Abstract of Title Condensed history of a title to a particular parcel of real estate, consisting of  a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Acceleration Clause the clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other covenant.

Acknowledgement a formal declaration made before a duly authorized officer, usually a notary public by a person who has a signed document.

Acre a measure of land equal to 43,560 square feet

Adjustable Rate Mortgage (ARM) a loan characterized by fluctuating interest rate, usually one tied to a bank or savings and loan association cost of funds index.

Ad Volerem Tax a tax levied according to value generally used to refer t real estate tax.

Agent one who acts or has the power to act for another.  A fiduciary relationship is created under the law of agency when a property owner, as the principle, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.

Alienation the act of transferring property to another.  Alienation may be voluntary, such as a gift or sale, or involuntary as through eminent domain or adverse possession.

Amortized Loan a loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Annual Percentage Rate (APR) the relationship of the total finance charges associated with a loan.  This must be disclosed to borrowers by lenders under the Truth in lending act.

Appraisal the process of developing and communicating an opinion of a property’s value.

Appreciation a temporary or permanent increase in the value of property due to economic causes

As Is signifies the owner offers the property in it present condition, with no modifications or improvement, and is usually intend to be a disclaimer of warranties or representations.

Asking Price the listed price of a parcel of real estate, the price at which it is offered to the public by the seller or broker.

Assessed Value (Ad Volrem) the value of real property established for the purpose of computing property taxes.

Asset something of value owned by persons, a useful item of property.

Associate Broker a real estate license classification use in New Mexico to descript a person who has qualified as a real estate broker but still works for and is supervised by a Qualifying Broker

Assumption of Mortgage acquiring title to property on which there is an existing mortgage an agreeing to be personally liable for the terms and conditions of the mortgage including payments.

Automated Underwriting computer systems that permit lenders to expedite the loan approval process and reduce lending costs.

Capital the money and or property comprising the wealth owned or used by a person or enterprise

Capital Gain the taxable profit derived from the sale o a capital asset.  The capital gain is the difference between the sales price and the basis of the property after making appropriate adjustments for closing cost, capital improvement, and allowable depreciation.

Capital Loss a loss derived from the sale of a capital asset, securities, stocks, or bonds,

Capitalization Rate the percentage selected fro use in the income approach to valuation of improved property.  The CAP rate is designed to reflect the recapture of the original investment over the economic life of the improvement to give investors an acceptable rate of return or their original investments and to provide for the return of the invested equity.  The formula is expressed as Income/Rate= Value.

Cash Flow the spendable income from an investment after deducting from the gross income all operating and fixed expenses, include=ding principal and interest.

Cashier’s Check a bill of exchange drawn buy a bank upon itself as a drawer and payable upon demand.

Cash on Cash the before tax cash flow divided by the capital invested in the property; a method to determine how efficiently capital invested in the property is used.

Caveat Emptor Latin for “let the buyer beware.”

Certificate of Occupancy CO a certificate issued by a government authority indicating that a building is ready and fit for occupancy and that there or no building code violations.

Chain of Title the recorded history of matters that affect the title to a specific parcel of real property such as ownership, encumbrances, and liens, usually beginning wit the original recorded source of title.  The chain of title shows the successive changes of ownership, each one linked to the next so that a chin is formed.

Clear Title title to property that is free from liens, defects or other encumbrances, except those the buyer has agreed to accept.

Client the person who employs an agent to perform a service for a fee also called a principal.

Cloud on Title any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful.

Closing the consummation of a real estate transaction when the seller delivers title to the buyer in exchange for payment by a buyer for the purchase price.

Commission payment to a broker for service rendered, such as the sale or purchase property.

Comparables properties use din an appraisal report that are substantially equivalent to the subject property.

Completive Market Analysis CMA a tool used by brokers to assist consumers in determining a property’s sale price.  It is not an appraisal.  The CMA consists of information about three types of properties similar to the subject property; prices of those sold, on the market, and expired.

Consideration that received by the grantor in the exchange for his or her deed.   Something of value that induces a person to enter into a contract.

Construction Loan a short term or interim loan to cover the construction costs of a building or development project, with loan proceeds advanced periodically in the form of installment payments as the work progresses.

Contingency a provision in a contract that requires the completion of a certain act or the happening of a particular event before that contract is binding.

Contract a legally enforceable agreement between competent parties who agree to perform or refrain from performing certain acts for consideration.

Conventional Loan a loan made with real estate as security and no involving participation in the form of insuring (FHA) or guaranteeing (VA) the loan.  The loan is conventional in the send that it conforms to accepted standards and that the lender looks solely to the credit of the borrower and the security of the property to ensure payment of the debt.

Cooperative Broker a broker who assists another broker in the sale of real property.

Cost Approach an approach to the valuation of property based on the improvement’s reproduction or replacement cost.

Counteroffer a new offer made in response to an offer received from an offeror.

Covenants, Conditions, and Restrictions (CC&RS) private restrictions on the use of real property.

Conveyance refers to any document that transfers title to real property.

Credit Report a report listing present and past debts, detailing the borrower’s ability to make timely payments and including information found form public records such as tax liens and judgments.

Credit Score a financial snapshot of a borrower’s credit history and current usage of credit at a given point in time determined by a mathematical formula based on information maintained by credit bureaus and other sources.  Sample scores range from 400 to 900 and the lower the number the greater the risk of default.

Curb Appeal the impression gained whether good or ban of a property when it is first seen, usually from the street while driving by.

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Debt Coverage Ratio the ratio of annual net income to annual debt service.

Debt Service the amount of money needed to meet the periodic payments of principal and interest on a loan or debt that is being amortized.

Debt to Equity Ratio the relationship of the total loan owed to the lender and the invested capital of the owner

Deed a written instrument  by which a property owner as “grantor” convey and transfers t a grantee an ownership interest in real property.

Deed In Lieu of Foreclosure a deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage.  This is way for the mortgagor to avoid foreclosure.

Deed Restrictions clauses in a deed limiting the future uses of the property.

Default the nonperformance of a duty whether arising under a contract or otherwise, failure to meet an obligation when due.

Defeasance Clause a clause used in leases and mortgages that cancels a specified right upon the occurrence of certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.

Deficiency Judgment a personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to the pay mortgage debt in full.

Depreciation  1) in appraisal, a loss of value in property due to any cause. 2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.

Developer one who attempts to put land to its mort profitable use through the construction of improvements such as commercial condominiums or subdivision projects.

Devise a gift of real property by will.  The donor is the devisor and the recipient is the devisee.

Disclosure to reveal, make known.

Discount Point a unit of measure used for various charges, one point equals one percent of the amount of the loan.

Distressed Property property that brings an insufficient return to the owners or is in difficulty for other reasons.  Sometimes it is a property that must be sold due to a pending foreclosure.

Down Payment the amount of cash a purchaser will pay at the time of purchase.

Dual Agency representing both parties to a transaction.  This is unethical unless both parties agree to I and it is illegal in many state.

Due on Sale Clause a provision in the mortgage that states the entire balance of the note is immediately due and payable if the mortgagor transfers the property.

Duress unlawful constraint or actions exercised upon a person whereby the person is force to perform an act against their will.  A contract entered into under duress is voidable.

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Habendum Clause is the part of the deed beginning with the words “to have and to hold,” following the granting clause and defining the extent of ownership the grantor is conveying

Heir is a person who inherits under a will or a person who succeeds to an interest under the state laws of descent if the decedent dies without a will

Highest and Best Use is term meaning that use of a property which is most likely to produce the greatest net return to the property over a given period of time

Hip Roof is a pitched roof with sloping sides and ends

Hold Harmless Clause is a contract provision whereby one party agrees to indemnify and protect the other party from an injuries or lawsuits arising out of the particular transaction

Holdover Tenant is a person who stays on the leased premises after their lease has expired.  The landlord normally has the choice of evicting the tenant or agreeing to allow them to remain as a tenant and pay rent

Home Equity Line of Credit (HELOC)  is a loan under which a home owner uses their residence as collateral and can then draw funds up to a prearrange amount against the property

Home Inspection is an inspection performed by a professional to determine the condition of a property

Home Owner’s Insurance is standardized insurance package that covers residential real estate owner against a financial loss from fire, theft, public liability and other common risks

Homestead is a piece of property that is owned and occupied as the family’s primary residence

Hostile Possession is possession of real property by one person that is adverse and in opposition to the possession of the title owner.

HUD is a federal a department of the federal government known as the U.S. Department of Housing and Urban Development.  HUD has many programs including, public housing, model cities, urban renewal, rehabilitation loans, and FHA subsidy programs

HUD 1 Form is a form used at closings detailing closing costs for the buyer and seller that is used for all loans that are federally related, (FHA, VA, FDIC insured funds) and for any loans that will be sold to Freddie Mac or Fannie Mae

HVAC is an acronym that stands for Heating Ventilating Air Conditioning systems in a building.

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Fair Housing Act the federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, or familial status, and national origin.

Fair Market Value an appraisal term for the most probable price in terms of money that a property, if offered for sale for a reasonable period of time in a competitive market, would bring to a seller who is willing by not compelled to sell, form a buyer who is willing but not compelled to buy.

Fannie Mae a government sponsored enterprise established to purchase any kind or mortgage loans in the secondary mortgage market from primary lenders.

Federal Tax Lien a lien that attaches to real property either if the federal estate tax is not paid or the taxpayer has violated the federal income tax or payroll tax laws.

Fee Simple the highest interest in real estate recognized by the law, the holder is entitles t all rights to the property.

FICO Score mathematical scores developed by the Fair Isaac Company and used by credit bureaus and lenders to evaluate the risk associated in lending money.   FICO scores range from 450 to 850, the higher the score the lower the risk.

FHA Loan a loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA’s regulations.

Fixture an item of personal property that has been converted to real property by being permanently affixed to the real property.

First Mortgage a mortgage on a property that is superior in right to any other mortgage.

Fixed Rate Loan a loan with the same rate of interest for the life of the loan.

Fixer Upper a property needing a lot of repair work usually sold below market value.

Flashing sheet metal used in roof and wall construction to protect a building from seepage of water.

Flip a transaction in which one party contracts to buy a property with the intention of quickly transferring (flipping) the property to the ultimate buyer.

Forbearance the act of refraining from taking legal action despite the fact that payment of a promissory note in a mortgage in arrears.  It is usually granted only when a borrower makes a satisfactory arrangement by which arrears will be paid at a future date.

Foreclosure the process of a legal procedure whereby property used as security for a debt is sold to satisfy the debt in the event of default in payment of the mortgage or default of other terms of the mortgage documents.

For Sale By Owner (FSBO) a situation in which the owner attempts to sell a property with a listing with a real estate broker.

Freddie Mac a government sponsored enterprise established to purchase primarily conventional mortgage loans in the secondary market,

Functional Obsolescence a loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.

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Warranty is a promise that certain stated facts are true.

Warranty Deed is a deed in which the grantor fully warrants good clear title to the premises, also called a general warranty deed.

Water Rights are common law rights of owners of land adjacent to rivers, lakes, or oceans, and includes restrictions on those rights and land ownership.

Water Table is the natural level at which the water is located whether it be below the ground or above the ground.

Will is a written document that is properly witnessed and provides for the transfer of real and personal property owned by the deceased.

Working Capital is the liquid assets available for the day to day operations of a business.

Work Out Plan is an attempt by a mortgagee to assist a mortgagor in default to work out a payment plan rather than proceed directly with a foreclosure.

Wrap Around Loan is a method of financing a property in which the new mortgage is placed in a secondary position.  The new mortgage includes both the unpaid principal of the first mortgage and any additional sums are advanced by the lender.

Writ of Execution is a court order authorizing and directing an officer of the court to levy and sell property of the defendant to satisfy a judgment.