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AGREEMENT OF SALE- An agreement between the seller (vendor) and buyer (vendee) for the purchase of real property. AIR RIGHTS- The rights to the use of the open space or vertical plane above a property. Ownership of the land includes the right to all air above the property. ALIENATION CLAUSE- A clause in a promissory note or mortgage which provides that the balance of the secured debt becomes immediately due and payable at the option of the mortgagee upon the alienation of the property by the mortgagor. ALLODIAL SYSTEM- The free ownership of land by individuals. AMENITIES- Features, both tangible and intangible, which enhance and add to the desirability of real estate. AMORTIZATION- The gradual repayment of a debt by means of systematic payments of principal and interest over a set period, where at the end of the period there is a zero balance. ANCHOR TENANT- Major department or chain stores which are strategically located at shopping centers so as to give maximum exposure to smaller satellite stores. ANNUAL PERCENTAGE RATE- The relationship of the total Finance Charge to the total amount to be finance as required under the Federal Truth-in-Lending Law. APPRAISAL- The process of estimating, fixing, or setting the market value of real property. An appraisal may take the form of a lengthy report, a completed form, a simple letter, or even an oral report. APPRECIATION- An increase in the worth or value of property due to economic or related causes, which may prove to be either temporary or permanent. APPURTENANT- Belonging to; adjunct; appended or annexed. ARBITRATION- The non-judicial submission of a controversy to selected third parties for their determination in the manner provided by agreement or by law. ASSESSED VALUATION- The value of real property as established by the state government for purposes of computing real property taxes. ASSESSMENT- A specific levy for a definite purpose, such as adding curbs or sewers in a neighborhood. Individual condominium owners are subject to special assessments benefiting the project as a whole and not funded through regular maintenance charges. ASSIGNMENT- The transfer of the right, title and interest in the property of one person, the assignor, to another, the assignee. In real estate, there are assignments of mortgages, contracts, agreements of sale, leases, and options, among others. ASSUMPTION OF MORTGAGE- The act of acquiring title to property which has an existing mortgage on it and agreeing to be personally liable for the terms and conditions of the mortgage, including payments. ATTACHMENT- The legal process of seizing the real or personal property of a defendant in a lawsuit, by levy or judicial order, and holding it in the custody of the courts as security for satisfaction of the judgment which the plaintiff may recover in any action upon a contract, express or implied. ATTORNEY-IN-FACT- One who is authorized by another to act in his place under a power of attorney. ATTORNMENT - The act of a tenant formally agreeing to become the tenant of a successor landlord; as in attorning to a mortgagee who has foreclosed on the leased premises. BALLOON PAYMENT- The final payment of a note or obligation, which is substantially larger than the previous installment payments, and which repays the debt in full; the remaining balance which is due at the maturity of a note or obligation. BARGAIN AND SALE DEED- A deed which recites a consideration and conveys all of the grantor's interest in the property to the grantee. BASE LINE AND MERIDIAN - An imaginary set of lines used by surveyors to locate and describe land under the Rectangular Survey Method of property description used in most mainland states. BASIS- The financial interest which IRS attributes to the owner of an asset for purposes of determining annual depreciation and gain or loss on sale of the asset. BENCH MARK- A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area. BENEFICIARY - A person who receives the benefits from the gifts or acts of another, such as one who is designated to receive the proceeds from a will, insurance policy or trust. BILATERAL CONTRACT - A contract in which each party promises to perform an act in exchange for the other party's promise to perform. BILL OF SALE- A written agreement by which one person sells, assigns or transfers his right to, or interest in, personal property to another. BLANKET MORTGAGE- A mortgage which is secured by several structures or a number of lots. A blanket mortgage is often used to finance proposed subdivisions or development projects, especially cooperatives. BLUE SKY LAWS- State securities laws designed to protect the public from fraudulent practices in the promotion and sale of securities, e.g., through limited partnerships, syndications, bonds. BOOT- Money or other property given to make up any difference in value or equity between two exchanged properties. BOUNDARIES- The perimeters or limits of a parcel of land as fixed by legal description which is usually a metes and bounds description. BREACH OF CONTRACT- Violation of any of the terms or conditions of a contract without legal excuse; default, non-performance, such as failure to make payment when due. BROKER - One who acts as an intermediary between parties to a transaction. A real estate broker is a properly licensed person who, for a valuable consideration, serves as an agent to others to facilitate the sale or lease of real property. BROKERAGE- That aspect of the real estate business which is concerned with bringing together the parties and completing a real estate transaction. Brokerage involves exchanges, rentals, trade-ins and management of property, as well as sales. BUDGET MORTGAGE- A mortgage with payments set up to cover more than interest and principal reductions. BUFFER ZONE - A strip of land separating one parcel from another. BUILDING PERMIT- A written permission granted by the County Building Department and required prior to beginning the construction of a new building or other improvement (including fences, fence walls, retaining walls and swimming pools). BUILDING RESIDUAL TECHNIQUE - A method of determining the value of an improvement normally used in appraising income property. BULK TRANSFERS- Any transfer in bulk, and not in the ordinary course of the seller's business, of a major part of the materials, inventory or supplies of an enterprise. BUNDLE OF RIGHTS- An ownership concept describing all those legal rights which attach to the ownership of real property, including the right to sell, lease, encumber, use, enjoy, exclude, will, etc. BUSINESS DAYS- Days of the week excluding Saturdays, Sundays, and holidays; normal working days. BUSINESS OPPORTUNITIES - Any type of business which is for sale. CANTILEVER- A projecting beam or overhanging portion supported at one end only. CAPITAL GAIN - The taxable profit derived from the sale of a capital asset. CAPITAL IMPROVEMENT- Any structure which is erected as a permanent improvement to real property; any improvement which is made to extend the useful life of a property, or to add to the value of the property. CAPITALIZATION- A mathematical process for converting net income into an indication of value, commonly used in the income approach to appraisal. CAP RATE (CAPITALIZATION RATE)- The percentage selected for use in the income approach to valuation of improved property. The cap rate is designed to reflect the recapture of the original investment over the economic life of the improvement, to give the investor an acceptable rate of return (yield) on the original investment, and to provide for the return on borrowed capital. CERTIFICATE OF REASONABLE VALUE (CRV)- A certificate issued by the Veterans Administration setting forth a property's current market value estimate, based upon a VA approved appraisal. CERTIFIED CHECK- A check which the bank guarantees to be good, and against which a stop payment is ineffective. CERTIFIED PROPERTY MANAGER- A professional property manager who has qualified for membership in and is a member of the Institute of Real Estate Management, and is designated a CPM. CHAIN OF TITLE - The recorded history of matters which affect the title to a specific parcel of real property, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title. CHATTEL- Personal property which is tangible and moveable. CLEAR TITLE - Title to property that is free from liens, defects or other encumbrances, except those which the buyer has agreed to accept, such as mortgage to be assumed, the ground lease of record, and the like; established title; title without clouds. CLIENT TRUST ACCOUNT - An account set up by a broker to keep client's monies segregated from the broker's general funds. CLOSING - The final stage of consummating a real estate transaction when the seller delivers title to the buyer, in exchange for the purchase price. CLOSING COSTS- Expenses of the sale which must be paid in addition to the purchase price (in the case of the buyer's expenses), or be deducted from the proceeds of the sale (in the case of the seller's expenses). CLOSING STATEMENT- A detailed cash accounting of a real estate transaction prepared by an escrow officer or other person designated to process the mechanics of the sale, showing all cash that was received, all charges and credits which were made, and all cash that was paid out in the transaction; also called a settlement statement. CLOUD ON TITLE - Any document, claim, unreleased lien or encumbrance which many impair or injure the title to property or make the title doubtful because of its apparent or possible validity. CLUSTER DEVELOPMENT- The grouping of housing units on less than normal size homesites, with the remaining land being devoted to common areas. CODE OF ETHICS- A written system of standards of ethical conduct. The Code of Ethics of the National Association of Realtors, first written in 1913, establishes the high standards of conduct for members of the Realtor community. COLLATERAL- Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the mortgaged property itself, which has been hypothecated. COLOR OF TITLE- A condition which has the appearance of good title, but which in fact is not valid title, as where title is founded on some written document which on its face appears valid and effective, but which is actually invalid. COMMERCIAL PROPERTY- A classification of real estate which includes income producing property such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, parking lots and stores, and other similar uses. COMMINGLING - To mingle or mix; for example, to deposit client funds in the broker's personal or general account. A licensee found guilty of commingling can have the license suspended or revoked by the Real Estate Commission. COMMISSION - The compensation paid to a real estate broker(usually by the seller) for services rendered in connection with the sale or exchange of real property. COMMITMENT- A pledge or promise to do a certain act, such as the promise of a lending institution to loan a certain amount of money at a fixed rate of interest to a qualified buyer, provided the loan is obtained on or before a certain date. COMMON AREAS- Land or improvements designated for the use and benefit of all residents, property owners and tenants. COMMON ELEMENTS - Parts of the property which are necessary or convenient to the existence, maintenance and safety of the condominium, or are normally in common use by all of the condominium residents. COMMON LAW - That body of law which is based on usage, general acceptance, and custom, as manifested in decrees and judgments of the courts; judge-made law, as opposed to codified or statutory law. COMMON WALL - A wall separating two living units. COMMUNITY PROPERTY- A system of property ownership based on the theory that each spouse has an equal interest in property acquired by the efforts of either spouse during marriage. COMPARABLES- Recently sold properties which are similar to a particular property being evaluated, and which are used to indicate a reasonable fair market value for the subject property. COMPOUND INTEREST- Interest which is computed upon the principal sum plus accrued interest. CONCESSIONS- Discounts given by landlords to prospective tenants to induce them to sign a lease. CONDEMNATION- Either a judicial or administrative proceeding to exercise the power of eminent domain, i.e., the power of the government to take private property for public use. CONDOMINIUM OWNERSHIP- An estate in real property consisting of an individual interest in an apartment or commercial unit, and an undivided common interest in the common areas such as the land, parking areas, elevators, stairways, and the like. CONSIDERATION- An act or forbearance, or the promise thereof, which is offered by one party to induce another to enter into a contract; that which is given in exchange for something from another. CONSTRUCTIVE EVICTION- Acts done by a landlord which so materially disturb or impair the tenant's enjoyment of the leased premises that a tenant is effectively forced to move out and terminate the lease without liability for any further rent. CONSTRUCTIVE NOTICE- Notice of certain facts which are implied bylaw to a person because he could have discovered the fact by reasonable diligence or by inquiry into public records. CONTINGENCY- A provision placed in contract which requires the completion of a certain act or the happening of a particular event before a contract is binding. CONTRACT - A legal agreement between competent parties who agree to perform or refrain from performing certain acts for a consideration. In real estate, there are many different types of contracts, including listings, contracts of sale, options, mortgages, assignments, leases, deeds, escrow agreements, and loan commitments, among others. CONVEYANCE- The transfer of title to real property by means of a written instrument such as a deed or an assignment of lease. COOPERATING BROKER- A broker who joins with another broker in the sale of real property. COOPERATIVE OWNERSHIP- Cooperative ownership of an apartment unit means that the apartment owner has purchased shares in a corporation which holds title to the entire apartment building. CO-TENANCY- A form of concurrent property ownership in which two or more persons own an undivided interest in the same property. COUNTER-OFFER - A new offer made as a reply to an offer received from another; this has the effect of rejecting the original offer, which cannot thereafter be accepted unless revived by the offeror's repeating it. COURTESY TO BROKERS- The practice of sharing commissions with cooperating brokers. COVENANT- A written agreement or promise of two or more parties by which either pledges to perform or not to perform specified acts on a property, or which specifies certain uses or non-uses of the property. COVENANTS AND CONDITIONS- Covenants are promises contained in contracts, the breach of which would entitle a person to damages. Conditions, on the other hand, are contingencies, qualifications or occurrences upon which an estate or property right would be gained or lost. COVENANTS RUNNING WITH THE LAND- Covenants which become part of the property and benefit or bind successive owners of the property. CUL DE SAC - A street which is open at one end only, and which usually has a circular turnaround; a blind alley. CUSTOMER TRUST FUND (CTF) - An impound account maintained for the purpose of setting up a reserve to pay certain periodic obligations such as real property taxes, insurance premiums, lease rent, and maintenance fees. DEALER- An IRS designation for a person who regularly buys and sells real property. DEBT SERVICE - The amount of money needed to meet the periodic payments of principal and interest when a debt is amortized. DECLARATION OF RESTRICTIONS- A statement of all the covenants, conditions and restrictions ("CC&R's") which affect a parcel of land. DEDICATION - The application of privately owned land to the public for no consideration, with the intent that the land will be accepted and used for public purposes. DEED - A written instrument by which a property owner "grantor" transfers to a "grantee" an ownership in real property. DEED OF TRUST- A legal document in which title to property is transferred to a third party trustee as security for an obligation owed by the trustor (borrower) to the beneficiary(lender). DEFAULT- Failure to fulfill a duty or promise or failure to perform any obligation or required act. The most common occurrence of default on the part of a buyer or lessee is non-payment of money. DEFERRED COMMISSIONS- Commissions which are earned but not yet fully paid. DEFICIENCY JUDGEMENT- A judgment against a borrower, endorser, or guarantor for the balance of the debt issued when the security for a loan is insufficient to satisfy the debt. DENSITY - A term, frequently used in connection with zoning requirements, which means the maximum number of building units per acre or the number of occupants or families per unit of land area (acre, square mile, etc.); usually the ratio of land area to improvement area. DEPOSIT- Money offered by a prospective buyer as an indication of good faith in entering into a contract to purchase; earnest money; security for the buyer's performance of a contract. DEPRECIATION (APPRAISAL)- A loss in value due to any cause; any condition which adversely affects the value of an improvement. DEPRECIATION (TAX)- For tax purposes, depreciation is an expense deduction taken for an investment in depreciable property. DEPTH TABLE- Tables of percentage designed to provide a uniform system of measuring the additional value to lots which accrues because of added depth, with the extra depth valued according to the added utility which it creates. DESCENT- The acquisition of an estate by inheritance, where an heir succeeds to the property by operation of law. Descent literally means the hereditary succession of an heir to property of an ancestor who dies intestate. DESCRIPTION- The portion of a conveyance document which defines the property being transferred. DEVELOPER- One who attempts to put land to its most profitable use by the construction of improvements. DEVISE- A transfer of real property under a will. DISCLAIMER- A statement denying legal responsibility, frequently found in the form of, "There are no promises, representations, oral understandings or agreements except as contained herein." DISCOUNT POINTS- An added loan fee charged by a lender to make the yield on a lower-than-market interest VA or FHA loan competitive with higher interest conventional loans. DISCRIMINATION - The act of making a distinction against or in favor of a person on the basis of the group or class to which the person belongs; the failure to treat people equally. DISTRAINT- The right of a landlord, pursuant to a court order, to seize a tenants belongings for rents in arrears. DOMICILE - The state where an individual has his true, fixed, permanent home and principal business establishment and to which place he has the intention of returning whenever he is absent. DOUBLE ESCROW- An escrow set up to handle the concurrent sale of one property and purchase of another property by same party. DOWER- The legal right or interest a wife acquires in property her husband held or acquired anytime during marriage. DUAL AGENCY- Representing both principals (buyer and seller) to a transaction. DUE ON SALE CLAUSE- A form of acceleration clause found in some mortgages, especially savings and loan mortgages, requiring the mortgagor to pay off the mortgage debt when selling the secured property, thus resulting in automatic maturity of the note at the lender's option. DUPLEX - A structure that provides housing accommodations for two families by having separate entrances, kitchens, bedrooms, lanais, living rooms and bathrooms. A two-family dwelling. DURESS - Unlawful constraint or action exercised upon a person whereby he is forced to perform some act against his will. A contract entered into under duress is void. EASEMENT- A property interest which one person has in land owned by another entitling the holder of the interest to limited use or enjoyment of the other's land. EASEMENT IN GROSS- The limited right of one person to use another's land (servient estate), which right is not created for the benefit of any land owned by the owner of the easement; that is, there is no dominant estate, as the easement attaches personally to the owner, not to the land. EMBLEMENTS - Growing crops (called "fructus industriales"),such as rice and taro, which are produced annually through labor and industry. EMINENT DOMAIN - The right of government, both state and federal, to take private property for a necessary public use, with just compensation paid to the owner. ENCROACHMENT- An unauthorized invasion or intrusion of a fixture or other real property wholly or partly upon another's property, thus reducing the size and value of the invaded property. ENCUMBRANCE- Any claim, lien, charge or liability attached to and binding upon real property which may lessen the value of the property but will not necessarily prevent transfer of title. ENTIRETY, TENANCY BY- A form of joint ownership of property between husband and wife with the right of survivorship. ENVIRONMENTAL IMPACT STATEMENT- A report which includes a detailed description of a proposed development project with emphasis on the existing environment setting, viewed from both a local and regional perspective, and a discussion of the probable impact of the project on the environment during all phases. EQUITY- That interest or value remaining in property after payment of all liens or other charges on the property. A owner's equity is normally the monetary interest over and above the mortgage indebtedness. ERRORS AND OMISSIONS INSURANCE - A form of insurance which covers liabilities for errors, mistakes and negligence in the usual listing and selling activities of a real estate office or escrow company. ESCHEAT - The reversion of property to the state when a decedent dies intestate and there are no heirs capable of inheriting, or when the property is abandoned. ESCROW- The process by which money and/or documents are held by a disinterested third person (a "stakeholder") until the satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow). ESTOPPEL- A legal doctrine by which a person is prevented from asserting rights or facts which are inconsistent with a previous position or representation he had made by his act, conduct or silence. ETHICS- A system of moral principles, rules and standards of conduct. EVICTION- The legal process of removing a tenant from possession of the premises for some breach of the lease contract. EXCHANGE- A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of a like kind. EXCLUSIVE AGENCY- A written listing agreement giving one agent the right to sell property for a specified time, but reserving to the owner the right to sell the property himself without payment of any commission. EXCLUSIVE LISTING- A written listing of real property in which the seller agrees to appoint only one broker to sell the property for a specified period of time. The two types of exclusive listings are the exclusive agency and the exclusive right to sell. EXECUTIVE- The act of making a document legally valid, such as formalizing a contract by signing, or acknowledging and delivering a deed. EXECUTOR- A person appointed by a testator to carry out the directions and requests in the last will and testament, and to dispose of property according to the provisions of the will. EXECUTORY CONTRACT- A contract in which one or both of the parties has not yet performed. EXTENDER CLAUSE- A "carry over" clause (referred to as a safety clause) contained in a listing which provides that a broker is still entitled to a commission for a set of period of time after the listing has expired if the property is sold to a former prospect of the broker. EXTENSION - An agreement to continue the period of performance beyond the specified period. FAIR MARKET VALUE - The highest monetary price which a property would bring, if offered for sale for a reasonable period of time in a competitive market, to a seller who is willing but not compelled to sell, from a buyer, willing but not compelled to buy, both parties being fully informed of all the purposes to which the property is best adapted and is capable of being used. FARM AREA- A selected geographical area or one specific building to which a real estate salesperson devotes special attention and study. FEASIBILITY STUDY- An analysis of a proposed project with emphasis on the attainable income, probable expenses, and most advantageous use and design. FEDERAL HOUSING ADMINISTRATION (FHA)- The FHA was set up in1934 under the National Housing Act to encourage improvement in housing standards and conditions, to provide an adequate home financing system by insurance of housing mortgages and credit, and to exert a stabilizing influence on the mortgage market. FEDERAL TAX LIEN- A federal lien which attaches to real property, either if the federal estate tax is not paid, or if the taxpayer has violated the federal income tax or payroll tax laws. FEDERAL TRADE COMMISSION (FTC)- A federal agency created to investigate and eliminate unfair and deceptive trade practices in business. FEE SIMPLE- The largest estate one can possess in real property. A fee simple estate is the least limited interest and the most complete and absolute ownership in land: it is of indefinite duration, freely transferable and inheritable. Fee simple title is sometimes referred to as "the fee. FIDUCIARY- A relationship which implies a position of trust or confidence wherein one is usually entrusted to hold or manage property or money for another. Among the obligations a fiduciary owes to the principal are duties of loyalty; obedience; full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies. FILLED LAND - An area where the grade has been raised by depositing or dumping dirt, gravel or lava rock. FINANCE CHARGE- The total of all costs imposed directly or indirectly by the creditor and payable either directly or indirectly by the customer, as defined under the federal Truth-in-Lending Law. FINANCE FEE- A mortgage brokerage fee to cover the expenses incurred in placing the mortgage with a lending institution; a mortgage service charge or origination fee. FINANCIAL STATEMENT - A formal statement of the financial status and net worth of a person or company, setting forth and classifying assets and liabilities as of a specified date. FINDER'S FEE- A fee paid to someone for producing a buyer to purchase or a seller to list property; also called a referral fee. FIRM COMMITMENT - A definite undertaking by a lender to loan a set amount of money at a specified interest rate for a certain term. FIRST REFUSAL, RIGHT OF- The right of a person to have the first opportunity either to purchase or lease real property. FISCAL YEAR- A business year used for tax, corporate or accounting purposes, as opposed to a calendar year. FIXTURE - An article which was once personal property but has been so affixed to the real estate that it has become real property (e.g. stoves, bookcases, plumbing, etc.). If determined to be a fixture, then the article passes with the property even though it is not mentioned in the deed. FLAG LOT- A land parcel having the configuration of an extended flag and pole. The pole represents access to the site which is usually located to the rear of another lot fronting a main street. FLOOR AREA RATIO- The ratio of floor area to land area expressed as a percent or decimal, which is determined by dividing the total floor area on a zoning lot by the lot area. FLOOR DUTY- A frequent practice in real estate brokerage offices of assigning one sales agent the responsibility for handling all telephone calls and office visitors for a specified period of time. FORECLOSURE- A legal procedure whereby property used as security for debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document. FRAUD - Any form of deceit, trickery, breach of confidence or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another. FREE AND CLEAR TITLE- Title to real property which is absolute and unencumbered by any liens, mortgages, clouds or other encumbrances. FRONTAGE- The length of a property abutting a street or body of water; that is, the number of feet that "front" the street or water. FUNCTIONAL OBSOLESCENCE - A loss in value of an improvement due to functional inadequacies, often caused by age or poor design. GARNISHMENT- A legal process designed to provide a means for creditors to safeguard for themselves the personal property of a debtor which is in the hands of a third party ("garnishee"). GENERAL AGENT- One who is authorized to perform any and all acts associated with the continued operation of a particular job or a certain business. GENERAL CONTRACTOR- A construction specialist who enters into a formal construction contract with a land owner or master lessee to construct a real estate building or project. GENERAL PARTNER- A co-owner of a partnership who is empowered to enter into contracts on behalf of the partnership and who is fully liable for all partnership debts. GIFT TAX- A graduated federal tax paid by a donor upon making a gift. GOOD FAITH- Bona fide. An act is done in good faith if it is in fact done honestly, whether it be done negligently or not. GOOD WILL- An intangible, salable asset arising from the reputation of a business. GOVERNMENT SURVEY - A system of land description in which large blocks of land are divided into tracts bounded by imaginary lines conforming to the true meridian. GRADUATED RENTAL LEASE- A lease in which the rent payments commence at a fixed, often low rate, but "step up" or increase at set intervals as the lease term matures. GRANDFATHER CLAUSE - Common expression used to convey the idea that something which was once permissible continues to be permissible despite changes in the controlling law. GRANTEE - The person who receives from the grantor a grant of real property. GRANTOR- The person transferring title to, or an interest in, real property. A grantor must be competent to convey; thus, for example, an insane person cannot convey title to real property. GROSS AREA - The total floor area of a building measured from the exterior of the walls (excluding those unenclosed). GROSS INCOME MULTIPLIER- A useful rule of thumb to estimate market value of income producing residential property. The multiplier is derived by using comparable sales divided by the actual or estimated monthly rentals and arriving at an acceptable average. GROSS LEASE - A lease of property under which the lessee pays a fixed rent, and the lessor pays the taxes, insurance, and other charges regularly incurred through ownership. GUARDIAN - One who is given the lawful custody and care of another(called a ward). LAND - The surface of the earth extending down to the center and upward to the sky, including all natural things thereon such as trees, crops, or water; plus the minerals below the surface and the air rights above. LAND CONTRACT- Another name for an installment purchase contract, by which the buyer obtains equitable title (the right to use the property) while the seller retains legal title (recorded title)as security for payment of the balance of the purchase price. LAND DESCRIPTION - A description of a particular piece of real property. LAND LEASEBACK- A creative financing device often used with raw land which a developer wants to improve, in which the developer sells the land to an investor who leases the land back to the developer under a long-term net lease and subordinates his fee ownership to the lender providing development financing. LAND, TENEMENTS AND HEREDITAMENTS- A feudal phrase used to describe all types of immovable realty including the land, buildings and all appurtenant rights thereto. LAND TRUST- An association organized by common owners of real property, which holds title to the real property in the name of one or more trustees for the benefit of the owners, whose beneficial interests may be represented by trust certificates. LANDLOCKED- Real property having no access to a public road or way. LANDLORD - The lessor or the owner of leased premises. The landlord retains a reversion interest in the property so that when the lease ends the property will revert to the landlord. LANDMARK- A stake, stream, cliff, monument or other object or feature which is used to fix or define land boundaries; also a prominent feature of a landscape or property that is the symbol for the place. LANDSCAPING- Shrubs, bushes, trees and the like, on the grounds surrounding a structure. LATERAL AND SUBJACENT SUPPORT - The support received by a parcel of real property from the land adjoining it is called lateral support. Subjacent support is that support which the surface of the earth receives from its underlying strata. LAW DAY- The date an obligation becomes due; sometimes refers to the closing date. LEASE- A lease is both a contract between lessor (landlord)and lessee (tenant) and a conveyance or demise of the premises by the lessor to the lessee. A lease is a contract in that item bodies the agreement between the parties. LEASEHOLD - A less-than-freehold estate which a tenant possesses in real property. LEGAL DESCRIPTION- A description which is complete enough that an independent surveyor could locate and identify a specific piece of real property. LEGAL NOTICE - That notice which is either implied or required by law. Constructive notice under the recording laws is also referred to as legal notice. LEGAL RATE OF INTEREST- The maximum interest rate permitted bylaw, with anything above that rate being usury. LESSEE - The person to whom property is rented or leased; called a "tenant" in most residential leases. LESSOR- The person who rents or leases property to another. In residential leasing, the lessor is often referred to as a landlord. LESS-THAN-FREEHOLD ESTATE- An estate held by one who rents or leases property. This classification includes an estate for years, periodic tenancy, estate at will, and estate at sufferance. LETTER OF CREDIT- An agreement or commitment by a bank("issuer") made at the request of a customer ("account party")that the bank will honor drafts or other demands of payment from third parties ("beneficiaries") upon compliance with the conditions specified in the letter of credit. LETTER OF INTENT- An expression of intent to invest, develop or purchase without creating any firm legal obligation to do so. LEVEL PAYMENT MORTGAGE- A mortgage which is scheduled to be repaid in equal periodic payments which include both principal and interest. LEVERAGE- The use of borrowed funds to purchase investment property with the anticipation that the property acquired will increase in return so that the investor will realize a profit not only on his own investment, but also on the borrowed funds; the employment of a smaller investment to generate a larger rate of return through borrowing. LICENSEE - A person who has a valid license. A real estate licensee can be a salesperson or a broker, active or inactive, an individual, a corporation, or a partnership. LIEN- A charge or claim which one person (lienor) has upon the property of another (lienee) as security for a debt or obligation. Liens can be created by agreement of the parties(mortgage) or by operation of law (tax liens). LIFE ESTATE- Any estate in real or personal property which is limited in duration to the life of its owner or the life of some other designated person. LIMITED COMMON ELEMENTS- That special class of common elements in a condominium reserved for the use of a certain apartment(s) to the exclusion of other apartments. LIMITED PARTNERSHIP- A partnership formed by two or more persons having as members one or more general partners and one or more limited partners. LINE OF CREDIT - A maximum amount of money a bank will lend one of its more reliable and credit worthy customers without need for any formal loan submission. LIQUIDATED DAMAGES- An amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive in the event the other party breaches a specified part of the contract. LIQUIDITY - The ability to sell an asset and convert it into cash at a price close to its true value. LIS PENDENS- A legal document recorded in the Bureau of Conveyances, which gives constructive notice that an action has been filed in either a state or federal court affecting a particular piece of property. "Lis Pendens" is a Latin term which means "action pending" and is in the nature of a quasi-lien. LISTING - A written employment agreement between a property owner and a broker authorizing the broker to find a buyer or a tenant for a certain real property. LITTORAL LAND- Land bordering on the shore of a sea or ocean and thus affected by the tide currents. LOAN COMMITMENT- A commitment by a lender of the amount he will loan to a qualified borrower on a particular piece of real estate for a specified amount of time under specific terms. LOAN-TO-VALUE RATIO- The ratio that the amount of the loan bears to the appraised value of the property or the sales price, whichever is lower. LOCUS SIGILLI- Latin for "under seal", used in the abbreviated form, "L.S.," at the end of signature line in some formal legal documents; used instead of the actual seal. LOSS PAYEE - The person designated on an insurance policy to be paid in case the insured property is damaged or destroyed. MAINTENANCE- The care and work put into a building to keep it in operation and productive use; the general repair and upkeep of a building. If maintenance is deferred, the building will suffer a loss in value. MALL- A landscaped public area set aside for pedestrian traffic. MARGINAL LAND- Land which is of little value because of some deficiency, such as poor access, lack of adequate rainfall, or steep terrain. MARKETABLE TITLE - Good or clear title reasonably free from risk of litigation over possible defects; also referred to as merchantable title. Marketable title need not, however, be perfect title. MARKET VALUE- The highest price, estimated in terms of money, which a property will bring if exposed for sale in the open market, allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which the property is adapted and for which it is capable of being used. MASTER PLAN - A comprehensive plan to guide the long-term physical development of a particular area. MEANDER LINE - An artificial line used by the surveyors to measure the natural, uneven, winding property line formed by rivers, streams and other watercourses bordering a property. MECHANIC'S LIEN- A statutory lien created in favor of materialmen and mechanics to secure payment for materials supplied and services rendered in the improvement, repair or maintenance of real property. METES AND BOUNDS- A common method of land description that identifies a property by specifying the shape and boundary dimensions of the parcel, using terminal points and angles. MILITARY CLAUSE- A clause inserted in some residential leases to allow the military tenant to terminate the lease in case of transfer, discharge or other circumstances making termination appropriate. MINERAL RIGHTS - Rights to subsurface land and profits. Normally, when real property is conveyed, the grantee receives all right and title to the land including everything above and below the surface, unless excepted by the grantor. MISREPRESENTATION- A false statement or concealment of a material fact made with the intent to induce some action by another party. MONEY - The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of his good faith intention to complete the transaction; called hand money or a binder in some states. MONTH-TO-MONTH TENANCY- A periodic tenancy where the tenant rents for one month at a time. In the absence of rental agreement (oral or written), a tenancy is deemed to be month-to-month, or in the case of boarders, week-to-week. MONUMENTS- Visible markers, both natural and artificial objects, which are used to establish the lines and boundaries of a survey. MORTGAGE - A legal document used to secure the performance of an obligation. In effect, the mortgage states that the lender can look to the property in the event the borrower defaults in payment of the note. MORTGAGE BANKER- A corporation or firm which normally provides its own funds for mortgage financing. MORTGAGE BROKER- A person or firm which acts as an intermediary between borrower and lender; one who, for compensation or gain, negotiates, sells or arranges loans and sometimes continues to service the loans. MORTGAGEE- The one who receives and holds a mortgage as security for a debt; the lender; a lender or creditor who holds a mortgage as security for payment of an obligation. MORTGAGOR- The one who gives a mortgage as security for a debt; the borrower; usually the landowner; the borrower or debtor who hypothecates or puts up his property as security for an obligation. MULTIPLE LISTING SERVICE (MLS) - An organization created by Realtors to facilitate the sharing of listings among member brokers.
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