Houses for Sale

Learning Series Real Estate Glossary

Real Estate can be a daunting and sometimes confusing world as a beginner. Even for advanced real estate agents and other real estate experts, keeping up with the terminology of the trade can be exhausting. We present a very detailed and extensive glossary below to help you navigate the world of realty.

This list is not exhaustive and may not be applicable in all jurisdictions. The definitions below are for educational use only and should not be used for legal purposes. Please consult with your local title company, real estate agent, or lender to see if these terms apply in your jurisdiction.

Abstract Of Title (in Real Estate)
The 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 (in Real Estate)
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.
Accession (in Real Estate)
Acquiring title to additions or improvements to real property as a result of the annexation of fixtures.
Accretion (in Real Estate)
The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea.
Accrued Item (in Real Estate)
On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.
Acknowledgment (in Real Estate)
A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document.
Actual Eviction (in Real Estate)
The legal process that results in the tenants being physically removed from the leased premises.
Actual Notice (in Real Estate)
Express information or fact; that which is known; direct knowledge.
Addendum (in Real Estate)
Any provision added to an existing contract without altering the content of the original; it must be signed by all parties.
Adjustable-Rate Mortgage (Arm) (in Real Estate)
A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index.
Adverse Possession (in Real Estate)
The actual, open, notorious, hostile, and continuous possession of another’s land under a claim of right. Possession for a statutory period may be a means of acquiring title.
Affidavit Of Title (in Real Estate)
A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the grantor (1) identifies himself and indicates marital status, (2) certifies that since the examination of the title on the date of the contract no defects have occurred in the title, and (3) certifies that he is in possession of the property (if applicable).
Affiliated Business Disclosure (in Real Estate)
A disclosure that a company or individual referring settlement services has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services and who then refers business to that provider or in some way influences the selection of that provider.
Agency (in Real Estate)
The relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions.
Agency Coupled With An Interest (in Real Estate)
An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).
Agent (in Real Estate)
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 principal, executes a listing agreement or management contract authorizing a licensed sponsoring broker to be his agent.
Air Lot (in Real Estate)
A designated airspace over a piece of land. An air lot, like surface property, may be transferred.
Air Rights (in Real Estate)
The right to use the open space above a property, usually allowing the surface to be used for another purpose.
Alienation (in Real Estate)
The act of transferring property to another. See also voluntary alienation and involuntary alienation.
Alienation Clause (in Real Estate)
The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the lender’s option if the property is sold by the borrower. In effect, this clause prevents the borrower from assigning the debt without the lender’s approval.
Allodial System (in Real Estate)
A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. Land is held under the allodial system in the United States.
Amendment (in Real Estate)
A change to an existing contract.
American Land Title Association (Alta) Policy (in Real Estate)
A title insurance policy that protects the interest in a collateral property of a mortgage lender who originates a new real estate loan.
Americans With Disabilities Act (Ada) (in Real Estate)
Legislation that prohibits discrimination against the physically or mentally impaired as it relates to employment opportunities and public accommodations.
Amortized Loan (in Real Estate)
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) (in Real Estate)
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.
Anticipation (in Real Estate)
The appraisal principle holding that value can increase or decrease based on the expectation of some future benefit or detriment produced by the property.
Antitrust Laws (in Real Estate)
Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing or allocation of customers or markets (real estate companies agreeing to limit their areas of trade or dealing to certain areas or properties).
Appraisal (in Real Estate)
An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.
Appraiser (in Real Estate)
An independent person trained to provide an unbiased opinion of value in an impartial and objective manner according to the appraisal process.
Appreciation (in Real Estate)
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.
Appropriation (in Real Estate)
The way a taxing body actually authorizes the expenditure of funds and provides for the sources of the funding.
Appurtenance (in Real Estate)
A right, privilege, or improvement belonging to, and passing with, the land.
Appurtenant Easement (in Real Estate)
An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land.
Asbestos (in Real Estate)
A mineral once used in insulation and other materials that can cause respiratory diseases.
Assemblage (in Real Estate)
The combining of two or more adjoining lots into one larger tract to increase their total value.
Assessment (in Real Estate)
The imposition of a tax, charge, or levy, usually according to established rates.
Assignment (in Real Estate)
The transfer in writing of interest in a bond, mortgage, lease, or other instrument.
Assumption Of Mortgage (in Real Estate)
Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments.
Attachment (in Real Estate)
The act of taking a person’s property into legal custody by writ or other judicial order to hold it available for application to that person’s debt to a creditor.
Attorney’S Opinion Of Title (in Real Estate)
An abstract of title that an attorney has examined and has certified to be, in his opinion, an accurate statement of the facts concerning the property ownership.
Automated Underwriting (in Real Estate)
Software that permits lenders to expedite the loan approval process and reduce lending costs.
Automatic Extension (in Real Estate)
A clause in a listing agreement stating that the agreement will continue automatically for a certain period of time after its expiration date. In many states, use of this clause is discouraged or prohibited.
Avulsion (in Real Estate)
The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.
Balance (in Real Estate)
The appraisal principle stating that the greatest value in a property will occur when the type and size of the improvements are proportional to each other as well as to the land.
Balloon Payment (in Real Estate)
A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.
Bargain And Sale Deed (in Real Estate)
A deed that carries with it no warranties against liens or other encumbrances but does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his discretion.
Base Line (in Real Estate)
The main imaginary line running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
Basis (in Real Estate)
The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner’s basis is the cost of the property plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.
Benchmark (in Real Estate)
A permanent reference mark or point established for use by surveyors in measuring differences in elevation.
Beneficiary (in Real Estate)
(1) The person for whom a trust operates or on whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction. Also called a legatee.
Bequest (in Real Estate)
A gift of personal property under a will. Also called a legacy.
Bilateral Contract (in Real Estate)
A contract by which all parties to the instrument are legally bound to act as prescribed.
Bill Of Sale (in Real Estate)
A legal document that transfers personal property.
Binder (in Real Estate)
An agreement that may accompany an earnest money deposit for the purchase of real property as evidence of the purchaser’s good faith and intent to complete the transaction.
Blanket Loan (in Real Estate)
A mortgage covering more than one parcel of real estate, providing for each parcel’s partial release from the mortgage lien on repayment of a definite portion of the debt.
Blind Ad (in Real Estate)
An advertisement whereby the sponsoring broker’s name is not identified in the advertisement.
Blockbusting (in Real Estate)
The illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of persons of a particular race or national origin into the neighborhood.
Boot (in Real Estate)
Money or property given to make up any difference in value or equity between two properties in an exchange.
Branch Office (in Real Estate)
A secondary place of business apart from the principal or main office from which real estate business is conducted. A branch office usually must be run by a licensed managing broker working on behalf of the sponsoring broker.
Branch Office License (in Real Estate)
In Illinois, a separate license that must be obtained for each branch office a sponsoring broker wishes to establish.
Breach Of Contract (in Real Estate)
Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.
Broker (in Real Estate)
One who acts as an intermediary on behalf of others for a fee or commission.
Brokerage (in Real Estate)
The bringing together of parties interested in making a real estate transaction.
Brokerage Agreement (in Real Estate)
A written or oral agreement between a sponsoring broker and a consumer for licensed activities to be provided to a consumer in return for compensation or the right to receive compensation from another. They may constitute either a bilateral or unilateral agreement between the sponsoring broker and the sponsoring broker’s client depending upon the content of the brokerage agreement. All exclusive brokerage agreements must be in writing.
Broker’S Price Opinion (Bpo) (in Real Estate)
A less-expensive alternative of valuating properties often used by lenders working with home equity lines, refinancing, portfolio management, loss mitigation, and collections. Many BPOs simply consist of a “drive by” that verifies the existence of the property, along with a listing of comparable sales.
Brownfield (in Real Estate)
Defunct, derelict, or abandoned commercial or industrial sites; many have toxic wastes.
Brownfields Legislation (in Real Estate)
Provides federal funding to states and localities to clean up brownfields sites.
Buffer Zone (in Real Estate)
A strip of land, usually used as a park or designated for a similar use, separating land dedicated to one use from land dedicated to another use (e.g., residential from commercial).
Building Code (in Real Estate)
An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.
Building Permit (in Real Estate)
Written governmental permission for the construction, alteration, or demolition of an improvement, showing compliance with building codes and zoning ordinances.
Bundle Of Legal Rights (in Real Estate)
The concept of land ownership that includes ownership of all legal rights to the land—for example, possession, control within the law, and enjoyment.
Buydown (in Real Estate)
A financing technique used to reduce the monthly payments for the first few years of a loan. Funds in the form of discount points are given to the lender by the builder or the seller to buy down or lower the effective interest rate paid by the buyer, thus reducing the monthly payments for a set time.
Buyer Agency Agreement (in Real Estate)
A principal-agent relationship in which the sponsoring broker is the agent for the buyer, with fiduciary responsibilities to the buyer.
Can-Spam Act Of 2003 (in Real Estate)
Establishes requirements for commercial email, spells out penalties for email senders, and gives consumers the right to have emailers stop sending emails to them.
Capital Gain (in Real Estate)
Profit earned from the sale of an asset.
Capitalization (in Real Estate)
A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as net income ÷ rate = value.
Capitalization Rate (in Real Estate)
The rate of return a property will produce on the owner’s investment.
Capping (in Real Estate)
The process of laying two to four feet of soil over the top of a landfill and then planting grass on it to enhance the landfill’s aesthetic value and prevent erosion.
Carbon Monoxide (Co) (in Real Estate)
A colorless, odorless gas that occurs due to incomplete combustion as a by-product of burning such fuels as wood, oil, and natural gas. Improperly ventilated CO can lead to death.
Cash Flow (in Real Estate)
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.
Cash Rent (in Real Estate)
In an agricultural lease, the amount of money given as rent to the landowner at the outset of the lease, as opposed to sharecropping.
Caveat Emptor (in Real Estate)
A Latin phrase meaning “let the buyer beware.”
Certificate Of Occupancy (in Real Estate)
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards. Also called an occupancy permit.
Certificate Of Reasonable Value (Crv) (in Real Estate)
A form indicating the appraised value of a property being financed with a VA loan.
Certificate Of Sale (in Real Estate)
The document generally given to the purchaser of delinquent property taxes at a tax foreclosure sale.
Certificate Of Title (in Real Estate)
A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
Chain Of Title (in Real Estate)
The succession of conveyances, from some accepted starting point, whereby the present holder of real property derives title.
Change (in Real Estate)
The appraisal principle that holds that no physical or economic condition remains constant.
Chattel (in Real Estate)
Items of personal property, including such tangibles as chairs, tables, clothing, money, bonds, and bank accounts. Chattels include trade fixtures.
Client (in Real Estate)
A person who is being represented by a licensee; the principal.
Closing (in Real Estate)
The point at which ownership of a property is transferred in exchange for the selling price.
Closing Statement (in Real Estate)
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction.
Cloud On Title (in Real Estate)
Any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
Co-Ownership (in Real Estate)
Ownership held by two or more persons.
Code Of Ethics (in Real Estate)
A written system of standards for ethical conduct.
Codicil (in Real Estate)
A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will.
Coinsurance Clause (in Real Estate)
A clause in insurance policies covering real property requiring that the policyholder maintain fire insurance coverage generally equal to at least 80% of the property’s actual replacement cost.
Collateral (in Real Estate)
Something having value that is given to secure repayment of a debt.
Commingling (in Real Estate)
The illegal act by a real estate licensee of mingling client or customer funds with the licensee’s personal funds.
Commission (in Real Estate)
Payment to a licensee for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Common Elements (in Real Estate)
Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
Common Law (in Real Estate)
The body of law based on custom, usage, and court decisions.
Common Law Of Agency (in Real Estate)
The traditional law governing the principal-agent relationship, superseded by statute in Illinois.
Community Association Manager Licensing And Disciplinary Act (in Real Estate)
Legislation created to provide for the regulation of managers of community association management and provide for high standards of professional conduct by those licensed. Anyone acting under this license cannot perform any activities for which a real estate managing broker’s license is required under the Real Estate License Act of 2000.
Community Property (in Real Estate)
A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage.
Community Reinvestment Act (Cra) (in Real Estate)
Under the act, financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.
Comparable (in Real Estate)
A property used in an appraisal report that is substantially equivalent to the subject property.
Comparative Market Analysis (Cma) (in Real Estate)
A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style, and amenities.
Compensation (in Real Estate)
The valuable consideration given by one person or entity to another person or entity in exchange for the performance of some activity or service.
Competition (in Real Estate)
The appraisal principle stating that excess profits generate competition.
Comprehensive Environmental Response, Compensation, And Liability Act (Cercla) (in Real Estate)
A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to clean up toxic sites, bringing legal action against responsible parties, and funding the abatement of toxic sites. Also known as Superfund.
Comprehensive Plan (in Real Estate)
A detailed plan to guide the long-term physical development of a particular area.
Condemnation (in Real Estate)
A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.
Conditional-Use Permit (in Real Estate)
Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area.
Condominium (in Real Estate)
The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.
Confession Of Judgment Clause (in Real Estate)
Permits judgment to be entered against a debtor without the creditor’s having to institute legal proceedings.
Confidential Information (in Real Estate)
Information given by a client to a licensee during the term of a brokerage agreement that the client requests (in writing or verbally) the licensee keep in confidence; relates to the client’s negotiating position; or could do damage to the client’s negotiating position if disclosed.
Conformity (in Real Estate)
The appraisal principle holding that the greater the similarity among properties in an area, the better they will hold their value.
Consideration (in Real Estate)
(1) That received by the grantor in exchange for his deed. (2) Something of value that induces a person to enter into a contract.
Construction Loan (in Real Estate)
A short-term loan usually made during the construction phase of a building project.
Constructive Eviction (in Real Estate)
Actions of a landlord that so materially disturb or impair a tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.
Constructive Notice (in Real Estate)
Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.
Consumer (in Real Estate)
A person or entity for whom an agent provides services, which are only to be provided by a licensee, or a person or entity who seeks such services from a licensee.
Contemporaneous Offers (in Real Estate)
When a buyer’s agent is acting as designated agent for more than one prospective buyer who the designated agent has reason to believe is making or preparing to make contemporaneous offers to purchase the property located at a specific address, the buyers have the option of being referred to another designated agent who will serve as the agent of the buyer.
Contingency (in Real Estate)
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
Contract (in Real Estate)
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. See also unilateral contract and bilateral contract.
Contribution (in Real Estate)
The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
Controlled Business Arrangement (Cba) (in Real Estate)
A system under which, to streamline the settlement process, a real estate firm, title insurance company, mortgage broker, home inspection company, or even a moving company may agree to offer a package of services to consumers.
Conventional Loan (in Real Estate)
A loan that requires no government insurance or guarantee.
Conversion (in Real Estate)
The wrongful appropriation of property belonging to another; also, the process of changing a property’s status from rental to condominium.
Conveyance (in Real Estate)
Any document that transfers title to real property. The term is also used in describing the act of transferring.
Cooperative (in Real Estate)
A residential multiunit building whose title is held by a trust or a corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease.
Cooperative Commission (in Real Estate)
In Illinois, an arrangement whereby both the buyer’s and the seller’s real estate agents are paid by the seller.
Corporation (in Real Estate)
An entity created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.
Correction Line (in Real Estate)
Provisions in the rectangular survey (government survey) system made to compensate for the curvature of the earth’s surface. Every fourth township line (at 24-mile intervals) is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a full six miles.
Cost Approach (in Real Estate)
The process of estimating the value of a property by adding to the estimated land value the appraiser’s estimate of the reproduction or replacement cost of the building, less depreciation.
Counteroffer (in Real Estate)
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.
Covenant (in Real Estate)
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts regarding property; usually found in such real estate documents as deeds, mortgages, leases, and contracts for deed.
Covenant Of Quiet Enjoyment (in Real Estate)
The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant’s possession or use of the property.
Covenants, Conditions, And Restrictions (Cc&Rs) (in Real Estate)
Private rules set up by the developer that set standards for all the parcels within a defined subdivision.
Credit (in Real Estate)
On a closing statement, an amount entered in a person’s favor—either an amount the party has paid or an amount for which the party must be reimbursed.
Curtesy (in Real Estate)
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.
Customer (in Real Estate)
The third party or non-represented consumer for who some level of service is provided.
Datum (in Real Estate)
A horizontal plane from which heights and depths are measured.
Debit (in Real Estate)
On a closing statement, an amount charged; that is, an amount that the debited party must pay.
Decedent (in Real Estate)
A person who has died.
Dedication (in Real Estate)
The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.
Deed (in Real Estate)
A written instrument that, when executed and delivered, conveys title to or an interest in real estate.
Deed In Lieu Of Foreclosure (in Real Estate)
A deed given by the mortgagor to the mortgagee when the mortgagor is in default under the terms of the mortgage. This is a way for the mortgagor to avoid foreclosure.
Deed In Trust (in Real Estate)
An instrument that grants a trustee under a land trust full power to sell, mortgage, and subdivide a parcel of real estate. The beneficiary controls the trustee’s use of these powers under the provisions of the trust agreement.
Deed Of Trust (in Real Estate)
An instrument used to create a mortgage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender). Also called a trust deed.
Deed Restrictions (in Real Estate)
Clauses in a deed limiting the future uses of the property.
Default (in Real Estate)
The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.
Defeasance Clause (in Real Estate)
A clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage on repayment of the mortgage loan.
Deficiency Judgment (in Real Estate)
A personal judgment levied against the borrower when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.
Density Zoning (in Real Estate)
Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision.
Department Of Housing And Urban Development (Hud) (in Real Estate)
Government agency that administers the Fair Housing Act, governs RESPA, and provides standardized forms such as the Settlement Statement (HUD-1), and the Good Faith Estimate (GFE).
Depreciation (in Real Estate)
(1) In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence, and external obsolescence. (2) In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property.
Descent (in Real Estate)
Acquisition of an estate by inheritance in which an heir succeeds to the property by operation of law.
Designated Agency (in Real Estate)
In Illinois, designated agency allows the sponsoring broker to appoint or designate one agent for the buyer and one agent for the seller, even within the same firm, without legally being construed as a dual agent.
Designated Agent (in Real Estate)
A licensee authorized by a sponsoring broker to act as the agent for a specific principal in a particular transaction.
Developer (in Real Estate)
One who attempts to put land to its most profitable use through the construction of improvements.
Devise (in Real Estate)
A gift of real property by will. The donor is the devisor, and the recipient is the devisee.
Discount Point (in Real Estate)
A unit of measurement used for various loan charges; one point equals 1% of the amount of the loan.
Discount Rate (in Real Estate)
The interest rate set by the Federal Reserve that member banks are charged when they borrow money through the Fed.
Division Of Real Estate (in Real Estate)
A division of IDFPR responsible for safeguarding the public by enforcing professional licensure.
Doctrine Of Prior Appropriation (in Real Estate)
The right to use any water, with the exception of limited domestic use, is controlled by the state rather than by the landowner adjacent to the water.
Dominant Tenement (in Real Estate)
A property that includes in its ownership the appurtenant right to use an easement over another person’s property for a specific purpose.
Dower (in Real Estate)
The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband’s lifetime, the right is only a possibility of an interest; on his death, it can become an interest in land.
Dual Agency (in Real Estate)
Representing both parties to a transaction. In Illinois, this is illegal unless both parties agree to it in writing.
Due-On-Sale Clause (in Real Estate)
A provision in the mortgage stating that the entire balance of the note is immediately due and payable if the mortgagor transfers (sells) the property.
Duress (in Real Estate)
Unlawful constraint or action exercised on a person whereby the person is forced to perform an act against his will. A contract entered into under duress is voidable.
Earnest Money (in Real Estate)
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
Easement (in Real Estate)
A right to use the land of another for a specific purpose, such as for a right-of-way or utilities.
Easement By Condemnation (in Real Estate)
An easement created by the government or government agency that has exercised its right under eminent domain.
Easement By Necessity (in Real Estate)
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor’s land.
Easement By Prescription (in Real Estate)
An easement acquired by continuous, open, and hostile use of the property for the period of time prescribed by state law.
Easement In Gross (in Real Estate)
An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example, a right granted by Eleanor Franks to Joe Fish to use a portion of her property for the rest of his life would be an easement in gross.
Economic Life (in Real Estate)
The number of years during which an improvement will add value to the land.
Emblements (in Real Estate)
Growing crops, such as corn, that are produced annually through labor and industry. Also called fructus industriales.
Eminent Domain (in Real Estate)
The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and determines the compensation to be paid to the owner.
Employee (in Real Estate)
Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees.
Employment Contract (in Real Estate)
A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business, this generally takes the form of a listing agreement or management agreement.
Enabling Acts (in Real Estate)
State legislation that confers zoning powers on municipal governments.
Encapsulation (in Real Estate)
A method of controlling environmental contamination by sealing off a dangerous substance.
Encroachment (in Real Estate)
A building or some portion of it (for example, a wall or fence) that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
Encumbrance (in Real Estate)
Anything (for example, a mortgage, tax, or judgment lien; an easement; a restriction on the use of the land) that may diminish the value or use and enjoyment of a property.
Equal Credit Opportunity Act (Ecoa) (in Real Estate)
The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status.
Equalization Factor (in Real Estate)
A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax is based on this adjusted value.
Equitable Lien (in Real Estate)
A lien that arises out of common law.
Equitable Right Of Redemption (in Real Estate)
The right of a defaulted property owner to recover the property before its sale by paying the appropriate fees and charges.
Equitable Title (in Real Estate)
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another’s name.
Equity (in Real Estate)
The interest or value that an owner has in property over and above any indebtedness.
Equity In Eminent Domain Act (in Real Estate)
Legislation that provides protections for private property owners when government seeks to acquire land for economic development projects.
Erosion (in Real Estate)
The gradual wearing away of land by water, wind, and general weather conditions; the diminishing of property by the elements.
Errors And Omissions (E&O) Insurance (in Real Estate)
Business liability insurance that helps protect real estate professionals, individuals, or companies from bearing the full cost of the defense for lawsuits relating to an error or omission in providing covered professional services.
Escheat (in Real Estate)
The reversion of property to the state or county in cases where a decedent dies intestate without heirs capable of inheriting, or when the property is abandoned.
Escrow (in Real Estate)
The closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered on the performance of certain conditions outlined in the escrow instructions.
Escrow Account (in Real Estate)
The trust account established by a sponsoring broker under the provisions of the license law for the purpose of holding funds on behalf of the sponsoring broker’s principal or some other person until the consummation or termination of a transaction. Also called a trust account.
Estate At Sufferance (in Real Estate)
The tenancy of a lessee who lawfully comes into possession of a landlord’s real estate but who continues to occupy the premises improperly after his lease rights have expired. Also called a tenancy at sufferance.
Estate At Will (in Real Estate)
An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite. Also called a tenancy at will.
Estate For Years (in Real Estate)
An interest for a certain, exact period in property leased for a specified consideration. Also called a tenancy for years.
Estate From Period To Period (in Real Estate)
An interest in leased property that continues from period to period—week to week, month to month, or year to year. Also called a tenancy from period to period.
Estate In Land (in Real Estate)
The degree, quantity, nature, and extent of interest a person has in real property.
Estate Taxes (in Real Estate)
Federal taxes on a decedent’s real and personal property.
Estoppel (in Real Estate)
Method of creating an agency relationship in which someone states incorrectly that another person is his agent, and a third person relies on that representation.
Estoppel Certificate (in Real Estate)
A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.
Ethics (in Real Estate)
The systems of moral principles and rules that become standards for professional conduct.
Eviction (in Real Estate)
A legal process to oust a person from possession of real estate.
Evidence Of Title (in Real Estate)
Proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer’s opinion, title insurance, or a Torrens registration certificate.
Exclusive Right-To-Sell Listing (in Real Estate)
A listing contract under which the owner appoints a designated broker as his exclusive agent for a designated period to sell the property on the owner’s stated terms. The owner agrees to pay the designated broker a commission when the property is sold, whether by the designated broker, the owner, or another broker.
Exclusive-Agency Listing (in Real Estate)
A listing contract under which the owner appoints a broker as his exclusive agent for a designated period of time to sell the property on the owner’s stated terms for a commission. The owner reserves the right to sell without paying anyone a commission if he sells to a prospect who has not been introduced or claimed by the sponsoring broker.
Executed Contract (in Real Estate)
A contract in which all parties have fulfilled their promises and thus performed the contract.
Execution (in Real Estate)
(1) The signing and delivery of an instrument. (2) A legal order directing an official to enforce a judgment against the property of a debtor.
Executory Contract (in Real Estate)
A contract under which something remains to be done by one or more of the parties.
Express Agency (in Real Estate)
An agency relationship based on a formal agreement between the parties.
Express Agreement (in Real Estate)
An oral or written contract in which the parties state the contract’s terms and express their intentions in words. Also called an express contract.
External Obsolescence (in Real Estate)
Reduction in a property’s value caused by outside factors (those that are off the property).
Fair Housing Act (in Real Estate)
The federal law that prohibits discrimination in housing based on race, color, religion, sex, handicap, familial status, and national origin.
Fannie Mae (in Real Estate)
A quasi-government agency established to purchase any kind of mortgage loans in the secondary mortgage market from the primary lenders.
Federal Deposit Insurance Corporation (Fdic) (in Real Estate)
An independent federal agency that insures the deposits in commercial banks.
Federal Reserve System (The Fed) (in Real Estate)
The country’s central banking system, which controls the nation’s monetary policy by regulating the supply of money and interest rates.
Fee Simple Absolute (in Real Estate)
The maximum possible estate or right of ownership of real property, continuing forever.
Fee Simple Defeasible (in Real Estate)
An estate in which the holder has a fee simple title that may be divested on the occurrence or nonoccurrence of a specified event. There are two categories of defeasible fee estates: fee simple on condition precedent (also called fee simple determinable) and fee simple on condition subsequent.
Fha Loan (in Real Estate)
A loan insured by the Federal Housing Administration and made by an approved lender in accordance with the FHA’s regulations
Fiduciary (in Real Estate)
One in whom trust and confidence is placed, such as a broker employed under the terms of a listing contract or buyer agency agreement.
Fiduciary Duties (in Real Estate)
Certain duties owed by a real estate licensee to a principal, including the duties of care, obedience, loyalty, disclosure, accounting, and confidentiality.
Fiduciary Standard (in Real Estate)
A legal standard that holds a licensee to the highest ethical standards that the law provides.
Financial Institutions Reform, Recovery, And Enforcement Act Of 1989 (Firrea) (in Real Estate)
Enacted in response to the savings and loan crisis of the 1980s, this act restructured the savings and loan association regulatory system.
Fiscal Policy (in Real Estate)
The government’s policy in regard to taxation and spending programs. The balance between these two areas determines the amount of money the government will withdraw from or feed into the economy, which can counter economic peaks and slumps.
Fixture (in Real Estate)
An item of personal property that has been converted to real property by being permanently affixed to the real property.
Foreclosure (in Real Estate)
The 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 note or default of other terms in the mortgage document. The foreclosure procedure brings the rights of all parties to a conclusion and passes the title in the mortgaged property to either the holder of the mortgage or a third party, who may purchase the realty at the foreclosure sale, free of all encumbrances affecting the property subsequent to the mortgage.
Formaldehyde (in Real Estate)
A colorless chemical with a strong, pronounced odor. It is classified as a possible human carcinogen.
Fractional Section (in Real Estate)
A parcel of land less than 160 acres, usually found at the edge of a rectangular survey.
Fraud (in Real Estate)
Deception intended to cause a person to give up property or a lawful right.
Freddie Mac (in Real Estate)
A corporation established to purchase primarily conventional mortgage loans in the secondary mortgage market.
Freehold Estate (in Real Estate)
An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.
Frontage (in Real Estate)
The length of a property along a street or waterfront.
Functional Obsolescence (in Real Estate)
A loss of value to an improvement to real estate arising from functional problems, often caused by age or poor design.
Future Interest (in Real Estate)
A person’s present right to an interest in real property that will not result in possession or enjoyment until sometime in the future, such as a reversion or right of reentry.
Gap (in Real Estate)
A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.
General Agency (in Real Estate)
The relationship of a broker, managing broker, or leasing agent with a sponsoring broker.
General Agent (in Real Estate)
One who is authorized by a principal to represent the principal in a specific range of matters.
General Lien (in Real Estate)
The right of a creditor to have all of a debtor’s property (both real and personal) sold to satisfy a debt.
General Partnership (in Real Estate)
A typical form of joint venture in which each general partner shares in the administration, profits, and losses of the operation.
General Real Estate Tax (in Real Estate)
A tax levied according to value, generally used to refer to real estate tax. Also called an ad valorem tax.
General Warranty Deed (in Real Estate)
A deed in which the grantor fully warrants good clear title to the premises. Used in most real estate deed transfers, a general warranty deed offers the greatest protection of any deed.
Ginnie Mae (in Real Estate)
A government agency that plays an important role in the secondary mortgage market. It sells mortgage-backed securities that are backed by pools of FHA and VA loans.
Good Faith Estimate (Gfe) (in Real Estate)
A document that indicates what a buyer’s estimated closing costs will be before closing. Once the GFE is issued, lenders are committed and may only modify the GFE in certain instances. If information or circumstances change after the original GFE is issued, a new GFE must be issued.
Government Check (in Real Estate)
The 24-mile-square parcels composed of 16 townships in the rectangular survey system of legal description.
Government Lot (in Real Estate)
Fractional sections in the rectangular survey system that are less than one quarter-section in area.
Grantee (in Real Estate)
A person who receives a conveyance of real property from a grantor.
Granting Clause (in Real Estate)
Words in a deed of conveyance that state the grantor’s intention to convey the property at the present time. This clause is generally worded as “convey and warrant”; “grant”; “grant, bargain, and sell”; or the like.
Grantor (in Real Estate)
The person transferring title to or an interest in real property to a grantee.
Gratuitous Agency (in Real Estate)
An agency that exists even if no fee is involved.
Gross Income Multiplier (Gim) (in Real Estate)
A figure used as a multiplier of the gross annual income of a property to produce an estimate of the property’s value.
Gross Lease (in Real Estate)
A lease of property according to which a landlord pays all property charges regularly incurred through ownership, such as repairs, taxes, insurance, and operating expenses. Most residential leases are gross leases.
Gross Rent Multiplier (Grm) (in Real Estate)
The figure used as a multiplier of the gross monthly income of a property to produce an estimate of the property’s value.
Ground Lease (in Real Estate)
A lease of land only, on which the tenant usually owns a building or is required to build as specified in the lease. Such leases are usually long-term net leases; the tenant’s rights and obligations continue until the lease expires or is terminated through default.
Groundwater (in Real Estate)
The water that exists under the earth’s surface within the tiny spaces or crevices in geological formations.
Group Boycotting (in Real Estate)
Two or more businesses conspiring against another business, or agreeing to withhold their patronage, in order to reduce competition.
Growing-Equity Mortgage (Gem) (in Real Estate)
A loan in which the monthly payments increase annually, with the increased amount being used to directly reduce the principal balance outstanding and thus shorten the overall term of the loan.
Guaranteed Sales Plan (in Real Estate)
Any real estate purchase or sales plan in which a sponsoring broker enters into an unconditional written contract with a seller, promising to purchase the seller’s property for a specified price if the property has not sold within an agreed period of time on terms acceptable to seller.
Heir (in Real Estate)
One who might inherit or succeed to an interest in land under the state law of descent when the owner dies without leaving a valid will.
Highest And Best Use Of A Property (in Real Estate)
The possible use of a property that would produce the greatest net income and thereby develop the highest value.
Holdover Tenancy (in Real Estate)
A tenancy whereby a lessee retains possession of leased property after the lease has expired and the landlord, by continuing to accept rent, agrees to the tenant’s continued occupancy as defined by state law.
Holographic Will (in Real Estate)
A will that is written, dated, and signed in the testator’s handwriting.
Home Equity Loan (in Real Estate)
A loan under which a property owner uses his residence as collateral and can then draw funds up to a prearranged amount against the property. Also called a line of credit.
Home Mortgage Disclosure Act (in Real Estate)
Requires that all institutional mortgage lenders with assets in excess of $36 million and with one or more offices in a given geographic area make annual reports.
Homeowners Insurance Policy (in Real Estate)
A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks.
Homestead (in Real Estate)
Land that is owned and occupied as the family home. In many states, a portion of the area or value of this land is protected or exempt from judgments for debts.
Hypothecation (in Real Estate)
To pledge property as security for an obligation or loan without giving up possession of it.
Illinois Department Of Financial And Professional Regulation (Idfpr) (in Real Estate)
The entity responsible for administering and enforcing the Illinois Real Estate License Act of 2000.
Illinois Human Rights Act (in Real Estate)
Legislation that prohibits discrimination on the basis of race, color, religion, sex, national origin, ancestry, familial status, physical or mental disability, age, marital status, unfavorable military discharge, sexual orientation, and order of protection status.
Illinois Radon Awareness Act (in Real Estate)
Legislation that requires a seller to provide to a buyer, before the buyer is obligated under any contract to purchase residential real property, a disclosure of information on radon hazards and the pamphlet Radon Testing Guidelines for Real Estate Transactions stating that the property may present the potential for exposure to radon.
Implied Agency (in Real Estate)
Agency, intentional or otherwise, created by action or deed.
Implied Contract (in Real Estate)
A contract under which the agreement of the parties is demonstrated by their acts and conduct.
Implied Warranty Of Habitability (in Real Estate)
A theory in landlord/tenant law in which the landlord renting residential property implies that the property is habitable and fit for its intended use.
Improvement (in Real Estate)
(1) Any structure, usually privately owned, erected on a site to enhance the value of the property—for example, building a fence or a driveway. (2) A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street, or sewer.
Income Approach (in Real Estate)
The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.
Independent Contractor (in Real Estate)
Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses, Social Security, and income taxes, and receives no employee benefits. Most real estate brokers are independent contractors.
Index Method (in Real Estate)
The appraisal method of estimating building costs by multiplying the original cost of the property by a percentage factor to adjust for current construction costs.
Inflation (in Real Estate)
The gradual reduction of the purchasing power of the dollar, usually related directly to the increases in the money supply by the federal government.
Informed Written Consent (in Real Estate)
Consent given by a client that allows a licensee to act as a dual agent.
Inheritance Taxes (in Real Estate)
State-imposed taxes on a decedent’s real and personal property.
Innocent Landowner Immunity (in Real Estate)
A clause of the Superfund Amendments and Reauthorization Act that establishes the criteria by which to judge whether a person or business could be exempted from environmental liability.
Interest (in Real Estate)
A charge made by a lender for the use of money.
Intermediate Mortgage Theory (in Real Estate)
Theory based on the principles of title theory states but still requiring the mortgagee to formally foreclose to obtain legal title.
Interstate Land Sales Full Disclosure Act Of 1968 (in Real Estate)
Federal law that regulates the sale of certain real estate in interstate commerce.
Intestate (in Real Estate)
The condition of a property owner who dies without leaving a valid will. Title to the property will pass to the decedent’s heirs as provided in the state law of descent.
Inverse Condemnation (in Real Estate)
An action brought by a property owner seeking just compensation for land taken for public use when the taker of the property does not intend to bring eminent domain proceedings. Property is condemned because its use and value have been diminished due to an adjacent property’s public use.
Investment (in Real Estate)
Money directed toward the purchase, improvement, and development of an asset in expectation of income or profits.
Involuntary Alienation (in Real Estate)
The act of transferring property to another through eminent domain or adverse possession.
Involuntary Lien (in Real Estate)
A lien placed on property without the consent of the property owner.
Joint Tenancy (in Real Estate)
Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. Upon the death of a joint tenant, the decedent’s interest passes to the surviving joint tenant or tenants by the right of survivorship.
Joint Venture (in Real Estate)
The joining of two or more people to conduct a specific business enterprise. A joint venture is similar to a partnership in that it must be created by agreement between the parties to share in the losses and profits of the venture. It is unlike a partnership in that the venture is for one specific project only rather than for a continuing business relationship.
Judgment (in Real Estate)
The formal decision of a court on the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.
Judicial Foreclosure (in Real Estate)
Type of foreclosure that allows the property to be sold by court order after the lender has given sufficient public notice to the defaulting borrower.
Junior Lien (in Real Estate)
An obligation, such as a second mortgage, that is subordinate in right or lien priority to an existing lien on the same realty.
Junk Fax Prevention Act Of 2005 (in Real Estate)
A federal law under which unsolicited fax advertisements and solicitations may only be sent to persons with whom the sender has an established business relationship.
Laches (in Real Estate)
An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.
Land (in Real Estate)
The earth’s surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.
Land Contract (in Real Estate)
A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until all payments are received in full. Also called a contract for deed or an articles of agreement for warranty deed.
Land Sales Registration Act Of 1999 (in Real Estate)
Regulates the offering, sale, lease, or assignment of any improved or unimproved land divided into 25 or more lots and offered as a part of a common promotional plan.
Landfill (in Real Estate)
An enormous hole, either excavated for the purpose of waste disposal or left over from surface mining operations.
Latent Defect (in Real Estate)
A hidden structural defect that could not be discovered by ordinary inspection and that threatens the property’s soundness or the safety of its inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects.
Law Of Diminishing Returns (in Real Estate)
Law that applies when at the point where additional improvements do not increase income or value.
Law Of Increasing Returns (in Real Estate)
Law that applies as long as money being spent on improvements produces an increase in income or value.
Lead (in Real Estate)
Used as a pigment and drying agent in alkyd oil-based paint in about 75% of housing built before 1978. An elevated level of lead in the body can cause serious damage to the brain, kidneys, nervous system, and red blood cells. Children under the age of six are most vulnerable.
Lead-Based Paint Hazard Reduction Act (in Real Estate)
Persons selling or leasing residential housing constructed before 1978 must disclose the presence of known lead-based paint and provide purchasers or tenants with any relevant records or reports.
Lease (in Real Estate)
A written or oral contract between a landlord (the lessor) and a tenant (the lessee) that transfers the right to exclusive possession and use of the landlord’s real property to the lessee for a specified period of time and for a stated consideration (rent). By state law, leases for longer than a certain period of time (generally one year) must be in writing to be enforceable.
Lease Purchase (in Real Estate)
The purchase of real property, the consummation of which is preceded by a lease, usually long term. Typically done for tax or financing purposes.
Leasehold Estate (in Real Estate)
A tenant’s right to occupy real estate during the term of a lease, generally considered to be a personal property interest.
Leasing Agent (in Real Estate)
In Illinois, individuals holding a limited license who wish to engage only in activities related to leasing residential property.
Legal Description (in Real Estate)
A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.
Legally Competent Parties (in Real Estate)
People who are recognized by law as being able to contract with others; those of legal age and sound mind.
Levy (in Real Estate)
To assess; to seize or collect. To levy a tax is to assess a property and set the rate of taxation. To levy an execution is to officially seize the property of a person to satisfy an obligation.
Liability Coverage (in Real Estate)
Insurance that covers injuries or losses sustained within the home.
License (in Real Estate)
(1) A privilege or right granted to a person by a state to operate as a real estate broker, managing broker, or leasing agent. (2) The revocable permission for a temporary use of land—a personal right that cannot be sold.
Lien (in Real Estate)
A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.
Lien Theory (in Real Estate)
Some states interpret a mortgage as being purely a lien on real property. The mortgagee thus has no right of possession but must foreclose the lien and sell the property if the mortgagor defaults.
Lien Waiver (in Real Estate)
Collected by the landowner from each contractor and subcontractor to create a continuing record that all lien claimants have released their lien rights.
Life Estate (in Real Estate)
An interest in real or personal property that is limited in duration to the lifetime of its owner or some other designated person or persons.
Life Tenant (in Real Estate)
A person in possession of a life estate.
Limited Liability Company (Llc) (in Real Estate)
A business structure that combines the most attractive features of limited partnerships and corporations. The members of an LLC enjoy the limited liability offered by a corporate form of ownership and the tax advantages of a partnership.
Limited Partnership (in Real Estate)
A business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners who are, by law responsible for losses only to the extent of their investments.
Liquidated Damages (in Real Estate)
An amount predetermined by the parties to a contract as the total compensation to an injured party should the other party breach the contract.
Lis Pendens (in Real Estate)
A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.
Listing Agreement (in Real Estate)
A contract between an owner (as principal) and a real estate sponsoring broker (as agent) by which the sponsoring broker is employed as agent to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission.
Listing Broker (in Real Estate)
The sponsoring broker in a multiple listing situation from whose office a listing agreement is initiated, as opposed to the cooperating sponsoring broker, from whose office negotiations leading up to a sale are initiated. The listing sponsoring broker and the cooperating sponsoring broker may be the same person.
Littoral Rights (in Real Estate)
(1) A landowner’s claim to use water in large navigable lakes and oceans adjacent to her property. (2) The ownership rights to land bordering these bodies of water up to the high-water mark.
Loan Origination Fee (in Real Estate)
A fee charged to the borrower by the lender for making a mortgage loan. The fee is usually computed as a percentage of the loan amount.
Loan-To-Value (Ltv) Ratio (in Real Estate)
The relationship between the amount of the mortgage loan and the value of the real estate being pledged as collateral.
Lot-And-Block System (in Real Estate)
A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat. Also called the recorded plat system.
Management Agreement (in Real Estate)
A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager’s authority.
Management Plan (in Real Estate)
A highly detailed plan that lays out the owner’s objectives with the property, as well as what the property manager wants to accomplish and how, including all budgetary information.
Managing Broker (in Real Estate)
A broker who has supervisory responsibilities for licensees in one or, in the case of a multi-office company, more than one office and who has been appointed as such by the sponsoring broker.
Manufactured Housing (in Real Estate)
Dwellings that are built offsite and trucked to a building lot where they are installed or assembled.
Marital Property (in Real Estate)
All property acquired after the date of marriage for the duration of the marriage.
Market (in Real Estate)
A place where goods can be bought and sold and a price established.
Market Price (in Real Estate)
The price a property actually sells for. Also called sales price.
Market Value (in Real Estate)
The most probable price that property would bring in an arm’s-length transaction under normal conditions on the open market.
Marketable Title (in Real Estate)
Good or clear title, reasonably free from the risk of litigation over possible defects.
Material Fact (in Real Estate)
Any fact that, if known, might reasonably be expected to affect the course of events.
Mechanic’S Lien (in Real Estate)
A statutory lien created in favor of contractors, laborers, and materialmen who have performed work or furnished materials in the erection or repair of a building and were not paid for such labor in full or at all.
Meridian (in Real Estate)
One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular survey system of property description.
Metes-And-Bounds Method (in Real Estate)
A legal description of a parcel of land that begins at a well- marked point and follows the boundaries, using directions and distances around the tract, back to the point of beginning.
Minimum Services (in Real Estate)
A provision of the Real Estate License Act of 2000 that requires licensees to perform a minimum level of service to clients.
Ministerial Acts (in Real Estate)
In Illinois, acts that a licensee may perform for a consumer that are informative and do not constitute active representation.
Minor (in Real Estate)
Someone who has not reached the age of majority and therefore does not have legal capacity to transfer title to real property.
Mold (in Real Estate)
Fungi that grows in the form of multicellular filaments called hyphae. Some mold can cause disease, and others play a role in biodegradation or in the production of antibiotics and enzymes.
Monetary Policy (in Real Estate)
Governmental regulation of the amount of money in circulation through such institutions as the Federal Reserve Board.
Month-To-Month Tenancy (in Real Estate)
A periodic tenancy under which the tenant rents for one month at a time. In the absence of a rental agreement (oral or written), a tenancy is generally considered to be month to month.
Monument (in Real Estate)
A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.
Mortgage (in Real Estate)
(1) A conditional transfer or pledge of real estate as security for the payment of a debt. (2) The document creating a mortgage lien.
Mortgage Banker (in Real Estate)
Mortgage loan companies that originate, service, and sell loans to investors.
Mortgage Broker (in Real Estate)
An agent of a lender who brings the lender and borrower together. The broker receives a fee for this service.
Mortgage Disclosure Improvement Act (Mdia) (in Real Estate)
Legislation that creates a timeline for the lender to provide the GFE and the TIL disclosure. The intent is to prevent consumers from receiving an enticing low rate at the initial loan application and then learning at settlement that the lender is charging more in fees.
Mortgage Insurance Premium (Mip) (in Real Estate)
An up-front premium charged at closing for all FHA loans.
Mortgage Lien (in Real Estate)
A lien or charge on the property of a mortgagor that secures the underlying debt obligations.
Mortgage Loan Originator (Mlo) (in Real Estate)
Anyone who, for compensation or expectation of compensation, takes a residential mortgage loan by phone or in person.
Mortgagee (in Real Estate)
A lender in a mortgage loan transaction.
Mortgagor (in Real Estate)
A borrower in a mortgage loan transaction.
Multiperil Policy (in Real Estate)
Insurance policies that offer protection from a range of potential perils, such as those of a fire, hazard, public liability, and casualty.
Multiple Listing Clause (in Real Estate)
A provision in an exclusive listing for the authority and obligation on the part of the listing broker to distribute the listing to other brokers in the multiple listing organization.
Multiple Listing Service (Mls) (in Real Estate)
A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most MLSs accept exclusive-right-to-sell or exclusive-agency listings from their member brokers.
Mutual Assent (in Real Estate)
A meeting of the minds between parties.
National Do Not Call Registry (in Real Estate)
A registry managed by the Federal Trade Commission that lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.
Nationwide Mortgage Licensing System (Nmls) (in Real Estate)
Mortgage loan originators (MLOs) in Illinois are required to register in this system.
Negligent Misrepresentation (in Real Estate)
Occurs when the broker should have known that a statement about a material fact was false.
Negotiable Instrument (in Real Estate)
A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee’s right to payment.
Net Lease (in Real Estate)
A lease requiring that the tenant pay not only rent but also costs incurred in maintaining the property, including taxes, insurance, utilities, and repairs.
Net Listing (in Real Estate)
A listing based on the net price the seller will receive if the property is sold. Under a net listing the sponsoring broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is legal in Illinois.
Net Operating Income (Noi) (in Real Estate)
The income projected for an income-producing property after deducting losses for vacancy, collection, and operating expenses.
Nonconforming Use (in Real Estate)
A use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area.
Nondisturbance Clause (in Real Estate)
A mortgage clause stating that the mortgagee agrees not to terminate the tenancies of the lessees in the event the mortgagee forecloses on the mortgagor-lessor’s building.
Nonjudicial Foreclosure (in Real Estate)
Some states allow nonjudicial foreclosure procedures to be used when the security instrument contains a power-of-sale clause. In this case, no court action is required.
Novation (in Real Estate)
Substituting a new obligation for an old one or substituting new parties to an existing obligation.
Obsolescence (in Real Estate)
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.
Offer And Acceptance (in Real Estate)
Two essential components of a valid contract; a “meeting of the minds.”
Open Buyer Agency Agreement (in Real Estate)
An agreement that permits the buyer to enter into multiple agreements with an unlimited number of sponsoring brokers, and the sponsoring broker receives compensation only if she locates the property the buyer ultimately purchases. Also called a nonexclusive buyer agency agreement.
Open Listing (in Real Estate)
A listing contract under which the sponsoring broker’s commission is contingent on the sponsoring broker producing a ready, willing, and able buyer before the property is sold by the seller or another sponsoring broker.
Open-End Loan (in Real Estate)
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
Option (in Real Estate)
An agreement to keep open for a set period an offer to sell or purchase property.
Option Listing (in Real Estate)
Listing with a provision that gives the listing sponsoring broker the right to purchase the listed property.
Package Loan (in Real Estate)
A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings, and major appliances.
Partition Suit (in Real Estate)
The division of cotenants’ interests in real property when the parties do not all voluntarily agree to terminate the co-ownership; takes place through court procedures.
Partnership (in Real Estate)
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law, a partnership is regarded as a group of individuals rather than as a single entity.
Party Wall (in Real Estate)
A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.
Payment Cap (in Real Estate)
The limit on the amount the monthly payment can be increased on an adjustable- rate mortgage when the interest rate is adjusted.
Percentage Lease (in Real Estate)
A lease, commonly used for commercial property, whose rental is based on the tenant’s gross sales at the premises; it usually stipulates a base monthly rental plus a percentage of any gross sales above a certain amount.
Percolation Test (in Real Estate)
A test of the soil to determine if it will absorb and drain water adequately to use a septic system for sewage disposal.
Perimeter (in Real Estate)
The length of an area’s outer boundary.
Personal Assistant (in Real Estate)
A person who may or may not hold a real estate license and assists one or more brokers. Personal assistants may play many roles, including office manager, marketer, organizer, and facilitator.
Personal Property (in Real Estate)
Items, called chattels, that do not fit into the definition of real property; movable objects. Also called personalty.
Physical Deterioration (in Real Estate)
A reduction in a property’s value resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.
Piti (in Real Estate)
Acronym for principle, interest, taxes, and insurance—expenses that comprise an owner’s monthly payment.
Planned Unit Development (Pud) (in Real Estate)
Planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision.
Plat Map (in Real Estate)
A map of a town, section, or subdivision indicating the location and boundaries of individual properties. Also called a subdivision plat.
Plottage (in Real Estate)
The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.
Pocket Card (in Real Estate)
The card issued by IDFPR to signify that the person named on the card is currently licensed under the Real Estate License Act of 2000.
Point Of Beginning (Pob) (in Real Estate)
In a metes-and-bounds legal description, the starting point of the survey, situated in one corner of the parcel. All metes-and-bounds descriptions must follow the boundaries of the parcel back to the point of beginning.
Police Power (in Real Estate)
The government’s right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, and welfare.
Power Of Attorney (in Real Estate)
A written instrument authorizing a person, the attorney-in-fact, to act as agent for another person to the extent indicated in the instrument.
Prepaid Item (in Real Estate)
On a closing statement, items that have been paid in advance by the seller, such as insurance premiums and some real estate taxes, for which she must be reimbursed by the buyer.
Prepayment Penalty (in Real Estate)
A charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that would otherwise be lost.
Price-Fixing (in Real Estate)
Real estate companies conspiring to set fixed compensation rates.
Primary Mortgage Market (in Real Estate)
The mortgage market in which loans are originated, consisting of lenders such as commercial banks, savings and loan associations, and mutual savings banks.
Principal (in Real Estate)
(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) The original amount (as in a loan) of the total due and payable at a certain date. (3) A main party to a transaction—the person for whom the agent works.
Principal Meridian (in Real Estate)
The main imaginary line running north and south and crossing a base line at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system of legal description.
Prior Appropriation (in Real Estate)
A concept of water ownership in which the landowner’s right to use available water is based on a government-administered permit system.
Private Mortgage Insurance (Pmi) (in Real Estate)
Insurance provided by private carrier that protects a lender against a loss in the event of a foreclosure and deficiency.
Probate (in Real Estate)
A legal process by which a court determines who will inherit a decedent’s property and what the estate’s assets and liabilities are.
Procuring Cause (in Real Estate)
The effort that brings about the desired result. Under an open listing the sponsoring broker who is the procuring cause of the sale receives the commission.
Professional Real Estate Services (in Real Estate)
Services that require a person to have an Illinois real estate license in order to perform those services on behalf of clients, customers, and consumers.
Progression (in Real Estate)
An appraisal principle that states that, between dissimilar properties, the value of the lesser-quality property is favorably affected by the presence of the better-quality property.
Promissory Note (in Real Estate)
A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party).
Property Management Agreement (in Real Estate)
An agreement between the property owner and sponsoring broker. It sets forth the nature of the relationship between the two parties. The agreement covers such items as time period, property manager’s responsibilities, extent of property manager’s authority, compensation, and reporting to name a few.
Property Manager (in Real Estate)
Someone who manages real estate for another person for compensation. Duties include collecting rents, maintaining the property, and keeping up all accounting.
Property Report (in Real Estate)
The mandatory federal and state documents compiled by subdividers and developers to provide potential purchasers with facts about a property before their purchase.
Proprietary Lease (in Real Estate)
A lease given by the corporation that owns a cooperative apartment building to the shareholder for the shareholder’s right as a tenant to an individual apartment.
Proration (in Real Estate)
Expenses, either prepaid or paid in arrears, that are divided or distributed between buyer and seller at the closing.
Protected Class (in Real Estate)
Any group of people designated as such by federal or state law. Currently includes ethnic minorities, women, religious groups, persons with handicaps, and others.
Puffing (in Real Estate)
Exaggerated or superlative comments or opinions.
Pur Autre Vie (in Real Estate)
“For the life of another.” A life estate pur autre vie is a life estate that is measured by the life of a person other than the grantee.
Purchase Money Mortgage (Pmm) (in Real Estate)
A note secured by a mortgage or deed of trust given by a buyer, as borrower, to a seller, as lender, as part of the purchase price of the real estate.
Quantity-Survey Method (in Real Estate)
The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction.
Quick-Take (in Real Estate)
A summary proceeding permitted by Illinois law in which a plaintiff/condemnor may obtain immediate fee simple title to real property, including the rights of possession and use.
Quiet Title (in Real Estate)
A court action to remove a cloud on the title.
Quitclaim Deed (in Real Estate)
A conveyance by which the grantor transfers whatever interest she has in the real estate, without warranties or obligations.
Radon (in Real Estate)
A naturally occurring gas that is suspected of causing lung cancer.
Range (in Real Estate)
A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description.
Rate Cap (in Real Estate)
The limit on the amount the interest rate can be increased at each adjustment period in an adjustable-rate loan. The cap also may set the maximum interest rate that can be charged during the life of the loan.
Ready, Willing, And Able Buyer (in Real Estate)
One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.
Real Estate (in Real Estate)
Land; a portion of the earth’s surface extending downward to the center of the earth and upward infinitely into space, including all things permanently attached to it, whether naturally or artificially.
Real Estate Administration And Disciplinary Board (in Real Estate)
Illinois regulatory body tasked with maintaining standards of professional conduct, discipline, and examination.
Real Estate Education Advisory Council (in Real Estate)
Approves and regulates schools, curricula, sponsors, and programs and suggests administrative rules to IDFPR.
Real Estate Investment Trust (Reit) (in Real Estate)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.
Real Estate License Act 2000 (The Act) (in Real Estate)
State law enacted to protect the public from fraud, dishonesty, and incompetence in the purchase and sale of real estate. It was amended in 2011.
Real Estate Licensee (in Real Estate)
The point of contact between two or more people in negotiating the sale, purchase, or rental of property.
Real Estate Recovery Fund (in Real Estate)
A fund established to cover claims of aggrieved parties who have suffered monetary damage through the actions of a real estate licensee.
Real Estate Research And Education Fund (in Real Estate)
A fund maintained by the Illinois State Treasury for research and education at state institutions of higher education or other organizations for research and the advancement of education in the real estate industry.
Real Estate Settlement Procedures Act (Respa) (in Real Estate)
The federal law that requires certain disclosures to consumers about mortgage loan settlements. The law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees.
Real Property (in Real Estate)
The interests, benefits, and rights inherent in real estate ownership.
Realtor® (in Real Estate)
A registered trademark term reserved for the sole use of active members of the National Association of REALTORS®.
Reconciliation (in Real Estate)
The final step in the appraisal process, in which the appraiser combines the estimates of value received from the sales comparison, cost, and income approaches to arrive at a final estimate of market value for the subject property.
Recording (in Real Estate)
The act of entering or recording documents affecting or conveying interests in real estate in the recorder’s office established in each county. Until it is recorded, a deed or mortgage ordinarily is not effective against subsequent purchasers or mortgagees.
Rectangular Survey System (in Real Estate)
System established in 1785 by the federal government, providing for surveying and describing land by reference to principal meridians and base lines. Also called the government survey system.
Redemption (in Real Estate)
The right of a defaulted property owner to recover her property by curing the default.
Redemption Period (in Real Estate)
A period of time established by state law during which a property owner has the right to redeem her real estate from a foreclosure or tax sale by paying the sales price, interest, and costs. Many states do not have mortgage redemption laws.
Redlining (in Real Estate)
The illegal practice of a lending institution denying loans or restricting their number for certain areas of a community.
Reduction Certificate (in Real Estate)
The document signed by a lender indicating the amount required to pay a loan balance in full and satisfy the debt; used in the settlement process to protect both the seller’s and the buyer’s interests. Also called a payoff statement.
Regression (in Real Estate)
An appraisal principle stating that, between dissimilar properties, the value of the better-quality property is affected adversely by the presence of the lesser-quality property.
Reinstatement (in Real Estate)
The activation of a suspended, revoked, or inoperative license.
Release Deed (in Real Estate)
A document, also called a deed of reconveyance, that transfers all rights given a trustee under a deed of trust loan back to the grantor after the loan has been fully repaid.
Remainder Interest (in Real Estate)
The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate, such as when an owner conveys a life estate to one party and the remainder to another.
Rent (in Real Estate)
A fixed, periodic payment made by a tenant of a property to the owner for possession and use, usually by prior agreement of the parties.
Rent Schedule (in Real Estate)
A statement of proposed rental rates, determined by the owner or the property manager or both, based on a building’s estimated expenses, market supply and demand, and the owner’s long-range goals for the property.
Rental-Finding Service (in Real Estate)
Any business that finds, attempts to find, or offers to find for any person for consideration a unit of rental real estate or a lessee for a unit of rental real estate not owned or leased by the business.
Replacement Cost (in Real Estate)
The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original.
Reproduction Cost (in Real Estate)
The construction cost at current prices of an exact duplicate of the subject property.
Restrictive Covenants (in Real Estate)
A clause in a deed that limits the way the real estate ownership may be used.
Reverse Mortgage (in Real Estate)
A loan under which the homeowner receives monthly payments based on her accumulated equity rather than a lump sum. The loan must be repaid at a prearranged date or on the death of the owner or the sale of the property.
Reversionary Interest (in Real Estate)
The remnant of an estate that the grantor holds after granting a life estate to another person.
Reversionary Right (in Real Estate)
The return of the rights of possession and quiet enjoyment to the lessor at the expiration of a lease.
Right Of First Refusal (in Real Estate)
A clause allowing the tenant the opportunity to buy the property before the owner accepts an offer from another party.
Right Of Survivorship (in Real Estate)
The right by which, upon the death of a joint tenant, the decedent’s interest passes to the surviving joint tenant or tenants by the right of survivorship.
Right-Of-Way (in Real Estate)
The right given by one landowner to another to pass over the land, construct a roadway, or use as a pathway, without actually transferring ownership.
Riparian Rights (in Real Estate)
An owner’s rights in land that borders on or includes a stream, river, or lake. These rights include access to and use of the water.
Risk Management (in Real Estate)
Evaluation and selection of appropriate property and other insurance.
Rules And Regulations (in Real Estate)
Real estate licensing authority orders that govern licensees’ activities; they usually have the same force and effect as statutory law.
Sale-Leaseback Arrangement (in Real Estate)
A transaction in which an owner sells her improved property and, as part of the same transaction, signs a long-term lease to remain in possession of the premises.
Sales Comparison Approach (in Real Estate)
The process of estimating the value of a property by examining and comparing actual sales of comparable properties.
Satisfaction Of Mortgage (in Real Estate)
A document acknowledging the payment of a mortgage debt.
Secondary Mortgage Market (in Real Estate)
A market for the purchase and sale of existing mortgages, to provide greater liquidity for mortgages, designed to provide a greater liquidity for mortgages.
Section (in Real Estate)
A portion of a township under the rectangular (government) survey system. A township is divided into 36 sections, numbered 1 through 36. A section is a square with mile- long sides and an area of one square mile, or 640 acres.
Secure And Fair Enforcement For Mortgage Licensing Act Of 2008 (Safe Act) (in Real Estate)
Act requires that each individual state must license and register mortgage loan originators (MLOs).
Security Deposit (in Real Estate)
A payment by a tenant, held by the landlord during the lease term and kept (wholly or partially) on default or destruction of the premises by the tenant.
Seisin (in Real Estate)
Possession of real property under claim of freehold estate (fee simple).
Separate Property (in Real Estate)
Under community property law, property owned solely by either spouse before the marriage, acquired by gift or inheritance after the marriage, or purchased with separate funds after the marriage.
Servient Tenement (in Real Estate)
Land on which an easement exists in favor of an adjacent property (called a dominant estate). Also called a servient estate.
Setback (in Real Estate)
The amount of space local zoning regulations require between a lot line and a building line.
Settlement Statement (Hud-1) (in Real Estate)
A special form that itemizes all charges to be paid by buyer and seller in connection with settlement.
Severalty (in Real Estate)
Ownership of real property by one person only. Also called sole ownership.
Severance (in Real Estate)
Changing an item of real estate to personal property by detaching it from the land; for example, cutting down a tree.
Sharecropping (in Real Estate)
In an agricultural lease, the agreement between the landowner and the tenant farmer to split the crop or the profit from its sale.
Sheriff’S Deed (in Real Estate)
In Illinois, a specialized quitclaim deed issued to the purchaser of a foreclosed home, the owner of which exercises the equitable right of redemption.
Sheriff’S Sale (in Real Estate)
Occurs when a default is not cured by redemption or reinstatement and a decree of foreclosure is entered.
Short Sale (in Real Estate)
A sale of real estate in which the sale proceeds fall short of the balance owed on the property’s mortgage loan.
Single Agency (in Real Estate)
The representation of a single principal.
Situs (in Real Estate)
The personal preference of people for one area over another.
Small Business Liability Relief And Brownfields Revitalization Act (in Real Estate)
Provides funds to assess and clean up brownfields, clarifies liability protections, and provides tax incentives toward enhancing state and tribal response programs.
Special Agent (in Real Estate)
One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing, and able buyer for a particular property.
Special Assessment (in Real Estate)
A tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or sewer.
Special Service Area (Ssa) (in Real Estate)
A taxing mechanism that can be used to fund a wide range of special or additional services and/or physical improvements in a defined geographic area within a municipality or jurisdiction.
Special Warranty Deed (in Real Estate)
A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of her tenure and ownership of the property and not against defects existing before that time.
Specific Lien (in Real Estate)
A lien affecting or attaching only to a certain, specific parcel of land or piece of property.
Specific Performance (in Real Estate)
A legal action to compel a party to carry out the terms of a contract.
Sponsor Card (in Real Estate)
In Illinois, a card that certifies a new licensee’s relationship with a sponsoring broker and serves as a temporary permit to practice until a permanent pocket card is received.
Sponsoring Broker (in Real Estate)
The broker who has issued a sponsor card to a licensed broker, managing broker, or leasing agent.
Square-Foot Method (in Real Estate)
The appraisal method of estimating building costs by multiplying the number of square feet in the improvements being appraised by the cost per square foot for recently constructed similar improvements.
Statute Of Frauds (in Real Estate)
The part of a state law that requires that certain instruments, such as deeds, real estate sales contracts, and certain leases, be in writing to be legally enforceable.
Statute Of Limitations (in Real Estate)
That law pertaining to the period of time within which certain actions must be brought to court.
Statutory Lien (in Real Estate)
A lien imposed on property by statute (for example, a tax lien).
Statutory Right Of Redemption (in Real Estate)
The right of a defaulted property owner to recover the property after its sale by paying the appropriate fees and charges.
Statutory Right Of Reinstatement (in Real Estate)
In Illinois, an option available when the defaulting mortgagor wishes to cure the default and reinstate the loan as if no acceleration had occurred.
Steering (in Real Estate)
The illegal practice of channeling prospective home buyers to particular areas, either to maintain the homogeneity of an area or to change the character of an area, which limits their choices of where they can live.
Stigmatized Property (in Real Estate)
A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang-related activity, illness, or personal tragedy.
Straight Loan (in Real Estate)
A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment. Also called a term loan.
Straight-Line Method (in Real Estate)
A method of calculating depreciation for tax purposes, computed by dividing the adjusted basis of a property by the estimated number of years of remaining useful life.
Strict Foreclosure (in Real Estate)
A way for a lender to acquire mortgaged property as an alternative to judicial foreclosure.
Subagent (in Real Estate)
One who is employed by a person already acting as an agent.
Subdivider (in Real Estate)
One who buys undeveloped land, divides it into smaller, usable lots, and sells the lots to potential users.
Subdivision (in Real Estate)
A tract of land divided by the owner, called the subdivider, into blocks, building lots, and streets according to a recorded subdivision plat, which must comply with local ordinances and regulations.
Sublease (in Real Estate)
The leasing of premises by a lessee to a third party for part of the lessee’s remaining term.
Subordination Agreement (in Real Estate)
A written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.
Subrogation (in Real Estate)
The substitution of one creditor for another, with the substituted person succeeding to the legal rights and claims of the original claimant. Subrogation is used by title insurers to acquire from the injured party rights to sue to recover any claims the insurers have paid.
Substitution (in Real Estate)
An appraisal principle stating that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable substitute property, assuming that no costly delay is encountered in making the substitution.
Subsurface Rights (in Real Estate)
Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property.
Suit For Specific Performance (in Real Estate)
A court action in which the defaulting party is sued to perform under the terms and conditions agreed to in the contract.
Suit To Quiet Title (in Real Estate)
A court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title.
Superfund (in Real Estate)
Popular name of the hazardous-waste cleanup fund established by CERCLA.
Superfund Amendments And Reauthorization Act (Sara) (in Real Estate)
An amendatory statute that contains stronger cleanup standards for contaminated sites, increased funding for Superfund, and clarifications of lender liability and innocent landowner immunity. See also Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
Supply And Demand (in Real Estate)
The appraisal principle that follows the interrelationship of the supply of and demand for real estate. Because appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace, as is any other commodity.
Surety Bond (in Real Estate)
An agreement by an insurance or bonding company to be responsible for certain possible defaults, debts, or obligations contracted for by an insured party. In the real estate business, a surety bond is generally used to ensure that a particular project will be completed at a certain date or that a contract will be performed as stated.
Surface Rights (in Real Estate)
Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air above it (air rights) or the minerals below the surface (subsurface rights).
Survey (in Real Estate)
The process by which boundaries are measured and land areas are determined; the onsite measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.
Syndicate (in Real Estate)
A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources. In a real estate investment syndicate, the parties own and/or develop property, with the main profit generally arising from the sale of the property.
Tacking (in Real Estate)
Adding or combining successive periods of continuous occupation of real property by adverse possessors. This concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession.
Taking (in Real Estate)
The legal concept that when land is taken for public use through the government’s power of eminent domain or condemnation, the owner must be compensated.
Tax Deed (in Real Estate)
An instrument given to a purchaser after the expiration of the redemption rights.
Tax Lien (in Real Estate)
A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.
Tax Sale (in Real Estate)
A court-ordered sale of real property to raise money to cover delinquent taxes. taxation The process by which a government or municipal quasi-public body raises monies to fund its operation.
Taxation (in Real Estate)
The process by which a government or municipal quasi-public body raises monies to fund its operation.
Tenancy By The Entirety (in Real Estate)
The joint ownership of property acquired by husband and wife during marriage. Upon the death of one spouse, the survivor becomes the owner of the property.
Tenancy In Common (in Real Estate)
A form of co-ownership by which each owner holds an undivided interest in real property as if she were sole owner. Each individual owner has the right to partition. Unlike joint tenants, tenants in common have right of inheritance.
Tenant (in Real Estate)
One who holds or possesses lands or tenements by any kind of right or title.
Tenant Improvements (in Real Estate)
Alterations to the interior of a building to meet the functional demands of the tenant.
Testate (in Real Estate)
Having made and left a valid will.
Testator (in Real Estate)
A person who has made a valid will.
The Priority Of Liens (in Real Estate)
is generally determined by the chronological order in which the lien documents are recorded; tax liens, however, have priority even over previously recorded liens.
Tie-In Agreement (in Real Estate)
An agreement to sell one product only if the buyer purchases another product as well. The sale of the first product is “tied” to the purchase of a second product. Also called a tying agreement.
Time Is Of The Essence (in Real Estate)
A phrase in a contract that requires the performance of a certain act within a stated period of time.
Time-Share (in Real Estate)
A form of ownership interest that may include an estate interest in property and that allows use of the property for a fixed or variable time period.
Time-Share Estate (in Real Estate)
A fee simple interest in a time-share property.
Time-Share Use (in Real Estate)
A right of occupancy in a time-share property, less than a fee simple interest.
Title (in Real Estate)
(1) The right to or ownership of land. (2) The evidence of ownership of land.
Title Insurance (in Real Estate)
A policy insuring the owner or mortgagee against loss by reason of defects in the title to a parcel of real estate, other than encumbrances, defects, and matters specifically excluded by the policy.
Title Search (in Real Estate)
The examination of public records relating to real estate to determine the current state of the ownership.
Title Theory (in Real Estate)
Some states interpret a mortgage to mean that the lender is the owner of mortgaged land. On full payment of the mortgage debt, the borrower becomes the landowner.
Town House (in Real Estate)
A type of residential dwelling with two floors that is connected to one or more dwellings by a common wall or walls. Title to the unit and lot vest in the owner who shares a fractional interest with other owners for the common areas.
Township (in Real Estate)
The principal unit of the rectangular (government) survey system. A township is a square with six-mile sides and an area of 36 square miles.
Township Line (in Real Estate)
The lines in a rectangular survey system that run east and west, parallel to the base line six miles apart.
Township Tier (in Real Estate)
Township lines that form strips of land and are designated by consecutive numbers north or south of the base line.
Trade Fixture (in Real Estate)
An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires.
Transfer Tax (in Real Estate)
Tax stamps required to be affixed to a deed by state and/or local law.
Trigger Terms (in Real Estate)
Specific credit terms that may not be advertised unless the advertisement includes other detailed information.
Trust (in Real Estate)
A fiduciary arrangement whereby property is conveyed to a person or institution, called a trustee, to be held and administered on behalf of another person, called a beneficiary. The one who conveys the trust is called the trustor.
Trustee (in Real Estate)
The holder of bare legal title in a deed of trust loan transaction.
Trustee’S Deed (in Real Estate)
A deed executed by a trustee conveying land held in a trust.
Trustor (in Real Estate)
A borrower in a deed of trust loan transaction.
Truth In Lending Act (Tila) (in Real Estate)
Federal legislation that allows the government to regulate the lending practices of mortgage lenders. Often called Regulation Z.
Unauthorized Practice Of Law (in Real Estate)
The act of engaging in the practice of law without authorization to practice law pursuant to state law.
Underground Storage Tank (Ust) (in Real Estate)
Commonly found on sites where petroleum products are used or where gas stations and auto repair shops are located. In residential areas, tanks are used to store heating oil. Over time, neglected tanks may leak hazardous substances into the environment.
Unenforceable Contract (in Real Estate)
A contract that has all the elements of a valid contract, yet neither party can sue the other to force performance of it.
Uniform Probate Code (in Real Estate)
Federal legislation that gives the surviving spouse the right to take an elective share on the death of the other spouse.
Uniform Standards Of Professional Appraisal Practice (Uspap) (in Real Estate)
A set of standards that details information required of an appraisal of residential property. The Uniform Residential Appraisal Report is required by many government agencies.
Uniform Vendor And Purchaser Risk Act (in Real Estate)
States that the seller bears any loss that occurs before the title passes or the buyer takes possession.
Unilateral Contract (in Real Estate)
A one-sided contract wherein one party makes a promise so as to induce a second party to do something. The second party is not legally bound to perform; however, if the second party does comply, the first party is obligated to keep the promise.
Unit-In-Place Method (in Real Estate)
The appraisal method of estimating building costs by calculating the costs of all the physical components in the structure, with the cost of each item including its proper installation, connection, and so forth. Also called the segregated cost method.
Unity Of Ownership (in Real Estate)
The four unities traditionally needed to create a joint tenancy—unity of title, time, interest, and possession.
Universal Agent (in Real Estate)
A person empowered to do anything the principal could do personally.
Unsecured Debt (in Real Estate)
Any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower in the case of bankruptcy or liquidation.
Usury (in Real Estate)
Charging interest at a higher rate than the maximum rate established by state law.
Va Loan (in Real Estate)
A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit the lender’s possible loss.
Valid Contract (in Real Estate)
A contract that complies with all the essentials of a contract and is binding and enforceable on all parties to it.
Value (in Real Estate)
The power of a good or service to command other goods in exchange for the present worth of future rights to its income or amenities.
Variance (in Real Estate)
Permission obtained from zoning authorities to build a structure or conduct a use that is expressly prohibited by the current zoning laws; an exception from the zoning ordinances.
Vendee (in Real Estate)
A buyer, usually under the terms of a land contract.
Vendor (in Real Estate)
A seller, usually under the terms of a land contract.
Void Contract (in Real Estate)
A contract that has no legal force or effect because it does not meet the essential elements of a contract.
Voidable Contract (in Real Estate)
A contract that seems to be valid on the surface but may be rejected or disaffirmed by one or both of the parties.
Voluntary Alienation (in Real Estate)
The act of voluntarily transferring property to another, such as by gift or sale.
Voluntary Lien (in Real Estate)
A lien placed on property with the knowledge and consent of the property owner.
Walk-Through (in Real Estate)
The final property inspection by the buyer, a few days before closing, to ensure that the property is in the same condition that it was in at the time the sales contract was written.
Waste (in Real Estate)
An improper use or an abuse of a property by a possessor who holds less than fee ownership, such as a tenant, life tenant, mortgagor, or vendee. Such waste ordinarily impairs the value of the land or the interest of the person holding the title or the reversionary rights.
Water Table (in Real Estate)
The natural level at which the ground is saturated.
Will (in Real Estate)
A written document, properly witnessed, providing for the transfer of title to property owned by the deceased, called the testator.
Workers’ Compensation Acts (in Real Estate)
Laws that require an employer to obtain insurance coverage to protect her employees who are injured in the course of their employment.
Wraparound Loan (in Real Estate)
A method of refinancing in which the new mortgage is placed in a secondary, or subordinate, position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender.
Writ Of Attachment (in Real Estate)
To prevent a debtor from conveying title to such previously unsecured real estate while a court suit is being decided, a creditor may seek a writ of attachment, by which the court retains custody of the property until the suit concludes.
Zoning Ordinance (in Real Estate)
An exercise of police power by a municipality to regulate and control the character and use of property.