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| Z - abstract
of title
- A condensed version
of the history of title to a piece of land that lists any transfers in ownership,
as well as any liabilities attached to it, such as mortgages.
- abutting
- The
joining, reaching, or touching of adjoining land. Abutting pieces of land have
a common boundary.
- acceleration
clause
- A provision in a written
mortgage, note, bond or conditional sales contract that, in the event of default,
the whole amount of principal and interest may be declared to be due and payable
at once.
- acceptance
-
An offerees consent to enter into a contract
and be bound by the terms of the offer.
- accretion
-
An addition to land through natural causes.
- acknowledgment
- A
declaration made by a person to a notary public, or other public official authorized
to take acknowledgments, that the instrument was executed by him and that it was
his free and voluntary act.
- acre
-
A measure of land equal to 43,560 square feet.
-
- ad
valorem
- Designates an assessment
of taxes against property. Literally, according to value.
-
-
additional principal payment
-
A payment by a borrower of more than the scheduled
principal amount due in order to reduce the remaining balance on the loan.
- adjustable
rate mortgage (ARM)
- A mortgage
loan whose interest rate fluctuates according to the movements of an assigned
index or a designated market indicator--such as the weekly average of one-year
U.S. Treasury Bills--over the life of the loan. To avoid constant and drastic
fluctuations, ARMs typically limit how often and by how much the interest rate
can vary.
-
-
adjusted basis
- The
original cost of a property plus the value of any capital expenditures for improvements
to the property minus any depreciation taken.
-
-
adjustment date
- The
date on which the interest rate changes for an adjustable-rate
mortgage (ARM).
-
-
adjustment period
- The
period that elapses between the adjustment dates for an adjustable-rate
mortgage (ARM).
- adjustments
-
Money that the buyer and sellers credit each other
at the time of closing. Often includes taxes and down payment.
- administrator/administratrix
-
A man/woman appointed by a court to settle the estate
of a deceased person when there is no will. Contrast with executor/executrix.
- adverse possession
- The
right of an occupant of land to acquire title against the real owner, where possession
has been actual, continuous, hostile, visible, and distinct for the statutory
period. The requirements for adversely possessing property vary between
states, but usually include continuous and open use for a period of five or more
years and paying taxes on the property in question.
-
affidavit
- Written
statement signed and sworn to before some person authorized to take an oath.
- agency
- The
legal relationship between a principal and an agent. In real estate transactions,
usually the seller is the principal, and the broker is the agent: however, a buyer
represented by a broker (i.e., buyer as principal is a growing trend. In an agency
relationship, the principal delegates to the agent the right to act on his or
her behalf in business transactions and to exercise some discretion while so acting.
The agent has a fiduciary relationship with the principal and owes to that principal
the duties of accounting, care, loyalty, and obedience. Also see buyer's
broker.
- agent
-
A person authorized to act for and under the direction
of another person when dealing with third parties. The person who appoints an
agent is called the principal. An agent can enter into binding agreements on the
principal's behalf and may even create liability for the principal if the agent
causes harm while carrying out his or her duties. See also attorney-in-fact.
- alienation Clause
- A
clause in a mortgage, which gives the lender the right to call the entire loan
balance due if the property is sold; due-on-sale clause.
- amenities
- Non
monetary benefits and satisfactions derived from property ownership, such as a
pleasant view, pride in home ownership, etc.
- ammendment
-
A modification to an existing contract, mutually
agreed to by all parties. Examples might include a change in the pruchase
price due to a low appraisal, or a change in the closing date.
- amortization
- The
operation of paying off indebtedness, such as a mortgage, by installments. The
conventional amortization periods are15 or 30 years. (See term)
- amortized mortgage
-
A mortgage requiring periodic payments that
include both interest and principal. Also see self
amortized loan.
- annual
membership
- The amount that is
charged annually for having a line of credit available. Often charged regardless
of whether or not you use the line.
- antitrust
laws
- Federal and state laws prohibiting,
among other things, monopolies, monopolistic practices, restraint of trade, and
price fixing.
- application
-
An initial statement of personal and financial information,
which is required to approve your loan.
- application
fee
- Fees that are paid upon application.
Charges for property appraisal and a credit report are usually included in the
application fee.
- appraisal
-
A determination of the value of something, such as
a house, jewelry or stock. A professional appraiser--a qualified, disinterested
expert--makes an estimate by examining the property, and looking at the initial
purchase price and comparing it with recent sales of similar property. Courts
commonly order appraisals in probate, condemnation, bankruptcy or foreclosure
proceedings in order to determine the fair market value of property. Banks and
real estate companies use appraisals to ascertain the worth of real estate for
lending purposes. And insurance companies require appraisals to determine the
amount of damage done to covered property before settling insurance claims.
- appraised value
- An
estimate of the present worth.
- appreciation
-
An increase in value or worth of property. Opposite
of depreciation.
- asking
(list) price
- The price placed
on property for sale.
- assessor
-
A local government official who determines the value
of the property for taxation purposes.
- assignee
-
A person to whom a property right is transferred.
For example, an assignee may take over a lease from a tenant who wants to permanently
move out before the lease expires. The assignee takes control of the property
and assumes all the legal rights and responsibilities of the tenant, including
payment of rent. However, the original tenant remains legally responsible if the
assignee fails to pay the rent.
- assignment
-
A transfer of property rights from one person to
another, called the assignee.
- assumable mortgage
- An
existing mortgage that can be taken over by the buyer on the same terms given
to the original borrower.
- assumption
of mortgage
- The
transfer of title to property to a grantee wherein he assumes liability for payment
of an existing note secured by a mortgage against the property; should the mortgage
be foreclosed and the property sold for a lesser amount than that due, the grantee-purchaser
who has assumed and agreed to pay the debt secured by the mortgage is personally
liable for the deficiency. Before a seller may be relieved of liability under
the existing mortgage, the lender must accept the transfer of liability for payment
of the note. Also known as simple assumption. Contrast withsubject
to mortgage.
- attachment
-
Method by which a debtor's property is placed in
the custody of the law and held as security pending outcome of a creditor's suit.
- attorney's opinion of title
-
An instrument written and signed by the attorney
who examines the abstracts of title, stating his opinion as to whether a seller
may convey good title.
- attractive
nuisance
- Something on a piece
of property that attracts children but also endangers their safety. For example,
unfenced swimming pools, open pits, farm equipment and abandoned refrigerators
have all qualified as attractive nuisances.
- auction
-
A public sale of property to the highest bidder.
- balloon mortgage
-
A mortgage where the final payment is considerably
larger than the preceding payments. Contrast with amortized
mortgage.
- balloon
payment
- A large final payment
due at the end of a loan, typically a home or car loan, to pay off the amount
your monthly payments didn't cover. Many states prohibit balloon payments in loans
for goods or services that are primarily for personal, family or household use,
or require the lender to let you refinance the balloon payment before forcing
collection.
- bill of
sale
- A written instrument given
to pass title to personal property.
- blanket
mortgage
- One mortgage on a number
of parcels of real property.
- blockbusting
-
The illegal practice of inducing panic selling in
a neighborhood by making representations of the entry, or prospective entry, of
members of a minority group; panic peddling.
See Fair Housing.
-
bond
- (1) A written agreement purchased from
a bonding company that guarantees a person will properly carry out a specific
act, such as managing funds, showing up in court, providing good title to a piece
of real estate or completing a construction project. If the person who purchased
the bond fails at his or her task, the bonding company will pay the aggrieved
party an amount up to the value of the bond.
-
-
(2) An interest-bearing document issued by
a government or company as evidence of a debt. A bond provides pre-determined
payments at a set date to the bond holder. Bonds may be "registered"
bonds, which provide payment to the bond holder whose name is recorded with the
issuer and appears on the bond certificate, or "bearer" bonds, which
provide payments to whomever holds the bond in-hand. Mortgage interest rates
are closely related to long term bond interest rates.
-
-
bonus to
selling agent (BTSA)
- Compensation,
above and beyond the sales commission, offered to the real estate agent who brings
the buyer to the transaction. A BTSA is used to provide an extra incentive
for real estate agents to show a particular listing. Often the bonus is
tied to closing within a certain time period or the property selling for a certain
price. A buyer's agent should not consider the BTSA a factor in any negotiations
between buyer and seller. Realistically, most BTSA's tend to disappear during
initial negotiations, eventhough they should never be considered as negotiable
after they have been offered. Any bonus to selling agent should be contained
in a written agreement between the seller and listing broker. The BTSA is
technically offered by the listing broker, not the seller, and thus should not
be a subject of negotiation.
- breach
of contract
- Failure, without
legal excuse, of one of the parties to a contract to perform according to the
contract.
- brokerage
-
For a commission or fee, bringing together parties
interested in buying, selling, exchanging, or leasing real property.
-
- BTSA
-
Acronym - bonus
to selling agent.
- building
line
- A line fixed at a certain
distance from the front and/or sides of a lot beyond which no structure can project.
See set back.
- bundle
of rights
- Ownership in real property
implies a group of rights, such as the right of occupancy, use and enjoyment,
the right to sell in whole or in part, the right to control the use, the right
to bequeath, the right to lease any or all of the rights, the right to the benefits
derived by occupancy and use of the property, etc.
- buy
down
- A cash payment, usually
measured in points, to a lender in order to reduce the interest rate a borrower
must pay.
- buyer's broker
-
A licensee who has declared to represent only the
buyer in a transaction, regardless of whether compensation is paid by the buyer
or the listing broker through a commission split. Some brokers conduct their business
by representing buyers only.
- calendar Year
-
A year using the actual number of days in each month
for a total of 365 days in a year (366 days in a leap year).
- cap
- The
maximum allowable increase, for either payment or interest rate, for a specified
amount of time on an adjustable rate mortgage.
-
-
capital gains
- The
profit on the sale of a capital asset, such as stock or real estate. If you sell
your primary residence, you can exclude $250,000 in profit from capital gains
tax. A couple can exclude $500,000.
- capitalization
-
The estimation of the value of income producing property
by dividing the annual net income by the capitalization rate.
- capitalization rate
- The
rate of expected return on investment property. A ratio of income to value.
- cash Out
- Receiving
money back when refinancing your present mortgage. Not available on homestead
property in Texas (See homestead).
-
- CC&R
-
See covenants,
conditions & restrictions.
-
-
CCCS
- See
Consumer Credit Counseling Service.
- ceiling
- The
maximum allowable interest rate over the life of the loan of an adjustable rate
mortgage.
- census
-
An official count of the number of people living
in a certain area, such as a district, city, county, state, or nation. The United
States Constitution requires the federal government to perform a national census
every ten years. The census includes information about the respondents' sex, age,
family, and social and economic status.
- Certificate
of Eligibility
- The document given
to qualified veterans which entitles them to VA guaranteed loans for homes, business,
and mobile homes. Certificates of eligibility may be obtained by sending DD-214
(Separation Paper) to the local VA office with VA form 1880 (request for Certificate
of Eligibility).
- chain
of title
- A history of conveyances
and encumbrances of a property from some starting point, whereby the present owner
derives title.
- channeling
-
The illegal practice of directing people to, or away
from, certain areas or neighborhoods because of minority status; Steering. See
Fair Housing.
-
chattel
- See
personal property.
-
-
cleaning fee
- A
nonrefundable fee charged by a landlord when a tenant moves in. The fee covers
the cost of cleaning the rented premises after you move out, even if you leave
the place spotless. Cleaning fees are illegal in some states and specifically
allowed in others, but most state laws are silent on the issue. Landlords in every
state are allowed to use the security deposit to clean a unit that is truly dirty.
- clear title
- A
land title that doesn't have any liens (including a mortgage) against it.
- closing
-
The conclusion of the sales transaction when the
seller transfers title to the buyer in exchange for consideration. In Texas, these
proceedings are usually held at a title company.
- closing costs
- Costs
the buyer must pay at the time of the closing in addition to the down payment
which may include points, title charges, credit report fee, document preparation
fee, mortgage insurance premium, inspections, appraisals, prepayments for property
taxes, deed recording fee, and homeowners insurance. Closing costs can vary considerably
from one financial institution to another.
- closing
statement
- A detailed written
summary of the financial settlement of a real estate transaction, showing all
charges and credits made, and all cash received and paid out.
- cloud on title
- A
claim or encumbrance that may effect title to land.
-
co-op
- See
cooperative housing or cooperative
sale.
- co-tenants
-
Two or more tenants who rent the same property under
the same lease or rental agreement. Each co-tenant is 100% responsible for
carrying out the rental agreement, which includes paying the entire rent if the
other tenant skips town and paying for damage caused by the other tenant.
- collateral
- Something
of value deposited with a lender as a pledge to secure repayment of a loan.
- commingling
- The
illegal practice of combining or mixing clients' funds with the agent's own funds.
- commission
- The
compensation paid to a licensed real estate broker or by the broker to the salesman
for services rendered. Usually a percentage of the selling price of the property.
- Community Reinvestment Act
-
The federal law which requires federally regulated
lenders to describe the geographical market area they serve. Deposits from that
area are to be reinvested in that area whenever practical.
- comparables
- Properties
which are similar to a particular property and are used to compare and establish
a value for that property.
- compound
interest
- Interest
which is computed on the principal and any unpaid accumulated interest. Contrast
with simple interest.
- condemnation
-
The act of taking private property for public use,
through due process under the right of eminent domain,
with compensation to the owner.
- condominium
-
A form of real estate, usually a dwelling with individual
ownership of separate portions of the building plus shared ownership of the common
areas.
- consideration
-
The price or subject matter, which induces a contract;
may be in money, commodity, exchange, or a transfer of personal effort.
- constructive
eviction
- The provision of housing
that is so substandard that, for all intents and purposes, a landlord has evicted
the tenant. For example, the landlord may refuse to provide light, heat, water
or other essential services, destroy part of the premises or refuse to clean up
an environmental health hazard, such as lead paint dust. Because the premises
are unlivable, the tenant has the right to move out and stop paying rent without
incurring legal liability for breaking the lease. Usually, the tenant must first
bring the problem to the landlord's attention and allow a reasonable amount of
time for the landlord to make repairs.
-
-
Consumer
Credit Counseling Service (CCCS)
- A
national non-profit agency that, at no cost, helps debtors plan budgets and repay
their debts. One major criticism of CCCS is that each office is primarily funded
by voluntary donations from the creditors that receive payments from debtors repaying
their debts through that office. The goal of CCCS is to insure that consumers
repay the debts that they owe. CCCS may arrange easy payment plans that
increase the chances for repayment, but harm a consumer's credit in the process.
Agreeing to a payment plan and following it to the letter may not stop creditors
from reporting delinquent repayment information to credit bureaus for each month
the payment falls short of the previous minimum amount.
-
-
contingency
- A
provision in a contract stating that some or all of the terms of the contract
will be altered or voided by the occurrence of a specific event. A
common example is a Buyer who enters into the purchase of another home before
his current home is sold. The Buyer will usually ask for the Seller to make
the sale contingent upon the sale of the Buyer's current home. If the Seller
receives another offer for the property, the first Buyer must either agree to
buy the home without any contingency, or step aside and let someone else purchase
the home.
- contract
-
A legally enforceable agreement to do, or not to
do, a particular thing for a consideration.
- contract
for deed
- A contract for the sale
of real estate where the deed (title) of the property is transferred only after
all the payments have been made. Also known as a land contract, agreement of sale,
conditional sales contract, or installment contract. Buyers should be wary
of this type of contract, since they can lose their entire investment if the owner
declares brankruptcy, before the deed has been transferred.
- contract for exchange of real estate
-
A contract for the sale of real estate in which the
consideration is paid wholly or partly in real property instead of cash.
- contract of sale
- The
agreement between the buyer and seller on the purchase price, terms, and conditions
necessary to both parties to convey the title to the buyer.
- conventional loan
- A
real estate loan, which is not insured by the FHA or guaranteed by the VA.
- conveyance
- Written
instrument, such as a deed or lease, that evidences transfer of some ownership
interest in real property from one person to another.
-
-
cooperative
housing
- (1) A form of
real estate, usually a dwelling in which residents own shares, but do not
directly own the space they inhabit. Rather, owning a share of the building
entitles the shareholder with the right to inhabit a certain space within the
dwelling, such as an apartment. Shares are usually proportional to the amount
of space in each apartment.
- (2)
A living arrangement in which residents must perform certain duties or chores
to benefit the entire residence, in addition to paying room and board. A common
form of dormitory living.
-
-
cooperative sale
-
A sale of property in which the buyer is brought
to the transaction by a real estate agent who works for a different real estate
broker than the listing agent. Both brokers/companies have agreed to cooperate
in closing the property, and typically, splitting the commission. Offers
of cooperation and compensation are commonly found in the MLS property listings.
- cost approach to value
-
An estimate of value based on current construction
costs, less depreciation, plus land value. Contrast with the income
approach to value and the market
data approach to value.
- counter
offer
- The rejection of an offer
to buy or sell that simultaneously makes a different offer, changing the terms
in some way. For example, if a Buyer offers $160,000 for a home, and the Seller
replies that he wants $175,000, the Seller has rejected the Buyer's offer of $160,000
and made a counteroffer to sell at $175,000. The legal significance of a counteroffer
is that it completely voids the original offer, so that if the Seller decided
to sell for $160,000 the next day, the Buyer would be under no legal obligation
to pay that amount for the property.
-
-
covenant
- A
restriction on the use of real estate that governs
its use, such as a requirement that the property will be used only for residential
purposes. Covenants are found in deeds or in documents that bind everyone who
owns land in a particular development. See Covenants,
Conditions & Restrictions.
- covenants,
conditions & restrictions (CC&Rs)
- The
restrictions governing the use of real estate,
usually enforced by a homeowners' association
and passed on to the new owners of property. For example, CC&Rs may tell you
how big your house can be, how you must landscape your yard or whether you can
have pets. If property is subject to CC&Rs, buyers must be notified before
the sale takes place.
-
-
credit bureau
- A
private, profit-making company that collects and sells information about a person's
credit history. Typical clients include banks, mortgage lenders and credit card
companies that use the information to screen applicants for loans and credit cards.
There are three major credit bureaus, Equifax, Experian and Trans
Union, and they are regulated by the federal Fair Credit Reporting Act.
-
- credit
file
- See credit
report.
-
-
credit insurance
- Insurance
a lender offers or requires a borrower to purchase to cover the loan. If the borrower
dies or becomes disabled before paying off the loan, the policy will pay off the
remaining balance. Federal and state consumer protection laws require the
lender to disclose to existing and potential borrowers the terms and costs of
obtaining credit insurance because it can affect the terms of the loan.
- credit limit
- The
maximum amount that you can borrow under a home equity plan.
-
-
credit report
-
An account of your credit history, prepared by a
credit bureau. A credit report will contain both credit history, such as what
you owe to whom and whether you make the payments on time, as well as personal
history, such as your former addresses, employment record and lawsuits in which
you have been involved. An estimated 50% of all credit reports contain errors,
such as accounts that don't belong to you, an incorrect account status or information
reported that is older than seven years (ten years in the case of a bankruptcy).
-
- credit
score
- In the mortgage lending
world, credit scores either make or break you when it comes to obtaining a home
mortgage or getting the best rate you can. There are three different scores
available to a mortgage lender each being generated by the three different credit
agencies. The most popular, known as a Fico score is from Experian (formally TRW),
then there is a Beacon score from Equifax, and finally a Emperica score from Trans
Union. This is the "mortgage scoring" system used to get a conventional
mortgage.
-
-
Simply, credit scores are numbers calculated based
upon your credit history. The better your credit, the higher your number or score
will be - the worse your credit, the lower the score. The number of inquiries
or times your credit has been pulled in the past 90 days will also lower your
"score". In some instances, lack of credit results in "no score"
on your report requiring you to provide "alternative credit" via your
rental, utility or telephone payment histories. There's plenty you can do to improve
your score if you know how the system works. Just don't expect much help from
your lender--most consider the actual formulas a trade secret and don't want people
angling for an advantage. Congress is currently working on legislation to
provide consumers with access to their credit scores and the formulas used to
calculate these scores.
-
-
There are some lenders that do not rely on credit
scores to the degree that most do. Some times, credit reports contain inaccuracies
that lower your score, this is when a lender has to use a common sense approach
to approving your loan. In some instances you may have to correct your credit
report, wait for your score to improve, then reapply for the loan. Talk with your
mortgage broker or lender to understand what your options are.
- creditor
- A
person or entity (such as a bank) to whom a debt is owed.
- cul-de-sac
- A
dead end street which widens sufficiently at the end to permit an automobile to
make a "U" turn.
DBA
- Doing Business As. Business names or aliases
filed with the county.
- debenture
-
Bonds issued without security.
- debt service
- The
total amount of credit card, auto, mortgage or other debt upon which you must
pay.
- debt-service ratio
-
The measurement of debt payments to gross household
income which may include, in addition to the main wage earner's salary, salaries
of other wage earners, commissions, bonuses, overtime, etc.
- Deceptive Trade Practices Act
-
Part of the federal Consumer Protection Act originally
passed in 1973 and made specifically applicable to real estate in 1975, specifically
prohibiting a lengthy number of false, misleading and deceptive acts or practices.
The Texas Supreme Court has defined a deceptive trade practice as one "which
has the capacity to deceive an average, ordinary person, even though that person
may have been ignorant, unthinking, or credulous." Also see Texas
Deceptive Trade Practices - Consumer Protection Act.
deduction
- In tax law, an amount that you can subtract
from the total amount on which you owe tax. Examples of federal income tax
deductions include mortgage interest, charitable contributions and certain state
taxes. For example, if Aimee receives an income of $60,000 in 1998 and pays $12,000
in mortgage interest during that same year, she can deduct $12,000 when she fills
out her federal tax return, leaving an amount of $48,000 upon which she must pay
tax.
-
- deed
-
A written instrument by which title to land is conveyed.
- deed in lieu (of
foreclosure)
- A means of escaping
an overly burdenome mortgage. If a homeowner can't make the mortgage payments
and can't find a buyer for the house, many lenders will accept ownership of the
property in place of the money owed on the mortgage.
Even if the lender won't agree to accept the property, the homeowner can prepare
a quitclaim deed that unilaterally transfers the homeowner's property rights to
the lender.
- deed of
trust
- The
legal instrument used in Texas in lieu of a mortgage, in which the property is
conveyed in trust to a trustee to be held as security for a loan.
- deed restrictions
-
Common name used in the Houston area to denote covenants,
conditions & restrictions (CC&Rs). Deed restrictions cover
allowable land uses and home types and sizes within a neighborhood. They
are especially important within Houston, and unincorporated parts of Harris County,
since zoning does not exist in these areas.
- default
- Non-performance
of a duty arising under a contract or otherwise.
- defeasanse
-
A clause in a deed, lease, will or other legal document
that completely or partially negates the document if a certain condition occurs
or fails to occur. Defeasance also means the act of rendering something null and
void. For example, a will may provide that a gift of property is defeasable--that
is, it will be void--if the beneficiary fails to marry before the willmaker's
death.
- delivery
-
The actual transfer of the deed, or an act of a seller
showing intent to make a deed effective, without which, there is no transfer of
title to the property.
- depreciation
-
A loss in value.
- descent
-
Acquisition of property through inheritance laws
when there is no will (when a person dies intestate).
- devise
- A
transfer of real estate by will or last testament.
- disclosure
-
The making known of a fact that had previously been
hidden; a revelation. For example, in many states you must disclose major
physical defects in a house you are selling, such as a leaky roof or potential
flooding problem.
- discount
points (or points)
- The
amount paid either to maintain or lower the interest rate charged. Each point
is equal to one percent (1%) of the loan amount (i.e., two points on a $100,000
mortgage would equal $2,000).
- discount
rate
- (1) The rate charged
member banks who borrow from the Federal Reserve System.
- (2)
The rate used to convert future income into present value.
- dispossess
- To
oust from land by legal process.
- dominant
tenement
- Property that carries
a right to use a portion of a neighboring property. For example, property that
benefits from a beach access trail across another property is the dominant tenement.
- down payment
-
An amount of money the buyer pays which is the difference
between the purchase price and the mortgage amount.
-
dual agency
- Representing
the buyer and the seller in the same transaction by the same agent. Since there
is an inherent conflict in fiduciary obligations to two different principals,
dual agency, at best, is a risky undertaking. TRELA requires that all parties
to a dual agency have full knowledge and consent (Disclosed Dual Agency). Contrast
with intermediary.
- due on sale
- A
clause in a mortgage agreement providing that, if the mortgagor (the borrower)
sells, transfers, or, in some instances, encumbers the property, the mortgagee
(the lender) has the right to demand the outstanding balance in full.
- duress
- Forcing
action or inaction against a person's will.
- earnest money
-
A deposit made by the buyer as evidence of good faith
in offering to purchase real estate and to secure performance of the contract.
Earnest money is typically held by a title company, in an escrow account, during
the period between acceptance of the contract and the closing.
- earnest money contract (EMC)
-
A contract for the sale or purchase of real estate
in which the purchaser is required to tender earnest money to evidence good faith
in completing the contractual obligations. Almost every sales contract for real
estate in Texas will be an earnest money contract. Also see sales
contract and promulgated contracts.
- easement
- A
right to use another person's real estate for a specific purpose. The most common
type of easement is the right to travel over another person's land, known as a
right of way. In addition, property owners commonly grant easements for the placement
of utility poles, utility trenches, water lines or sewer lines. The owner of property
that is subject to an easement is said to be "burdened" with the easement,
because he or she is not allowed to interfere with its use. For example, if the
deed to John's property permits Sue to travel across John's main road to reach
her own home, John cannot do anything to block the road. On the other hand, Sue
cannot do anything that exceeds the scope of her easement, such as widening the
roadway.
- easement by
prescription
- A right to use property,
acquired by a long tradition of open and obvious use. For example, if hikers have
been using a trail through your backyard for ten years and you've never complained,
they probably have an easement by prescription through your yard to the trail.
- economic obsolescence
-
Loss of value of real property due to external forces
or events; eg., a sewer plant is built next door to the subject property. Contrast
with Functional Obsolescence.
- effective interest rate
-
The cost of credit on a yearly basis expressed as
a percentage. Includes up-front costs paid to obtain the loan, and is, therefore,
usually a higher amount than the interest rate stipulated in the mortgage note.
Useful in comparing loan programs with different rates and points.
-
- effluxion
of time
- The normal expiration
of a lease due to the passage of time, rather than due to a specific event that
might cause the lease to end, such as destruction of the building.
- egress
-
An exit, or the act of exiting. The most famous use
of this word was by P.T. Barnum, who put up a large sign in his circus tent saying
"This Way to the Egress." Thinking an egress was some type of
exotic bird, people eagerly went though the passage and found themselves outside
the circus tent. Compare ingress.
- emblements
- Annual
crops produced by cultivation. They are deemed to be personal property.
- eminent domain
-
The right of government to take private property
for public use, through court action known as condemnation.
The Fifth Amendment to the United States Constitution allows the government to
take private property if the taking is for a public use and the owner is "justly
compensated" (usually, paid fair market value) for his or her loss. A public
use is virtually anything that is sanctioned by a federal or state legislative
body, but such uses may include roads, parks, reservoirs, schools, hospitals or
other public buildings. Sometimes called expropriation.
-
-
enclave community
- Smaller
in scope than master-planned communities, enclave communities typically
blend different price ranges of residential neighborhoods with amenities such
as public recreation areas and parks, neighborhood schools and extensive landscaping.
Recreation areas may include public swimming pools, tennis courts, and children's
play grounds. Many offer large water features and gated access.
- encroachment
- A
fixture, or structure, such as a wall or fence, which invades a portion of a property
belonging to another. Solutions range from paying the rightful property
owner for the use of the property to the court-ordered removal of the structure.
- encumbrance
- A
cloud against clear, free title to the property which does not prevent conveyance,
such as unpaid taxes, easements, deed restrictions, mortgage loans, etc.
- endorsement
- Writing
one's name, either with or without additional words, on a negotiable instrument,
or on a paper attached to it.
- Equal
Credit Opportunity Act
- The 1974
federal law (Title VII of the Consumer Credit Protection Act) which requires fairness
and impartiality without discrimination on the basis of race, color, religion,
national origin, sex or marital status, or receipt of income from public assistance
programs in the extension of credit, and good faith exercises of any right under
the Consumer Credit Protection Act (eg. the creditor must state reasons for denial
of credit).
- Equal Treatment/Different
Impact
- It is possible to be guilty
of discrimination even by treating two individuals the same. If the results of
the treatment are discriminatory, or tend to exclude or otherwise harm members
of a minority group, or have discriminatory impact, they are against the law.
For example, an apartment house which rents only to doctors and lawyers, where
there are few, if any, minority doctors or lawyers in the area, may be a violation
of the Fair Housing Laws.
- equity
- The
difference in dollars between a house's value and the mortgage amount.
- escalator clause
- The
clause in a contract permitting adjustments of the payments.
- escheat
- The
reversion of property to the state in the event the owner thereof dies without
leaving a will (intestate) and has no heirs to whom the
property may pass by lawful descent.
- escrow
- A
trust arrangement by which none or more parties deposit things of value with an
authorized escrow agent in accordance with the terms of a real estate agreement.
- escrow account
-
(1) A third party account that holds money
safely while a sale is in progress.
- (2)
An account used to save monies required for the payment of an eventual debt.
Often used by lenders to save for property taxes, hazard insurance, homeowner's
dues, etc.
- Escrow accounts are typically
non-interest bearing for the contributors, but may pay interest to the entity
holding the account (lenders, title companies, lawyers, etc.).
- estimate of value
- An
appraisal; the appraised value.
- et
ux
- Abbreviation for "et
uxor", meaning "and wife".
- eviction
-
Removal of a tenant from rental property by a law
enforcement officer. First, the landlord must file and win an eviction lawsuit,
also known as an "unlawful detainer."
- exception
-
As used in the conveyance of real estate, an exception
is the exclusion of some part of the property conveyed, with title of that excepted
part remaining with the grantor. For example, in most subdivision developments,
mineral rights are not conveyed to the purchaser of a lot, but remain the property
of the developer. Contrast with Reservation.
- exclusive agency (EA)
-
A listing agreement which gives the listing agent
the right to sell the property for a specified time. The owner reserves the right
to sell the property himself without paying a commission to the agent. Brokers
run the risk of investing their time, effort, and money in a listing that, even
if sold through their marketing efforts, does not produce a commission. Contrast
with Exclusive Right to Sell.
- exclusive
right to sell (ERS)
- A listing
agreement which gives the listing agent the right to sell the property for a specified
time, with the right to collect a commission if the property is sold by anyone,
including the owner, during the listing period. Contrast with Exclusive
Agency.
- exculpatory
clause
- A provision in a lease
that absolves the landlord from responsibility for all damages, injuries or losses
occurring on the property, including those caused by the landlord's actions. Most
states have laws that void exculpatory clauses in rental agreements, which means
that a court will not enforce them.
- executor/executrix
-
The man/woman appointed in a will to carry out the
requests of the will. Contrast with Administrator/Administratrix.
- expropriation
- See
eminent domain.
Fair Housing
Act & Fair Housing Amendments Act - Federal
laws that prohibit housing discrimination on the basis of race or color, national
origin, religion, sex, familial status or disability. The federal Acts apply to
all aspects of the landlord/tenant relationship, from refusing to rent to members
of certain groups to providing different services during tenancy.
- Fair Housing Laws
-
Federal, state, and local laws, particularly Title
VIII of the 1968 Civil Rights Act, Title VI of the Civil Rights Act of 1964, and
the Civil Rights Act of 1866, which forbid discrimination because of race, sex,
color, religion, or national origin, in the selling or renting of homes or apartments,
and in other specified transactions. These laws have been recently been expanded
to include familial status (having children) and disabilities (Americans with
Disabilities Act).
-
- Fannie
Mae
- Created by Congress in 1938
to bolster the housing industry during the Depression, Fannie Mae was originally
part of the Federal Housing Administration
(FHA) and authorized to buy only FHA-insured loans to replenish lenders'
supply of money. In 1968, Fannie Mae became a private company operating with private
capital on a self-sustaining basis. Its role was expanded to buy mortgages
beyond traditional government loan limits, reaching out to a broader cross-section
of Americans.
-
-
Today, Fannie Mae operates under a congressional
charter that directs it to channel its efforts into increasing the availability
and affordability of homeownership for low-, moderate-, and middle-income Americans.
Fannie Mae receives no government funding or backing, and is one of the nation's
largest taxpayers as well as one of the most consistently profitable corporations
in America. Fannie Mae establishes strict guidelines for mortgage loans
it is willing to purchase. As the largest buyer of mortgage loans in the
US, these guidelines have become the industry standard for the majority of home
loans. Any loan that meets these Fannie Mae guidelines is called a "conforming
loan".
-
-
FDIC
- Acronym
- The Federal Deposit Insurance
Corporation.
-
-
Federal
Deposit Insurance Corporation (FDIC)
- The
Federal Deposit Insurance Corporation's mission is to maintain the stability of
and public confidence in the nation's financial system. To achieve this goal,
the FDIC has insured deposits and promoted safe and sound banking practices since
1933. FDIC insurance is offered at almost every US bank and savings and
loan. In general, the FDIC insures individual accounts in each financial institution
for a maximum of $100,000.00 per account. An individual or entity may only
be insured for a total of $100,000.00 for all the accounts held in any one institution,
or any of its branches.
- Federal
Emergency Management Agency (FEMA)
- FEMA
is the governmental unit that has leadership responsibilities for the Nation's
emergency management system. Once the President has declared a major disaster,
FEMA coordinates not only its own response activities but also those of as many
as 28 other Federal agencies that may participate. FEMA also works with
States, territories, and communities during non-disaster periods to help plan
for disasters, develop mitigation programs, and anticipate what will be needed
when major disasters occur. Among its many responsibilities the agency operates
the Federal Insurance Administration, which makes flood insurance available to
residents of communities that agree to adopt and enforce sound floodplain management
practices.
- Federal
Home Loan Mortgage Corporation (FHLMC)
- See
Freddie Mac.
-
-
Federal
Housing Administration
- The Federal
Housing Administration (FHA), a wholly owned government corporation, was established
under the National Housing Act of 1934 to improve housing standards and conditions;
to provide an adequate home financing system through insurance of mortgages; and
to stabilize the mortgage market. FHA was consolidated into the newly established
Department of Housing and Urban Development
(HUD) in 1965. Since 1934, FHA has been extremely successful in achieving
these goals. FHA loans require special a appraisal/inspection that determine
if a property meet the agency's minimum property standards. While somewhat
more expensive that a conventional loan in terms of interest rates and insurance
fees, FHA loans offer slightly more liberal qualifying criteria. The current
maximum FHA loan amount in the Houston area, for a single-family home, is $139,650.00
- fee simple estate
-
The most complete form of ownership of real property;
absolute ownership. Commonly used to to denote a property where the owner has
undivided title to the land on which the property is situated.
- FHA
- The
Federal Housing Administration which insures mortgage loans made
by approved lenders, in accordance with FHA regulations.
-
-
FHLMC
- Acronym
- Federal Home Loan Mortgage Corporation. See Freddie
Mac.
- fiduciary
-
The relationship of trust, honesty and confidence
between agent and principal; the faithful relationship owed by an agent to the
principal.
- finder's
fee
- A fee charged by real estate
brokers and apartment-finding services in exchange for locating a rental property.
These fees are permitted by law. Some landlords, however, charge finder's fees
merely for renting a place. This type of charge is not legitimate and, in some
areas, is specifically declared illegal.
- first
mortgage
- A mortgage which is
in first lien position, taking priority over all other liens (which are financial
encumbrances).
- fixed
rate mortgage
- A mortgage with
an interest rate and monthly payment that doesn't vary for the term of the loan.
- fixture
- Personal
property which has been attached to real estate so as to become part of the real
property. The article must meet at least one of three conditions:
- 1. Attached in a permanent manner.
-
2. Specially adapted to the property. or
-
3. Intentionally made part of the real property.
- Flood Control District
-
A special taxing district created to provide flood
control in specific areas of a county.
- flood
insurance
- A special and separate
type of homeowner's insurance the provides coverage for damages resulting from
flooding. Flood insurance is required by most lenders only if the property
is located within a designated flood plain. The cost of the policy is related
to the associated flooding risk. If a property has a small section of land
located within a flood plain, but away from the residential improvements (house),
the lender will still require a policy, but its cost will be much lower.
Likewise, flood insurance policies for properties not located within any floodplain,
are fairly inexpensive.
-
-
Most flood insurance is underwritten by the federal
government through FEMA
and the National Flood Insurance Program in cooperation with private insurance
agencies. More than 18,000 communities participate in the Federal flood
insurance program. More than 3.8 million National Flood Insurance Program (NFIP)
home and business policies are in effect. The United States experiences
flooding threats throughout all four seasons of the year and, in fact, flooding
is the most common natural disaster. There are, on average, 1000 floods per year
in the U.S. Nearly everyone is at some risk of experiencing the effects
of flooding. In the Houston area, 25 percent of flood-insurance claims come
from areas outside a designated flood plain.
- flood
plain
- Flood plains are by definition
subject to periodic flooding. They are generally characterized by relatively flat
topography and soil types that were laid down during past inundations by flood
waters. If your property is in the 100-year flood plain, there is a 1-in-100
chance in any given year that your property will flood. If it is in the 25-year
flood plain, there is a 1-in-25 chance in any given year that your property will
flood. The statistical chance of flooding is not changed by any one flooding event;
but repeated flooding may result in the flood plain being recalculated.
-
- A
100-year flood plain is always wider than a 25-year flood plain, and the 25-year
flood plain is contained within the 100-year flood plain. The flood prone areas
of the United States cover approximately 150,000 square miles or 94 million acres
of land, an area roughly the size of the State of Montana. People living in flood
plains are 26 times more likely to experience a flooding disaster than they are
a fire disaster during the life of the 30-year mortgage on their homes.
-
- The
changes in flood plain maps reflect changes in land use (such as increased building
activity), changes in the waterways, and flood control improvements (such as detention
ponds or other flood control measures). As more lots are covered with more
buildings and parking lots, the amount of water that flows into creeks and lakes
increases because there is less vegetation to absorb the water when it rains.
This is one reason why buildings that were not originally built in a flood plain
are now in the 25-year or 100-year flood plain.
- FNMA
-
Usually referred to as "Fannie
Mae", the acronym stands for the Federal National Mortgage Association.
-
- For
Sale By Owner (FSBO)
- An individual
homeowner who is attempting to sell his property without a real estate broker.
The acronym, FSBO is pronounced "fizzbo."
-
foreclosure
-
A legal process instituted by a mortgagee or lien
creditor after the debtor's default.
- forfeiture
-
The loss of property or a privilege due to breaking
a law. For example, a landlord may forfeit his or her property to the federal
or state government if the landlord knows it is a drug-dealing site but fails
to stop the illegal activity. Likewise, a homeowner may lose his house to
satisfy IRS debts or if the government suspects the home was bought with money
derived from criminal acts. The government may seize and sell the property
at auction, often far below its fair market value, before the homeowner has been
allowed the due process of a trial. If the homeowner is found not guilty,
the government is only required to pay back the amount received at auction, and
not the market value.
- fraud
-
A misstatement of a material fact made with intent
to deceive or made with reckless disregard of the truth, and which actually does
deceive.
-
- Freddie
Mac
- Chartered by Congress in
1970, Freddie Mac is a publicly held corporation that purchases mortgages in the
secondary mortgage market. Freddie Mac came into being as the Federal
Home Loan Mortgage Corporation (FHLMC) with the mission to create a continuous
flow of funds to mortgage lenders. By supplying lenders with the money to
make mortgages and packaging the mortgages into marketable securities which are
sold to investors, Freddie Mac also helps to sustain a stable mortgage credit
system which in turn, reduces the mortgage rates paid by homebuyers. Over
the years, Freddie Mac has been responsible for opening the door to homeownership
for one out of six home buyers in America who would not have qualified otherwise.
- front foot
- One
linear foot (12 inches) along the street side of a lot.
- FSBO
- Acronym
- For Sale By Owner
- functional obsolescence
-
Loss of value of real property caused by modernization
or changing tastes or standards; e.g.. single bath, inadequate closet space, etc.
Contrast with economic obsolescence.
- garden home
- See
patio home
- gated
community
- A neighborhood or group
of neighborhoods, usually surrounded by masonary walls, restricting access through
the use of a manned guard station or electronically operated gates. The
electronic gates may be opened through the use of individual remote controls and/or
a numeric keypad and code. Some gated communities restrict entry at all
times, while others only limit access during the evening hours. The City
of Houston does not allow public city streets to be gated off, so only neighborhoods
with private streets, may have restricted access. The costs associated with
maintaining a manned guard gate can significantly impact monthly maintenance fees,
depending on the size of the community.
- general
lien
- A
lien that includes all the property owned by a debtor, rather than a specific
property. Contrast with Specific Lien.
- general
warranty deed
- A deed in which
the grantor fully warrants good and clear title to the property. A general warranty
deed offers the most protection of any deed.
-
-
Ginnie Mae
-
The common nickname for the Government National Mortgage
Association. Ginnie Mae was created in 1968 as a wholly owned corporation
within the Department of Housing and Urban Development (HUD), having been separated
from Fannie Mae. Ginnie Mae does not loan money for mortgages. Instead,
it operate in the secondary mortgage market, buying loans and selling mortgage-backed
securities investors, which in turn, increases the availability of mortgage credit.
-
- Government
National Mortgage Association
- See
Ginnie Mae.
-
-
GNMA
- Acronym
- Government National Mortgage Association, also known as "Ginnie
Mae"
- good
faith estimate
- A written estimate
of closing costs which a lender must provide you within three days of submitting
an application.
- government
survey method
- A
system of land description (not used in Texas) which uses meridians (north and
south lines) and base lines (east and west lines). Areas include quadrangles (24
miles on each side), townships (6 miles on each side), and sections (1 mile on
each side). Also known as the Rectangular Survey Method. Contrast with metes
and bounds, and recorded plat (Lot
and Block Number) method.
- grace
period
- A period of time during
which a loan payment may be paid after its due date but not incur a late penalty.
Such late payments may be reported on your credit report.
-
-
grant deed
-
A deed containing an implied promise that the person
transfering the property actually owns the title and that it is not encumbered
in any way, except as described in the deed. This is the most commonly used type
of deed. Compare quitclaim deed.
- grantee
- A
person to whom real estate is conveyed; the buyer.
- grantor
-
A person conveying real estate by deed; the seller.
- gross debt service
- The
amount of money needed to pay principal, interest and taxes, and sometimes energy
costs. If the dwelling unit is a condominium, all or a portion of common fees
are excluded, depending on what expenses are covered.
-
gross income
- For
qualifying purposes, the income of the borrower before taxes or expenses are deducted.
- gross lease
-
A commercial real estate lease in which the tenant
pays a fixed amount of rent per month or year, regardless of the landlord's operating
costs, such as maintenance, taxes and insurance. A gross lease closely resembles
the typical residential lease. The tenant may agree to a "gross lease with
stops," meaning that the tenant will pitch in if the landlord's operating
costs rise above a certain level. In real estate lingo, the point when the
tenant starts to contribute is called the "stop level," because thats
where the landlords share of the costs stops. Contrast with Net
Lease.
-
habendum clause
-
The "to have and hold" clause which defines
or limits the quantity of the estate granted in the premises of the deed.
- hazard insurance
-
A contract between purchaser and an insurer, to compensate
the insured for loss of property due to hazards (fire, hail damage, etc.), for
a premium. Most common, lender required feature of homeowners
insurance.
- hereditaments
-
Property, personal and real, capable of being inherited.
-
- high-rise
-
A nine-story or taller building containing residential
apartments or condominium units. In addition to spectacular views, most
high-rises offer their residents a full range of amenities. Building features
may include 24-hour concierge service, swimming pools, spas, saunas, tennis courts,
exercise areas, party rooms and guest suites. Security is enhanced at these
buildings by the manned entry desks and limited access, covered parking garages.
Compare with mid-rise.
- highest and best use
-
The particular use of a real property which will
produce the greatest financial return. The optimum use of a site as used in appraisal.
This is often determined by location, neighboring properties, deed
restrictions and local zoning regulations. A home
built on a busy street, surrounded by commercial property, and not restricted
from other development, is not fulfilling its highest and best use. Once
the property is redeveloped into commercial property, it can meet it economic
potential.
-
-
HOA
- Acronym
- homeowner's association
- hold harmless
- In
a contract, a promise by one party not to hold the other party responsible if
the other party carries out the contract in a way that causes damage to the first
party. For example, many leases include a hold harmless clause in which the tenant
agrees not to sue the landlord if the tenant is injured due to the landlords
failure to maintain the premises. In most states, these clauses are illegal in
residential tenancies, but may be upheld in commercial settings.
- home equity loan
- A
fixed or adjustable rate loan obtained for a variety of purposes, secured by the
equity in your home. Interest paid is usually tax-deductible. Often used for home
improvement or freeing of equity for investment in other real estate or investment.
Recommended by many to replace or substitute for consumer loans whose interest
is not tax-deductible, such as auto or boat loans, credit card debt, medical debt,
and education loans. Home equity loans were recently made available in Texas
due to changes the homestead laws as of January 1, 1999.
-
-
home warranty
- A
service contract that covers a major housing system--for example, plumbing or
electrical wiring--for a set period of time from the date a house is sold. The
warranty guarantees repairs to the covered system and is renewable. A basic,
one year Buyer's warranty costs $295 to $350 with additional coverage available
for garage door openers, spas, swimming pools, sprinkler system and other appliances.
-
- homeowners'
association (HOA)
- An organization
comprising neighbors concerned with managing the common areas of a subdivision
or condominium complex. These associations take on issues such as maintaining
common land and recreation areas, and collecting dues from residents. The homeowners'
association is also responsible for enforcing any covenants, conditions &
restrictions that apply to the property. Payment of dues and participation
in the homeowner's association may be either voluntary or mandatory, depending
on the neighborhood.
- homeowners'
insurance
- A type of insurance
policy designed to protect homeowners from financial losses related the ownership
of real property. In addition to covering losses due to vandalism, fire,
hail, etc.(hazard insurance), most
policies also provide theft and liability coverage. Flood related damage
requires a separate flood insurance policy or rider.
- homestead
-
(1) The house in which a family lives, plus
any adjoining land and other buildings on that land.
- (2)
Land, and the improvements thereon, designated by the owner as his homestead and,
therefore, protected by state law from forced sale by certain creditors of the
owner. Texas offers homestead protection for a single residential property.
In addition, Texas mandates a minimum $15,000 school district property tax exemption
on the appraised value of a homestead property. Other taxing authorities,
such as cities and counties, may offer additional property tax exemptions on homesteads.
Homestead protection will not stop foreclosures
for deliquent mortgages, taxes or mandatory
homeowner's association dues.
-
(3) Land acquired out of the public lands
of the United States. The term "homesteaders" refers to people who got
their land by settling it and making it productive, rather than purchasing it
outright.
-
-
house closing
- The
final transfer of the ownership of a house from the seller to the buyer, which
occurs after both have met all the terms of their contract and the deed has been
recorded. Also known as just "closing".
- Housing and
Urban Development, Deparment of (HUD)
- The
U.S. Department of Housing and Urban Development. This is the agency responsible
for enforcing the federal Fair Housing Act.
- HUD
- Acronym
- Housing and Urban Development.
implied warranty of habitability
- A legal doctrine that requires landlords to
offer and maintain livable premises for their tenants. If a landlord fails to
provide habitable housing, tenants in most states may legally withhold rent or
take other measures, including hiring someone to fix the problem or moving out.
See constructive eviction.
- improvements
-
Valuable additions to the land, such as buildings,
fences, roads, etc., which increase the value of the property.
- incidents of ownership
-
Any control over property. If you give away property
but keep an incident of ownership--for example, you give away an apartment building
but retain the right to receive rent--then legally, no gift has been made. This
distinction can be important if you're making large gifts to reduce your eventual
estate tax.
- income approach
to value
- An
estimate of value based on the monetary returns that a property can be expected
to generate; capitalization. Contrast with the cost
approach to value and the market
data approach to value.
- Independent
School District
- In Texas, all
but one of the state's school districts are considered "Independent"
since they do not fall under the direct control of any other local government,
and their boundaries are not constrained by any city or county border lines.
Each district is run by an elected school board, which appoints a superintendent
and sets budgets and tax rates. Only the State of Texas has the authority
to regulate and oversee the actions of an Independent School District.
-
- The
one exception is the Stafford Municipal School District, which de-annexed itself
from the Fort Bend Independent School District. Stafford MSD lies entirely
within the city limits of the City of Stafford, and shares its recreational and
auditorium facilities.
- index
-
A number, usually a percentage, upon which future
interest rates for adjustable rate mortgages are based.
-
ingress
-
An entrance, or the act of entering. Compare egress.
- inspection clause
- A
stipulation in an offer to purchase that makes the sale contingent on the findings
of a home inspector.
- insurable
title
- A title which a title company
will insure.
- interest
-
(1) The sum paid in return for the use of
money; could be considered rent for the use of money.
- (2)
The type and extent of ownership in property.
- interest
rate
- The periodic charge, expressed
as a percentage, for use of credit.
- intermediary
-
As of January 1, 1996, a broker may act as an intermediary
between the parties if the broker complies with the The Texas Real Estate License
Act. The broker must obtain the written consent of each party to the transaction
to act as an intermediary. The written consent must state who will pay the broker
and, in conspicuous bold or underlined print, set forth the broker's obligations
as an intermediary. The broker is required to treat each party honestly and fairly
and to comply with The Texas Real Estate License Act. A broker who acts as an
intermediary in a transaction:
- (1)
shall treat all parties honestly;
- (2)
may not disclose that the owner will accept a price less than than the asking
price unless authorized in writing to do so by the owner;
- (3)
may not disclose that the buyer will pay a price greater than the price submitted
in a written offer unless authorized in writing to do so by the buyer; and
-
(4) may not disclose any confidential information
or any information that a party specifically instructs the broker in writing not
to disclose unless authorized in writing to disclose the information or required
to do so by The Texas Real Estate License act or a court order or if the information
materially relates to the condition of the property.
- With
the parties' consent, a broker acting as an intermediary between the parties may
appoint a person who is licensed under The Texas Real Estate License Act and associated
with the broker to communicate with and carry out instructions of one party and
another person who is licensed under the Act and associated with the broker to
communicate with and carry out instructions of the other party.
- intestate
-
Legal designation of a person who has died without
leaving a valid will.
- intimidation
-
As defined in the fair housing laws, it is the illegal
act of coercing, intimidating, threatening, or interfering with a person in exercising
or enjoying any right granted or protected by federal, state or local fair housing
laws.
- invitee
-
A business guest, or someone who enters property
held open to members of the public, such as a visitor to a museum. Property owners
must protect invitees from dangers on the property. In an example of the perversion
of legalese, social guests that you invite into your home are called "licensees."
- joint tenancy
-
A way for two or more people to share ownership of
real estate or other property. When two or more people own property as joint tenants
and one owner dies, the other owners automatically own the deceased owner's share.
For example, if a parent and child own a house as joint tenants and the parent
dies, the child automatically becomes full owner. Because of this right of survivorship,
no will is required to transfer the property; it goes directly to the surviving
joint tenants without the delay and costs of probate. Contrast with tenancy
in common.
- judgment
-
The official and authentic decision of a court of
justice concerning the respective rights and claims of the parties to an action
or suit.
- laches
-
Delay or negligence in asserting one's rights.
- landlord
-
The owner of any real estate, such as a house, apartment
building or land, that is leased or rented to another person, called the tenant.
- latent defect
- Hidden
structural defects and flaws.
- lease
-
An oral or written agreement (a contract) between
two people concerning the use by one of the property of the other. A person can
lease real estate (such as an apartment
or business property) or personal property
(such as a car or a boat). A lease should cover basic issues such as when the
lease will begin and end, the rent or other costs, how payments should be made,
and any restrictions on the use of the property. The property owner is often called
the "lessor," and the person using
the property is called the "lessee."
In Texas, any lease over one year in length, must be in writing.
- lease option
- A
contract in which an owner leases his house (usually for one to five years) to
a tenant for a specific monthly rent, and which gives the tenant the right to
buy the house at the end of the lease period for a price established in advance.
This allows a potential home buyer move into a house he may wish to eventually
buy without having to come up with a down payment or financing at that time.
- lease purchase
- A
contract in which an owner leases his house (usually for one to five years) to
a tenant for an increased monthly rent, and which gives the tenant the right to
buy the house at the end of the lease period for a price established in advance,
with the incremental rent increase being used to form a down payment. Buyers
should be wary of this type of contract since they may lose their extra rent/down
payment money should the owner suffer financial setbacks before the purchase has
been completed.
-
-
leasehold estate
- A
form of real estate in which a tenant is allowed to construct permanent structures
upon a parcel of leased land, and derive some use or income from said structures
during the period of the lease. Leasehold estates usually involve long-term
leases, ranging from 20 to 99 years. Land owners are able to have their
property developed, with no out of pocket expenses. Instead of having to
sell their land too soon, they retain their family's rights to the land, while
receiving a steady income stream. The tenant saves the initial land acquisation
costs and may gain access to property that would be otherwise unavailable.
The downside is, as the lease nears the end or its term, the tenant's investment
becomes uncertain, and the landlord is in a position to make demands for compensation,
above the fair market price. Leaseholds are much more common in commercial
real estate, but can apply to some residential properties as well. Hawaii
has many leasehold condominium projects, and even Houston has at least one mid-rise
condominium building that lacks ownership of the land it occupies.
- legal description
- A
description of a specific parcel of real estate which is acceptable to the courts
in that state, and which will allows an independent surveyor to locate and identify
it. Usually it uses one of the following methods; government
survey (Not Used in Texas), metes and bounds,
or recorded plat (lot and block number).
- less favorable treatment
-
Any time a person is treated differently on the basis
of race, sex, religion, color, familial status, disability, or national origin,
either by action or inaction, in the selling or leasing of real property, it is
a violation of the Fair Housing Laws.
Also known as unequal treatment or different treatment.
-
lessee
-
Tenant leasing property.
-
lessor
-
One who leases property to a tenant.
- leverage
- The
use of borrowed funds to finance an investment and to magnify the rate of return.
-
- Levy
Improvement District (LID)
- A
type of Water Control and Improvement District, used to build and maintain levies.
Levies are used to contain flooding creeks and rivers.
-
licensee
- A
person licensed by the Texas Real Estate Commission to engage in real estate brokerage,
either as a broker or as a salesman.
- LID
-
Acronym - Levy
Improvement District.
- lien
-
A monetary claim against a property. These should
be settled before the sale is finalized.
- lien
theory state
- Texas
is a Lien Theory State, where legal title of mortgaged property resides with the
mortgagor (borrower), with the mortgage as a lien against the property. Contrast
with title theory state.
- life estate
- An
interest in property only for the duration of someone's life.
- life tenant
- One
who has a life estate in real property.
- limited
equity housing
- An arrangement
designed to encourage low-and moderate-income families to purchase housing, in
which the housing is offered at an extremely favorable price with a low down payment.
The catch is that when the owner sells, she gets none of the profit if the market
value of the unit has gone up. Any profit returns to the organization that built
the home, which then resells the unit at an affordable price.
- lis pendens
- A
notice indicating that legal action is pending on a property.
- listing agreement
- The
legal agreement between the listing agent/broker and the vendor, setting out the
services to be rendered, describing the property for sale, and stating the terms
of payment.
-
-
loan-to-value
ratio (LTV)
- The ratio of the
amount being loaned in respect to the appraised value of the property, usually
expressed as a percentage. If a buyer was putting down $20,000, and borrowing
a first lien of $180,000, on a $200,000 property, then the loan would have a 90%
LTV. Loan-to-value ratios can effect interest rates, loan qualifying criteria,
and lender requirements for PMI
and escrow accounts.
- lock or lock In
- A
commitment you obtain from a lender assuring you a particular interest rate or
feature or a definite time period. Provides protection should interest rates rise
between the time you apply for a loan, acquire loan approval, and, subsequently,
close the loan and receive the funds you have borrowed.
-
-
loft
- (1)
A style of residential construction. In Houston the term "loft"
is used quite liberally. It may refer to an older building that has been
converted into residential condominiums, or it may mean a new mid-rise project
with a "loft-style" finish to the units. There are also new construction
townhomes that are promoted as being "lofts". A builder creates
new loft space by leaving exposed brick walls, bare polished concrete floors and
having unhidden heating ducts, trusses, etc.
- (2)
An upstairs room or area that has an open wall, overlooking a room or area below.
-
- LTV
-
See loan-to-value
ratio.
-
mandatory
continuing education (MCE)
- The
State of Texas requires that its licensed real estate brokers, and salesmen (who
have met their SAE requirement), attend at least 15 hours of certified real estate
education courses before each license renewal (every two years). At least
six of the 15 hours must be in legal topics.
- manufactured
home
- A structure built in a factory,
that is later shipped to, and placed on, the homesite. The term can apply
to both mobile homes and pre-fab homes.
- margin
-
An amount, usually a percentage, which is added to
the index to determine the interest rate for adjustable rate mortgages.
- marginal land
- Property
which is barely profitable to use.
- market
approach to value
- An
estimate of value based on the actual sales prices of comparable properties. Contrast
with cost approach to value and
income approach to value.
- market value
- The
price that a willing buyer and a willing seller, both given full information,
and neither under pressure to act, would agree upon. Also known as Fair Market
Value.
-
- master-planned
community
- A large scale, mixed
use, real estate development that follows a long term, comprehensive plan.
Master-planned communities typically blend different price ranges of residential
neighborhoods with some commercial properties designed to serve the residents'
needs. Residential properties may include patio homes, townhouses, condominiums
and apartment complexes in addition to neighborhoods of single-family homes.
Likewise, multiple home builders are included in the construction of the various
neighborhoods. Commercial development can consist of retail strip centers
ans shopping malls, restaurants, entertainment venues and office buildings.
-
- In
addition, master-planned communities usually offer amenities such as public recreation
areas and parks, neighborhood schools and extensive landscaping. Recreation
areas may include public swimming pools, tennis courts, children's play grounds
and sports fields. Many offer large water features and public or private
golf courses.
- The term "master-planned"
has become somewhat of an overused buzzword in the current market place.
True master-planned communities require a a multi-year commitment from the developer
and contain thousands of homes.
- MCE
-
See mandatory
continuing education.
- mechanic's
lien
- A legal claim placed on
real estate by someone who is owed money for labor, services or supplies contributed
to the property for the purpose of improving it. Typical lien claimants are general
contractors, subcontractors and suppliers of building materials. A mechanics'
lien claimant can sue to have the real estate sold at auction and recover the
debt from the proceeds. Because property with a lien on it cannot be easily sold
until the lien is satisfied (paid off), owners have a great incentive to pay their
bills.
- mediation
-
A dispute resolution method designed to help warring
parties resolve their own dispute without going to court. In mediation, a neutral
third party (the mediator) meets with the opposing sides to help them find a mutually
satisfactory solution. Unlike a judge in her courtroom or an arbitrator conducting
a binding arbitration, the mediator has no power to impose a solution. No formal
rules of evidence or procedure control mediation; the mediator and the parties
usually agree on their own informal ways to proceed.
-
metes and bounds
-
A system of land description using distance (metes)
and angles/compass directions (bounds), beginning and ending at the same point.
Contrast with government survey
and recorded plat method.
- mid-rise
-
A 4-story to 8-story tall building that contains
residential apartment or condominium units. While not offering the panoramic
views of a high-rise, mid-rise buildings
can offer comparable levels of amenities and services. Building features
may include 24-hour concierge service, swimming pools, spas, saunas, tennis courts,
exercise areas, and party rooms. Security is enhanced at these buildings
by the manned entry desks and limited access, covered parking garages.
- mineral rights
- An
ownership interest in the minerals contained in a particular parcel of land, with
or without ownership of the surface of the land. The owner of mineral rights is
usually entitled to either take the minerals from the land himself or receive
a royalty from the party that actually extracts the minerals.
- minimum payment
- The
minimum amount that you must pay, usually monthly, on a home equity loan or line
of credit. In some plans, the minimum payment may be "interest only,"
(simple interest). In other plans, the minimum payment may include principal and
interest (amortized).
- minority
-
As defined in the Civil Rights Act of 1968 as part
of the Fair Housing Laws "'minority' means any group, or any member of a
group, that can be identified either: (1) by race, color, religion, sex,
disability, or national origin; or (2) by any other characteristic (such
as familial status) on the basis of which discrimination is prohibited by a federal,
state, or local fair housing law.
- misrepresentation
-
A false statement, or concealment, of material fact
with the intention of inducing action of another.
- mobile
home
- A type of manufactured home,
that is transported to the home site using wheels attached to the structure.
Mobile homes come in various widths and lengths, and maybe composed of one to
three pieces. A one piece home is called a "single-wide", while
a house that is joined together from two halves is called a "double-wide".
Recently, "triple-wides" have appeared, and become as the largest mobile
homes available. Most sections are between 14 and 16 feet wide, and 54 to
80 feet in length. Mobile homes do not require any foundation or substructure.
They sit up off the ground, with skirting used around the base to hide the wheel
and jacks. While it is possible to tie down a mobile home to a piece of
land, using straps and screw-in anchors, the structures are very susceptible to
high winds and tornados.
- month-to-month
tenancy
- A rental agreement that
provides for a one-month tenancy that is automatically renewed each month unless
either tenant or landlord gives the other the proper amount of written notice
(usually 30 days) to terminate the agreement. Some landlords prefer to use month-to-month
tenancies because it gives them the right to raise the rent after giving proper
notice. This type of rental also provides a landlord with an easy way to get rid
of troublesome tenants, because in most states month-to-month tenancies can be
terminated for any reason. It is also common for leases to revert to month-to-month
tenancies at the end of the original lease period, if another lease has not been
signed.
- monument
-
A fixed object or point, either natural or man-made,
used in making a survey.
- mortgage
-
A contract providing security for the repayment of
a loan, registered against property, with stated rights and remedies in the event
of default. Lenders consider both the property (security) and financial worth
of the borrower (covenant) in deciding on a mortgage loan.
- mortgage banker
- Originates
mortgage loans, loaning you their funds and closing the loan in their name.
- mortgage broker
- A
person or company having contacts with financial institutions or individuals wishing
to invest in mortgages.
- mortgage
loan
- A loan which utilizes real
estate as security or collateral to provide for repayment should you default on
the terms of your loan. The mortgage or deed of trust
is your agreement to pledge your home or other real estate as security.
- mortgagee
- The
lender in a mortgage loan transaction.
- mortgagor
-
The borrower in a mortgage loan transaction.
- MUD
- See
Municipal Utility District.
- Multiple Listing Service (MLS)
-
A system by which a number of real estate firms share
information about homes that are for sale. Membership usually provides a
monthly book and/or computer service that provides Realtors®
with detailed listings of most homes currently on the market.
- Municipal
Utility District (MUD)
- Municipal
Utility Districts are authorized under the Texas Constitution, Article III, Section
52, or Article XVI, Section 59. They are local political subdivisions of
the State, governed by a board of directors. After the terrible floods in
Texas during 1912-14, people across the state realized there was a real need to
confirm the State's duty to not only prevent floods but, also through the storage
of flood waters, to conserve the water for beneficial usages. This was the
genesis for the passage of Section 59 of Article XVI in 1917, which allowed water
districts to operate with unlimited bonded indebtedness. In 1925, legislation
was passed which authorized the creation of Water Control and Improvement Districts
-- WCIDs -- with the same bonded indebtedness and taxing authority.
-
- To
create a new water district, a developer files an application through the Office
of the State Attorney General to the TNRCC.
The application outlines the developer's plans for providing various services
such as water, sewer and drainage to areas where municipal services are not already
in place. A Board of Directors is established, which is assisted by qualified
professionals who provide services on a fee basis. Not all water districts are
created equal. Some are established under General Law by theTexas
Natural Resource Conservation Commission (TNRCC); some by Commissioners
Court; and others are created by the governing board of a city. Special
law districts are created by an act of the State Legislature. All water
districts, however, must comply with the laws contained in the Texas Water
Code.
-
- Water
districts are generally empowered to incur debt and levy taxes. If voters
approve unlimited tax bonds, a debt service tax to pay the bonds is also approved.
Each year, the water district board is obligated to levy a property tax adequate
to cover the debt. This tax is levied on all property in the district based
on appraised value, regardless of services received, and must comply with the
Property Tax Code. The tax rate must be published each year and public hearings
held if the effective tax rate increases more than three percent over the previous
year. District voters may also approve a maintenance tax. Water districts
must comply with the Texas Open Meetings Act and the Texas Open Records Act and
have an annual audit performed by an independent auditing firm. Water districts
are generally empowered to:
- negative amortization
-
Amortization in which the payment made is insufficient
to fund complete repayment of the loan at its termination. Usually occurs when
the increase in the monthly payment is limited by a ceiling. The portion of the
payment which should be paid is added to the remaining balance owed. The balance
owed may increase, rather than decrease over the life of the loan.
- net lease
-
A commercial real estate lease in which the tenant
regularly pays not only for the space (as he does with a gross lease) but for
a portion of the landlords operating costs as well. When all three of the
usual costs--taxes, maintenance and insurance--are passed on, the arrangement
is known as a "triple net lease." Because these costs are variable and
almost never decrease, a net lease favors the landlord. Accordingly, it
may be possible for a tenant to bargain for a net lease with caps or ceilings,
which limits the amount of rent the tenant must pay. For example, a net lease
with caps may specify that an increase in taxes beyond a certain point (or any
new taxes) will be paid by the landlord. The same kind of protection can be designed
to cover increased insurance premiums and maintenance expenses. Contrast
with gross lease.
-
net listing
- A
price, which must be expressly agreed upon, below which the owner will not sell
the property and at which the broker will not receive a commission; the broker
receives the excess over and above the net listing price as commission. The broker
in this type of listing will have a very hard time maintaining his fiduciary responsibilities
to his seller since his interests are potentially at odds with the interests of
the seller.
- non-escrowing
loan
- Typically, mortgage lenders
require escrow accounts for property taxes, hazard insurance, and sometimes, homeowner's
association dues. Monthly contributions to these accounts are rolled into
a lender's mortgage payment. In Texas, escrow accounts are non-interest
bearing, so many borrowers prefer the option of keeping the monies for their hazard
insurance and property taxes in their own interest bearing accounts, until they
become due. Most lenders only allow non-escrowing loans on mortgages with
an 80% or lower, loan-to-value ratio.
- Property
taxes can be paid as late as January 31st of the following year before interest
and penalties begin to accrue. If the borrower has the discipline to save
the monies for taxes and insurance independently, a non-escrowing loan would be
the smart choice. Most lenders charge a one-time fee at closing for selecting
the non-escrow option. Non-escrowing loans also have lower closing costs
since the lender does not collect reserves, which place a 2-3 month cushion of
pro-rated payments in the escrow account. Additionally, the seller's pro-rated
share of the year's property taxes is applied directly to the buyer's closing
costs, instead of being placed into the escrow account.
-
note
- A
written instrument of credit attesting to a debt and promise to pay.
- nuisance
-
Something that interferes with the use of property
by being irritating, offensive, obstructive or dangerous. Nuisances include a
wide range of conditions, everything from a chemical plant's noxious odors to
a neighbor's dog barking. The former would be a "public nuisance," one
affecting many people, while the other would be a "private nuisance,"
limited to making your life difficult, unless the dog was bothering others. Lawsuits
may be brought to abate (remove or reduce) a nuisance. See quiet
enjoyment, attractive nuisance.
- obsolescence
-
A loss in value of real property caused by changes
either internal or external to the property. See economic
obsolescence, functional obsolescence,
and physical deterioration.
- offer
- A
proposal to enter into an agreement with another person. An offer must express
the intent of the person making the offer to form a contract, must contain some
essential terms--including the price and subject matter of the contract--and must
be communicated by the person making the offer. A legally valid acceptance of
the offer will create a binding contract.
- open
house
- An opportunity for prospective
buyers to view a house in a low pressure environment.
-
open listing
- A
listing under which the principal (owner) reserves the right to list his property
with other brokers.
- option
-
The right to purchase property within a definite
time at a specified price. There is no obligation to purchase, but the seller
is obligated to sell if the option holder exercise the right to purchase. For
the option to be valid, it must include consideration.
-
option fee
- An
amount of money payed by a prospective Buyer, to a Seller, in order to obtain
an option period, as specified in Paragraph 7 of a TREC promulagated earnest money
contract. If a Buyer decides to close on the property, the option fee may
be credited to his funds at closing.
- option
period
- Current residential earnest
money contracts, promulagated by the Texas Real Estate Commission offer the choice
of an option period, under Paragraph 7. During this period, the length of
which is negotiable, the Buyer has a right to inspect the property and has an
absolute right to terminate the offer/contract for any reason, without penalty.
In exchange for this option period, the Buyer pays an option fee to the Seller.
If the Buyer decides to continue with the sale of the property, this option fee
may be credited to him at closing. Typical option periods run from 7 to
14 days long.
- ordinance
-
A law adopted by a town or city council, county board
of supervisors or other municipal governing board. Typically, local governments
issue ordinances establishing zoning and parking rules and regulating noise, garbage
removal, and the operation of parks and other areas that affect people who live
or do business within the locality's borders.
- origination
fee
- A fee charged by lenders,
in addition to interest, for services in connection with granting of a loan. Usually
a percentage of the loan amount.
- panic peddling
-
The illegal practice of inducing panic selling in
a neighborhood by making representations of the entry, or prospective entry, of
members of a minority group; blockbusting.
See Fair Housing.
- party wall
- Wall
erected on line between adjoining properties for the use of both properties.
- patio home
-
A single-family home that sits on a small lot, often
with one outside wall of the structure sitting on the property line. Patio
homes have no common structural walls with adjoining propeties, but their zero
lot line wall may form part of their neighbors backyard fence/wall.
These properties often have a small back or side yard large enough for a patio
or garden area. Also known as a garden home.
- percentage
lease
- Lease in which all or part
of rental is a specified percentage of gross income from total sales made upon
the premises.
- person
-
An individual, a partnership, or a corporation, foreign
or domestic.
- personal
property
- Property
which is tangible, movable, and not fixed to the land. Also called chattel and
personalty. Contrast with real property.
- personalty
-
Personal property; chattel. Contrast with Realty.
- physical deterioration
-
The loss of value to real property from all causes
due to the action of the elements and old age. Physical deterioration can be either
curable or incurable.
- PITI
-
Principal, Interest, Taxes and Insurance.
- planned
unit development (PUD)
- In a PUD,
the planned unit development association owns and maintains property in a real
property development project for the benefit of its members, who are owners of
individual parcels of real property in the development and are members of the
association because of that ownership. The level of services and fees are
similar to a condominium complex, but since each owner has title to a specific
parcel of land, lenders may treat units as non-condominiums. This allows
higher LTV loans and eliminates owner occupancy percentage requirements.
- plat book
- A
record of recorded subdivisions of land.
- PMI
-
Acronym - private
mortgage insurance.
- points
-
Fees paid to induce lenders to make mortgage loans
at a particular interest rate. Each point is equal to one percent (1%) of the
loan principal. Same as discount points.
- police power
- The
authority of a government to adopt and enforce law governing the use of real estate
based on the need to promote public safety, health, and general welfare.
- power of attorney (POA)
-
A written authorization by a person to another person
to act for him on his behalf.
- prepayment
-
Paying off all or part of the mortgage before the
scheduled date.
- prepayment
clause in a mortgage
- Statement
of the terms upon which the mortgagor (borrower) may pay the entire or stated
amount on the mortgage principal at some time prior to the due date.
- prepayment penalty
- A
fee paid to the lending institution for paying a loan prior to the scheduled maturity
date.
- primary mortgage
market
- Lenders
who originate loans and makes funds available directly to the borrowers. Contrast
with secondary mortgage market.
- prime rate
- The
interest, or discount rate charged by a commercial bank to its largest and strongest
customers.
- principal
-
The amount of money owed to the lender not including
interest.
- principle
of conformity
- An appraisal principle
which holds that the maximum value is realized when a reasonable degree of homogeneity
(sameness) exists in a neighborhood.
- private
mortgage insurance (PMI)
- Default
insurance on conventional loans, normally insuring the top 20%-25% of the loan
and not the whole loan.
- promulgated
contracts
- The
Texas Real Estate Commission has prepared and authorized various standard contracts
which must be used by all licensees when acting as agents in real estate transactions
with limited exceptions.
- property
taxes
- Taxes that are paid yearly
on real property. Property taxes are ad valorem, based on the assessed value
of the real property. In Texas the assessed value is determined by the County
Appraisal District. Each taxing authority multiplies this appraised value
by its annual tax rate. Taxing authorities include local school districts,
counties, cities, water districts(MUD's,
PUD's, LID's,
etc.), and other special tax districts.
- pro-rate
-
To divide or distribute proportionally. At closing,
various expenses such as taxes, insurance, interest, rents, etc. are prorated
between the seller and buyer.
- Public
Utility District (PUD)
- A water
district, created by a city or county, promoting development of a designated area
by providing water and sewer services. The PUD operates in the same manner
as a Municipal Utility District,
but is created by a local government, not a private developer.
- PUD
- Acronym
- planned unit development.
-
Acronym - Public
Utility District.
- puffing
-
Non-factual or extravagant statements and opinions
made to enhance the perceived desirability of a property. The is a fine line between
legal puffing and illegal misrepresentation, and puffing is best avoided. An example
of puffing would be, "This home has the best view in the city". Also
known as puffery.
- purchase
offer
- A document that lists the
price, terms and conditions under which a buyer is willing to purchase a property.
- qualify
-
To meet a mortgage lender's approval requirements.
- qualifying ratios
- Comparisons
of a borrower's debts and gross monthly income.
- quiet
enjoyment
- The right of a property
owner or tenant to enjoy his or her property without interference. Disruption
of quiet enjoyment may constitute a nuisance.
Leases and rental agreements often contain a "covenant of quiet enjoyment,"
expressly obligating the landlord to see that tenants have the opportunity to
live undisturbed.
- quitclaim
deed
- A deed that transfers whatever
ownership interest the transferor has in a particular property. The deed
does not guarantee anything about what is being transferred, including an actual
ownership interest. For example, a divorcing husband may quitclaim his interest
in certain real estate to his ex-wife, officially giving up any legal interest
in the property. A quit claim deed may also be used to clear up a cloud
on the title to the property in cases where there is a question of a possible
ownership claim. Compare with grant deed.
- ready, willing and able
-
A buyer who is prepared to buy on the seller's terms
and has the financial capacity to do so.
- real
estate
- Refers to land and improvements
and the rights to own or use them. "A leasehold, as well as any other interest
or estate in land, whether corporeal, incorporeal, freehold, or non-freehold,
and whether the real estate is situated in this state or elsewhere." {TRELA,
Section 2(1)} In popular usage, Real Estate is used interchangeably with real
property and realty.
- real estate board
- A
non profit organization representing local real estate agents/brokers and salespeople,
which provides services to its members and maintains and operates the Multiple
Listing Service in the community.
- real
estate agent
- A person licensed
to negotiate and transact the sale of real estate on behalf of the property owner.
- Real Estate Appraiser, licensed
-
A person licensed to legally appraise real estate
property for a fee. Texas has required its appraiser be licensed since 1939.
In 1991 the responsibility for licensing real estate appraisers was transfered
from the Texas Real Estate Commission to a newly formed Texas Appraiser Licensing
and Certification Board (TALCB). There are several classes of licensed real
estate appraisers, with the highest classification - Certified General RE Appraiser,
requiring a minimum of 180 classroom hours, and 3,000 hours appraisal work over
at least 2˝ years.
- Real
Estate Broker, licensed
- To be
eligible to apply for a real estate Broker License, an individual must have not
less than two (2) years active experience in Texas as a licensed real estate salesperson
and 180 classroom hours of core real estate coursesplus an additional 720 classroom
hours in related courses acceptable to the Commission. The applicant must
also pass the TREC Real Estate Broker's exam,
and then continue to maintain his license with mandatory continuing education
(MCE) courses .
- Real
Estate Center
- In 1971, the Texas
Real Estate Research Center was created by the state legislature. It is located
on the campus of Texas A&M University, and is part of the Lowry Mays College
and Graduate School of Business. Today, the shortened "Real Estate Center"
name is used. The mission of the Real Estate Center is to conduct real estate
related research based on needs of the Texas citizenry and disseminate the results
and findings.
- Real Estate
Inspector, licensed
- A Licensed
Real Estate Inspector is someone who is licensed by TREC
who holds himself out to the public as being trained and qualified to inspect
property. Formerly known as Registered Real Estate Inspector before January 1,
1996.
- Real Estate Salesperson,
licensed
- To be eligible to apply
for a real estate Salesperson License, an individual must complete core education
courses in Principles of Real Estate , Law of Agency and Law of Contracts.
An additional six (6) semester (90 classroom) hours must be completed in core
courses or in related courses acceptable to the Commission. The applicant must
also pass the TREC Real Estate Salesperson's
exam, and then continue to maintain his license with mandatory continuing education
(MCE) courses. Recently licensed real estate salespersons are required to
complete a total of 18 semester (270 classroom) hours of education by the end
of their third year of licensure, taking at least 30 hours per year.
- real property
-
Refers to the right to own land and improvements.
Commonly used interchangeably with Real Estate and Realty. Contrast with personal
property.
- REALTOR®
-
A real estate broker or an associate who holds active
membership in a local real estate board that is affiliated with the NATIONAL
ASSOCIATION OF REALTORS®.
- realty
-
Refers to land and buildings and other improvements
from a physical standpoint. Real Estate and Real Property tend to be used interchangeably
with Realty in everyday usage. Contrast with personalty.
- receiver
- Court-appointed
custodian who holds property for the court, pending final disposition of the matter
before the court.
- recorded
plat
- A
subdivision map filed with the county recorder's office that shows the location
and boundaries (lot and block number) of individual parcels of land. Contrast
with government survey method and
metes and bounds.
- recording
- The
act of entering in the public records, the written record of title to real property,
thereby giving constructive notice to the public.
- recovery
fund
- A fund maintained by the
Texas Real Estate Commission which upon court order is used to reimburse the public
for monetary loss due to illegal acts of licensees.
-
redlining
- The
illegal practice of refusing to originate mortgage loans, or limiting their number,
in certain neighborhoods on the basis of racial or ethnic composition. See Fair
Housing.
- refinancing
-
To apply for a new mortgage in order to gain better
terms, usually either a lower interest rate or a different principal amount.
- Regulation 'Z'
- Truth
in lending law developed by the Federal Reserve System which requires lenders
to provide full disclosure of the terms of the loan, including interest rates
expressed as an annual percentage rate (APR).
- RELA
-
Real Estate License Act.
-
release
- To
relinquish an interest or claim to a piece of property.
-
remainder
- The
future interest in an estate which takes effect after the termination of another
estate, such as a life estate; what is left at the termination of a life estate.
- rent control
- Laws
that limit the amount of rent landlords may charge, and that state when and by
how much the rent can be raised. Most rent control laws also require a landlord
to provide a good reason, such as repeatedly late rent, for evicting a tenant.
Rent control exists in some cities and counties in California, Maryland, New Jersey,
New York and Washington, D.C.
- reserves
-
Amounts of money set aside by a mortgage company
to assure payment of property taxes, homeowners' association dues, and insurance
premiums. The money is kept in an escrow account
-
reservation
-
A right reserved by a grantor in the sale or lease
of a property. In a sale, the title of all property passes to the grantee, but
the use may be reserved for the grantor. Contrast with exception.
- RESPA
- Real
Estate Settlement Procedures Act is a federal law which deals with the procedures
to be followed in a real estate closing, and is intended to make borrowers more
knowledgeable about possible costs and charges.
- restrictions
-
Limitations on the use or occupancy of real estate
contained in a deed or in local ordinances pertaining to land use.
- right
of survivorship
- The right of
a surviving joint tenant to take ownership of a deceased joint tenant's share
of the property. See joint tenancy.
- riparian owner
- One
who owns land bounding upon a river or water course (stream, creek, bayou, etc.).
- Road Utility District (RUD)
-
Pursuant to Article III, Section 52 of the Texas
Constitution, a Road Utility District may be created to construct, acquire, improve
and provide financing for a road facility. The term "road facility"
is defined as a road constructed, acquired or improved by a district; or property,
an easement, or work constructed, acquired, or improved by a district and necessary
or appropriate for, or in aid of the improvement of, a river, creek, or stream
to prevent overflow; or the construction and maintenance of a pool, lake, reservoir,
dam, canal or waterway for the purpose of drainage, if the property, easement,
or works is related to, or in furtherance of, the construction, acquisition, or
improvement of a road.
- running
with the land
- A phrase used in
property law to describe a right or duty that remains with a piece of property
no matter who owns it. For example, the duty to allow a public beach access path
across waterfront property would most likely pass from one owner of the property
to the next.
- Rural
Fire Prevention District (RFPD)
- A
special taxing district created to provide rural residents with fire-fighting,
fire prevention and other emergency services.
- sales contract
-
A written agreement stating the terms of the sale
agreed to by both buyer and seller. TREC promulgated
standard contracts must be used by all licensees, with certain limited exceptions.
See earnest money contract.
- Salesperson
Annual Education (SAE)
- A real
estate salesperson is required to complete a total of 18 semester (270 classroom)
hours of education by the end of their third year of licensure. All active
and inactive salespersons, who are under the SAE requirement, must show evidence
of having completed a minimum of 30 hours in core or related real estate education
each year or until a total of 270 classroom hours have been completed. At least
180 hours of the 270 must be in core real estate. Therefore the other 90
hours may be in related. Evidence of successful completion must be received on
or before the renewal filing deadline. If this documentation is not received on
time, the license will expire.
- SAE
-
Acronym - Salesperson
Annual Education
- secondary
mortgage market
- Buying
and selling of existing mortgage loans, designed to provide additional liquidity
for lenders. Contrast with primary mortgage
market. Also see Fannie Mae,
Freddie Mac and Ginnie
Mae.
- security
deposit
- A payment required by
a landlord to ensure that a tenant
pays rent on time and keeps the rental unit in good condition. If the tenant damages
the property or leaves owing rent, the landlord can use the security deposit to
cover what the tenant owes.
- security
interest
- An interest that a lender
takes in the borrower's property to assure repayment of a debt.
- self amortized loan
-
A loan which will retire the debt by systematic payments
of principal and interest, so that at the end of the loan period, the balance
will be zero.
- servicing
a loan
- The ongoing process of
collecting your monthly mortgage payment, including accounting for and payment
of your yearly tax and/or homeowners insurance bills.
-
servient tenement
- Property
that is subject to use by another for a specific purpose. For example, a beachfront
house that has a public walkway to the beach on its premises would be a servient
tenement.
- setback
-
The distance a building must be set back from the
property lines in accordance with local zoning ordinances or deed restrictions.
- shared equity mortgage
-
A home loan in which the lender gets a share of the
equity of the home in exchange for providing a portion of the down
payment. When the home is later sold, the lender is entitled to a
portion of the proceeds.
- short
sale (of house)
- A sale of a house
in which the proceeds fall short of what the owner still owes on the mortgage.
Many lenders will agree to accept the proceeds of a short sale and forgive the
rest of what is owed on the mortgage when the owner cannot make the mortgage payments.
By accepting a short sale, the lender can avoid a lengthy and costly foreclosure,
and the owner is able to pay off the loan for less than what he owes. See also
deed in lieu (or foreclosure).
- simple interest
-
Interest computed only on the principal balance.
Contrast with compound interest.
- single-family home
- A
free-standing, residential structure, designed to accomodate one family.
Single-family homes include traditional houses, as well as patio
homes.
- special
warranty deed
- A warranty deed
which, instead of warranting the title from sovereignty of the soil to the last
grantee, merely warrants the title against every person whomsoever lawfully claiming
or to claim the same, or any part thereof, by, through or under the grantor.
- specific lien
-
A claim that only applies to or affects a certain
property or group of properties. Contrast with general
lien.
- specific
performance
- Carrying out of the
precise terms agreed upon in a contract. Also see suit
for specific performance.
- spite
fence
- An unsightly fence erected
for no other purpose than to irritate a neighbor. Such a fence may be illegal
under local fence height and appearance regulations or state laws that specifically
bar spite fences. Even if it doesn't violate regulation or laws, the fence may
still be illegal if it was built with malicious intent.
-
Statute of Frauds
- The
law which requires among other things, that all contracts transferring real estate,
or for the leasing of property for over one year, must be in writing to be enforceable.
- statutory year
- A
year composed of twelve months, each with thirty (30) days, for a total of 360
days in a statutory year. Also known as a banker's year. Contrast with calendar
year.
- steering
-
The illegal practice of directing members of minority
groups to, or away from, certain areas or neighborhoods; channeling.
See Fair Housing.
- subject to mortgage
-
The buyer of an already mortgaged property makes
the payments, but does not take personal responsibility for the loan. Should the
mortgage be foreclosed and the property sold for a lesser amount than is owed,
the grantee-buyer is not personally liable for the deficiency, but the grantor-seller
is. Contrast with assumption of mortgage.
- sublease
- A
rental agreement or lease between a tenant and a new tenant (called a sublessee)
who will either share the rental or take over from the first tenant. The sublessee
pays rent directly to the tenant. The tenant is still completely responsible
to the landlord for the rent and for any damage, including that caused by the
sublessee. Most landlords prohibit subleases unless they have given prior written
consent. Compare with assignment.
- subpoena
- A
legal process ordering a witness to appear and give testimony or to present documents
under penalty of law. TREC has subpoena powers.
- substitution, principle of
-
The principle which states that a buyer will pay
no more for a property than the cost of an equally desirable alternative property.
- succession
- The
passing of property or legal rights after death. The word commonly refers to the
distribution of property under a states intestate succession laws, which
determine who inherits property when someone dies without a valid will. When used
in connection with real estate, the word refers to the passing of property by
will or inheritance, as opposed to gift, grant, or purchase.
- suit for specific performance
-
A legal action brought by either a buyer or a seller
to enforce performance of the terms of a contract.
- TALCB
- Acronym
- Texas Appraiser
Licensing and Certification Board
- taking
-
See eminent domain.
- tenancy by the entirety
-
A special kind of property ownership that's only
for married couples. Both spouses have the right to enjoy the entire property,
and when one spouse dies, the surviving spouse gets title to the property (called
a right of survivorship). It
is similar to joint tenancy, but it is available
in only about half the states.
- tenancy
in common
- A
type of ownership in which two or more people have an undivided interest in property,
without the right of survivorship. Upon death of one of the owners, his/her interest
passes to his/her heirs or devises. Contrast with joint
tenancy.
- tenant
-
Anyone, including a corporation, who rents real property,
with or without a house or structure, from the owner (called the landlord).
The tenant may also be called the "lessee."
- tenants in common
- See
tenancy in common.
- tenement
- Everything
that may be occupied under a lease by a tenant.
- term
-
The actual life of a mortgage, at the end of which
the mortgage becomes due and payable unless the lender renews the mortgage.
- Texas
Appraiser Licensing and Certification Board (TALCB)
- A
regulatory agency of the State of Texas, the TALCB was created in 1991 to license,
certify and regulate real estate appraisers in Texas under state and federal laws.
It superseded the Texas Real Estate Appraiser Certification Committee of the Texas
Real Estate Commission.
- Texas
Deceptive Trade Practices - Consumer Protection Act
-
Makes it illegal for false, misleading, or deceptive
acts or practices in the advertising, offering for sale, selling, or leasing of
any real or personal property. The Act provides for civil penalties and in some
cases, for mandatory triple damages and attorney fees for the aggrieved party.
Also see Deceptive Trade Practices
Act.
- Texas
Housing Agency (THA)
- Created
in 1979, the THA issues tax exempt mortgage revenue bonds. The funds may be used
to purchase existing mortgages from lending institutions, to purchase new mortgage
loans, or to make direct loans to qualified housing sponsors who are recommended
by a lending institution. The agency does not actually originate mortgages, but
issues commitments to lenders to purchase mortgages that meet all the agency's
requirements. This is known as a forward commitment program.
- Texas
Natural Resource Conservation Commission (TNRCC)
- The
TNRCC is the lead environmental agency for The State of Texas. Its mission
is to protect the state's human and natural resources consistent with sustainable
economic development. Goals include clean air, clean water, and the safe management
of waste. The TNRCC is responsible for the general supervision and oversight
of water districts and utilities, including the processing of petitions to create
a district and applications to approve a utility service area. In addition, the
agency maintains approval authority over many utility matters including the review
of most district bond issues to assure the engineering and economic feasibility
of projects, as well as standby fees, impact fees, fire plans, and other district
matters plus the rates charged by privately-owned and member-owned utilities.
- Texas
Real Estate License Act (TRELA)
- The
law which established the Texas Real Estate Commission and governs the licensure
and lawful behavior of Real Estate Brokers and Salespersons. The Texas Real
Estate License Act may be amended by the State Legislature, as it deems necessary.
- Texas
Real Estate Commission (TREC)
- The
state regulatory agency responsible for the education and licensing of Real Estate
Brokers, Inspectors and Salespersons. TREC also provides enforcement of
the Texas Real Estate License Act,
the Rules of the of the Real Estate Commission, the Texas Timeshare Act and the
Residential Service Company Act. The mission of the Texas Real Estate Commission
is to assist and protect consumers of real estate services, and foster economic
growth in Texas. Through its programs of education, licensing and industry regulation,
the Commission ensures the availability of capable and honest real estate service
providers.
- Texas Veterans
Home Improvement Program
- This
program assists Texas veterans in the repair and improvement of their principle
residence by providing low interest home improvement loans up to $15,000.
- Texas Veterans Housing Assistance Program
(VHAP)
- Established by a constitutional
amendment in 1984, the VHAP assists Texas veterans in the purchase of a principal
residence.
- Texas Veterans
Land Program
- Established by state
in 1949 to assist Texas veterans to buy land with a small down payment and with
long term mortgages with low interest rates.
- time
is of the essence
- A clause, which
if included in a contract, makes failure to perform by a specified date a material
breach or violation of the contract.
- timeshare
-
An arrangement under which a purchaser receives an
interest in real property and the right to use an accommodation or amenities,
or both, for a specified period and on a recurring basis. Used primarily for selling
vacation properties.
- title
-
The right of ownership of a property.
- title company
-
A company that provides title insurance policies.
In Texas title companies also act as escrow agents, conduct title searches and
hold closings.
- title
insurance
- Protection for lenders
or homeowners against financial loss resulting from legal defects in the title.
- title search
- Checks
all the records relating to the property to determine whether the seller can sell
the property, and can do so free of liens.
- title
theory state
- The
system in which the lender has legal title to the mortgaged property and the borrower
has equitable title. Texas is not a title theory state. Contrast with lien
theory state.
- TNRCC
-
See Texas
Natural Resource Conservation Commission.
-
torrens system
- A
system of land registration (not used in Texas) in which clear title is established
with a governmental authority, which issues title certificates to owners.
- townhouse
- A
dwelling unit usually with two,three or four floors, and shared structural walls.
It can be individually owned, a condominium,
a cooperative, a planned
unit development or a rental property.
- transaction
fee
- A fee which may be charged
each time you draw on a home equity credit line.
- TREC
-
Acronym - Texas
Real Estate Commission.
- TRELA
-
Acronym - Texas
Real Estate License Act.
- TRERC
-
Acronym - Texas Real Estate Research Center, now
renamed Real Estate Center.
- triple net lease
- See
net lease.
- trust
deed
- The most common method of
financing real estate purchases in California (most other states use mortgages).
The trust deed transfers the title to the property to a trustee--often a title
company--who holds it as security for a loan. When the loan is paid off, the title
is transferred to the borrower. The trustee will not become involved in the arrangement
unless the borrower defaults on the loan. At that point, the trustee can sell
the property and pay the lender from the proceeds. In Texas it is more commonly
refered to as a deed of trust.
- trustee
- One
who as agent for others handles money or holds title to their land.
- underwriting
-
The process of verifying data and approving a loan.
- unlawful detainer
- An
eviction lawsuit.
- usufruct
-
The right to use property--or income from property--that
is owned by another.
- usury
-
Charging more than the rate of interest allowed by
law.
- VA
-
The Veterans Administration, a federal agency which
guarantees loans made to qualified veterans on approved property.
- vara
- A
measurement of length of 33 1/3 inches in Texas.
- variable rate
- An
interest rate that changes periodically in relation to an index. Payments may
increase or decrease accordingly.
- variance
-
An exception to a zoning
ordinance, usually granted by a local government. For example, if you own an oddly
shaped lot that could not accommodate a home in accordance with your city's setback
requirement, you could apply at the appropriate office for a variance allowing
you to build closer to a boundary line.
- vendee
-
Purchaser.
- vendor
-
Seller.
- view
ordinance
- A law adopted by some
cities or towns with desirable vistas--such as those in the mountains or overlooking
the ocean--that protects a property owner from having his or her view obstructed
by growing trees. View ordinances don't cover buildings or other structures that
may block views.
- village
acre
- A lot size used in the Houston
area to denote a 40,000 square foot parcel. In the Memorial Villages of
Bunker Hill, Hedwig, Hillshire, Hunter's Creek, Piney Point and Spring Valley,
lot sizes are often expressed in village acres or a fractions of village acres.
The term was coined by developers who successfully lobbied for slighty smaller,
minimum lot size requirements, in the cities' zoning
regulations.
- virtual
home tour
- Any method used to
provide internet users with a graphical presentation of a home, or homes.
Presentations may include web pages, java applets, streaming video, panoramic
images and bubble views.
- void
-
Having no legal force or effect; legally invalid.
- voidable
- A
contract which appears valid and enforceable on the surface, but may be declared
invalid by one of the parties, such as a contract entered into by a minor.
- waiver
-
The intentional or voluntary relinquishment of a
known claim or right.
- walk
through
- (1) A Buyer's
on-site inspection of the property being purchased, just prior to closing.
-
(2) A detailed inspection of a new construction
home, in which punch list and cosmetic items are addressed, prior to final acceptance.
- warranty deed
- A
type of deed that contains express assurances about the legal validity of the
title being transferred. See general
warranty deed andspecial warranty
deed.
- writ
of execution
- A court order which
authorizes and directs the proper officer of the court (usually the sheriff) to
carry into effect the judgment or decree of the court.
- zero
lot line
- A
term generally used to describe the positioning of a structure on a lot so that
one side rests directly on the lot's boundary line (no set back). Where
allowed by zoning and/or deed restrictions, it is used for "patio
homes".
- zoning
-
Exercise of police power of city in regulating and
controlling the character or use of property. Zoning laws divide area cities into
different areas according to use, from single-family residences to industrial
plants. Zoning ordinances control the size, location, and use of buildings within
these different areas. Houston is the largest city in the U.S. without zoning.
Most of the other cities and villages within the Houston Metropolitan Area do
have zoning regulations.
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