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Acceptance
A voluntary expression by the person receiving the offer (the offeree, and quite often the seller of the property) to be bound by the exact terms of the offer in the manner requested or authorized by the person making the offer (the offeror, and quite often the potential buyer of the property). An acceptance must be unequivocal and unconditional.
Access
The right to enter upon and leave property. The owner of land which abuts or adjoins a road or highway normally has a vested right to come and go from his or her land to the highway without obstruction, subject to limitations imposed by the governing body.
Accrued
An accumulation over a certain period of time, such as accrued depreciation or accrued interest.
Accrued Depreciation
Any diminishment or loss of utility or value of a building from the time of initial construction to the present. Accrued depreciation is calculated as the difference between what it would cost to replace the building new and the current appraised value of the building.
Accrued Interest
Unpaid interest that has already been earned.
Acknowledgment
A formal declaration to a public official by a person who has signed (executed) an instrument which states that the signing was voluntary.
Acquisition
The act or process by which property ownership is achieved. The ways in which title to real property is transferred may be classified as (1) voluntary conveyance (deed), (2) transfer by devise (dying with a will) or descent (dying without a will), (3) transfer by adverse possession, (4) transfer by accession and (5) transfer by public action or by operation of law.
Acre
A measure of land in whatever shape equal to 43,560 square feet, 4,840 square yards or 160 square rods. A square parcel of land measuring 208.71 feet on each side contains one acre.
Act of God
Any act of nature such as rain, lightning, floods or earthquakes. Many casualty insurance policies do not cover losses resulting from an "Act of God."
Actual Possession
The physical occupancy and control by someone of a parcel of real estate. For example, if John has clear title to his house and is living in the house then he is in actual possession of the house. A distinction should be made between actual possession and constructive possession which occurs when a person has the legal right to assume occupancy but does not actually occupy the space.
Ad Valorem
The Latin word for "according to value."
Ad Valorem Tax
A tax levied according to value, generally used to refer to real estate tax. Also called the general tax.
Add on Rate
Interest charged on a principal amount for specified term, regardless of any repayments of principal. The borrower is paying interest on the full principal sum for the entire loan period, even though the principal is being reduced each month.
Addendum
Additional material attached to and made part of a document. If there is space insufficient to write all the details of a transaction on the sales contract form, the parties will attach an addendum or supplement to the document. The sales contract should incorporate the addendum by referring to it as part of the agreement. The addendum should refer to the sales contract and be dated and signed or initialed by all the parties.
Adjacent Land
Land lying close to or near another parcel, though the two parcels may not actually touch. The term should not be confused with adjoining land which exists when two parcels are actually jointed to each other.
Adjustable-Rate Mortgage (ARM)
A mortgage loan with an interest rate subject to change over the term of the loan. The interest rate is tied to the performance of a specified market rate, such as the cost of funds index calculated by the 11th District of the Federal Home Loan Bank Board, or the yields on one-year or six-month U.S. Treasury securities.
Adjusted Basis
The original cost basis of a property reduced by certain deductions and increased by certain improvement costs. The original basis determined at the time of acquisition is reduced by the amount of allowable depreciation or depletion allowances taken by the taxpayer, and by the amount of any uncompensated property losses suffered by the taxpayer. It then increases by the cost of capital improvements plus certain carrying costs and assessments. The amount of gain or loss recognized by the taxpayer upon sale of the property is determined by subtracting the adjusted basis on the date of sale from the adjusted sales price.
Adjustment Period
In an adjustable rate mortgage (ARM), the "adjustment period," is the period of time (i.e., one month, three months, six months, one year, etc.) between changes in one interest rate charged and the next interest rate to be charged.
Adjustments
The additions and subtractions made in the market data or comparable sales approach to value to account for differences in location, design, age, etc. between the properties being used as comparables and the subject property being appraised.
Administrator
A person appointed by a court to administer or settle the estate of a deceased person who has died intestate (without a legal will).
Advance Fee
A fee paid before any services are rendered. Specifically, it is a practice of some brokers to obtain a nonrefundable fee from the seller in advance to cover the advertising of properties or businesses for sale while giving no guarantee that a buyer will be found, which is often held to be improper conduct. Brokers must keep accurate records of expenditures.
Adverse Action
A denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit either on the amount requested or on the terms requested.
Aesthetic Value
The intangible value of property created when the property possesses unique characteristics or features that make it attractive.
Aesthetic Zoning
Zoning for beauty. May regulate architectural styles, colors or signage.
Affidavit
Latin meaning "has pledged his faith." A written statement of facts made voluntarily and sworn to under oath before a public official or other persons authorized to administer such an oath.
Affidavit of Title
A sworn statement by the seller of real estate that no defects of title other than those stated in the sales contract or deed exist in the title being conveyed.
Affirmation
A solemn and formal declaration attesting to the truth of some matter. In certain instances, an affirmation is substituted for an oath, as for example, when a person for religious or personal reasons does not wish to take an oath.
Affirmative Fair Housing Marketing Plan
Action taken with the intent of encouraging minority integration in housing. The Department of Housing and Urban Development (HUD) has required an affirmative fair housing marketing plan from all subdivisions, multi-family projects and mobile home parks of five or more units before these projects are eligible for participation in various federal programs, including home mortgage programs.
After Acquired Title
Legal ownership in real property acquired by someone who had previously transferred his or her legal interest in the property.
Agent
One who acts for and in the place of a principal for the purpose of affecting the principal's legal relationship with third persons. The power of an agent to affect the principal's legal relations for lawful purposes is called authority.
Air Lot
A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
Alienation
The act of transferring ownership, title, interest, or estate in real property from one person to another. Property is usually sold or conveyed by voluntary alienation, as with a deed or assignment of lease. Involuntary alienation takes place when property is sold against the owner's will, as in a foreclosure sale or a tax sale.
All-Inclusive Encumbrance
See wraparound mortgage
Amendment to the Escrow Instructions
A change to escrow instructions requiring the agreement of both buyer and seller.
Amendments
An amendment is a change to the existing content of a contract. Any time words or provisions are added to or deleted from the body of the contract, the contract has been amended.
Amenity or Amenities
The qualities and state of being pleasant and agreeable. In residential appraising, those peculiar and intangible benefits of home ownership such as satisfaction of possession and use arising from architectural excellence, scenic beauty, and desirable social environment.
American Land Title Association (ALTA)
An association, founded in 1907, representing more than 2,100 title abstractors, title insurance companies, title insurance agents, and associate members. Since the role and responsibility of the title industry, and of its ALTA members, is to guarantee the safe, efficient transfer of real property, the ALTA membership functions cooperatively and effectively to provide protection for consumers and lenders alike. Members of the association use standardized title insurance forms developed by ALTA to provide uniformity within the industry. The ALTA staff represents specialists in the fields of government relations, public affairs, research and state governmental affairs. ALTA’s national headquarters is located at 1828 L Street, N.W., Suite 303, Washington, D.C. 20036; (202) 296-3671.
American Society of Appraisers (ASA)
A professional organization of appraisers engaged in the appraisal of both real and personal property. It confers the designations ASA and FASA (Fellow).
Americans with Disabilities Act (ADA)
Signed into law on July 26, 1990, the Americans with Disabilities Act of 1990 ("ADA") prohibits discrimination against individuals with disabilities. The ADA addresses discrimination in four general areas:
1. Employment (Title I);
2. Public services (Title II);
3. Public accommodations and commercial facilities (Title III); and,
4. Telecommunications (Title lV).
The purpose of the ADA is to give individuals with disabilities civil rights protection against discrimination similar to hose afforded to individuals on the basis of race, color, national origin, sex, and religion.
Amortization
The paying down of principal over time. In a typical mortgage loan, the principal is scheduled to be paid off, or fully amortized, over the term of the loan.
Amortization Rate
The percentage of a periodic payment that is applied to the reduction of the principal; in a level- payment mortgage this corresponds to the sinking fund factor.
Amortization Term
The time period over which the principal amount would be retired on the basis of the periodic installments paid.
Amortized Loan
A financial obligation that is repaid over a period of time by a series of periodic payments.
Annexation
An addition to property by the act of joining or uniting one thing to another, as in attaching personal property to real property, thereby creating a fixture. For example, a sink becomes a fixture when it is annexed to the plumbing outlet.
Annual Percentage Rate (APR)
The actual yearly cost of credit stated to the nearest one-fourth of one percent. Any lender subject to the federal Truth-in-Lending Act must fully disclose the APR to the borrower.
Appraisal
An estimate or opinion of value supported by factual information as of a certain date.
Appraisal Process
A systematic step-by-step analysis used by the appraiser to accurately reach an opinion of value. While each appraisal assignment varies according to the purpose of the appraisal and the approach(es) used, a well-done estimate of value will follow some standardized procedure.
Appraisal Report
A written report submitted by the appraiser to support and document the opinion of value rendered by the appraiser. The form of the appraisal report can be a letter of valuation, a single page standard form or a more elaborate report.
Appraised Value
An estimate of value based on the appraiser's analysis of data within the context of the appraisal problem that the appraiser was employed to solve.
Appraiser
An individual who has the experience, training, and legal qualifications to appraise real or personal property. Effective July 1, 1991, appraisers must be state certified or licensed in order to appraise property involving a federally insured or regulated agency.
Appreciation
An increase in an asset's market value over its value at some previous point in time. The increase can be a result of inflation, increased demand or some other related cause. The term denotes the opposite of depreciation.
Appurtenant
Belonging to; adjunctive; appended or annexed to. For example, the garage is appurtenant to the house, and the common interest in the common elements of a condominium is appurtenant to each apartment. Appurtenant items run with the land when the property is transferred.
Arbitration
A procedure for resolving disputes out of court by an impartial third party chosen by the disputing parties who agree to abide by the decision of the arbitrator. While disagreements and disputes involving real estate often result in court action, disputing parties sometimes agree to settlement through arbitration.
Arrears
Money which is not paid on time, as for example, if a borrower has not made the last two mortgage payments, he or she is said to be in arrears. In many political jurisdictions, property taxes are paid at the end of the year rather than at the beginning and are thus referred to as due in arrears rather than in advance.
As-Is
Words in a contract intended to signify that no guarantees, whatsoever, are given regarding the subject property and that it is being purchased exactly as it is found. An "as-is" indicator is intended to be a disclaimer of warranties or representations. The recent trend in the courts to favor consumers tends to prevent sellers from using "as-is" wording in a contract to shield themselves from possible fraud charges brought on by neglecting to disclose material defects in the property.
Assemblage
The combining of two or more adjoining lots into one larger tract to increase their total value.
Assessment
The imposition of a tax, charge or lein, usually according to established rates.
Assessment
A determination of the value of a parcel for the purpose of levying a property tax on that parcel. The term also is used to denote the means by which local governments raise the money to pay for certain improvements which directly benefit property owners adjoining or adjacent to the improvements. For example, the cost of paving a previously unpaved road could be assessed to the land on each side of the road. The actual cost to a particular landowner would be based on his or her front footage as a percentage of the total footage being improved. Joint forms of ownership such as condominiums and cooperatives allocate the expenses incurred for the maintenance and upkeep of the common areas and limited common areas and assess each unit owner for his or her proportionate share.
Assessor
A public official either appointed or elected to appraise property and place an assessed value on that property for the purpose of levying a property (ad valorem) tax.
Assets
An accounting term used to denote the real and personal property one possesses, as distinguished from debts and obligations which are known as liabilities. Assets minus liabilities equals net worth.
Assign
To transfer to another.
Assignee
The person to whom a claim, benefit, or right in property is made.
Assignment
The transfer of a claim, benefit or right in property belonging to one person (the assignor) to another person (the assignee). Real estate instruments in which assignments occur include sales contracts, mortgages, options, and leases. Rights under contracts are valuable property rights which can ordinarily be assigned to third persons. The legal effect of an assignment is to substitute the assignee for the assignor in the contractual relationship with the other original contracting party.
Assignment of Lease
A transfer by the tenant (lessee) of his or her interest in the lease to a third person. Both the lessor and lessee may transfer their respective interests in a lease to a third person, unless prohibited by the terms of the lease.
Associate Broker
A person who has met the qualifications necessary for a real estate broker's license but who works jointly with and is employed by another broker.
Attached Housing
Two or more units that are physically attached but intended and designed for occupancy as individual housing units. Such units may be in the form of a duplex, triplex or fourplex as well as row houses which may extend for a complete city block. In contrast, most residential units are in the form of detached units.
Attorney at Law
A person authorized to practice law in his or her respective state and thus permitted to give legal advice, draft legal instruments, and represent clients in courts of law.
Attorney in Fact
A person authorized to act on behalf of another by virtue of a power of attorneys. Anyone of legal capacity may be an attorney in fact, and depending on the desire of the person creating the relationship, the attorney in fact's authority could be that of a universal, general, or specific agent.
Attorney's Opinion of Title
A statement issued by an attorney as to the quality of title after examining an abstract of title. Commonly referred to as "opinion of title."
Authority
The power of an agent to affect the principal in legal relations with third persons for lawful purposes. Authority may be classified into: (1) actual authority, (2) implied authority, (3) apparent or ostensible authority, (4) inherent authority, and (5) other authority which may be implied from particular circumstances. Generally, the authority of an agent is strictly construed by the courts.
Average Hourly Earnings
A monthly reading by the Bureau of Labor Statistics of the earnings of hourly plant and nonsupervisory workers in the private sector. While the AHE excludes salaried workers (unlike the employment cost index), it is available each month with only a brief lag. Released by BLS as part of the Employment Situation release, the report is generally issued on the first Friday of the month for the prior month.
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