage of net income after expenses, debt service and taxes. Also called equity participation or revenue sharing.
letter-P parties (party) Those persons taking part in a transaction as principals, e.g., seller, buyer, or lender in a real estate transaction.
letter-P partition A division of real or personal property or the proceeds therefrom among co-owners.
letter-P partition action Court proceedings by which co-owners seek to sever their joint ownership and parcel or sell a property.
letter-P partnership A voluntary association of two or more persons to carry on a business or venture on terms of mutual participation in profits and losses.
letter-P party wall A common boundary improvement located on a property line between adjacent properties, such as a wall, fence or building co-owned by the adjacent property owners.
letter-P passive category income Profits and losses from rental real estate, operations and sales, and from non-owner-operated businesses.
letter-P pass-through provisions An all-inclusive trust deed (AITD) provision used by a carryback seller which provides for the payment of any demands made by the underlying mortgage holder, other than regular principal and interest payments, to be passed through to the buyer when triggered by the buyer’s conduct. [See RPI Form 442 and 443]
letter-P patent Conveyance of title to government land.
letter-P payment adjustment date With regard to an adjustable rate mortgage, the date the borrower's monthly principal and interest payment may change.
letter-P payment cap A limit on the amount of increase in the borrower’s monthly principal and interest at the payment adjustment date on an adjustable rate mortgage (ARM).
letter-P payment rate With respect to an adjustable rate mortgage, the rate at which the borrower repays the loan - reflects buydowns or payment caps.
letter-P payoff demand A written demand, prepared by a mortgage holder, for the total dollar amount required on the date of preparation to pay off the mortgage as a requisite for recording a reconveyance of their trust deed lien on a property.
letter-P penalty An extra payment or charge required of the borrower for deviating from the terms of the original loan agreement. Usually levied for being late in making regular payment or for paying off the loan before it is due, known as late charges and prepayment penalties.
letter-P per capita income A measure of average income per person in a population center.
letter-P percentage lease A commercial lease agreement for a retail operation that sets the total amount of rent the tenant will pay as a percentage of the tenant's gross sales. [See RPI Form 552-4]
letter-P perfecting the lien The preparation and filing of a UCC-1 Financing Statement (UCC-1) to put the public on notice of the lien created by a security agreement.
letter-P perimeter heating Baseboard heating, or any system in which the heat registers are located along the outside walls of a room, especially under the windows.
letter-P periodic interest rate cap A limit on the amount the interest rate can increase with each future adjustment of an adjustable rate mortgage (ARM).
letter-P periodic tenancy A leasehold interest which lasts for automatic successive rental periods of the same length of time, terminating upon notice from either party. [See RPI 551 and 552-5]
letter-P permanent nuisance A nuisance which cannot be abated at a reasonable cost and by reasonable means.
letter-P permissive improvement A nonmandatory improvement the tenant is authorized to complete without further landlord consent.
letter-P personal property Moveable property not classified as part of real estate, such as trade fixtures.
letter-P personal use loan A mortgage origination which funds a personal use, such as a loan that funds the purchase or improvement of an owner’s principal residence or second home.
letter-P personal-satisfaction contingency provision A provision in an agreement requiring the personal approval of an aspect of a transaction by the seller or buyer, not a third party, as a condition for further performance or cancellation of the transaction. [See RPI Form 150 §11.10(b)]
letter-P Pest Control Certification A certificate of clearance by the Structural Pest Control company indicating the property is free of pest infestation or infection in the visible and accessible areas, commonly called a termite clearance.
letter-P physical deterioration Impairment of condition. Loss in value brought about by wear and tear, disintegration, use and actions of the elements; termed curable and incurable.
letter-P physical file A file to store all the information and documents regarding a transaction, such as agreements and disclosures. [See RPI Form 520]
letter-P physical life The total number of years a building is presumed to potentially exist in a productive capacity.
letter-P PITI (principal, interest, taxes and insurance) The sum of the components of a monthly payment to a mortgage holder applied in part on the debt and in part as an impound account deposit for payment of annually recurring ownership expenses such as property taxes and insurance premiums.
letter-P plaintiff In a court action, the one who sues; the complainant.
letter-P planned development A subdivision consisting of separately owned parcels of land together with membership in an association which owns common area. Sometimes the owners of separate interests also have an undivided interest in the common area.
letter-P planned unit development (PUD) A term sometimes used to describe a planned development. A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning.
letter-P planning commission An agency of local government charged with planning the development, redevelopment or preservation of an area.
letter-P plat (of survey) A map of land made by a surveyor showing the boundaries, buildings and other improvements.
letter-P pledge To offer an asset (such as an existing carryback note) as collateral or security for another, unrelated debt. Also known as hypothecation. [See RPI Form 242]
letter-P pledgee One who is given a pledge or a security. (See definition of Secured Party.)
letter-P pledgor One who offers a pledge or gives security. (See definition of debtor.)
letter-P plottage A term used in appraising to designate the increased value of two or more contiguous lots when they are joined under single ownership and available for use as a larger single lot. Also called assemblage.
letter-P plottage increment The appreciation in unit value created by joining smaller ownerships into one large single ownership.
letter-P points A fee charged by a lender as prepaid interest which in turn reduces the note rate on the mortgage, with a point equaling 1% of the amount of the mortgage.
letter-P police power The basis for enacting local ordinances such as zoning, traffic, health and safety regulations and rent control.
letter-P portfolio income category Unearned income from interest on investments in bonds, savings, stocks and mortgage notes, and income, profits and losses from management-free income property.
letter-P portfolio investor An investor who seeks income from interest earned on bonds, savings and trust deed notes and earnings on stocks, land held for profit and management-free long-term property leases.
letter-P portfolio lender A lender who both funds and holds a mortgage to collect the interest income.
letter-P portfolio yield Any lender earnings from fees or interest on a mortgage.
letter-P post-closing surprise The post-closing discovery of detrimental conditions hidden in the wording of an equity purchase (EP) agreement or escrow instructions.
letter-P power of attorney A temporary authority granted to an individual to perform activities during a period of the owner's incapacity or travel. [See RPI Form 447]
letter-P power-of-sale provision A trust deed provision authorizing the trustee to initiate a non-judicial foreclosure sale of the described property on instructions from the beneficiary.
letter-P prefabricated house A house manufactured and sometimes partly assembled before delivery to building site.
letter-P preferred stock A class of corporate stock entitled to preferential treatment such as priority in distribution of dividends.
letter-P pre-foreclosure workout Negotiations between a mortgage holder and defaulting property owner with the purpose of exploring options to avoid foreclosure.
letter-P preliminary title report (prelim) A report constituting a revocable offer by a title insurer to issue a policy of title insurance, used by a buyer and escrow for an initial review of the vesting and encumbrances recorded and affecting title to a property.
letter-P prepaid items of expense Prorations of prepaid items of expense which are credited to the seller in the closing escrow statement.
letter-P prepayment Provision made for loan payments to be larger than those specified in the note.
letter-P prepayment penalty A levy charged by a mortgage holder to a borrower who pays off the outstanding principal balance on a mortgage prior to its maturity. [See RPI Form 418-2]
letter-P prescription A process for acquiring property rights to use another's property, such as an easement, through adverse use hostile to the rights of the owner.
letter-P prescriptive easement The right to use another's property established by the adverse use of the property for a period in excess of five years without a claim of ownership.
letter-P prescriptive right The right to use water established by appropriating nonsurplus water openly and adversely for an uninterrupted period of five years without documentation of a legal right.
letter-P present value Future rental net operating income discounted at a given rate of return minus the effects of inflation.
letter-P presumption An assumption of fact that the law requires to be made from another fact or group of facts found or otherwise established in the section.
letter-P price adjustment provision A provision contained in a purchase agreement calling for an adjustment in the price paid for a property to cover the costs necessary to bring the property into the condition as disclosed at the time of acceptance.
letter-P price appreciation Any increase beyond the rate of consumer inflation above the price paid for property experienced by the owner on its resale.
letter-P price fixing An arrangement among providers of the same service to sell their services only at a predetermined price.
letter-P price tier A segment of the housing market, either low- mid- or high-tier, with low and upper price limits that change based on market factors. As opposed to the median price figure, the movement of the market is best understood through an analysis of individual price tiers.
letter-P price-to-earnings (P/E) ratio The market value per share divided by earnings per share. This is a quick way to measure the price level of the stock market or an individual stock.
letter-P price-to-value difference The difference between the price agreed to in a purchase agreement and the value of the property on the date the agreement is breached.
letter-P prima facie Latin meaning first sight, a fact presumed to be true until disproved.
letter-P prime offer rate A base rate used by banks to price short-term business loans and home equity lines of credit, set 3% above the federal funds rate.
letter-P prime rate A base rate used by banks to price short-term business loans, set 3% above the federal funds rate.
letter-P principal A person, an individual or an entity, acting as a buyer or seller, represented by a broker and their agents.
letter-P principal disputes Disputes between a buyer and seller.
letter-P principal, interest, taxes and insurance (PITI) The four components of monthly mortgage debt.
letter-P principal limit The maximum mortgage amount available to the homeowner on a home equity conversion mortgage (HECM).
letter-P principal note The promissory note which is secured by the mortgage or trust deed.
letter-P principal residence The residential property where the homeowner resides a majority of the year.
letter-P principal residence profit exclusion A tax exclusion on profit from a home sale up to a set dollar amount.
letter-P principles of value The application of several appraisal principles to arrive at a final value. The basic principle is substitution.
letter-P prior lien A lien which is senior or superior to others.
letter-P priority The order in which trust deed liens on title to real estate hold their security interest in the property in the event of foreclosure.
letter-P priority of lien The order in which liens are given legal precedence or preference.
letter-P private lender An individual or non-government organization that lends money.
letter-P private mortgage insurance (PMI) Default mortgage insurance coverage provided to a mortgage holder by private insurers on conventional mortgages with loan-to-value (LTV) ratios higher than 80%.
letter-P privity Mutual relationship to the same rights of property, contractual relationship.
letter-P privity of contract The relationship which exists between the persons who are parties to a contract.
letter-P privity of estate A mutual or successive relationship to the same rights in property; a connection between persons to the same estate in property.
letter-P pro forma operating budget A budget which discloses the amount of assessments collected by an HOA, its cash reserves and whether special assessments are anticipated to occur.
letter-P pro rata In proportion; according to a percentage or proportion of a whole, such as annual property taxes, based on part of a month or year.
letter-P pro rata rent Rental payment amount due for the portion of the rental period remaining after a change in the rent amount due. [See RPI Form 552 §4.1]
letter-P probate referee (on foreclosure) An appraiser appointed by the court in a judicial foreclosure action to advise the court on a property’s fair market value (FMV) on the date of the judicial foreclosure sale.
letter-P probate sale A court managed sale of a property during the probate process.
letter-P procuring cause That cause originating from a series of events that, without break in continuity, results in an agent producing a final buyer under an agency employment; the real estate agent who first procures a ready, willing, and able buyer for the agreed upon price and terms entitling them to a fee.
letter-P profit a prendre The right to remove minerals from another's real estate.
letter-P profit and loss statement A type of financial statement which discloses the tenant's business income, expenses and net operating income. [See RPI Form 209-2]
letter-P progress payments Scheduled, periodic, and partial payment of construction loan funds to a builder as each construction stage is completed.
letter-P progression, principle of The worth of a lesser valued residence tends to be enhanced by association with higher valued residences in the same area.
letter-P prohibited transactions Improper investment of individual retirement account (IRA) funds by the IRA owner resulting in self-dealing, defined as transactions between the IRA and disqualified persons.
letter-P projection An opinion about an income property's future performance based on its performance during the preceding 12-month period, adjusted for presently known trends.
letter-P promissory note A document given as evidence of a debt owed by one person to another. [See RPI Form 421 and 424]
letter-P proof-of-loss statement A statement submitted to the title insurance company by the insured referencing the encumbrance discovered after they were issued the policy, the amount of the loss and the basis for calculating the loss.
letter-P property Everything capable of being owned and acquired lawfully. The rights of ownership. The right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights. Property is classified into two groups, personal property and real property.
letter-P property appreciation The portion of the increase in property prices beyond the rate of inflation.
letter-P property charges On a home equity conversion mortgage (HECM), a collective term for property taxes, insurance, ground rents, fees and special assessments.
letter-P property expense profile An itemized analysis of the costs a tenant or landlord will incur to operate and maintain a particular property. [See RPI Form 562]
letter-P property management A service offered by a licensed real estate broker in their real estate business involving the marketing, operation, maintenance and day-to-day accounting for rental properties.
letter-P property management agreement An employment agreement setting the rights, responsibilities and expectations of both the property manager and the landlord. [See RPI Form 590]
letter-P property operating data The actual costs of operating a property for its intended use. [See RPI Form 306, 352 and 562]
letter-P property profile A report from a title company providing information about a property’s ownership, encumbrances, use restrictions and comparable sales data.
letter-P Proposition 13 A 1979 California state constitutional amendment restricting property tax increases in years following acquisition by limiting annual increases in assessed value of real estate to no more than 2%, or the rate of consumer inflation if less.
letter-P proration Provisions entitling the seller to a credit for the portion of prepaid sums which have not accrued on obligations a buyer assumes on the day escrow closes, or entitling the buyer to a credit for amounts assumed which accrued unpaid through the day prior to the close of escrow. [See RPI Form 401 §10]
letter-P proration of taxes To divide or prorate the taxes equally or proportionately to time of use, usually between seller and buyer.
letter-P protected group A class of people who receive special protections against discrimination due to their distinguishing factors.
letter-P proximate cause That cause of an event which, in a natural and continuous sequence unbroken by any new cause, produced that event, and without which the event would not have happened. Also, the procuring cause.
letter-P prudent investor standard A property management standard reflecting the expectations of a well-informed investor for efficient and effective management of rental income and expenses.
letter-P public accommodation Property owned, leased or operated by a private entity whose operation affects commerce.
letter-P public controls State laws, zoning regulations, building codes and local plans designed to protect property values and control growth.
letter-P public housing Subsidized housing typically reserved for low-income families, the elderly, and persons with disabilities.
letter-P public nuisance A nuisance affecting an entire segment of the public.
letter-P public policy A system of laws maintained by local, state or federal government for the conduct of its people.
letter-P public records Documents recorded with the county and available to the public. Includes information regarding property ownership, property tax values and pending litigation.
letter-P public trustee The county public official whose office has been created by statute to whom title to real property in certain states, e.g., Colorado, is conveyed by Trust Deed for the use and benefit of the beneficiary, who usually is the lender.
letter-P puffing An exaggeration of a property feature or benefit which, if reasonably believed to be fact, can rise to misrepresentation and fraud.
letter-P punitive damages Monies awarded in excess of actual money losses in order to deter unlawful actions.
letter-P purchase agreement The primary document used as a checklist to negotiate a real estate sales transaction between a buyer and seller. [See RPI Form 150- 159]
letter-P purchase and installment saleback Involves purchase of the property upon completion of construction and immediate saleback on a long-term installment contract.
letter-P purchase and leaseback Involves the purchase of property by buyer and immediate leaseback to seller.
letter-P purchase of land, leaseback and leasehold mortgages An arrangement whereby land is purchased by the lender and leased back to the developer with a mortgage negotiated on the resulting leasehold of the income property constructed. The lender receives an annual ground rent, plus a percentage of income from the property.
letter-P purchase-assist funding The use of proceeds from a mortgage to fund the price paid by the borrower to acquire real estate.
letter-P purchase-money debt A mortgage which funds the purchase or construction of a one-to-four unit owner-occupied residence, also called a nonrecourse debt.
letter-P purchase-money mortgage Nonrecourse mortgage financing provided by a lender as purchase-assist funding for the purchase of a one-to-four unit residential property the buyer is going to occupy, or a seller carryback note and trust deed as an extension of credit to a buyer of any type of real estate which is secured solely by the property sold. Anti-deficiency mortgage.
letter-P purchase money paper A nonrecourse note evidencing a debt for the purchase of a one-to-four unit residential property the buyer is going to occupy, or a seller carryback note and trust deed as an extension of credit to a buyer of any type of real estate which is secured solely by the property sold.
letter-P purchasing power A homebuyer's ability to purchase property funded by a purchase-assist mortgage based on 31% of their gross income for mortgage payments at current interest rates.
letter-P pure risk Entirely unacceptable acts leading to absolute liability for the misconduct.
letter-P pure-net lease A commercial lease in which a tenant assumes absolutely all the obligations of ownership. [See RPI Form 552-2 and 552-3]
letter-P put option A provision in all trust deeds which, in tandem with anti-deficiency laws, grants the owner of mortgaged real estate the right to default and force the mortgage holder to first sell — or buy — the property through foreclosure for the amount of the mortgage debt.
letter-P pyramiding The practice of assessing a late charge for the delinquent payment of a previously assessed late charge.
letter-Q qualified endorsement The payee's signature on the back of a check with the words for deposit only.
letter-Q qualified interest Interest on a mortgage which has accrued and been paid and is an allowable interest deduction for ownership of a first and second home.
letter-Q qualified mortgage (QM) A consumer mortgage which meets ability-to-repay rules under the Truth in Lending Act (TILA).
letter-Q qualified residential mortgage (QRM) A consumer mortgage – a consumer purpose loan secured by a one to four unit residential property – which meets low-risk criteria, exempting it from the 5% risk retention rule. QRMs meet ability-to-repay requirements, including the maximum debt-to-income ratio of 43%.
letter-Q quantitative easing The purchase of government mortgage backed bonds by the Federal Reserve to drive down interest rates and increase liquidity.
letter-Q quantity survey The most detailed method of the cost approach in appraisal. This is generally done by contractors when bidding a project.
letter-Q quantum meruit Compensation paid to a broker on termination of a listing agreement set as the value of the time, effort and money the broker expended acting on the employment, not based on the lost opportunity of the employment.
letter-Q quarter round A molding that presents a profile of a quarter circle.
letter-Q quiet enjoyment Right of an owner or tenant to the use of the property without interference of possession.
letter-Q quiet title A court action to remove a cloud and establish title to a property.
letter-Q quitclaim deed A document used to convey whatever interest, if any, the grantor may hold in the real estate. [See RPI Form 405]
letter-R radiant heating A method of heating, usually consisting of coils, or pipes placed in the floor, wall or ceiling.
letter-R radon gas A naturally occurring gas which accumulates in confined areas at ground level and poses a health risk to occupants.
letter-R rafters Wood beams on which sheathing is placed. Together, these form the shape of a roof.
letter-R range A strip or column of land six miles wide, determined by a government survey, running in a north-south direction, lying east or west of a principal meridian.
letter-R range lines A series of government survey lines running north and south at six-mile intervals starting with the principal meridian and forming the east and west boundaries of townships.
letter-R rate adjustment date With respect to an adjustable rate mortgage, the date the borrower's note rate may change.
letter-R rate lock A lender’s conditional, unsigned commitment to fund a mortgage at a quoted interest rate, origination fee and points, regardless of whether interest rates rise or fall prior to funding.
letter-R ratification The adoption or approval of an act performed on behalf of a person without previous authorization, such as the approval by a principal of previously unauthorized acts of an agent, after the acts have been performed.
letter-R ratify The later adoption or approval of an act performed on behalf of a person when the act was not previously authorized.
letter-R ready, willing and able buyer One who is prepared to enter into a purchase agreement, wants to buy, and meets the financing requirements for purchase.
letter-R real demand The demand of end-user buyer-occupants in the real estate market.
letter-R real estate Land and anything permanently affixed or appurtenant to it.
letter-R real estate agent A person who, for compensation or in expectation of compensation, is employed by a licensed broker to do one or more of the acts of a licensed broker.
letter-R real estate board An organization whose members consist primarily of real estate brokers and salespersons.
letter-R real estate fixture Personal property attached to the real estate as an improvement, which becomes part of the conveyable real estate.
letter-R real estate investment trust (REIT) A security traded on the stock market made up of investments in income generating property, trust deeds and government securities.
letter-R Real Estate Law A collection of 29 codes in California civil law governing real estate practice licensed under the Business and Professions Code and in the Government Code.
letter-R real estate owned property (REO) Property acquired by a mortgage holder through foreclosure.
letter-R Real Estate Recovery Fund Funds available to individuals who have obtained a final-court judgment against a licensee and are unable to recover the judgment from the licensee. Also known as the Consumer Recovery Account.
letter-R Real Estate Settlement Procedures Act (RESPA) A federal law governing the behavior of service providers on a federally related mortgage which prohibits them from giving or receiving unlawful kickbacks.
letter-R real estate syndicate An organization of investors usually in the form of a limited liability company who have joined together for the purpose of pooling capital for the acquisition of real property interests. [See RPI Form 371 and 372]
letter-R real estate trust A special arrangement under Federal and State law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation taxes, profits being passed to individual investors who are taxed.
letter-R real interest rate The nominal interest rate minus the rate of inflation. The real interest rate includes a margin of profit if the nominal rate is higher than the par rate.
letter-R real property Land and anything growing on, attached to, or erected on it, excluding anything that may be severed without injury to the land.
letter-R real property loan law Article 7 of Chapter 3 of the Real Estate Law under which a real estate licensee negotiating loans secured by real property within a specified range is required to give the borrower a statement disclosing the costs and terms of the loan and which also limits the amount of expenses and charges that a borrower may pay with respect to the loan.
letter-R real rate of earnings The desired fixed rate of return on the investment in excess of the future rate of inflation.
letter-R real rate of return The nominal interest rate on a mortgage minus the rate of inflation.
letter-R reasonable belief The actual knowledge a landlord has of the ownership of personal property without investigating.
letter-R reasonable certainty The degree of certainty expected from a reasonable person.
letter-R reasonable person test A judicial test used to determine reasonable behavior between two parties.
letter-R reasonably foreseeable The possibility a crime or danger may occur due to a previous crime on the premises. A landlord has a duty to take reasonable measures to prevent harm to persons on the property or warning tenants of the prior criminal activity.
letter-R recapture The process of recovery by an owner of money invested by employing the use of a rate of interest necessary to provide for the return of an investment; not to be confused with interest rate, which is a rate of return on an investment.
letter-R recast A mortgage holder’s demand to modify the note terms and receive payment of additional fees in exchange for waiving the due-on clause in their mortgage.
letter-R recession An economic event triggered and controlled by the Federal Reserve to maintain the sustainability of economic growth.
letter-R recharacterization When a sale-lease-option arrangement is the economic equivalent of a financing arrangement, rather than functioning as a sale and repurchase transaction.
letter-R reconciliation The final step in the appraisal process. Placing weight on the alternative value conclusions, to arrive at a final value decision.
letter-R reconveyance A document executed by a trustee named in a trust deed to release the trust deed lien from title to real estate, used when the secured debt is fully paid. [See RPI Form 472]
letter-R recording The process of placing a document on file with the Recorder for a county as the designated public official for public notice.
letter-R recourse debt A debt for which a debtor may be personally liable if a sale of the secured property does not fully satisfy the debt on a default.
letter-R recourse mortgage A mortgage debt in which a lender may pursue collection from a property owner for a loss due to a deficiency in the value of the secured property to fully satisfy the debt if the lender forecloses judicially.
letter-R recurring costs The regular and continuing costs of a buyer incurred in the closing of an escrow to acquire property. Distinguished from non-recurring costs.
letter-R recurring operating expenses The regular and continuing costs of using and maintaining a property.
letter-R red flag A visually observable material defect in a property that was previously unknown and not disclosed to the buyer.
letter-R redeem The clearing of title to a parcel of real estate of a monetary lien, such as a mortgage, through payment of the debt in full as is required during a redemption period to avoid loss of the property either at a trustee’s foreclosure sale or following a judicial foreclosure sale.
letter-R redemption A property owner or junior lienholder’s right to clear title to property of a mortgage lien prior to the completion of a trustee’s sale or following a judicial foreclosure sale by paying all amounts due on the mortgage debt, including foreclosure charges.
letter-R redlining Failure to provide financing in certain communities based on the demographics of that community.
letter-R referee An advisor to the court on the feasibility of the division or sale of co-owned real estate.
letter-R referral fee A fee paid by one service provider to another for referring a client to them. Prohibited by the Real Estate Settlement Procedures Act (RESPA) when consumer financing funds the purchase of one-to-four unit residential property.
letter-R refinancing The paying-off of an existing obligation and assuming a new obligation in its place. To finance anew, or extend or renew existing financing.
letter-R reformation A legal process to correct an omission or error in a grant deed by court action.
letter-R reformation action A court action by a tenant seeking to reform the terms of a lease agreement to include prior agreements, oral or written, intended to be part of the lease agreement.
letter-R regression, Principle of A real estate valuation theory which holds the worth of a greater valued property is negatively affected by the close proximity of numerous lesser valued comparable properties.
letter-R regular assessments Recurring HOA assessments which fund the operating budget to pay for the cost of maintaining the common areas.
letter-R regular financier A lender subject to Truth in Lending Act restrictions by making more than a set threshold of consumer purpose loans or mortgage in a calendar year.
letter-R Regulation X The regulation which implements the Real Estate Settlement Procedures Act (RESPA) dictating federally related mortgage origination activities by consumer mortgage originators.
letter-R Regulation Z (Reg Z) A federal regulation implementing the Truth in Lending Act (TILA).
letter-R rehabilitation The restoration of a property to satisfactory condition without drastically changing the plan, form or style of architecture.
letter-R reinstatement A property owner or junior lienholder’s right to reinstate a mortgage and cure any default prior to five business days before the trustee’s sale by paying delinquent amounts due on the note and trust deed, plus foreclosure charges.
letter-R reinstatement period The period of time during which the tenant may reinstate their right of possession if they meet the terms set by the unlawful detainer judgment.
letter-R rejection When a person chooses not to accept the terms of an offer.
letter-R Release and Cancellation of Employment Agreement A form used by a broker when employed by a client under an existing listing agreement that is terminated by mutual agreement, to document the agreed-to termination of the employment, cancel the listing agreement and liquidate any claims that may have arisen due to the employment. [See RPI Form 121]
letter-R release clause Upon the payment of a specific sum of money to the holder of a blanket mortgage, the mortgage lien on a specifically described parcel is reconveyed, leaving the mortgage as a lien on the remainder of the secured parcels.
letter-R release deed An instrument executed by the mortgagee or the trustee reconveying to the mortgagor or trustor the real estate which secured the loan after the debt has been paid in full.
letter-R reliction The gradual recession of water leaving land permanently uncovered.
letter-R remainder An estate which takes effect after the termination of the prior estate, such as a life estate. A future possessory interest in real estate.
letter-R remainder depreciation The possible future loss in value of an improvement to real property.
letter-R remedies provision A provision in a nonresidential lease agreement stating the nonbreaching party's available actions upon a breach of the lease agreement. [See RPI Form 552]
letter-R remote grantee A future owner of real estate who later takes title to a property, also known as a successor.
letter-R renegotiable rate mortgage A loan secured by a long term mortgage which provides for renegotiation, at pre-determined intervals, of the interest rate (for a maximum variation of five percent over the life of the mortgage.)
letter-R rent Compensation received by a landlord in exchange for the tenant's use, possession and enjoyment of the property.
letter-R rent control Local ordinances that are reasonably related to the prevention of excessive rents and maintaining the availability of existing housing. [See RPI Form 550 §1.3]
letter-R rent provision A provision contained in a lease agreement establishing the tenant's obligations to pay rents for occupancy and use of the premises leased.
letter-R rent skimming When an investor receives rents from a parcel of residential rental property during their first year of ownership and does not apply the rents (or an equivalent amount) to the payments due on all mortgages secured by the property.
letter-R rental agreement The written document which sets the terms and conditions of a periodic tenancy. [See RPI Form 551 and 552-5]
letter-R rental market The market environment in which landlords seek tenants and tenants seek landlords for the occupancy of property. The rental market sets the amount of rent a property will command on any given day.
letter-R rental vacancy rate The percentage of unoccupied rental housing units.
letter-R renters by necessity Households for whom traditional ownership of their shelter is not economically possible.
letter-R rentier The class of earners whose income is earned passively, generated from owned tangible and intangible assets rather than through their labor.
letter-R renunciation When an individual who has been granted something or has accepted something later gives it up or rejects it, as occurs when an agent withdraws from an agency relationship.
letter-R repair-and-deduct remedy An option available to a residential tenant when the landlord fails to repair leased property allowing the tenant makes the repairs and deducts their cost from the next month's rent payment.
letter-R replacement cost The cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design and layout.
letter-R rescind The cancellation of a contract which restores the parties to the same position they held before they entered into the contract.
letter-R rescission 1) The termination of an agreement or transaction from its inception by mutual consent of the participants to the agreement or transaction, or by one participant based on fraud or misrepresentation of another participant. 2) The homeowner’s termination of a non-purchase money consumer mortgage, restoring the lender and homeowner to their original positions.
letter-R reservation A right retained by a grantor in conveying property.
letter-R reservation agreement The written document which sets the terms of a transient occupancy. [See RPI Form 593]
letter-R reservation of rights clause A clause in the nonwaiver of rights provision in nonresidential rental and lease agreements stating acceptance of late rent does not waive the landlord's right to enforce remedies for any remaining breach of the lease agreement by the tenant. [See RPI Form 552 §20 and 558 §7]
letter-R reserve account An account established by a limited liability company (LLC) to cover miscellaneous transactional costs incurred to create the LLC and purchase the property, and for for unexpected operating expenses. [See RPI Form 371]
letter-R reserve requirement A requirement to hold cash in reserve as a buffer against default in case of a life-changing event.
letter-R reserves 1) In a common interest subdivisions, an accumulation of funds collected from owners for future replacement and major maintenance of the common area and facilities. 2) With regard to mortgage loans, an accumulation of funds, collected by the lender from the borrower as part of each monthly mortgage payment, an amount allocated to pay property taxes and insurance when they are due.
letter-R residence Any building designed to be occupied as a residence by one or more families, or vacant land offered for the construction of a residential building.
letter-R resident manager An individual employed by the property manager or landlord to live onsite at the managed property and handle its daily operations. [See RPI Form 591]
letter-R resident manager agreement An employment agreement which establishes the rights and duties of a resident manager and the obligations of the property manager and landlord. [See RPI Form 591]
letter-R residential mortgage A consumer mortgage other than a carryback mortgage requiring the licensee arranging the mortgage to be mortgage loan origination (MLO)-endorsed by the California Bureau of Real Estate (CalBRE).
letter-R residential mortgage credit report (RMCR) A detailed account of a buyer’s credit, employment and residence history.
letter-R residential mortgage loan report A report filed by California Bureau of Real Estate (CalBRE)-licensed mortgage brokers who act as direct lenders.
letter-R residual income On a U.S. Department of Veterans Affairs (VA)-guaranteed mortgage, an analysis of a veteran’s monthly debt obligations from their gross income to ensure the veteran is able to meet minimum living expenses.
letter-R restitution 1) The return of possession of the rented premises to a wrongfully removed tenant. 2) A refund to the buyer by the seller on a rescission of a transaction in exchange for the restoration of the property to the seller.
letter-R restoration The return of funds and documents on a rescission of a purchase agreement or transaction sufficient to place all the parties in the position they held before entering into the agreement or closing the transaction.
letter-R restraint on alienation A limit placed on a property owner’s ability to sell, lease for a period exceeding three years or further encumber a property, as permitted by federal mortgage policy.
letter-R restricted real estate mortgages All mortgages made by private party lenders which are neither made nor arranged by a real estate broker.
letter-R restriction A limitation on the use of real property. Property restrictions fall into two general classifications - public and private. Zoning ordinances are examples of the former type. Restrictions may be created by private owners, typically by appropriate clauses in deeds, or in agreements, or in general plans of entire subdivisions. Usually they assume the form of a covenant, or promise to do or not to do a certain thing.
letter-R restriction-on-transfer provision A provision in a lease agreement calling for either the landlord's consent to any transfer of the tenant's leasehold interest or the prohibition of any transfer of that interest.
letter-R retainer agreement A contract entered into between an attorney and licensee specifying the respective responsibilities of each, and the hourly rate, deposit and other fees the attorney charges for legal services.
letter-R retaliatory eviction A tenant whose tenancy is sought to be terminated for lawfully exercising any rights.
letter-R retroactive interest differential (RID) The mortgage holder’s losses, calculated based on the interest differential between the note rate and the market rate on the date of a third party’s unlawful interference with the mortgage holder’s right to call a mortgage.
letter-R retrospective value The value of the property as of a previous date.
letter-R return Profit from an investment; the yield.
letter-R return of capital The annual return of funds originally contributed to the investors or, in the case of a real estate investment, that portion of the net operating income (NOI) annually sheltered from taxes by a depreciation deduction, s well as any net proceeds from a refinance or resale of the property, cumulative up to the amount of the original contributions, also known as return of investment. To be distinguished from a return on capital.
letter-R return on capital An annual yield on invested capital, stated for group investment purposes as a percentage of equity capital contributed by group members to fund the costs of acquisiton and improvements of a property, represented by the property's net operating income (NOI) less interest paid on mortgage debt, also called return on investment (ROI).
letter-R return on investment A measure of earnings in relation to capital invested.
letter-R reverse eminent domain The use of eminent domain to seize mortgages. Contrast with the traditional use of eminent domain to seize real estate.
letter-R reverse lease-option A sale-leaseback agreement with the option to purchase as an addendum.
letter-R reverse mortgage A mortgage which allows senior homeowners to use their home equity as a stream of income.
letter-R reversion The conveyance of real estate fixtures from a tenant to landlord on expiration of a lease.
letter-R reversionary interest A future interest a person retains on the grant of property which reverts to the person on the occurrence of an event.
letter-R revocable transfer on death deed (RTDD) Any document created to transfer real estate without covenant or warranty of title to a beneficiary upon the owner's death. [See RPI Form 411]
letter-R revocation When the person making an offer withdraws their offer prior to delivery of the signed acceptance.
letter-R right of alienation A property owner's ability to sell, lease or further encumber their property.
letter-R right of first refusal A pre-emptive right held by another person to buy a property if the owner decides to sell. [See RPI Form 579]
letter-R right of redemption A property owner's or junior lienholder's right to clear a property's title of a mortgage lien prior to the completion of the trustee's sale by paying all amounts due on the mortgage, including foreclosure charges.
letter-R right of rescission The right to cancel a completed transaction such as a sale or letting of property, including restoration, after the transaction has been closed.
letter-R right of survivorship The right of surviving joint tenants or a spouse to succeed to the entire interest of the deceased co-owner.
letter-R right, title and interest A term used in deeds to denote that the grantor is conveying all of that to which grantor held claim.
letter-R right-of-way A privilege under an easement granted by the owner of property giving the owner of another property the right to pass over their property.
letter-R right-to-enter provision A provision contained in a lease agreement which reserves to the landlord the right to enter the leased premises to make necessary repairs, alterations or inspections.
letter-R riparian land A parcel of real estate located next to a water source with surface water and within the watershed of the surface water.
letter-R riparian right The right of a real estate owner to take surface water from a running water source contiguous to their land.
letter-R risk layering The increased risk of default posed by cumulative smaller risks.
letter-R risk reduction program Office procedures implemented and actively overseen by a broker to mitigate risk of liability by ensuring the broker's employees conduct themselves as the broker expects.
letter-R risk analysis A study made, usually by a lender, of the various factors that might affect the repayment of a loan.
letter-R risk premium rate The lender's safety net against borrower default. The risk premium rate varies according to the homebuyer's qualifications and the security of the property.
letter-R risk rating A process used by the lender to decide on the soundness of making a loan and to reduce all the various factors affecting the repayment of the loan to a qualified rating of some kind.
letter-R risk tolerance The amount of investment risk an investor is willing to accept.
letter-S safety clause A provision in an exclusive listing agreement earning the broker a fee during an agreed safety period after expiration of the employment for marketing efforts with identified buyers, tenants or property, if the client sells the listed property to an identified buyer or purchases or leases an identified property during the safety period. [See RPI Form 102 §3.1(d), 103 §4.1(c) and 110 §3.1(d)]
letter-S safety conditions Property conditions which do not meet current building codes and might affect property value.
letter-S safety period An agreed period commencing on expiration of a broker's employment during which a broker earns a fee under safety clause conditions
letter-S sale and leaseback A financial arrangement allowing an owner of a property they occupy to sell the property and retain occupancy by agreeing to lease the property from the buyer as part of the purchase agreement negotiated. The seller receives cash while the buyer is assured a tenant and a fixed return on their investment.
letter-S sale-leaseback and purchase option arrangement A disguised mortgage arrangement created when a seller conveys title to an investor/lender and retains possession under a lease agreement with the right to repurchase title and redeem the property for a fixed dollar sum.
letter-S sale-leaseback-buy-back A sale and leaseback transaction in which the leaseholder has the option to buy back the original property after a specified period of time.
letter-S sales contract A contract by which buyer and seller agree to terms of a sale.
letter-S sales goal The amount of after-tax income agents and brokers intend to earn as a result of their real estate licensing activities.
letter-S salvage value In computing depreciation for tax purposes, the reasonably anticipated fair market value of the property at the end of its useful life and must be considered with all but the declining balance methods of depreciation.
letter-S sandwich lease A leasehold interest which lies between the primary lease and the operating lease.
letter-S sash Wood or metal frames containing one or more window panes.
letter-S satisfaction Discharge of a mortgage or trust deed from the records upon payment of the debt.
letter-S satisfaction piece An instrument for recording and acknowledging payment of an indebtedness secured by a mortgage.
letter-S savings and loan association (S&L) A financial depository institution which accepts deposits and makes mortgages and other loans, also known as a thrift.
letter-S savings rate The percentage of an individual's monthly disposable income which is not spent.
letter-S Schedule A Identification of the property interest insured, the legal description of the insured property, the date and time coverage began, the premium paid for the policy and the total dollar amount to be paid for all claims settled.
letter-S Schedule B Exceptions from coverage, both standard and itemized, by the title insurance policy.
letter-S scribing Fitting woodwork to an irregular surface.
letter-S seal An impression made to attest the execution of an instrument.
letter-S seasoned loan A loan on which the borrower has consistently made payments when due for an extended period of time.
letter-S second home An individual's alternative residence where they do not reside a majority of the year.
letter-S secondary easement An easement on a property which abuts a primary easement and allows the user of that easement to further enter upon the property for purposes of maintaining the primary easement.
letter-S secondary financing A loan secured by a second mortgage or trust deed on real property. These can be third, fourth, fifth, sixth mortgages or trust deeds, on and on ad infinitum.
letter-S secondary mortgage market A market where mortgages are sold by originators to bundlers who aggregate them into pools which become collateral for bonds sold to investors, called mortgage backed securities (MBS).
letter-S section A portion of land is established by government survey which contains 640 acres and is one mile square.
letter-S Section 32 mortgage A consumer mortgage subject to additional disclosures and restrictions due to its high points and fees or an annual percentage rate (APR) or prepayment penalty duration which exceeds thresholds set by the federal Truth in Lending Act (TILA).
letter-S Section 35 mortgage A closed-end consumer mortgage secured by a principal residence and subject to mandatory impounds, appraisal requirements and restrictions due to an annual percentage rate (APR) which exceeds thresholds set by the federal Truth in Lending Act (TILA).
letter-S Section 8 housing A government housing program for low income households which provides qualifying tenants with rent subsidies and minimum habitability standards.
letter-S Section 609 credit dispute A credit repair tactic which disputes outdated and unverifiable derogatory information.
letter-S secular stagnation An abnormally lengthy period of sluggish economic growth.
letter-S Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) A federal consumer protection law which created a uniform national licensing and registration scheme for mortgage loan originators (MLOs).
letter-S secured loan transaction A mortgage transaction which places a lien on the owner’s interest in a property for the amount of the debt owed the mortgage holder, including financial transactions documented by sellers as sale-leaseback and purchase lease-option arrangements.
letter-S secured party This is the party having the security interest. Thus the mortgagee, the conditional seller, the pledgee, etc., are all now referred to as the secured party. (Uniform Commercial Code.)
letter-S securitization The process of Wall Street bankers breaking up mortgage pools into mortgage-backed bonds and selling these bonds to various banks and individual investors.
letter-S security Collateral for a debt in the form of a lien imposed on property.
letter-S security agreement An agreement entered into between a mortgage holder and buyer to grant the mortgage holder additional security in the form of a lien on personal property described in the agreement. [See RPI Form 436]
letter-S security deposit A source of funds to pay tenant obligations owed the landlord on the tenant's default in the rental or lease agreement. [See RPI Form 550 §2.1 and 552 §1.2]
letter-S security interest A generic term designating the interest held in real estate or personal property by a lender, carryback seller or judgment creditor which is evidenced by either a trust deed, UCC-1 financing statement or abstract of judgment. [See RPI Form 450 and 436-1]
letter-S seisin (seizin) Possession of real estate by one entitled thereto.
letter-S self-directed IRA An individual retirement account which enables the account owner to invest the IRA funds in a broad range of investments such as real estate, giving the owner direct and continuing control over the management of IRA funds.
letter-S self-help One of several enforcement steps taken by a lender when an owner defaults on a post-1996 trust deed, in which the lender takes possession of the property and collects rents nonjudicially.
letter-S sell phase The ideal moment to sell property, characterized by rising prices, monthly decreases in sales volume and a yield spread falling for at least six months.
letter-S seller financing A note and trust deed executed by a buyer of real estate in favor of the seller for the unpaid portion of the sales price on closing. Also known as an installment sale, credit sale or carryback financing.
letter-S seller-may-cancel provision A purchase agreement provision authorizing the seller to cancel if a specified condition or event does not occur, whether or not the agreement contains a time-essence provision.
letter-S seller's agent An agent representing the seller. Also known as a listing agent. [See RPI Form 102]
letter-S seller's market A real estate market characterized by high homebuyer demand and low housing inventory.
letter-S seller's net sheet A document prepared by a seller's agent to disclose the financial consequences of a sale when setting the listing price and on acceptance of a buyer's price in a purchase offer. [See RPI Form 310]
letter-S senior citizen housing Housing intended for persons 55 or 62 years of age or older.
letter-S seniors Those over the age of 65.
letter-S separate fee agreement An agreement between the seller and the seller's broker in a sales transaction, separate from the buyer's purchase agreement offer, that obligates the seller to pay a broker fee to their agent.
letter-S separate property Property owned by a married person in his or her own right outside of the community interest including property acquired by the spouse (1) before marriage, (2) by gift or inheritance, (3) from rents and profits on separate property, and (4) with the proceeds from other separate property.
letter-S separated report A report issued by a structural pest control company which is divided into Section I items, noting active infestations, and Section II items, noting adverse conditions which may lead to an infestation.
letter-S septic tank An underground tank in which sewage from the house is reduced to liquid by bacterial action and drained off.
letter-S service provider An individual or company which offers services connected with a prospective or actual consumer mortgage origination.
letter-S servicer An individual responsible for receiving scheduled payments from a homeowner by arrangement with the mortgage holder.
letter-S servicing Supervising and administering a mortgage after its origination, involving collection of payments, maintenance of records, computation of interest and principal, foreclosure of defaulted loans and so on.
letter-S servicing loans Supervising and administering a loan after it has been made. This involves such things as collecting the payments, keeping accounting records, computing the interest and principal, foreclosure of defaulted loans and so on.
letter-S servient tenement A property burdened by a license or easement.
letter-S set aside To annul by court order a document transferring an interest in real estate.
letter-S set back ordinance An ordinance requiring improvements built on property to be a specified distance from the property line, street or curb.
letter-S settlement service Any service provided in connection with a prospective or actual consumer mortgage origination.
letter-S severalty Ownership by one person.
letter-S shadow demand The real estate demand created by potential households whose formation is delayed by poor economic conditions.
letter-S shadow inventory The inventory of properties whose pending release onto the market (e.g., REOs, foreclosures, speculator holdings) will destabilize real estate sales volume and prices.
letter-S shared appreciation mortgage (SAM) A type of split-rate note calling for the proprty owner to periodically pay interim interest at a fixed rate, and when the balance is due, to further pay the holder of the note as additional interest an agreed fraction of the property’s increased value. [See RPI Form 430]
letter-S shareowners Investors in real estate investment trusts (REITs) and other securities. Shareowners are subject to the gains and losses experienced by the company issuing the security.
letter-S sheriff's deed Deed given by court order in connection with sale of property to satisfy a judgment.
letter-S sheriff's sale A public auction of property held by the sheriff pursuant to a court order to seize and sell the property to satisfy a money judgment.
letter-S short payoff A sale in which the lender accepts the net proceeds at closing in full satisfaction of a greater amount of mortgage debt.
letter-S short sale A sale of encumbered property in which the mortgage lender accepts the net proceeds at closing in full satisfaction of a greater amount of mortgage debt.
letter-S short-term rate A variable interest rate which changes often, driven by Federal Reserve actions to keep inflation and deflation in check.
letter-S signage provision A provision in a nonresidential lease agreement which gives the landlord control over the size, style, content and location of signs constructed or installed on the leased premises.
letter-S signer An employee who has written authorization from the broker to withdraw or disburse funds from the trust account.
letter-S simple interest Interest computed on the principal amount of a loan only as distinguished from compound interest.
letter-S single agency The buyer's agent who is paid their fee on a transaction by their buyer client, and does not fee split or otherwise share in the fee received by the seller's broker.
letter-S single family residence A housing structure, attached or detached, maintained and used as a single dwelling unit.
letter-S sinking fund Fund set aside from the income from property which, with accrued interest, will eventually pay for replacement of the improvements.
letter-S site valuation The appraised valuation of the ground (site) separate from any structure (improvement) that may be on the site.
letter-S skin in the game A risk management measure of a purchaser's stake in an investment, such as a homebuyer's down payment on a home purchase.
letter-S slander of title False and malicious statements disparaging an owner's title to property resulting in money losses to the owner.
letter-S small claims An informal court proceeding for disputes over amounts of ,000 or less, or ,000 or less for individuals.
letter-S small lender A lender with assets of .052 billion or less which made 2,000 or fewer first-lien consumer mortgages in the preceding calendar year (two years, for applications received before April 1).
letter-S small lender qualified mortgage A type of qualified mortgage (QM) under Regulation Z (Reg Z) which allows small community mortgage lenders to include features otherwise prohibited in consumer mortgages.
letter-S small mortgage A first trust deed debt not exceeding ,000 or a junior trust deed debt not exceeding ,000.
letter-S solar easement An easement restricting an owner's ability to maintain improvements interfering with a neighbor's solar energy system.
letter-S sole proprietor A broker who conducts business as an individual rather than through a licensed corporate entity.
letter-S special advisor A state-licensed certified public accountant or attorney in good standing appointed by a self-directed IRA LLC operating agreement who will be consulted on a transaction involving the LLC for the purpose of determining whether the transaction is allowed or prohibited.
letter-S special assessment A lien against real estate by a public authority to pay the cost of public improvements, such as street lights, sidewalks and street improvements. In a common interest subdivision, an additional charge levied by the association for unanticipated repairs.
letter-S special damages Money losses not incurred directly from another's breach of a real estate agreement, but which are naturally incurred as a result of the breach. Also known as consequential damages.
letter-S Special Information Booklet A required Truth in Lending Act (TILA) disclosure containing information about the consumer mortgage process, mortgage features and costs.
letter-S special power of attorney A written instrument whereby a principal confers limited authority upon an agent to perform certain prescribed acts on behalf of the principal.
letter-S special warranty deed A deed in which the grantor warrants or guarantees the title only against defects arising during grantor's ownership of the property and not against defects existing before the time of grantor's ownership.
letter-S specific performance action An action to compel performance of an agreement, such as a purchase agreement or assignment of rents.
letter-S speculator A real estate investor who owns property short-term, sandwiching themselves between the seller and end user of the property.
letter-S stacking order The order of mortgage application documents requested by a lender.
letter-S stagflation The economic concurrence of high inflation, slow economic growth and high unemployment. Noted stagflation occurred most recently in the 1970s.
letter-S standard depth Generally the most typical lot depth in the neighborhood.
letter-S standby commitment The mortgage banker frequently protects a builder by a standby agreement, under which banker agrees to make mortgage loans at an agreed price for many months into the future. The builder deposits a standby fee with the mortgage banker for this service. Frequently, the mortgage broker protects self by securing a standby from a long-term investor for the same period of time, paying a fee for this privilege.
letter-S starfish puzzle Just as starfish sprout arms in unpredictable directions, the unpredictability of the direction of new markets during a recovery.
letter-S start-up fee A flat, one-time fee charged by a property manager for the time and effort taken to become sufficiently familiar with the operations of the property to commence management.
letter-S state-licensed mortgage loan originator (MLO) A mortgage loan originator (MLO) licensed and regulated by a state agency.
letter-S State Water Resources Control Board Government entity established to ensure the proper allocation and efficient use of state water resources.
letter-S statement of deficiencies A document a residential landlord presents to a vacating tenant specifying any repairs or cleaning to be completed by the tenant to avoid deductions from the security deposit. [See RPI Form 567-3]
letter-S statement of financial position A balance sheet prepared by a homeowner which lists the dollar amounts of the homeowner’s assets and liabilities. [See RPI Form 209-3]
letter-S Statute of Frauds California state law requiring specific types of contracts to be in writing and signed by the person to be charged with performance before they will be enforceable by a court, e.g., purchase agreements and lease agreements for a term of more than one year.
letter-S statute of limitations A period of time establishing the deadline for filing a lawsuit to resolve a dispute.
letter-S statutory breach A breach of the lease agreement which automatically forfeits the tenant's right of possession.
letter-S statutory warranty deed A short term warranty deed which warrants by inference that the seller is the undisputed owner, has the right to convey the property, and will defend the title if necessary. This type of deed protects the purchaser in that the conveyor covenants to defend all claims against the property. If conveyor fails to do so, the new owner can defend said claims and sue the former owner.
letter-S stay-or-pay clause An unenforceable provision calling for the residential tenant to forego a return of their security deposit if they move before a set date.
letter-S steering An unlawful housing practice that includes words or actions by a real estate sales licensee intended to influence the choice of a prospective buyer or tenant. A violation of federal fair housing provision that seek to eliminate discrimination in the sale or rental of housing.
letter-S stepped-up basis The readjustment of an appreciated asset’s cost basis to fair market value for future tax purposes when transferred by inheritance.
letter-S sticky pricing A seller’s irrational reliance on past home pricing as a basis for setting current pricing, called the money illusion.
letter-S straight line depreciation A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement.
letter-S straight note A note calling for payment of the entire amount of principal and accrued interest in a single lump sum when the principal is due. [See RPI Form 423]
letter-S strategic default Intentionally defaulting on a mortgage to force the lender to foreclose and buy the property for the mortgage debt amount, called a put.
letter-S strict liability To be liable for another's injuries without concern for fault.
letter-S strict rent control A type of rent control ordinance that limits rent increases on all rental units.
letter-S Structural Pest Control report (SPC) A report disclosing any active infestations, damage from infestations or conditions which may lead to infestations.
letter-S subaccount ledger An accounting document or file identifying the owner of trust funds and the amount held for the owner.
letter-S subagent An individual who has been delegated agency duties by the primary agent of the client, not the client themselves.
letter-S Subdivided Lands Act (SLA) A law administered by the California Bureau of Real Estate (CalBRE) which protects purchasers of subdivided land consisting of five-or-more parcels or condominium and apartment projects containing five-or-more units (with exceptions) from fraud.
letter-S Subdivided Lands Law Government regulations that empower the Real Estate Commissioner to approve a public report for the sale of property divided and developed by the land owners.
letter-S subdivision An activity by an owner of real estate which divides a greater parcel of land into several separate smaller parcels for the purpose of sale, lease or financing as regulated by law.
letter-S Subdivision Map Act A California subdivision law stating conditions for the approval of a subdivision map and requiring local governments to enact ordinances directly controlling the types of subdivision projects permitted and the physical improvements to be installed.
letter-S subject to a mortgage When a grantee takes title to real property subject to a mortgage, grantee is not responsible to the holder of the promissory note for the payment of any portion of the amount due. The most that grantee can lose in the event of a foreclosure is grantee's equity in the property. (See also assumption of mortgage.) In neither case is the original maker of the note released from primary responsibility. If liability is to be assumed, the agreement must so state.
letter-S subject-to transaction A sale of mortgaged property calling for the buyer to take title subject to the mortgage, the principal balance being credited toward the purchase price paid. Compare with formal assumption. [See RPI Form 156 §5]
letter-S sublease A leasehold interest subject to the terms of a master lease.
letter-S submerged state The subtle operation of many government social programs that collectively promote or discourage a particular activity, such as homeownership.
letter-S subordinate To make subject to, or junior or inferior to by use of a subordination agreement.
letter-S subordination The rearrangement of mortgage lien priorities on title in which a mortgage lien takes a lesser or junior position to another mortgage lien on a property.
letter-S subordination agreement An agreement entered into by a mortgage holder to permit their security interest in title to the mortgaged property to take an inferior position to another encumbrance. [See RPI Form 281]
letter-S subornation The act of inducing another person to commit an unlawful act.
letter-S subpoena A legal order to cause a witness to appear and give testimony.
letter-S subprime In mortgage lending, a borrower who poses a higher risk of not timely repaying a mortgage, or a mortgage with a high risk of default due to inferior underwriting standards.
letter-S subprime borrower A borrower who poses a higher risk of not repaying a loan as agreed.
letter-S subprime mortgage A mortgage made to a borrower based on loose underwriting standards and resulting in a high risk of default.
letter-S subrogation The replacement of one person with another in regard to a legal right or obligation.
letter-S subscription agreement A form agreement used by a syndicator when soliciting and subscribing investors for cash contributions to a limited liability company (LLC) for investment in real estate, to confirm their receipt and approval of the investment circular and LLC operating agreement, and acknowledge receipt of the funds they contribute and their membership in the LLC. [See RPI Form 373]
letter-S subsidy The government support of a particular entity or activity. For homebuyers, these come in the form of tax credits.
letter-S subsidy buydown Funds provided usually by the builder or seller to temporarily reduce the borrower's monthly principal and interest payment.
letter-S substituted service In place of personally serving the tenant, the notice is personally delivered to a person of suitable age at the tenant's residence or place of business and is mailed to the leased premises, or posted on and mailed to the premises.
letter-S substitution, principle of Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution.
letter-S successor tenant On a transfer, the new tenant who acquires by assignment the original tenant's entire leasehold interest in the property. [See RPI Form 552 §9]
letter-S sum of the years digits An accelerated depreciation method.
letter-S super-conforming mortgage A conforming loan with a maximum principal amount adjusted for a high-cost area.
letter-S superior court system California's trial court system.
letter-S supervisory scheme Policies and rules established by the California Bureau of Real Estate controlling a broker's oversight of licensed and unlicensed individuals employed by the broker.
letter-S supply The available inventory a local real estate market is able to offer.
letter-S supply and demand, principle of In appraising, a valuation principle starting that market value is affected by intersection of supply and demand forces in the market as of the appraisal date.
letter-S supra-competitive A market condition where prices are unfairly set by collusion, preventing others from entering the market and hurting consumers.
letter-S Supreme Court The final court for appeals in both the state and federal court systems.
letter-S surety One who guarantees the performance of another Guarantor.
letter-S surplus funds Funds remaining when the price paid for property by the successful bidder at a trustee’s sale exceeds the amount of debt and costs due the foreclosing mortgage holder.
letter-S surplus productivity, principle of The net income that remains after the proper costs of labor, organization and capital have been paid, which surplus is imputable to the land and tends to fix the value thereof.
letter-S surrender A mutual cancellation of a lease agreement by the landlord and the tenant, written or by their conduct, when the tenant vacates the leased premises. [See RPI Form 587]
letter-S survey The process by which a parcel of land is measured and its area is ascertained.
letter-S suspended losses A capital loss incurred as a result of passive activities on a property that is not realized in a given tax year and and carried forward for use in futureyears to offset income or profits from the property incurring the loss.
letter-S syndication When a group of investors form a limited liability company to fund the purchase price and carrying costs of owning real estate.
letter-S syndicator An individual who solicits cash contributions from investors to fund a limited liability company which will acquire real estate for investment purposes.
letter-T take-out loan The loan arranged by the owner or builder developer for a buyer. The construction loan made for construction of the improvements is usually paid in full from the proceeds of this more permanent mortgage loan.
letter-T targeted transaction A transaction type subject to the rules of a particular legal code or regulation.
letter-T tax Enforced charge exacted of persons, corporations and organizations by the government to be used to support government services and programs.
letter-T tax deductions Expenses related to real estate ownership that may be deducted from income for purposes of income tax reporting.
letter-T tax deed The deed given to a purchaser at a public sale of land held for nonpayment of taxes. It conveys to the purchaser only such title as the defaulting taxpayer had.
letter-T tax foreclosure sale The sale of a property by the County Tax Collector to pay unpaid property taxes.
letter-T tax sale Sale of property after a period of nonpayment of taxes.
letter-T tax-free exchange The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade.
letter-T teaser rate A temporary, low introductory interest rate found in some adjustable rate mortgages.
letter-T temporary qualified mortgage A transitional qualified mortgage (QM) under Regulation Z (Reg Z) for lenders originating mortgages insured or guaranteed by the federal government or sold to Fannie Mae or Freddie Mac.
letter-T tenancy-at-sufferance A leasehold condition created when a tenant retains possession of the rented premises after the tenancy has terminated. [See RPI Form 550 §3.3]
letter-T tenancy-at-will A leasehold interest granted to a tenant, with no fixed duration or rent owed. A tenancy-at-will can be terminated at any time by an advance notice from either party.
letter-T tenant The party who has legal possession and use of real property belonging to another.
letter-T Tenant Estoppel Certificate (TEC) A statement which summarizes the monetary and possessory terms of a lease agreement, and whether the landlord and tenant have fully performed their obligations. [See RPI Form 598]
letter-T tenant improvements Improvements made to a leased property to meet the needs of the occupying tenant. [See RPI Form 552 §11]
letter-T tenant improvements and alterations clause A clause in a nonresidential lease agreement which specifies the tenant's right to make alterations or further improve the premises during the tenancy. [See RPI Form 552 §11]
letter-T tenant lease worksheet A document the leasing agent uses to analyze the tenant's current financial condition and needs for leased space. [See RPI Form 555]
letter-T tenant-initiated recovery procedure The recovery process initiated by a tenant to retrieve personal property from a landlord within 18 days after vacating rental property. [See RPI Form 582]
letter-T tenant-mitigation provision A provision in a nonresidential lease agreement allowing the landlord to leave the tenant's leasehold and the lease agreement intact on the tenant's breach, and then recover rent from the tenant for the life of the lease without the landlord first taking steps to mitigate losses. [See RPI Form 552 §21.1]
letter-T tenants by the entireties Under certain state laws, ownership of property acquired by a husband and wife during marriage, which property is jointly and equally owned. Upon death of one spouse it becomes the property of the survivor.
letter-T tenants in common (TIC) Co-ownership of real estate by two or more persons who each hold equal or unequal undivided interest, without the right of survivorship.
letter-T tenants-by-foreclosure Former homeowners who were forced out of their homes by foreclosure in the wake of the 2008 recession, now employed but in need of housing and forced to rent.
letter-T tender To make an offer.
letter-T tenement A freehold interest in land and things immovable located on the land.
letter-T tentative map The Subdivision Map Act requires subdividers to submit initially a tentative map of their tract to the local planning commission for study. The approval or disapproval of the planning commission is noted on the map. Thereafter, a final map of the tract embodying any changes requested by the planning commission is required to be filed with the planning commission.
letter-T tenure in land The mode or manner by which an estate in lands is held. All rights and title rest with owner.
letter-T tenure payment A home equity conversion mortgage (HECM) payment option in which the homeowner receives equal monthly payments until they die or sell the property.
letter-T term payment A home equity conversion mortgage (HECM) payment option in which the homeowner receives equal monthly payments for a fixed period of time.
letter-T termination The cancellation of a transaction before escrow has closed or a lease has ended.
letter-T termination-of-agency clause A provision in an exclusive listing agreement which calls for a broker fee to be earned and payable when the client cancels the employment without cause. [See RPI Form 102 §3.1(c), 103 §4.1(b) and 110 §3.1(c)]
letter-T termite shield A shield, usually of noncorrodible metal, placed on top of the foundation wall or around pipes to prevent passage of termites.
letter-T termites Ant-like insects which feed on wood and are highly destructive to wooden structures.
letter-T testator One who makes a will.
letter-T The Civil Rights Acts of 1866 and 1870 Federal prohibitions against racial discrimination on all types of real estate.
letter-T The Federal Reserve Bank (the Fed) The central bank in control of regulating the U.S. financial and monetary system.
letter-T third party Persons who are not parties to a contract which affects an interest they have in the object of the contract.
letter-T third party beneficiary A person for whose benefit two other persons place a provision in an agreement, such as a provision for payment of broker fees.
letter-T three Cs of underwriting The three major components of a mortgage applicant reviewed by an underwriter: credit, capacity and collateral.
letter-T threshold A strip of wood or metal beveled on each edge and used above the finished floor under outside doors.
letter-T threshold broker A private lender in the business of making mortgages, or a mortgage broker who annually negotiates services an aggregate dollar amount of mortgages above a statutory threshold.
letter-T tidelands Lands that are covered and uncovered by the ebb and flow of the tide.
letter-T time-essence provision A purchase agreement provision declaring that dates for performance of any activity or occurrence of an event are to be strictly enforced as essential to the continuation of the transaction.
letter-T time-share estate A right of occupancy in a time-share project (subdivision) which is coupled with an estate in the real property.
letter-T time-share project A form of subdivision of real property into rights to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, on an annual or some other periodic basis, for a specified period of time.
letter-T time-share use A license or contractual or membership right of occupancy in a timeshare project which is not coupled with an estate in the real property.
letter-T title Indicates fee position of lawful ownership and right to property. Bundle of Rights possessed by an owner. Combination of all elements constituting proof of ownership.
letter-T title conditions Encumbrances such as liens, conditions, covenants and restrictions and easements which affect title to property.
letter-T title insurance A form of indemnity insurance by which a title insurance company holds harmless a person who acquires an interest in real estate against a monetary loss caused by an encumbrance on title that is not listed in the policy and the insured was unaware of when the policy was issued.
letter-T title report A report which discloses the condition of the title, made by a title company preliminary as a revocable offer to issue title insurance policy.
letter-T title theory Mortgage arrangement whereby title to mortgaged real property vests in the lender. Some states give greater protection to mortgage lenders and assume lenders have title interest. Distinguished from Lien Theory States.
letter-T tolerance Acceptable ranges of deviation for changes to fees and amounts disclosed on a Loan Estimate, set by type of charge.
letter-T topography Nature of the surface of land; topography may be level, rolling, mountainous. Variation in earth's surface.
letter-T torrens title System of title records provided by state law (no longer used in California).
letter-T tort Any wrongful act (not involving a breach of contract) for which a civil section will lie for the person wronged.
letter-T townhouse One of a row of houses usually of the same or similar design with common side walls or with a very narrow space between adjacent side walls.
letter-T township In the survey of public lands of the United States, a territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square, located between two range lines and two township lines.
letter-T trade fixture A fixture used to render services or make products for the trade or business of a tenant.
letter-T trade or business income Income, profits and losses from the taxpayer's trade or owner-operated business, resale inventory and real estate used in the trade or business.
letter-T trade-in An increasingly popular method of guaranteeing an owner a minimum amount of cash on sale of owner's present property to permit owner to purchase another. If the property is not sold within a specified time at the listed price, the broker agrees to arrange financing to personally purchase the property at an agreed upon discount.
letter-T tranches Bonds issued by investment pools divided into various levels of risk, reward and rate of maturity.
letter-T transaction agent (TA) The term lenders use to identify the buyer’s agent in a sales transaction.
letter-T transaction coordinator A licensed or unlicensed individual hired to assist an agent or broker to process documents, contracts and disclosures in a real estate file.
letter-T transfer Any assignment, sublease or further encumbrance of the leasehold by the tenant. [See RPI Form 552 §9]
letter-T Transfer Disclosure Statement (TDS) A mandatory disclosure prepared by a seller and given to prospective buyers setting forth any property defects known or suspected to exist by the seller, generically called a condition of property disclosure. [See RPI Form 304]
letter-T transfer fee A charge made by a lending institution holding or collecting on a real estate mortgage to change its records to reflect a different ownership.
letter-T transient occupancy The occupancy of a vacation property, hotel, motel, inn, boarding house, lodging house, tourist home or similar sleeping accommodation for a period of 30 days or less. [See RPI Form 593]
letter-T transitional license A provisional mortgage loan originator (MLO) license which allows an MLO moving to another state to perform MLO services for a short period of time while they fulfill requirements to obtain an MLO license in the new state.
letter-T transmutation The transfer of property between separate property and community property or between the separate property interests owned by spouses.
letter-T Treasury Bills (T-Bills) Government securitized debt instruments. T-bills are sold to the public, member banks and other financial institutions.
letter-T treble damages A usury penalty computed at three times the total interest paid by the borrower during the one year period immediately preceding their filing of an action on a nonexempt private lender mortgage.
letter-T trespass Any wrongful and unauthorized entry onto real estate in the possession of another.
letter-T trespasser A person who occupies a property without the owner's transfer of the right to occupy.
letter-T trial courts Courts which hear and decide the facts of a case and apply the proper rules of law to resolve the dispute.
letter-T trickle-down economics The economic theory suggesting that an increase in the strength of the wealthy leads to an increase in the well-being of lower classes.
letter-T triggering terms Words and phrases in consumer mortgage advertisements which trigger the need for additional disclosures.
letter-T triple net lease A commercial lease which passes the responsibility for all costs and maintenance of the property to the tenant. [See RPI Form 552-2 and 552-3]
letter-T trust account An account separate and apart and physically segregated from a broker's own funds, in which the broker is required by law to deposit all funds received for clients.
letter-T trust deed A security device which attaches a money obligation as an encumbrance on a marketable interest in real estate. [See RPI Form 450]
letter-T trust funds Items which have or evidence monetary value held by a broker for a client when acting in a real estate transaction.
letter-T trustee One who holds title to real estate in trust for another.
letter-T trustee (on a mortgage) A party to a mortgage who, as a legal fiction, holds title to property as security for the performance of an obligation with the authority to sell the property or reconvey the trust deed on instructions from the mortgage holder.
letter-T trustee's sale guarantee A policy issued by a title insurance company to a trustee before or at the time the notice of default (NOD) is recorded providing coverage for the trustee should they fail to serve notices on any party of record due to an omission in the guarantee.
letter-T trustor One who borrows money secured by a trust deed and authorizes a trustee to either release the trust deed lien from title when the obligations under the trust deed have been fully performed, or sell the property to satisfy the trust deed obligations on declaration of a default by the trust deed holder.
letter-T trustor's offset statement Statement by owner of property or owner of lien against property setting forth the present status of liens against said property.
letter-T Truth in Lending Act (TILA) A federal consumer mortgage law which controls the terms of a consumer mortgage and requires lenders to disclose mortgage rates and charges.
letter-T turnover rate The percentage of households relocating each year, whether from rentals or ownership.
letter-T two-year right of recission (equity purchase) A seller-in-foreclosure's right to rescind a closed equity purchase transaction when the equity purchase investor exploits an unconscionable advantage during negotiations to acquire the property.
letter-U U.S. Department of Veterans Affairs (VA) automatic A lender authorized to certify a mortgage conforms to U.S. Department of Veterans Affairs (VA) regulations.
letter-U U.S. Department of Veterans Affairs (VA) mortgage guarantee A program that assists qualified veterans or their surviving spouses to buy a home with zero down payment. [See RPI Form 153]
letter-U unconscionable advantage When an equity purchase investor or a mortgage holder exploits an element of oppression, helplessness or surprise to exact unreasonably favorable terms from a property owner or tenant.
letter-U underemployment When hours worked each week are cut, resulting in a lower-than-normal income.
letter-U underimprovement An improvement which, because of its deficiency in size or cost, is not the highest and best use of the site.
letter-U underwriting The analysis of the risk of default posed by the information in a complete mortgage application and documentation.
letter-U undocumented immigrant An individual who enters a country without the approval of that country.
letter-U undue influence Use of a fiduciary or confidential relationship to obtain a fraudulent or unfair advantage over another's weakness of mind, or distress or necessity.
letter-U unearned increment An increase in value of real estate due to no effort on the part of the owner; often due to increase in population.
letter-U unearned incremental increase An increase in the value of the property due to outside influences separate from any action by the property owner.
letter-U unemployment When an employee loses their job, resulting in no income.
letter-U unenforceable A contract that cannot be enforced in court of law.
letter-U uniform commercial code Establishes a unified and comprehensive method for regulation of security transactions in personal property, superseding the existing statutes on chattel mortgages, conditional sales, trust receipts, assignment of accounts receivable and others in this field.
letter-U Uniform Residential Loan Application (URLA) A standardized mortgage application prepared by the buyer with the assistance of the transaction agent (TA) and the lender’s representative. [See RPI Form 202]
letter-U Uniform State Test (UST) A standardized test fulfilling both national and state components of the mortgage loan originator (MLO) exam.
letter-U unilateral cancellation A situation under a purchase agreement when one party acting alone terminates the agreement, eliminating the requirement for the buyer and seller to perform on the terms stated.
letter-U unilateral employment agreement An oral or written employment agreement obligating the broker to use their best-efforts to fulfill the client's real estate goals without imposing a due diligence duty on the broker until a match is located, commonly called an open listing.
letter-U unilateral fee instructions Instructions signed only by the seller which authorize escrow to pay the broker fee from their net proceeds of the sale.
letter-U unit-in-place method The cost of erecting a building by estimating the cost of each component part, i.e., foundations, floors, walls, windows, ceilings, roofs, etc., (including labor and overhead).
letter-U universal homeownership The idea that everyone can and should be able to own a home. Similar to the American Dream policy.
letter-U unknown and unsuspected claims Claims unknown to the parties which are later established and pursued after entering into a general release.
letter-U unlawful detainer (UD) The unlawful possession of a property. [See RPI Form 575 -578]
letter-U unlicensed activities Activities performed by unlicensed assistants, such as clerical work which does not relate to the communication of information such as price and terms of a sale with potential buyers and sellers.
letter-U unlicensed assistant An individual hired by a broker to perform nondiscretionary administrative activities that do not require a license, such as reviewing documents or helping at an open house, on behalf of the employing broker or their agents. [See RPI Form 507]
letter-U unrelated debt financed income Taxable income on the portion of income and profit realized from ownership of debt leveraged real estate by a self-directed IRA LLC.
letter-U Unruh Civil Rights Act A California law which prohibits discrimination by a business establishment based on sex, race, color, religion, ancestry, national origin, disability or medical condition. A real estate practice is a business establishment.
letter-U unsecured debt A mortgage balance remaining unpaid following reconveyance of property subject to a trust deed, exhaustion of the security by foreclosure of a prior lien or errors in the principal amount of a mortgage debt in a beneficiary statement or payoff demand.
letter-U unsecured note A document evidencing a debt owed by one person to another where the debt is not secured by collateral, also called an unsecured promissory note. [See RPI Form 424]
letter-U unusable credit Freddie Mac’s designation of credit other than usable credit, e.g., nontraditional debt.
letter-U upcharging The practice of marking up the price of a third-party service and keeping the difference.
letter-U urban property City property; closely settled property.
letter-U usable credit Freddie Mac’s designation that an applicant has enough accurate traditional credit history to generate a valid credit score.
letter-U use license The grant of a personal privilege to use property with no right to occupy or exclude others.
letter-U use-maintenance provision A provision in a commercial lease agreement which establishes the landlord's and tenant's responsibility for the care and maintenance of the premises during the lease term. [See RPI Form 552 §7.1]
letter-U use-of-premises provision A provision contained in a nonresidential lease agreement which establishes the single specified purpose for the tenant's use of the leased premises. [See RPI Form 552 §6]
letter-U usufructuary right The right to reasonable use of water subject to changing circumstances controlling the use of water.
letter-U usury A limit on the lender’s interest rate yield on non-exempt real estate mortgages.
letter-U utilities Refers to services rendered by public utility companies, such as - water, gas, electricity, telephone, cable, internet.
letter-U utility The ability to give satisfaction and/or excite desire for possession. An element of value.
letter-V VA assumption fee A fee of 0.5% of a VA loan, assumed by the buyer of a VA-guaranteed single family residence (SFR) upon closing.
letter-V VA loan A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran's Affairs guarantees the lender payment of the mortgage.
letter-V vacancy decontrol A type of rent control ordinance that applies rent ceilings only to existing tenants.
letter-V vacancy rate The percentage of a building's space that is not rented over a given period.
letter-V valid Having force, or binding force; legally sufficient and authorized by law.
letter-V valley The internal angle formed by the junction of two sloping sides of a roof.
letter-V valuation Estimated worth or price. Estimation. The act of valuing by appraisal.
letter-V value The present worth stated in dollars of the future benefits arising out of the ownership of a property.
letter-V variable interest rate (vlrs or vmrs, variable mortgage rates.) An interest rate in a real estate loan which by the terms of the note varies upward and downward over the term of the loan depending on money market conditions.
letter-V vendee A buyer under a land sales contract.
letter-V vendor A seller under a land sales contract.
letter-V vendor's lien An unrecorded interest on title to property sold granting the seller the right to foreclose on the property when the buyer defaults on payment of remaining amounts owed on the purchase price.
letter-V veneer Thin sheets of wood.
letter-V venue The physical location of the court which has jurisdiction and the correct forum to hear a dispute.
letter-V verification Sworn statement before a duly qualified officer to correctness of contents of an instrument.
letter-V vested Bestowed upon someone; secured by someone, such as title to property.
letter-V vesting A method of holding title to real estate, including tenancy in common, joint tenancy, community property and community property with the right of survivorship.
letter-V vicious economic cycle The economic climate in which growth slows after a boom, causing property owners to lose when selling (referred to as a buyer’s market).
letter-V virtuous cycle The economic climate during a period of growth, in which property owners gain by selling (referred to as a seller's market).
letter-V visual inspection An inspection of a listed property performed by the seller's agent and undertaken to observe defects to be noted on a condition of property disclosure, called the Transfer Disclosure Statement (TDS).
letter-V void To have no force or effect; that which is unenforceable.
letter-V void deed A deed that is unenforceable and conveys no interest in real estate.
letter-V voidable contract That which is capable of being adjudged void, but is not void unless action is taken to make it so.
letter-V voidable deed A deed that is valid and enforceable until it is challenged due to a defect and declared invalid by a court order.
letter-V Volcker Rule A section of the Dodd-Frank Act authorizing limits on specific types of speculative bets placed by commercial banks using consumer deposits.
letter-V voluntary lien Any lien placed on property with consent of, or as a result of, the voluntary act of the owner.
letter-W wainscoting Wood lining of an interior wall; lower section of a wall when finished differently from the upper part.
letter-W waive To relinquish, or abandon; to forego a right to enforce or require something.
letter-W waiver A mortgage holder's consent to forego a right to enforce a provision or agreement.
letter-W waiver agreement An agreement in which a mortgage holder consents to the owner’s present or future transfer of an interest in the mortgaged property as a waiver of the mortgage holder’s due-on rights. Also known as an assumption agreement. [See RPI Form 431 and 432]
letter-W warehouse lender A lender who funds a mortgage under an agreement to immediately resell the mortgage in the secondary mortgage market.
letter-W warehousing Mortgages held by loan brokers until they are bundled with other mortgages and sold on the secondary mortgage markets.
letter-W warranty deed A deed used to convey real property which contains warranties of title and quiet possession, and the grantor thus agrees to defend the premises against the lawful claims of third persons. It is commonly used in many states but in others the grant deed has supplanted it due to the modern practice of securing title insurance policies which have reduced the importance of express and implied warranty in deeds.
letter-W warranty of authority A representation by an agent to third persons that the agent has and is acting within the scope of authority conferred by his or her principal.
letter-W waste The intentional destruction or neglect of property which diminishes its value. [See RPI Form 550 §6.8 and 552 §7.4]
letter-W waste provision A provision in a lease agreement in which the tenant agrees not to destroy, damage or remove any part of the leased premises. [See RPI Form 552 §7.4]
letter-W water table Distance from surface of ground to a depth at which natural groundwater is found.
letter-W waterbed addendum An addendum to a rental or lease agreement setting the additional security deposit and insurance coverage the tenant will provide the landlord to keep a waterbed on the premises. [See RPI Form 564]
letter-W watered stock A condition that occurs when the dollar value of the investors' percentage of ownership on closing will be less than the down payment they have funded to acquire an investment property.
letter-W wear and tear Depreciation of an asset due to ordinary usage.
letter-W wild document A document outside of the chain of title, such as one created through forgery.
letter-W will A written, legal declaration of a person expressing his or her desires for the disposition of that person's property after his or her death.
letter-W withdrawal-from-sale clause A provision in an exclusive listing agreement which calls for a broker fee to be earned and payable when the seller withdraws the property from sale, makes the property unmarketable, transfers ownership or, without the broker's consent, further leases the property. [See RPI Form 102 §3.1(b)]
letter-W wrap around mortgage A subordinate financing (security) device by which a lender assumes responsibility to make payments on existing trust deed(s) on a property of a borrower, the mortgage note received by the lender having a dollar face amount in the sum of the principle outstanding on the existing trust deed(s) and the additional amount funded by the lender. An all-inclusive mortgage, all-inclusive trust deed note, or land sales contract.
letter-Y yard A unit of measurement 3 feet long.
letter-Y yield The interest earned by an investor on an investment (or by a bank on the money it has loaned). Also, called return.
letter-Y yield rate The yield expressed as a percentage of the total investment. Also, called rate of return.
letter-Y yield spread The difference between the 10-year Treasury Note rate and the 3-month Treasury Bill rate, forecasting economic conditions one year forward.
letter-Z zero ability to pay (ZAP) The household financial situation where a mortgage debt commitment when coupled with other necessities exceeds disposable income.
letter-Z zero lower bound interest rates Economic conditions characterized by a very low nominal interest rate. As the interest rate is at or near zero, the Federal Reserve (the Fed) cannot lower it further to stimulate the economy without going negative.
letter-Z zone The area set off by the proper authorities for specific use; an area subject to certain restrictions or restraints.
letter-Z zoning Building and land use restrictions enacted by local policy makers to ensure a consistent flow of new improvements to meet the demand of population growth.

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