Abutting – Parcels of land next to each other that share a common border.
Abstract of Title – A summary of all of the recorded instruments and proceedings which affect the title to property, arranged in the order in which they were recorded.
Acceleration Clause – Term given to the practice of paying off a mortgage loan faster than required by terms of the mortgage agreement.
Accession – A mode of acquiring property that involves the addition of value to property through labor or the addition of new materials. For example, a person who owns a property on a river delta also takes ownership of any additional land that builds up along that riverbank due to natural deposits or man made deposits.
Accessory Apartment Uses – A second residential unit that may be contained within an existing single-family home, garage, or carriage house. An accessory apartment is usually required to be a complete housekeeping unit that can function independently with separate access, kitchen, bedroom, and sanitary facilities.
Accessory Uses – The use of land that is subordinate, incidental to, and customarily found in connection with the principal use allowed on a lot by the zoning law. A garage is incidental to the principal use of a lot as a single-family residence and customarily found on a single-family parcel.
Accretion – The addition of land through processes of nature, as by water or wind.
Acknowledgement – A formal declaration before a duly authorized officer by a person who has executed an instrument that such execution is the person’s act and deed.
Acre – A measure of land equaling 43,560 square feet.
Act of Waste – Describes a cause of action that can be brought in court to address a change in condition of a property brought about by a current tenant that damages or destroys the value of that property.
Active Income – Income for which services have been performed.
Actual Cash Value – A method of valuing insured property.
Actual Eviction – Where one is either by force or by process of law, actually put out of possession.
Actual Notice – Notice delivered in such a way as to give legally sufficient assurance that actual knowledge of the matter has been conveyed to the recipient.
Ad Valorem Taxes – According to valuation.
Adjusted Basis – The original cost of a property minus depreciation and sales of portions thereof plus allowable additions such as capital improvements and certain carrying costs and assessments. A bookkeeping rather than appraisal term.
Adjustable Rate Mortgage (ARM) – A mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.
Administrative Discipline – The Department of State’s ability to enforce license laws through reprimand and denial as well as the suspension and revocation of licenses.
Advance Consent to Dual Agency – The seller or buyer agrees to dual agency before it occurs by indicating the same on the agency disclosure form.
Adverse Possession – A means of acquiring title where an occupant has been in actual, open, notorious, exclusive, and continuous occupancy of property under a claim of right for the required statutory period.
After Tax Cash Flow – The net profit/loss realized after taxes are deducted.
Agency Disclosure Form – A written explanation, to be signed by a prospective buyer or seller of real estate, explaining to the client the role that the broker plays in the transaction.
Agent – One who undertakes to transact some business or to manage some affair for another by authority of the latter.
Air Rights – Rights in real property to use the space above the surface of the land.
Alienation Clause – Allows lender to require the balance of a loan to be paid in full if the collateral is sold (also known as a “due on sale” clause).
Alluvion – The increase in the area of land due to sediment deposited by a river. This changes the size of a piece of land (a process called accession) and thus it value over time.
Alteration Agreement – Describes the terms under which the cooperative gives permission to a shareholder before making any changes or improvements to the unit the shareholder occupies.
Americans with Disabilities Act – A wide-ranging civil rights law enacted by the U.S. Congress in 1990, that prohibits, under certain circumstances, discrimination based on disability.
Amortization – The process by which a loan principal decreases over the life of a loan.
Amperage – A unit measure of electricity.
Anchor Stores – A key tenant in retail. Typically one of the larger stores in a shopping mall, usually a department store or a major retail chain (Macys, Nordstrom, etc.).
Apartment Information Vendor – Any person who engages in the business of claiming, demanding, charging, receiving, collecting, or contracting for the collection of, a fee from a customer for furnishing information concerning the location and availability of real property, including apartment housing, which may be leased, rented, shared or sublet as a private dwelling, abode, or place of residence.
Apartment Sharing Agent – any person who, for a fee, arranges, conducts, coordinates, handles or causes meetings between a customer and the current owner or occupant of legally occupied real property, including apartment housing, who wishes to share that housing with one or more individuals.
Appraisal – An estimate of a property’s value by an appraiser who is usually presumed to be expert in his work.
Appreciation – Monetary gain resulting from the increase in the market value of an investment, excluding additions of capital. For example, a house which is sold five years after it was purchased for 50% more than the purchase price.
Appropriation – A sum of money or total of assets devoted to a special purpose.
Approved Assessing Unit – A city or town which has been certified by the State Board of Real Property Tax Services to have completed a revaluation or an update in conformance with its rules and regulations.
Appurtenances – Something which is outside property itself but belongs to the land and adds to its greater enjoyment such as a right-of-way or a barn or a dwelling.
Architectural Review Board – Oversees and upholds the quality and aesthetics of a neighborhood, town, or city.
Area Variance – Permission to modify or exceed the bulk regulations imposed by local zoning ordinances.
Article 12-A – The section of the New York Real Property Law pertaining to real estate salespersons and brokers.
Article 78 Proceeding – An appeal brought forth because of a ruling by a government agency.
“As is” – A legal term used to disclaim some implied warranties for an item being sold. Denotes that the seller is selling, and the buyer is buying a property in whatever condition it presently exists.
Asbestos – A naturally occurring mineral fiber sometimes found in older homes. It is hazardous to health when a possibility exists of exposure to inhalable fibers. Homeowners should be alert for friable asbestos and always seek professional advice in dealing with it.
Asbestosis – A chronic lung disease caused by inhaling asbestos fibers.
Assessed Value – A valuation placed upon property by a public officer or a board, as a basis for taxation.
Assessing Unit – A city, county, town or village with the authority to value real property for purposes of taxation.
Assessment Review Board – An independent tribunal established to hear assessment appeals.
Assessments – A charge against real estate made by a unit of government to cover a proportionate cost of an improvement such as a street or sewer.
Assignment – The method or manner by which a right or contract is transferred from one person to another.
Associate Real Estate Broker – A licensed real estate broker who by choice elects to work under the name and supervision of another real estate broker.
Attorney Review Clause – A clause found in real estate contracts that may allow buyers to walk away from an agreed upon sale for any reason.
Avulsion – A sudden and perceptible loss or addition to land by the action of water, or a sudden change in the bed or course of a stream.
Balloon Mortgage – A mortgage which does not amortize over the term of the note, thus leaving a balance due at maturity.
Bargain and Sale Deed – A deed conveying real property without covenants.
Basement – One or more floors of a building that are either completely or partially below the ground floor.
Basis – A major accounting method that recognizes revenues and expenses at the time physical cash is actually received or paid out.
Beam – A horizontal structural member that supports a floor. Beams are typically wood, cold formed metal framing or steel.
Bearing Walls – Structural walls that transfer building loads down to the foundation. Joists, beams, and roofs are typically supported by bearing walls.
Before Tax Cash Flow – The net profit/loss calculated by subtracting expenses from income before taxes are paid.
Beneficiary – The person who receives or is to receive the benefits resulting from certain acts.
Blanket Mortgage – A type of loan used to fund the purchase of more than one piece of real property. A blanket mortgage is often used for subdivision financing.
Blind Ad – An ad that remains anonymous as to who is advertising. Blind ads are illegal.
Blockbusting – The practice of inducing homeowners in a particular neighborhood to sell their homes quickly, often at below market prices, by creating the fear that the entry of a minority group or groups into the neighborhood will cause a precipitous decline in property values.
Blueprint – Architectural drawings that describe the layout and construction of a house.
Board Package – A series of documents submitted for the review by a cooperative board.
Boot – Cash received in a tax-deferred exchange.
Bridge Loan – A type of short-term loan, typically taken out for a period of 2 weeks to 3 years.
British Thermal Unit (BTU) – The amount of heat energy needed to raise the temperature of one pound of water by one degree F. This is the standard measurement used to state the amount of energy that a fuel has as well as the amount of output of any heat generating device.
Broker’s Agent – A broker’s agent is an agent that cooperates or is engaged by a listing agent or a buyer’s agent (but does not work for the same firm as the listing agent or buyer’s agent) to assist the listing agent or buyer’s agent in locating a property to sell or buy, respectively, for the listing agent’s seller or the buyer agent’s buyer.
Building Code – Regulations established by state or local governments stating fully that structural requirements for building.
Building Department – A town or city agency that oversees and reviews building applications by licensed professionals to ensure compliance with local building code and zoning ordinances.
Building Envelope – Refers to the massing or bulk of a building. Typically defined by the exterior walls of a building.
Building Permit – Written governmental permission for the construction, renovation or substantial repair of a building.
Bundle of Rights – The premise that the ownership of real estate consists of the ownership of various rights associated with it. These rights include the right to use and/or occupy, the right to sell in whole or in part, the right to lease, the right to bequeath and the right to do none of the foregoing.
Buydown – Obtaining a lower interest rate by paying additional points to the lender.
Buyer Agent – An agent who represents the buyer of real property.
By-laws – The owner’s rights and obligations for a condominium.
Capital Expense (CAPEX) – Expenditures creating future value. Incurred when a property owner spends money to upgrade a building in an effort to add value and/or extend the useful life of the building.
Capital Gain – A profit that results from a the sale of a property where the amount realized from the sale exceed the purchase price.
Capital Loss – The difference between a lower selling price and a higher purchase price, resulting in a financial loss to the seller.
Capital Reserve Budget – Money set aside by a property owner for long-term capital expenditures to a property.
Capitalization Rate – The percentage which is the sum of the discount rate, the effective tax rate and the recapture rate representing the relationship between net operating income and present value. Formula: Value = Income / Rate
Cash Flow – The net result when income from an investment property is subtracted from the expenses. The result is used to determine the rate of return on an investor’s money.
Cash on Cash Return – A percentage return on money invested in a property by an investor. Formula: Cash Flow/Down Payment.
Caveat – A Latin term that means “let him beware.” Caveats have many applications in law and finance, pertaining to all parties involved being aware of all of the facts of a transaction. Caveat is usually interpreted as a sort of warning or cautionary expression.
Caveat Emptor – Let the buyer beware. The buyer must examine the goods or property and buy at the buyer’s own risk.
Cease and Desist List – Upon the establishment of a cease and desist zone by the Secretary, a list of homeowners who have filed owner’s statements expressing their wish not to be solicited by real estate brokers or salesperson. Soliciting of listed homeowners by licensees is prohibited. Violators of such prohibition are subject to licensure suspensions or revocation.
Census Tract – Small, relatively permanent statistical subdivisions of a country or equivalent entity that are updated by local participants prior to each decennial census. The primary purpose of the census tracts is to provide a stable set of geographic units for the presentation of statistical data.
Certificate of Occupancy (CO) – A document issued by a governmental authority that a building is ready and fit for occupancy.
Chain of title – The sequence of historical transfers of title to a property. It runs from the present owner back to the original owner of the property.
Change of Association – The process by which a salesperson’s license changes sponsorship.
Chattel – Personal property, such as household goods.
Chlordane – A colorless, odorless, viscous liquid used as an insecticide. It may be toxic to humans and wildlife as a result of its effect on the nervous system.
Chloro-flouro Carbons (CFCs) – A fluid, containing hydrocarbons, that absorbs heat from a reservoir at low temperatures and rejects heat at higher temperatures. When emitted into the atmosphere, CFCs cause depletion of the stratospheric ozone layer.
Circuit Breaker – The safety valves for electrical systems. It interrupts an electric circuit when an unusual condition arises such as lightning and malfunctioning appliances. Unlike a fuse, it can be reset.
Civil Rights Act of 1866 – A federal law that prohibits all discrimination on the basis of race.
Clean Air Act (CAA) – Federal law designed to control air pollution on a national level.
Client – The one by whom a broker is employed.
Closing Statement – A document commonly used in real estate transactions, detailing the fees, commissions, insurance, etc. that must be transacted for a successful transfer of ownership to take place.
Commingling – To mingle or mix, for example, a client’s funds in the broker’s personal or general account.
Commission – A sum due a real estate broker for services in that capacity.
Common Areas – Spaces in a commercial building shared by the tenants or residents of the building. Common areas include lobbies, corridors, stairs, elevators, etc.
Common Elements – Also known as Common Areas; refers to the spaces in a building shared by residents of the building. Common areas include lobbies, corridors, stairs, elevators, etc.
Comparative Market Analysis – A property evaluation that determines property value by comparing similar properties sold within the last year.
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – Enacted in 1980, a federal law designed to clean up sites contaminated with hazardous substances.
Condemnation – Taking private property for public use, with fair compensation to the owner; exercising the right of eminent domain.
Condominium – A form of fee simple ownership of part of a structure having multiple units. Owners have title to their own units plus a share of the common elements.
Condop – A residential establishment that includes both a condominium and cooperative ownership structures. Typically the condop refers to the residential portion of a building which is treated as a single condominium unit owned through a cooperative-ownership structure.
Confidentiality – An agent is obligated to safeguard his/her principal’s lawful confidences and secrets. Therefore, a real estate broker must keep confidential any information that may weaken a principal’s bargaining position. The duty of confidentiality precludes a broker who represents a seller from disclosing to a buyer that the seller can, or must, sell a property below the listed price. Conversely, a broker who represents a buyer is prohibited from disclosing to a seller that the buyer can, or will, pay more than what has been offered for a property. The duty of confidentiality does not include an obligation by a broker who represents a seller to withhold know material facts about the condition of the seller’s property from the buyer, or to misrepresent the property’s condition. To do so constitutes misrepresentation and may impose liability on both the broker and/or the seller.
Conservation Advisory Council – Created by the local legislature to advice in the development, management, and protection of the community’s natural resources and to prepare an inventory and map of open spaces.
Consideration – Anything given to induce another to enter into a contract such as money or personal services.
Construction Mortgage – A loan secured by real estate which is for the purpose of funding the construction of improvements or building(s) upon the property.
Constructive Eviction – Any disturbance of the tenant’s possession of the leased premises by the landlord whereby the premises and rendered unfit or unsuitable for the purpose for which they were leased.
Constructive Notice – Information or knowledge of a fact imputed by law to a person because the person could have discovered the fact by proper diligence and inquiry (e.g. via public records).
Contingency – A provision in a contract that requires the occurrence of a specific event before the contract can be completed.
Continuing Education – Post license education required by salespersons and brokers. New York State demands 22.5 hours of continuing education.
Conveyance – The transfer of the title of land from one to another. The means or medium by which title of real estate is transferred.
Cooperating Agent – A real estate agent who sells a property. The selling agent may be (1) the subagent or listing agent of the seller; (2) a buyer’s agent; or (3) a dual agent. Also called a selling agent or participating agent.
Cooperative – A dwelling unit owned by a corporation in which an owner owns stock commensurate with the value of his or her apartment compared to the value of the building as a whole. The stockholder has a proprietary lease to the apartment.
Corrective Maintenance – A maintenance task performed to identify, isolate, and rectify a problem with a property so that the property can be restored to an acceptable condition.
Cost – The total dollar expenditure for labor, materials, legal services, architectural design, financing, taxes during construction, interest, contractor’s overhead and profit, and entrepreneurial overhead and profit (may or may not equal value).
Cost Approach – A method of estimating the value of real property by calculating a current construction cost, subtracting accrued depreciation and adding a land value obtained from the market. This method works best when the improvements are relatively new and estimates of depreciation are thus more likely to be accurate.
Counteroffer – A type of offer made in response to another offer, which was seen as unacceptable. A counteroffer revises the initial offer, making it more appealing for the person making the new offer.
County Health Department – A local unit with the responsibility for protecting, assuring, and improving the health of its citizens.
Covenant – Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or stipulating certain uses or non-uses of the property.
Covenants, Conditions and Restrictions (CCRs) – Limitations and rules on a group of homes by a builder, developer, neighborhood association and/or homeowner associations; when living in a building, a buyer gives up certain freedoms to be part of a shared community.
Crawl Space – Shallow space between the underside of the first floor of a house and the ground.
Credit – an agreement that a person will borrow money and repay it to the lender over time.
Cul-de-sac – A blind alley: a street with only one outlet.
Curtesy – A husband’s interest upon the death of his wife in the real property of an estate that she either solely owned or inherited provided they bore a child capable of inheriting the estate.
Customer – The party the agent brings to the principal as seller or buyer of the property.
Declaration – Also known as a Master Deed, is a fundamental document that establishes the existence of and further governs the use and maintenance of a condominium property.
Debt Service – Annual amount to be paid by a debtor on an obligation to repay borrowed money.
Debits – The amount charged as due or owing.
Dedication – An appropriation of land to some public use, made by the owner, and accepted for such use by or on behalf of the public.
Dedication by Deed – Land that has been put aside for a public use by a deed which states exactly what the property will be used for.
Deductible – The amount of expenses that must be paid out of pocket before an insurer will pay any expenses.
Deed Restriction – A imposed restriction in a deed for the purpose of limiting the use of the land such as:
1) A restriction against the sale of liquor thereon.
2) A restriction as to the size, type, value or placement of improvements that may be erected thereon.
Default – The failure to pay back a loan.
Delivery and Acceptance – Legal policy mandates that a deed to real property be a matter of public record; therefore, subsequent to delivery and acceptance, a deed must be properly recorded.
Demography – The statistical study of human populations.
Department of Housing and Urban Development (HUD) – Established in 1965, HUD works to create a decent home and suitable living environment for all Americans; it does this by addressing housing needs, improving and developing American communities, and enforcing fair housing laws.
Depreciation – A loss of utility and thus value caused by physical deterioration, functional obsolescence or economic obsolescence or any combination thereof.
Description (Schedule A) – Consists of the written words which delineate a specific piece of real property.
Designated Sales Agent – Appointing one or more individual agents in a firm to represent only the interests of the seller and one or more different individual agents in the firm to represent only the interests of the buyer when a firm has an “in-house” dual agency situation.
Direct Cost – The cost of labor and materials.
Disability / Handicap – The consequence of an impairment that may be physical, cognitive, mental, sensory, emotional, developmental, or some combination of these.
Disclosure – The release of relevant information about a property that may influence the final sale, especially if it represents defects or problems.
Discount points – A form of pre-paid interest where 1 point equals 1 percent of the loan amount.
Doctrine of Laches – Failure to do something at the proper time, especially such delay as will bar a party from bringing a legal proceeding.
Dominant Tenement – A parcel of real property that has an easement over another piece of property (the servient estate).
Dower – The part of or interest in real estate of a deceased husband given by law to his widow during her life.
Down Payment – The portion of a home’s purchase price that is paid in cash and is not part of the mortgage loan. This amount varies based on the loan type, but is determined by taking the difference of the sale price and the actual mortgage loan amount. Mortgage insurance is required when a down payment less than 20 percent is made.
Dual Agency – Representing both principals (seller and buyer) to a transaction.
Due Diligence – The review and investigation of a property to evaluate any legal liability.
“Due on Sale” Clause – Allows lender to require the balance of a loan to be paid in full if the collateral is sold (also known as an Alienation Clause).
Earnest Money Deposit – Down payment made by a purchaser of real estate as evidence of good faith.
Easement – A right that may be exercised by the public or individuals on, over or through the lands of others.
Easement Appurtenant – An easement that benefits the dominant estate and “runs with the land”. In other words, an easement appurtenant generally transfers automatically when the dominant estate is transferred.
Easement by Condemnation – An easement created by the government or government agency that has exercised its right under eminent domain.
Easement by Grant – The creation of an easement by one party expressly transferring the easement to another party.
Easement by Implication – An easement that is not created by express statements between the parties; but as a result of surrounding circumstances that dictate that an easement must have been intended by the parties.
Easement by Necessity – Parcels without access to a public way may have an easement of access over adjacent land if crossing that land is absolutely necessary to reach the landlocked parcel and there has been some original intent to provide the lot with access.
Easement by Prescription – Implied easements granted after the dominant estate has used the property in a hostile, continuous, and open manner for a statutorily prescribed number of years.
Easement for Light and Air – A type of negative easement. This easement prevents an adjoining land owner from building any structure that would obstruct the passage of light or air from reaching the dominant land.
Easement in Gross – An easement that benefits an individual or a legal entity, rather than a dominant estate.
Eave – The section of the roof that overhangs the walls of a house.
Economic Obsolescence – A loss in value caused by influences external to the property such as increasing industrial activity near a residential neighborhood.
Electro-magnetic Field – Created when electricity flows through a wire.
Eminent Domain – A right of the government to acquire property for necessary public use by condemnation; the owner must be fairly compensated.
Employee – A person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent business.
Encroachment – A building, part of a building, or obstruction which intrudes upon or invades a highway or sidewalk or trespasses upon the property of another.
Encumbrance – Any right to or interest in the land interfering with its use or transfer, or subjecting it to an obligation.
Environmental Impact Statement – A report addressing the potential effects on the environment of a proposed federal government project.
Escheat – The reversion to the State of property in event the owner thereof abandons it or dies, without leaving a will and has no distributees to whom the property may pass by lawful descent.
Escrow – A written agreement between two or more parties providing that certain instruments or property be placed with a third party to be delivered to a designated person upon the fulfillment or performance of some act or condition.
Estate for Years – A leasehold estate for any specific period of time. An estate for years is not automatically renewed.
Estoppel – The principle which prevents a person from asserting something contrary to what is implied by a previous action or statement of that person.
Evaluation – A study of the nature, quality, or utility of certain property interests in which a value estimate is not necessarily required, e.g. highest and best use, feasibility, market supply and demand, etc.
Eviction – A legal proceeding by a lessor landlord to recover possession of real property.
Exclusive Agency – An agreement of employment of a broker to the exclusion of all other brokers; if sale is made by any other broker during term of employment, broker holding exclusive agency is entitled to commissions in addition to the commissions payable to the broker who effected the transaction.
Exclusive Right to Sell – An agreement of employment by a broker under which the exclusive right to sell for a specified period is granted to the broker; if a sale during the term of the agreement is made by the owner or by any other broker, the broker holding such exclusive right to sell is nevertheless entitled to compensation.
Executed Contract – An agreement that has been fully performed.
Executor – A person or institution appointed by a testator to carry out the terms of their will.
Executory Contract – A contract which has not yet been fully performed (fully executed).
Exemption – Conditions under which a property condition disclosure statement is not required.
Express Contract – A contract in which all elements of a contract are specifically stated (offer, acceptance, consideration), and the terms are stated, as compared to an “implied” contract in which the existence of the contract is assumed by the circumstances.
Expressed Agency – An actual agency created by written or oral agreement between the principal and the agent.
Fair Housing Act of 1968 – A federal prohibition that protects buyer/renter of a dwelling from seller/landlord discrimination with regards to race, color, religion, gender, or national origin.
Familial Status – A single person, pregnant woman or a household with children under 18 living with parents or legal custodians who might experience housing discrimination.
Family – A group consisting of parents and children living together in a household.
Fascia – Architectural term for a band running horizontally and situated vertically under a roof edge, or which forms the outer surface of a cornice, visible to an observer. Typically consisting of a wooden board or sheet metal.
Fee Simple Estate – Absolute ownership of real property; a person has this type of estate where the person is entitled to the entire property with unconditional power of disposition during the person’s life and descending to the person’s heirs or distributees.
FHA Mortgage – Backed loans that usually require a lower down payment and may sometimes have a lower interest rate.
Fiduciary – A person who on behalf of or for the benefit of another transacts business or handles money or property not the person’s own; such relationship implies great confidence and trust.
Fiduciary Duties – The legal duty of a fiduciary to act in the best interests of the beneficiary. One common duty includes confidentiality.
Filtering Down – The decline in value of properties in neighborhoods that were once middle or upper-middle income.
First Substantive Contact – The first contact or meeting by a licensee when some detail and information about the property is shared with parties who express some interest in the real estate transaction.
Fixture / Trade Fixture – Personal property so attached to the land or improvements as to become part of the real property.
Flashing – Sheet metal used at wall and roof junctions and around chimneys to prevent water entry.
Flip Tax – A fee paid by a seller or buyer on a housing co-op transaction typically in New York City. It is not a tax, and not deductible as a property tax. It is a transfer fee payable upon the sale of an apartment to the co-op.
Flipping – A term used for buying a home and then turning around and reselling it for a profit.
Footing – Concrete set in the soil (foundation bed) that support the foundation of the house.
Forbearance – A special agreement between the lender and the borrower to delay a foreclosure.
Foundation Walls – The part of the structure, typically below grade, upon which all other construction is built.
Freon – Moderately toxic gases or liquids which have typically been used as refrigerants (in air conditioning units) and as aerosol propellants.
Friable – Easily crumbled or reduced to powder. Asbestos is an example of a friable substance.
Front Foot – Refers to the length of a parcel facing a street.
Full Covenant and Warranty Deed – A type of deed where the grantor guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to the grantee. This type of deed contains the strongest guarantee of title.
Functional Obsolescence – Impairment of useful capacity or efficiency; loss of value caused by super adequacy, inadequacy or changes in the art inherent in the property itself. not to be confused with external effects of economic obsolescence. Curable if the cost to cure is justified by the resulting increase in value of the property; otherwise incurable.
Fuse – A device used in electrical systems to protect against excessive current.
General Agent – An agent with the full authority over one property of the principal, such as a property manager.
General Lien – A lien that attaches to all personal and real property of a person or firm.
Girder – A primary horizontal structural element. Typically a deep beam in which smaller joists or beams frame into.
Grace Period – A time past the deadline for an obligation during which a late penalty that would have been imposed is waived.
Graduated Lease – A lease which provides for a graduated change at stated intervals in the amount of the rent to be paid; used largely in long-term leases.
Graduated Payment Mortgage – A type of fixed-rate mortgage in which the payment increases gradually from an initial low base level to a desired, final level.
Grantee – The buyer in a transaction.
Grantor – The seller in a transaction.
Gross Income – Total income from property before any expenses are deducted.
Gross Lease – A lease of property whereby the lessor is to meet all property charges regularly incurred through ownership.
Ground Lease – An agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.
Groundwater – Water located beneath the earth’s surface in soil pore spaces and in the fractures of rock formations.
Group Boycott – An agreement between members of a trade to exclude other members from fair participation in the trade.
Group Home – A home where a small number of unrelated people in need of care, support, or supervision can live together, such as those who are elderly or mentally ill.
Habendum clause – A clause in a deed or lease that defines the type of interest and rights to be enjoyed by the grantee or lessee. Also known as the “to have and to hold’” clause.
Headers – Local horizontal structural elements used in wood framing to span doors and windows.
Hectare – Equal to 10,000 square meters.
Historic Preservation / Landmark Commissions – Established to review proposed projects within historic districts for compliance with standards established for new development or alteration or improvement of historic buildings and landmarks.
Holdover Tenant – A tenant who remains in possession of leased property after the expiration of the lease term.
Home Equity Loan – A loan secured by equity value in the borrower’s property.
Home Inspection – An examination of a real estate property’s condition, usually performed in connection with the property’s sale. A qualified home inspector can assess the condition of a property’s roof, foundation, heating and cooling systems, plumbing, electrical work, water and sewage, and some fire and safety issues. In addition, the home inspector will look for evidence of insect, water or fire damage or any other issue that may affect the value of the property.
Home Occupations – A business conducted in a residential dwelling unit that is incidental and subordinate to the primary residential use.
Homestead – The home which is owned by and is the usual residence of the client along with all the surrounding land and any building on that land, provided the land is not separated from the home by an property owned by others.
House Rules – Rules in a cooperative that cover common issues including garbage disposal, maintenance, noise, and conflict resolution.
Illiquidity – The concept that property is an illiquid asset because it cannot easily be sold or exchanged for cash.
Implied Agency – Form of agency that occurs when the words and actions of the parties indicate that there is an agency relationship.
Implied Contract – A legal substitute for a contract. An implied contract is an agreement created by actions of the parties involved, but it is not written or spoken. This is a contract assumed to have been drawn.
In Rem – A proceeding against the reality directly; as distinguished from a proceeding against a person. (Used in taking land from nonpayment of taxes, etc.)
Income Approach – An appraisal technique whereby the value of an income producing property is estimating by capitalizing its net operating income using an appropriate capitalization rate.
Value = Income / Rate.
Independent Contractor – A person that provides services to another under terms specified in a contract or within a verbal agreement. An independent contractor is not an employee.
Indirect Cost – Costs that support a construction project, such as legal or architectural fees.
Index Lease – A lease tied to an index such as the Consumer Price Index.
Inflation – The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
Informed Consent – An agreement to do something or to allow something to happen only after all the relevant facts are disclosed.
Infrastructure – Basic physical and organizational structures needed for the operation of a society or city.
Insured Value – The value of an asset or asset group that is covered by an insurance policy; can be estimated by deducting cost of noninsurable items (e.g. land value) from market value.
Interest – A fee paid by the borrower of a loan as a form of compensation for the use of money.
Interest and Tax Deductibility – Reductions of the income subject to tax, for various items, especially expenses incurred to produce income.
Investment Value – The specific value of an investment to a particular investor or class of investors based on individual investment requirements; distinguished from market value, which is impersonal and detached.
Involuntary Alienation – Loss of property through attachment, condemnation, foreclosure, sale of taxes or other involuntary transfer of title.
Involuntary Lien – A lien imposed against property without consent of the owner, e.g., taxes, special assessments.
Irrevocable Consent – Incapable of being recalled or revoked; unchangeable; unalterable.
Joint Tenancy – Ownership of realty by two or more persons, each of whom has an undivided interest with the “right of survivorship”.
Joint Venture – A business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity.
Joists – Horizontal timbers, beams or bars supporting a floor.
Jones vs. Mayer Supreme Court Decision (1968) – Held that Congress could regulate the sale of private property in order to prevent racial discrimination. Bars all racial discrimination, private as well as public, in the sale or rental of property, and that the statute, thus construed, is a valid exercise of the power of Congress to enforce the 13th Amendment.
Kickback – Payment by a broker of any part of compensation to a real estate transaction to anyone who is not licensed or who is not exempt from the license law.
Lally Columns – Rounded columns that serve as a structural post. Typically found in basements and are made of steel or iron.
Land Lease – A land lease–also called a ground lease–is a lease agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.
Land Patent – A supreme title to land which was originally acquired within the United States of America by a treaty. It grants the rights to the described land under the treaty to the individual person named on the patent and to their heirs and their assigns forever.
Landlord’s Agent – A person who has oral or written authority, either express or implied, to act for or on behalf of a landlord.
Lawyer’s Fund for Client Protection – Setup to protect consumers from dishonest attorneys.
Lead – A material used in pipes and paint of many older homes. We now know that lead is hazardous to health. The local environmental protection agency should be consulted for guidelines on handling, removal and applicable laws.
Lead Agency – The governmental agency that oversees the environmental impact process and makes final decisions.
Lease – A contract whereby, for a consideration, usually termed rent, one who is entitled to the possession of real property transfers such rights to another for life, for a term of years, or at will.
Lease Escalation Clause – A contract provision allowing for one to pass an increase in costs to another party. Escalation clauses are usually related to influences beyond both parties control, such as inflation.
Leasehold Estate – The interest or estate which a lessee of real estate has therein by virtue of the lessee’s lease.
Lender Rebate – A payment to a mortgage broker by a lender.
Lessee – A person to whom property is rented under a lease.
Lessor – One who rents property to another under a lease.
Letter of Intent (LOI) – Generally an agreement to agree. It outlines the terms between parties who have not formalized an agreement into a contract. LOIs are generally not binding and unenforceable.
Leverage – The use or borrowed capital (mortgage) to increase the potential return of an investment.
Levy – An assessment of tax.
Liability Insurance – Policy that covers civil liabilities to third parties, arising from bodily injury, property damage, or other wrongs due to the action or inaction of the insured.
License – Permission granted by a party to another party as an element of an agreement between both parties.
Lien – A legal right or claim upon a specific property which attaches to the property until a debt is satisfied.
Life Estate – The conveyance of title property for the duration of the life of the grantee.
Lifetime Cap/Ceiling – Some mortgages have interest rate ceilings (or limits) which are similar to, and sometimes referred to as, lifetime caps.
Liquidated Damages – A provision in certain legal contracts that allows for the payment of a specified sum should one of the parties be in breach of contract.
Lis Pendens – A legal document, filed in the office of the county clerk giving notice that an auction or proceeding is pending in the courts affecting the title to the property. (Not applicable in commission disputes.)
Listing Agreement – An employment contract between principal and agent, authorizing the agent to perform services for the principle involving the latter’s property.
Littoral Rights – The right of a property owner whose land borders on a body of water, such as a lake, ocean or sea, to reasonable use and enjoyment of the shore and water the property borders on.
Loan To Value ratio (LTV) – A financial term used by lenders to express the ratio of a loan to the value of an asset (property) purchased.
Lot and Block – Method of identifying legal description of property.
Loyalty – An agent’s duty to place the client’s interest above those of all others, including the agent’s own self-interest.
Maintenance – Monthly payments by a shareholder to a cooperative corporation.
Management Agreement – A contract between the owner of a property and someone who agrees to manage it.
Management Proposal – A document that sets forth the duties of the manager when employed by the owner.
Margin – The amount of interest a bank charges on a loan over the base rate.
Marital Status – Indicated whether the person is married. The only possible answers are “married” or “single”.
Market Allocation – An agreement between members of a trade to refrain from competition in specific market areas.
Market Price – The actual selling price of a property.
Market Value – The most probable price that a property should bring if exposed for sale in the open market for a reasonable period of time, with both the buyer and seller aware of current market conditions, neither being under duress.
Marketable Title – A title that a court of equity considers to be so free from defect that it will legally force its acceptance by a buyer.
Master Plan – A long-term planning document. It establishes the framework and key elements of a site reflecting a clear vision created and adopted in an open process. It synthesizes civic goals and the public’s aspirations for a project, gives them form and organization, and defines a realistic plan for implementation, including subsequent approvals by public agencies.
Mechanic’s Lien – A security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property.
Metes and Bounds – A term used in describing the boundary lines of land, seeing forth all the boundary lines together with their terminal points and angles.
Misdemeanor – A crime punishable by up to a year in prison and/or a $1,000 fine.
Misrepresentation – Making an intentionally false statement to induce someone to contract.
Mold – A fungus that grows in the form of multicellular filaments called hyphae.
Moratorium – A temporary prohibition of an activity.
Mortgage – An instrument in writing, duly executed and delivered, that creates a lien upon real estate as security for the payment of a specified debt, which is usually in the form of a bond.
Mortgage Banker – A company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.
Mortgage Broker – An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or yield spread premium from the lender as compensation for its services.
Mortgage Broker Dual Agency Disclosure Form – A banking department form required when a person is acting as a mortgage broker and a real estate broker in the same transaction.
Mortgage Commitment – A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.
Mortgage Contingency Clause – A clause in a contract that states a mortgage must be obtained in order for the contract to be binding.
Mortgage Insurance Premium (MIP) – The amount paid by a mortgagor for mortgage insurance, either to a government agency such as the FHA or to a private mortgage insurance (MI) company.
Mortgage Value – The estimate worth of a particular asset which is established for the purposes of obtaining financing secured against that asset.
Mortgagee – The lender or bank who provides a loan to the borrower or homeowner.
Mortgagor – the borrower, typically a home owner.
Multiple Listing Service (MLS) – A service provided by a group of real estate brokers. They band together to create a Multiple Listing Service that allows each of them to list each other’s houses. Under this arrangement, the listing broker and the selling broker split the commission for each sale.
Negative amortization – Occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases.
Net Income – The result of subtracting expenses from income.
Net Lease – A lease that requires the tenant to pay, in addition to rent, some or all of the property expenses that normally would be paid by the property owner. These include expenses such as real estate taxes, insurance, maintenance, repairs, utilities, and other items.
Net Listing – A price below which an owner will not sell the property, and at which price a broker will not receive a commission; the broker receives the excess over and above the net listing as the broker’s commission.
Net Operating Income – Equal to the Gross income minus expenses (and sometimes debt service). Also referred to as cash flow.
New York State Human Rights Law – Protects individuals from the discrimination based on their age, creed, race, color, sex, sexual orientation, national origin, marital status, disability, military status, domestic violence victim status, arrest record, conviction record, predisposing genetic characteristics, and familial status.
New York State Office of Parks, Recreation and Historic Preservation (OPRHP) – Oversees public recreational areas and administrators federal and state preservation programs authorized by federal and state law.
Non-Conforming Loan – A loan that fails to meet bank criteria for funding.
Non-Conforming Use – Utilization of a use that does not comply with local zoning for a particular parcel.
Non-Homestead – Real property that does not meet the definition of homestead. Non-homestead real property is generally counted as an asset; however, it is considered unavailable during the time the client make a reasonable effort to sell the property.
Non-Possessory – A term of the law of property to describe any of a category of rights held by one person to use land that is in the possession of another.
Non-Solicitation Order – A rule adopted by the Secretary of State which prohibits any or all types of solicitation directed towards homeowners within a defined geographic area. Such rule may be adopted after a public hearing and upon the Secretary’s determination that homeowners within the subject area have been subject to intense and repeated solicitations by real estate brokers or salespersons and that such solicitations have caused owners to reasonably believe that property values may decrease because persons of different race, ethnic, religious or social backgrounds are moving or about to move into such area.
Novation – The act of either:
1) replacing an obligation to perform with a new obligation; or
2) adding an obligation to perform; or
3) replacing a party to an agreement with a new party.
Obedience – The fiduciary relationship obligates the agent to act in good faith at all times, obeying the client’s instructions in accordance with the contract.
Obsolescence – One of the causes of depreciation. It is the loss of desirability and usefulness caused by new inventions, changes in design, and improved processes for production, or from the influence of external factors. Obsolescence may be either economic or functional.
Offer and Acceptance – Elements required for the formation of a legally binding contract. The expression of an offer to contract on certain terms by one person (the “offeror”) to another person (the “offeree”), and an indication by the offeree of its acceptance of those terms.
Offering Statement – A document prepared by the attorneys representing the builders of a newly constructed condominium building. The statement includes information about the number and type of units in the building, the Homeowners Association rights and duties to owners, and a list of any easements or liens affecting the title of the building. In most cases, buyers looking to purchase a new construction condo get the Offering Statement from their agent before they make an offer on a unit.
Open Listing – A listing given to any number of brokers without liability to compensate any except the one who first secures a buyer ready, willing and able to meet the terms of the listing, or secures the acceptance by the seller of a satisfactory offer; the sale of the property automatically terminates the listing.
Operating Budget – An amount of money set aside by the owner for a specific period for the property manager to manage the property effectively.
Option – A right given for a consideration to purchase or lease a property upon specified terms within a specified time; if the right is not exercised the option holder is not subject to liability for damages; if exercised, the grantor of option must perform.
Option to Renew – A clause in a lease that outlines the terms for renewing or extending an original lease agreement.
Package Mortgage – A method of financing in which the loan that finances the purchase of a home also finances the purchase of personal items such as a washer and dryer, refrigerators, stove, and other specified appliances.
Package Policy – Insurance policy that combines coverage from two or more types of insurance (such as property and liability) into one policy.
Parcel – A piece of land under one ownership.
Partition – The division which is made of real property between those who own it in undivided shares.
Party Wall – A wall built along the line separating two properties, partly on each, which wall either owner, the owner’s heirs and assigns has the right to use; such right constituting an easement over so much of the adjoining owner’s land as is covered by the wall.
Passive Activity Income – Earnings an individual derives from a rental property in which he or she is not actively involved.
Payment Cap – The limit to the monthly payment on a mortgage.
Percentage Lease – A lease of property in which the rental is based upon the percentage of the volume of sales made upon the leased premises, usually provides for minimal rental.
Percolation Rate – The rate, usually expressed as inches per hour or inches per day, at which water moves through soil.
Periodic Lease – Also known as a tenancy from year to year, month to month, or week to week, is an estate that exists for some period of time determined by the term of the payment of rent.
Personal Property – Any property which is not real property.
Pitch – Also known as the slope. Typically used in describing the slope of a roof, driveway, sidewalk, etc.
Planned Unit Development – A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association.
Planning Board – A local elected or appointed government board charged with recommending to the local town or city council the boundaries of the various zoning districts and appropriate regulations to be enforced therein.
Plaster Board / Wall board – Gypsum board panels that are typically used in interior wall construction. Wall board usually has a painted finish and are supported by wood or metal studs behind.
Platform Construction – Wood frame construction commonly found in residential construction in which floors are supported by joists, beams, and bearing walls.
Pledged Account Mortgage (PAM) – Money is placed in a pledged savings account. This fund, plus earned interest, is used to gradually reduce mortgage payments.
Plottage – Increment in unity value of a plot of land created by assembling smaller ownerships into one ownership.
Pocket Card – A card issued by the Department of State to each licensee which contains the photo, name and business address of the licensee, and, in the case of a real estate salesperson, the name and business address of the broker with whom he or she is associated and shall certify that the person whose name appears thereon is a licensed real estate broker or salesperson.
Point – Equal to 1 percent of a loan amount. For example, 1 point on a $100,000 is equal to $1,000.
Police Power – The right of any political body to enact laws and enforce them, for the order, safety, health, morals and general welfare of the public.
Poly-chlorinated Byphenols (PCBs) – A synthetic, odorless, liquid organic compound and carcinogen appearing in groundwater and soil.
Possessory – The intent and right of a person to occupy and/or exercise control over a particular plot of land.
Post and Beam Construction – A type of construction in which the beams and joists are larger, allowing the floor to span longer than the typical 16” or 24” found in residential construction.
Power of Attorney – A written instrument duly signed and executed by a person which authorizes an agent to act on his/her behalf to the extent indicated in the instrument.
Pre Application and Fee Agreement – A form used between mortgage brokers or mortgage bankers and a home buyer that provides certain disclosures prior to the application of a mortgage.
Pre-approval – An evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend.
Pre-qualification – A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.
Predatory Lending – The Unfair, deceptive, or fraudulent practices of some lenders during the loan origination process.
Prepayment Penalty Clause – A clause in a mortgage contract that says if the mortgage is prepaid within a certain time period, a penalty will be assessed. The penalty is usually based on percentage of the remaining mortgage balance or a certain number of months worth of interest.
Preventative Maintenance – Keeping property and equipment in a good state of repair so as to minimize the need for more costly major repair work or replacement.
Price – The amount a purchaser agrees to pay and a seller agrees to accept in an arms length transaction.
Price Fixing – Conspiring to establish fixed fees or prices for services or products.
Primary Mortgage Market – The market where borrowers and mortgage originators come together to negotiate terms and effectuate mortgage transaction. Mortgage brokers, mortgage bankers, credit unions and banks are all part of the primary mortgage market.
Principal – (1) The employer of an agent or broker; the broker’s or agent’s client. (2) A sum of money lent or invested on which interest is paid.
Private Mortgage Insurance (PMI) – Insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan.
Pro-forma Statement – An accounting statement that forecasts income and expenses for a period of time, typically five or more years. Pro-forma statements are typically used by investors to estimate their rate of return for a particular property.
Promissory Note – A signed document containing a written promise to pay a stated sum to a specified person/institution or the bearer at a specified date or on demand.
Property Insurance – Provides protection against most risks to property, such as fire, theft and some weather damage.
Property Management – The administration of residential, commercial and/or industrial real estate. Property management typically involves the managing of property that is owned by another party or entity. Property managers are typically paid a fee and/or a percentage of the rent brought in for the property while under management.
Property Management Report – An accounting report issued periodically by the property manager to the owner outlining all income and expenditures for that accounting period.
Property Manager – An individual or company responsible for the day-to-day functioning of a piece of real estate.
Proprietary Lease – A lease given by a corporation to another. It is often used in a co-op context, where the owner is given a certain number of shares in the co-op, along with a proprietary lease for one of the residences in the building.
Proration – Allocation of closing costs and credits to buyers and sellers.
Public Grant – A term that is used for a gift of land that is from the government.
Quiet Enjoyment – The right of an owner or a person legally in possession to the use of property without interference of possession.
Quitclaim Deed – A deed which conveys simply the grantor’s rights or interest in real estate, without any agreement or covenant as to the nature or extent of that interest, or any other covenants; usually used to remove a cloud from the title.
R-Value – A measurement of the ability of insulation to slow the transfer of heat or cold. The higher the R value, the greater the insulation power.
Radon – A colorless, odorless gas that is emitted from soils, rocks and water as a result of radioactive decay in certain areas of the country. Radon is known to cause cancer. Homes should be tested for radon. The local environmental agency should be consulted on its handling, removal and any applicable laws.
Rafter – The structural member or beam that supports the roof. It spans from the exterior wall to the ridge board of the peak of the roof.
Rate Cap – Limits to the interest rate on an adjustable-rate mortgage.
Rate Lock – An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest rate.
Rate of Return – A profit on an investment over a period of time, expressed as a proportion of the original investment.
Real Estate / Real Property – Land, and generally whatever is erected upon or affixed thereto.
Real Estate Appraiser – A practitioner who has the knowledge and expertise necessary to estimate the value of an asset, or the likelihood of an event occurring, and the cost of such an occurrence. Ideally, an appraiser acts independently of the buying and selling parties in a transaction in order to arrive at the fair value of an asset without bias.
Real Estate Broker – A licensed individual or firm that charges a fee to serve as the mediator between the buyer and seller. Mortgage brokers are individuals in the business of arranging funding or negotiating contracts for a client, but who does not loan the money. A real estate broker is someone who helps find a house.
Real Estate Salesperson – An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
Real Estate Settlement Procedures Act (RESPA) – A consumer protection statute, first passed in 1974. The purpose of RESPA are
1) To help consumers become better shoppers for settlement services and
2) To eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.
Real Property Tax Rate – The tax levy divided by the total taxable assessed value of a taxing jurisdiction, usually expressed in dollars per thousand, dollars per hundred, or mills.
Reasonable Care – The degree of caution and concern for the safety of himself/herself and others an ordinarily prudent and rational person would use in the circumstances. This is a subjective test of determining if a person is negligent, meaning he/she did not exercise reasonable care.
Recaptured Depreciation – When real property is sold at a gain and accelerated depreciation has been claimed, the owner may be required to pay a tax at ordinary (non-accelerated) rates to the extent of the excess accelerate depreciation.
Receiver of Taxes – The collecting officer for each city and town that receives real property taxes and assessments.
Rescission – The right of an individual involved in a contract to return to a state identical to that before they entered into the agreement, due to courts not recognizing the contract as legally binding. In many cases, rescission may be an option if there is a material error in the contract, among other reasons.
Recognition Agreement – The agreement between the cooperative building and the bank lending money for purchase of shares of stock in the cooperative.
Reconciliation – The final stage in the appraisal process where the appraiser reviews the data and estimates the subject property’s value.
Red-Lining – The refusal to lend money within a specific area for various reasons. This practice is illegal.
Referees deed – Used to convey real property sold pursuant to a judicial order in an action for the foreclosure of a mortgage or for partition.
Reference to a Plat – A section of a deed that may refer to a plat map, which includes the block and lot number of a particular piece of property.
Reformation – A remedy whereby a court orders a change in a written document to reflect what it ought to have said in the first place.
Regulation Z – The Truth in Lending Act of 1968 is United States federal law designated to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
Release Clause – A clause found in a blanket mortgage which gives the owner of the property the privilege of paying off a portion of the mortgage indebtedness, and thus freeing a portion of the property from the mortgage.
Remainder Interests / Remainderman – The person who is to receive the property after the termination of the prior estate.
Rentable Square Footage – Usable area that can be leased/rented to a tenant.
Replacement Cost – Normal cost of exact duplication of a property as of a certain date.
Resident Manager – A manager of a property who lives on-site.
Restrictive Covenant – Any type of agreement that requires the buyer to either take or abstain from a specific action. In real estate transactions, restrictive covenants are binding legal obligations written into the deed of a property by the seller.
Reverse Annuity Mortgage – A form of mortgage in which the lender makes periodic payments to the borrower using the borrower’s equity in the home as satisfaction of mortgage.
Reversionary Interest – The interest which a grantor has in lands or other property upon the termination of the preceding estate.
Revocation – An act of recalling a power of authority conferred, as the revocation of a power of attorney; a license, an agency, etc.
Rider – Also known as an addendum, in general, is a writing annexed to an agreement.
Right of First Refusal – A contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, befor he owner is entitled to enter into the transaction with a third party.
Right of Survivorship – Right of the surviving joint owner to succeed to the interests of the deceased joint owner, distinguishing feature of a joint tenancy or tenancy by entirety.
Right-of-Way – The right to pass over another’s land pursuant to an easement or license.
Riparian Rights – The right of a property owner whose land borders a natural water course, such as a river, to reasonable use and enjoyment of the water that flows past the property. Riparian literally means “riverbank”.
Risk Management – Controlling and limiting risk in property ownership.
Safe Drinking Water Act (SDWA) – Enacted in 1974, a federal law intended to ensure safe drinking water for the public.
Sale-and-Leaseback – A transaction where one sells an asset and leases it back for the long-term; therefore, one continues to be able to use the asset but no longer owns it.
Sales Comparison Approach – Valuation method which compares a subject property’s characteristics with those of comparable properties which have recently sold in similar transactions.
Satisfaction of Mortgage – A document acknowledging the payment of a mortgage debt.
Secondary Mortgage Market – The market where mortgage loans and servicing rights are bought and sold between mortgage originators, mortgage aggregators (securitizers) and investors. The secondary mortgage market is extremely large and liquid.
Security Deposit – A monetary deposit given to a lender, seller or landlord as proof of intent. Security deposits can be either refundable or nonrefundable, depending on the terms of the transaction.
Self Dealing – The conduct of a trustee, an attorney, a corporate officer, or other fiduciary that consists of taking advantage of his position in a transaction and acting for his own interests rather than for the interests of his clients.
Seller’s Agent – An agent who represents the seller of real property.
Septic System – A small-scale sewage treatment system common in areas with no connection to main sewage pipes provided by local governments or private corporations.
Servient Tenement – A parcel of real property that is encumbered by an easement of a dominant estate.
Setbacks – The distance from the curb or other established line, within which no buildings may be erected.
Severalty – Ownership by only a single individual.
Share Loan – A loan in which shares of stock are used as collateral. Typically found in cooperative purchases.
Shared Equity Mortgage – Joint ownership of real estate by both lenders and property dwellers. When the property is eventually sold, the owners share in the proceeds, or equity. In the meantime the property occupants benefit from interest and property tax write-offs.
Sheathing – Panels that cover the exterior wall. Typically made of plywood or exterior grade gypsum board.
Siding – A veneer cover found on the side of residential construction. Typically made of wood boards (horizontal), vinyl, or aluminum.
Sill Plates – The bottom member of wood frame stud wall.
Slab-on-Grade Construction – A structure which does not include a basement. The first floor is made up of a concrete slab, which lays on the ground and supported by foundation walls.
Soffit – The underside of a roof overhang.
Special Agent – An agent with limited authority to act on behalf of the principal, such as created by a listing.
Special Assessment – An assessment made against a property to pay for a public improvement by which the assessed property is supposed to be especially benefited.
Special Assessment Districts – A geographic area in which the market value of real estate is enhanced due to the influence of a public improvement and in which as tax is apportioned to recover the costs of the public improvement.
Special Purpose Real Estate – Property that is appropriate for one type of use or limited use. This type of property has unique design or layout, uses special construction materials, or other features that limit the property’s utility for purposes other than the one for which it was built. For example, a church, theater, or school.
Specifications – A document provided by Architects that describe the quality of construction.
Specific Lien – A lien that only binds to a specific asset or property.
Specific Performance – An order of a court which requires a party to perform a specific act, usually what is stated in a contract.
Sponsor – (1) A licensed real estate broker that holds the license of a salesperson. (2) The developer or owner organizing and offering for sale a condominium or cooperative development.
Spot Zoning – The application of zoning to a specific parcel of land within a larger zoned area when the rezoning is usually at odds with a city’s master plan and current zoning restrictions.
Stabilized Budget – A forecast of income and expenses for a property, typically over a three to five year period.
State of New York Mortgage Association (SONYMA) – A mortgage program that assists first-time homebuyers with the purchase of a home in New York State.
Statute of Frauds – State law which provides that certain contracts must be in writing in order to be enforceable at law.
Statute of Limitations – A statute barring all right of action after a certain period of time from the time when a cause of action first arises.
Steering – The practice in which real estate brokers guide prospective home buyers towards or away from certain neighborhoods based on their race. Steering is highly illegal.
Straight Mortgage – A non-amortizing mortgage under which the principal is paid in its entirety upon the maturity date.
Straight-line Depreciation – A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year.
Studs – Vertical framing members found in wall construction. Typically placed 12”, 16” or 24” on center.
Sub-agent - An agent of a person already acting as an agent of a principal.
Subdivision Regulations – The control of the division of a tract of land into individual lots by requiring development according to specific design standards and procedures adopted by local ordinances.
Sublease – An arrangement in which the lessee (tenant) in a lease assigns the lease to a third party, thereby making the old lessee the sublessor, and the new lessee the sublessee, or subtenant.
Subordination Agreement – A legal document used to make the claim of one party junior to (or inferior to) a claim in favor of another.
Superfund Amendments and Reauthorization Act – Enacted in 1986, made several important changes and additions to CERCLA, including minimum cleanup requirements.
Survey – The process by which a parcel of land is measured and its area ascertained; also the blueprint showing the measurements, boundaries and area.
Suspension – The right of the Department of State to deactivate a broker’s or salesperson’s license for wrongdoing.
Taking – The act of a government body obtaining a property under its power of eminent domain.
Tax Assessor – An elected or appointed official of a county, city, town or village whose function is to value real property for the purposes of taxation.
Tax-Deferred Exchange – Under Section 1031 of the US Internal Revenue Code, the exchange of certain types of property may defer the recognition of capital gains or losses due upon sale, and hence defer any capital gains taxes otherwise due.
Tax Depreciation – An income deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.
Tax Lien – A lien imposed by law upon a property to secure the payment of taxes.
Tax Shelter – Any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments.
Tenancy for Years – A lease for a fixed period of time. For a tenancy for years lease, no notice is needed for termination, the lessee knows the termination date from the outset of the lease.
Tenancy in Common – An ownership of realty by two or more persons, each of whom has an undivided interest, without the “right of survivorship”.
Tenant’s Agent – A licensed real estate agent who acts on behalf of a tenant in a commercial property transaction.
Termination – The discontinuance of an agent’s relationship with his/her sponsoring broker.
Termination of Association Notice – A written document that terminates the relationship between an agent and his/her sponsoring broker.
Testers – Volunteers from state or private agencies who enforce fair housing by claiming to be home seekers, thereby finding out if brokers deal fairly with all clients/customers.
Tie-in Arrangement – A contract where one transaction depends upon another.
“Time is of the Essence” – A phrase in a contract that means that performance by one party at or within the period specified in the contract is necessary to enable that party to require performance by the other party.
Time Value of Money (TVM) – The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.
Title – Legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest.
Title Closing – The process in which the title company oversees the closing or document signing of the loan in close conjunction with the entity performing the escrow function on the loan. Once the loan documents are signed and all contingencies are satisfied, the title company records the security instrument and releases the proceeds of the loan.
Title Insurance – A policy of insurance which indemnifies the holder for any loss sustained by reason of defects in the title.
Title Search – An examination of the public records to determine the ownership and incumbrances affecting real property.
Topography – The arrangement of the natural and artificial physical features of an area.
Transfer of Development Rights – The purchase and use of air rights from adjoining or nearby properties.
Triple Net Lease – A lease in which the tenant or lessee is responsible for paying a portion of or all of the common expenses related to real estate ownership, in addition to base rent.
Trustee – Any person who holds property, authority, or a position of trust and responsibility for the benefit of another.
Trustor – A person who conveys title to a trustee.
Umbrella Policy – Insurance policy that covers amounts above those covered under one or more other primary policies, and which does not pay until the losses exceed a certain sum. Also called excess insurance.
Underground Storage Tanks – A tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground.
Underwriting – The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.
Undivided Interest – The interest in property owned by tenants whereby each tenant has an equal right to enjoy the entire property.
Undivided Loyalty – The fiduciary duty that prohibits the agent from advancing any interests adverse to the principal’s interest or conducting the principal’s business in such a way as to benefit a customer, a subagent, the agent or any other party to the detriment of the principal’s interest unless required by statute, regulation or common law – e.g., disclosing material facts and defects of a property.
Undisclosed Dual Agency – A relationship in which the real estate agent is found to be the agent of both the buyer and seller in a transaction, but without the knowledge and informed consent of both parties. Undisclosed Dual Agency is illegal in all states.
Uniform Commercial Code – A standard set of business laws that regulate financial contracts. The Uniform Commercial Code has been adopted by most states in the U.S. The code itself has nine separate articles. Each article deals with separate aspects of banking and loans. The UCC better enabled lenders to loan money secured by the borrower’s personal property.
Unities of Interest, Possession, Time and Title – Describes the conditions that must exist in order for certain kinds of property interests to be created. In order for two or more people to own property as joint tenants with right of survivorship, or for a married couple to own property as tenants by the entirety, they must have the four unities (Interest, Possession, Time, and Time)
Urea Formaldehyde Foam Insulation (UFFI) – A type of foamed in-place insulation that releases formaldehyde gas. It was banned by the Consumer Public Safety Commission in 1982 from use in residences and schools. Holding that the risks had not been proven, a Federal Court lifted the ban in 1983. The local consumer and/or environmental protection agency should be consulted for additional information on this type of insulation.
Use Variance – Permission to use or develop land other than that permitted by local zoning ordinances.
Useable (usable) Square Footage – Space that can be used or occupied by a tenant. Typically does not include elevators, stairs, mechanical spaces, etc.
Usury – On a loan, claiming a rate of interest greater than that permitted by law.
VA Mortgage – A mortgage loan designed to offer long-term financing to eligible American veteran or their surviving spouses (provided they do not remarry). The basic intention of the VA direct home loan program is to supply home financing to eligible veterans in areas where private financing is not generally available and to help veterans purchase properties with no down payment.
Valuation – The process of estimating market value, investment value, insurable value, or other properly defined value of an identified interest or interests in a specific parcel or parcels of real property as of a given date.
Value-in-Use – The net present value (NPV) of a cash flow or other benefits that an asset (real property) generates for a specific owner under a specific use.
Variable Expense – Property expenditures that vary depending of the operations of the property.
Variance – The authorization to improve or develop a particular property in a manner not authorized by zoning.
Vicarious Liability – A situation in which one party is held partly responsible for the unlawful actions of a third party.
Village Board of Trustees – The governing body of villages.
Violation – Act, deed or conditions contrary to law or permissible use of real property.
Void – To have no force or effect; that which is unenforceable.
Voidable – That which is capable of being adjudged void, but is not void unless action is taken to make it so.
Voltage – Electromotive force or potential difference expressed in volts.
Voluntary Alienation – Transfer of title to an asset with the consent of the owner.
Voluntary Lien – A contractual or consensual lien that is created by an action taken by the debtor, such as a mortgage loan to buy real estate.
Wetlands – An area that is inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances does support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas, but exclude irrigation ditches unless delineated as part of an adjacent wetland.
Wrap-around Mortgage – A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the exits in addition to any superior mortgages already secured by the property.
Zoning Board of Appeals – A local appointed board that has the power to review administrative rulings made by the planning board or another legislative body.
Zoning Ordinance – Act of city or country of other authorities specifying type and use to which property may be put in specific areas.