GLOSSARY

 

Abstract of title  A condensed history of the recorded documents affecting title to real property.

 

Acceleration clause  A mortgage clause that allows the lender to call the entire balance due and payable immediately in the event of a default by the borrower.

 

Adjustable-rate mortgage (ARM)  A mortgage loan program that allows the lender to change the interest rate based on a published index that is beyond the lender’s control.

 

Advanced fees  Fees collected in advance of performing a real estate service.

 

Agent  A representative; one who is authorized to act on behalf of another; a person entrusted with another’s business.

 

Americans with Disabilities Act (ADA)  A federal statute designed to remove physical   barriers that prevent equal access to public places, and to ensure that qualified persons have equal employment opportunities regardless of disability.

 

Annual percentage rate (APR)  A calculation required under the Truth-in-Lending Act that discloses the annual cost of credit, including financing charges.

 

Appraisal  A supported, defended estimate of value of property rights as of a given date.

 

Arbitration  The act of having a third party render a binding decision in a dispute between two parties.

 

Arm’s-length transaction  A transaction in which the parties are dealing from equal bargaining positions.

 

Asbestos  A mineral fiber that was commonly used prior to 1979 in a variety of building construction materials for insulation and as a fire retardant.

 

Assessed value  Worth established for each unit of real property for tax purposes by a county property appraiser.

 

Balloon payment  The final payment due under a partially amortized mortgage that is larger than the periodic payments made during the term of the loan.

 

Blind advertising  Advertising that fails to disclose the registered name of the brokerage firm.

 

Book value  The amount shown for capitol assets (equipment, real estate, etc.) on the books of a company, less deprecation taken for accounting purposes.

 

Buyer’s market  A period in the real estate economy when the supply of properties for sale exceeds the demand for those properties, giving buyers a negotiating advantage.

 

Capital gain  Profit made on the sale of a capital asset, such as real property.

 

Certificate of title  A statement of opinion by an attorney or abstractor on the status of the title to a parcel of real property based on an examination of the public records.

 

Civil Rights Act of 1866  A statute that prohibits discrimination based on race regarding the inheritance, purchase, lease, sale, holding, and conveying of real property.

 

Comparative market analysis (CMA)  A list of properties in an area similar to the subject property that are currently listed, have recently sold, or have failed to sell in a reasonable marketing period. It is the basis for a licensee’s “opinion of value” to a buyer or seller.

 

Contingency  A condition in a contract that, unless satisfied, may make the contract voidable by one or both of the parties.

 

Contract  An agreement between two parties to do or abstain from doing some specific act.

 

Credit scoring  A method of reporting a person’s credit standing with a numeric or letter grade used by lenders in setting interest rates, down payments, and credit limits.

 

Escrow account  An account in a bank, title company, credit union, savings association, or trust company used solely for safekeeping customer funds and not for deposit of personal funds.

 

Exclusive agency listing  An agreement given to a broker by a seller to pay the broker by a seller to pay the broker’s commission if the property is sold by any broker, but reserving the seller’s right to sell directly without owing a commission.

 

Exclusive-right-of sale listing  An agreement given to a broker by the seller to pay a commission to a broker if the property is sold during the listing period. The broker is legally the procuring cause of any sale.

 

Fair Housing Act  A part of the Civil Rights Act of 1968 (Title VIII) that prohibits discrimination against persons based on race, color, religion, national origin, sex, handicap, or family status.

 

Fixtures  Items that originally were personal property but have been permanently attached to or made part of real property.

 

Foreclose  A legal process initiated by a lender in case of a mortgage default. It extinguishes the right of others, including the owner and lien holders with a lower priority.

 

Fully amortized mortgage  A type of loan paid off in equal monthly payments of principal and interest.

 

Home equity loan  A mortgage secured by a personal residence. It provides a line of credit available for draws when needed by the homeowner. It is sometimes used as a home improvement loan.

 

Joint tenancy  Real property ownership by two or more persons in which all parties have the same rights of possession, equal interests, purchased at the same time, are all on the same deed, and have the right of survivorship.

 

Joint venture Two or more parties in an arrangement confined to only one or a limited number of business deals.

 

Liquidated damages  The amount of valuable consideration for a contract agreed by the parties to be just compensation in case of default.

 

Mortgagee  The lender who holds a mortgage lien on real property for collateral.

 

Mortgage insurance premium (MIP)  The amount paid by a borrower for insurance that protects the lender against loss in case of the borrower’s subsequent default. Normally the FHA mortgage insurance is called MIP, and private mortgage insurance is called PMI.

 

Mortgagor  The borrower who owes money on a mortgage loan. In Florida, the mortgagor owns the property.

 

Net lease  A lease that requires the tenant to pay for specified operating expenses of the building, such as taxes, maintenance, and insurance. This allows the landlord to effectively keep all of the rent paid by the tenant, because there are no other operating expenses.

 

Net listing  An agreement by an owner giving a broker the right to sell real property. The owner specifies a required amount from the sale and the broker’s compensation is any amount over the net amount. In Florida, the broker may keep only an amount equal to a customary commission.

 

Net operating income  The income remaining after subtracting all relevant operating expenses.

 

 

Open listing  A non exclusive agreement in which a seller agrees to compensate a broker if the broker procures a sale of the property, but reserves the right to sell the property directly without paying a commission.

 

Option contract  An agreement that allows one to buy, sell, or lease real property for specified terms within a specified period of time.

 

Personal property  Any tangible item not permanently attached to real estate.

 

Price  The amount of dollars that a buyer agrees to pay and a seller agrees to accept under the specific circumstances surrounding a transaction.

 

Principal  The party employing the services of a real estate broker as a single agent.

 

Purpose of an appraisal  The purpose of an appraisal is to estimate value.

 

Radon gas  A colorless, odorless gas resulting from the breakdown of naturally occurring radioactive materials in the soil. Most authorities believe it to be a serious health hazard.

 

Real property  An interest or estate in land and any interest in business enterprises or business opportunities, including any assignment, leasehold, subleasehold, or mineral right.

 

Right of first refusal  The right, but not the obligation, of a person to take the place of a buyer with the same terms agreed to by the seller and the buyer.

 

Sale and leaseback  A financing technique whereby the owner sells a property and then rents it back from the buyer for continued occupancy.

 

Sale contract  An agreement between a buyer and a seller to transfer title to a parcel of real property.

 

Short term gain  A capitol gain on investment property held for less than 12 months, taxed at higher rates than those for long-term gains.

 

Three-day notice  A document from a landlord to a delinquent tenant demanding payment of the rent or possession of the premises within three days.

 

Time-sharing  The right to occupy a property for a specific part of the year.

 

Title insurance  A guarantee that the title insurance company will pay an owner or a mortgagee if title to property is later discovered to be defective.

 

Unsecured note  A promissory note without a mortgage, based strictly on the credit of the borrower.

 

Variance  An exception to zoning regulations or ordinance granted to relieve a hardship.

 

Writ of possession  A court order allowing the landlord to evict a tenant.

 

Zoning  Classification of real property for various purposes, the government power to control and supervise the utilization of privately owned real property.