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C
CANTILEVER - A projecting beam or
overhanging portion supported at one end only.
CAPITAL GAIN - The taxable profit derived from the sale of a
capital asset.
CAPITAL IMPROVEMENT - Any structure which is erected as a permanent
improvement to real property; any improvement which is made to extend
the useful life of a property, or to add to the value of the property.
CAPITALIZATION - A mathematical process for converting net income
into an indication of value, commonly used in the income approach to
appraisal.
CAP RATE (CAPITALIZATION RATE) - The percentage selected for
use in the income approach to valuation of improved property. The cap
rate is designed to reflect the recapture of the original investment
over the economic life of the improvement, to give the investor an acceptable
rate of return (yield) on the original investment, and to provide for
the return on borrowed capital.
CERTIFICATE OF REASONABLE VALUE (CRV) - A certificate issued
by the Veterans Administration setting forth a property's current market
value estimate, based upon a VA approved appraisal.
CERTIFIED CHECK - A check which the bank guarantees to be good,
and against which a stop payment is ineffective.
CERTIFIED PROPERTY MANAGER - A professional property manager
who has qualified for membership in and is a member of the Institute
of Real Estate Management, and is designated a CPM.
CHAIN OF TITLE - The recorded history of matters which affect
the title to a specific parcel of real property, such as ownership,
encumbrances and liens, usually beginning with the original recorded
source of the title.
CHATTEL - Personal property which is tangible and moveable.
CLEAR TITLE - Title to property that is free from liens, defects
or other encumbrances, except those which the buyer has agreed to accept,
such as mortgage to be assumed, the ground lease of record, and the
like; established title; title without clouds.
CLIENT TRUST ACCOUNT - An account set up by a broker to keep
client's monies segregated from the broker's general funds.
CLOSING - The final stage of consummating a real estate transaction
when the seller delivers title to the buyer, in exchange for the purchase
price.
CLOSING COSTS - Expenses of the sale which must be paid in addition
to the purchase price (in the case of the buyer's expenses), or be deducted
from the proceeds of the sale (in the case of the seller's expenses).
CLOSING STATEMENT - A detailed cash accounting of a real estate
transaction prepared by an escrow officer or other person designated
to process the mechanics of the sale, showing all cash that was received,
all charges and credits which were made, and all cash that was paid
out in the transaction; also called a settlement statement.
CLOUD ON TITLE - Any document, claim, unreleased lien or encumbrance
which many impair or injure the title to property or make the title
doubtful because of its apparent or possible validity.
CLUSTER DEVELOPMENT - The grouping of housing units on less than
normal size homesites, with the remaining land being devoted to common
areas.
CODE OF ETHICS - A written system of standards of ethical conduct.
The Code of Ethics of the National Association of Realtors, first written
in 1913, establishes the high standards of conduct for members of the
Realtor community.
COLLATERAL - Something of value given or pledged as security
for a debt or obligation. The collateral for a real estate mortgage
loan is the mortgaged property itself, which has been hypothecated.
COLOR OF TITLE - A condition which has the appearance of good
title, but which in fact is not valid title, as where title is founded
on some written document which on its face appears valid and effective,
but which is actually invalid.
COMMERCIAL PROPERTY - A classification of real estate which includes
income producing property such as office buildings, gasoline stations,
restaurants, shopping centers, hotels and motels, parking lots and stores,
and other similar uses.
COMMINGLING - To mingle or mix; for example, to deposit client
funds in the broker's personal or general account. A licensee found
guilty of commingling can have the license suspended or revoked by the
Real Estate Commission.
COMMISSION - The compensation paid to a real estate broker(usually
by the seller) for services rendered in connection with the sale or
exchange of real property.
COMMITMENT - A pledge or promise to do a certain act, such as
the promise of a lending institution to loan a certain amount of money
at a fixed rate of interest to a qualified buyer, provided the loan
is obtained on or before a certain date.
COMMON AREAS - Land or improvements designated for the use and
benefit of all residents, property owners and tenants.
COMMON ELEMENTS - Parts of the property which are necessary or
convenient to the existence, maintenance and safety of the condominium,
or are normally in common use by all of the condominium residents.
COMMON LAW - That body of law which is based on usage, general
acceptance, and custom, as manifested in decrees and judgments of the
courts; judge-made law, as opposed to codified or statutory law.
COMMON WALL - A wall separating two living units.
COMMUNITY PROPERTY - A system of property ownership based on
the theory that each spouse has an equal interest in property acquired
by the efforts of either spouse during marriage.
COMPARABLES - Recently sold properties which are similar to a
particular property being evaluated, and which are used to indicate
a reasonable fair market value for the subject property.
COMPOUND INTEREST - Interest which is computed upon the principal
sum plus accrued interest.
CONCESSIONS - Discounts given by landlords to prospective tenants
to induce them to sign a lease.
CONDEMNATION - Either a judicial or administrative proceeding
to exercise the power of eminent domain, i.e., the power of the government
to take private property for public use.
CONDOMINIUM OWNERSHIP - An estate in real property consisting
of an individual interest in an apartment or commercial unit, and an
undivided common interest in the common areas such as the land, parking
areas, elevators, stairways, and the like.
CONSIDERATION - An act or forbearance, or the promise thereof,
which is offered by one party to induce another to enter into a contract;
that which is given in exchange for something from another.
CONSTRUCTIVE EVICTION - Acts done by a landlord which so materially
disturb or impair the tenant's enjoyment of the leased premises that
a tenant is effectively forced to move out and terminate the lease without
liability for any further rent.
CONSTRUCTIVE NOTICE - Notice of certain facts which are implied
bylaw to a person because he could have discovered the fact by reasonable
diligence or by inquiry into public records.
CONTINGENCY - A provision placed in contract which requires the
completion of a certain act or the happening of a particular event before
a contract is binding.
CONTRACT - A legal agreement between competent parties who agree
to perform or refrain from performing certain acts for a consideration.
In real estate, there are many different types of contracts, including
listings, contracts of sale, options, mortgages, assignments, leases,
deeds, escrow agreements, and loan commitments, among others.
CONVEYANCE - The transfer of title to real property by means
of a written instrument such as a deed or an assignment of lease.
COOPERATING BROKER - A broker who joins with another broker in
the sale of real property.
COOPERATIVE OWNERSHIP - Cooperative ownership of an apartment
unit means that the apartment owner has purchased shares in a corporation
which holds title to the entire apartment building.
CO-TENANCY - A form of concurrent property ownership in which
two or more persons own an undivided interest in the same property.
COUNTER-OFFER - A new offer made as a reply to an offer received
from another; this has the effect of rejecting the original offer, which
cannot thereafter be accepted unless revived by the offeror's repeating
it.
COURTESY TO BROKERS - The practice of sharing commissions with
cooperating brokers.
COVENANT - A written agreement or promise of two or more parties
by which either pledges to perform or not to perform specified acts
on a property, or which specifies certain uses or non-uses of the property.
COVENANTS AND CONDITIONS - Covenants are promises contained in
contracts, the breach of which would entitle a person to damages. Conditions,
on the other hand, are contingencies, qualifications or occurrences
upon which an estate or property right would be gained or lost.
COVENANTS RUNNING WITH THE LAND - Covenants which become part
of the property and benefit or bind successive owners of the property.
CUL DE SAC - A street which is open at one end only, and which
usually has a circular turnaround; a blind alley.
CUSTOMER TRUST FUND (CTF) - An impound account maintained for
the purpose of setting up a reserve to pay certain periodic obligations
such as real property taxes, insurance premiums, lease rent, and maintenance
fees.
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D
DEALER - An IRS designation for a
person who regularly buys and sells real property.
DEBT SERVICE - The amount of money needed to meet the periodic
payments of principal and interest when a debt is amortized.
DECLARATION OF RESTRICTIONS - A statement of all the covenants,
conditions and restrictions ("CC&R's") which affect a
parcel of land.
DEDICATION - The application of privately owned land to the public
for no consideration, with the intent that the land will be accepted
and used for public purposes.
DEED - A written instrument by which a property owner "grantor"
transfers to a "grantee" an ownership in real property.
DEED OF TRUST - A legal document in which title to property is
transferred to a third party trustee as security for an obligation owed
by the trustor (borrower) to the beneficiary(lender).
DEFAULT - Failure to fulfill a duty or promise or failure to
perform any obligation or required act. The most common occurrence of
default on the part of a buyer or lessee is non-payment of money.
DEFERRED COMMISSIONS - Commissions which are earned but not yet
fully paid.
DEFICIENCY JUDGEMENT - A judgment against a borrower, endorser,
or guarantor for the balance of the debt issued when the security for
a loan is insufficient to satisfy the debt.
DENSITY - A term, frequently used in connection with zoning requirements,
which means the maximum number of building units per acre or the number
of occupants or families per unit of land area (acre, square mile, etc.);
usually the ratio of land area to improvement area.
DEPOSIT - Money offered by a prospective buyer as an indication
of good faith in entering into a contract to purchase; earnest money;
security for the buyer's performance of a contract.
DEPRECIATION (APPRAISAL) - A loss in value due to any cause;
any condition which adversely affects the value of an improvement.
DEPRECIATION (TAX) - For tax purposes, depreciation is an expense
deduction taken for an investment in depreciable property.
DEPTH TABLE - Tables of percentage designed to provide a uniform
system of measuring the additional value to lots which accrues because
of added depth, with the extra depth valued according to the added utility
which it creates.
DESCENT - The acquisition of an estate by inheritance, where
an heir succeeds to the property by operation of law. Descent literally
means the hereditary succession of an heir to property of an ancestor
who dies intestate.
DESCRIPTION - The portion of a conveyance document which defines
the property being transferred.
DEVELOPER - One who attempts to put land to its most profitable
use by the construction of improvements.
DEVISE - A transfer of real property under a will.
DISCLAIMER - A statement denying legal responsibility, frequently
found in the form of, "There are no promises, representations,
oral understandings or agreements except as contained herein."
DISCOUNT POINTS - An added loan fee charged by a lender to make
the yield on a lower-than-market interest VA or FHA loan competitive
with higher interest conventional loans.
DISCRIMINATION - The act of making a distinction against or in
favor of a person on the basis of the group or class to which the person
belongs; the failure to treat people equally.
DISTRAINT - The right of a landlord, pursuant to a court order,
to seize a tenants belongings for rents in arrears.
DOMICILE - The state where an individual has his true, fixed,
permanent home and principal business establishment and to which place
he has the intention of returning whenever he is absent.
DOUBLE ESCROW - An escrow set up to handle the concurrent sale
of one property and purchase of another property by same party.
DOWER - The legal right or interest a wife acquires in property
her husband held or acquired anytime during marriage.
DUAL AGENCY - Representing both principals (buyer and seller)
to a transaction.
DUE ON SALE CLAUSE - A form of acceleration clause found in some
mortgages, especially savings and loan mortgages, requiring the mortgagor
to pay off the mortgage debt when selling the secured property, thus
resulting in automatic maturity of the note at the lender's option.
DUPLEX - A structure that provides housing accommodations for
two families by having separate entrances, kitchens, bedrooms, lanais,
living rooms and bathrooms. A two-family dwelling.
DURESS - Unlawful constraint or action exercised upon a person
whereby he is forced to perform some act against his will. A contract
entered into under duress is void.
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E
EASEMENT - A property interest which
one person has in land owned by another entitling the holder of the
interest to limited use or enjoyment of the other's land.
EASEMENT IN GROSS - The limited right of one person to use another's
land (servient estate), which right is not created for the benefit of
any land owned by the owner of the easement; that is, there is no dominant
estate, as the easement attaches personally to the owner, not to the
land.
EMBLEMENTS - Growing crops,such as rice and taro, which are produced
annually through labor and industry.
EMINENT DOMAIN - The right of government, both state and federal,
to take private property for a necessary public use, with just compensation
paid to the owner.
ENCROACHMENT - An unauthorized invasion or intrusion of a fixture
or other real property wholly or partly upon another's property, thus
reducing the size and value of the invaded property.
ENCUMBRANCE - Any claim, lien, charge or liability attached to
and binding upon real property which may lessen the value of the property
but will not necessarily prevent transfer of title.
ENTIRETY, TENANCY BY - A form of joint ownership of property
between husband and wife with the right of survivorship.
ENVIRONMENTAL IMPACT STATEMENT - A report which includes a detailed
description of a proposed development project with emphasis on the existing
environment setting, viewed from both a local and regional perspective,
and a discussion of the probable impact of the project on the environment
during all phases.
EQUITY - That interest or value remaining in property after payment
of all liens or other charges on the property. A owner's equity is normally
the monetary interest over and above the mortgage indebtedness.
ERRORS AND OMISSIONS INSURANCE - A form of insurance which covers
liabilities for errors, mistakes and negligence in the usual listing
and selling activities of a real estate office or escrow company.
ESCHEAT - The reversion of property to the state when a decedent
dies intestate and there are no heirs capable of inheriting, or when
the property is abandoned.
ESCROW - The process by which money and/or documents are held
by a disinterested third person (a "stakeholder") until the
satisfaction of the terms and conditions of the escrow instructions
(as prepared by the parties to the escrow).
ESTOPPEL - A legal doctrine by which a person is prevented from
asserting rights or facts which are inconsistent with a previous position
or representation he had made by his act, conduct or silence.
ETHICS - A system of moral principles, rules and standards of
conduct.
EVICTION - The legal process of removing a tenant from possession
of the premises for some breach of the lease contract.
EXCHANGE - A transaction in which all or part of the consideration
for the purchase of real property is the transfer of property of a like
kind.
EXCLUSIVE AGENCY - A written listing agreement giving one agent
the right to sell property for a specified time, but reserving to the
owner the right to sell the property himself without payment of any
commission.
EXCLUSIVE LISTING - A written listing of real property in which
the seller agrees to appoint only one broker to sell the property for
a specified period of time. The two types of exclusive listings are
the exclusive agency and the exclusive right to sell.
EXECUTIVE - The act of making a document legally valid, such
as formalizing a contract by signing, or acknowledging and delivering
a deed.
EXECUTOR - A person appointed by a testator to carry out the
directions and requests in the last will and testament, and to dispose
of property according to the provisions of the will.
EXECUTORY CONTRACT - A contract in which one or both of the parties
has not yet performed.
EXTENDER CLAUSE - A "carry over" clause (referred to
as a safety clause) contained in a listing which provides that a broker
is still entitled to a commission for a set of period of time after
the listing has expired if the property is sold to a former prospect
of the broker.
EXTENSION - An agreement to continue the period of performance
beyond the specified period.
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