Mortgage Glossary


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A
ABANDONMENT When a tenant leaves a property before the expiration of the lease agreement.
ABROGATION To nullify or replace.  Signing of the closing documents nullifies the Real Estate Purchase Contract except for warranties which extend beyond the closing date.
ACCELERATION CLAUSE Allows a loan to become due and payable immediately if certain requirements are not met, such as making payments, maintaining the physical condition of the property or paying property taxes and hazard insurance.
ACCESSION The process of adding to real property.
ACKNOWLEDGE The legal process of having the signature on a contract or other legal document verified by a notary public.
ACRE 43,560 square feet
ACTUAL DELIVERY Transferring a deed from the grantor to the grantee by handing the deed to the grantee or sending it by certified mail.  
ACTUAL EVICTION The legal process by which a lessor evicts the lessee and regains possession of the property.
AD VALOREM TAX A tax levied according to the value of the property
ADDENDUM Additions or changes incorporated into the REPC by reference.
ADJUSTABLE RATE MORTGAGE A loan where the interest rate is periodically adjusted based on a specific economic indicator.
ADJUSTED COST BASIS Cost basis plus improvements, minus depreciation claimed during the years the property was owned.
ADMINISTRATOR A person appointed by the court to carry out the terms of a will.
ADVERSE POSSESSION The process whereby a non-owner can gain ownership of property by occupying it in hostile, continuous, open, and notorious possession, and in Utah, paying the property taxes for the statutory period of time (7 years in Utah).
AGENCY A relationship between two parties wherein the principal hires another person to represent him or her.
AGENCY BY ESTOPPEL The principal seeks to deny an agency relationship, but the court stops him from denying the agency, and thereby confirms it.
AGENCY BY RATIFICATION The agency is created by implication, or actions, and the principal approves it by agreeing after the agency service has been performed to compensate the agent.
AGENCY BY STATUTE The law has given rise to the agency, such as a Sheriff appointed by the court to be the agent of the owner in a foreclosure sale.
AGENT The person hired by a principal to act for and in behalf of, or to represent the principal, and always acting in the principal's best interest.
ALIENATION OF TITLE A change of  ownership.  May be voluntary (sold the property) or involuntary (foreclosure sale).
ALIENATION, DUE ON SALE, NON-ASSUMPTION CLAUSE A clause which allows the lender to call the loan due and payable immediately if the property is sold or the loan is assumed.
ALL-INCLUSIVE TRUST DEED (AITD) A State-approved document used for security, usually in seller financing, where the financing is structured as a wraparound.
ALLODIAL A socio-economic system that allows for private ownership of real property.
ALTA POLICY The lender's title insurance policy which offers coverage in the amount of the loan which includes a site visit to discover unrecorded encumbrances.
AMENITY A "nice, but not necessary" feature which provides personal pleasure to the owner of real property.  It can be tangible or intangible.
AMORTIZED LOAN A loan which has regular monthly payments of both principle and interest.
ANNUAL PERCENTAGE RATE OR A P R The interest rate plus any other charges for the loan, including such things as discount points and origination fees; computed as a yearly percentage rate.  It is used for comparing loans.  
ANTICIPATION The appraisal principle that weighs the value of the future benefits a product or property will bring.
APPRAISAL A professional process for estimating the value of real property.
APPRECIATION A percentage of increase in the value of the property over it's value when it was originally purchased.
APPROVED FORMS The Division of Real Estate and the State Attorney General's office allow licensees to fill out these forms.  They include the Real Estate Purchase Contract, its Addendum; the Residential Earnest Money Agreement; the All Inclusive Trust Deed and its Note; and the Uniform Real Estate Contract.
APPURTENANT Attached to the land (such as a house) or the deed (such as a recorded easement).
ARBITRATION The two parties in disagreement agree to accept the decision of a third party who acts both as a mediator and a judge.  It avoids the excessive time and high costs of a court action.
"AS IS" CLAUSE The clause in the Real Estate Purchase Agreement that stipulates the buyer is buying the property in its curent condition and with the faults that have been disclosed.
ASSEMBLAGE Combining two or more parcels of land into one.
ASSESSED VALUE A percentage of the appraised value, as determined by law, upon which the tax rate will be levied to determine the property tax.
ASSIGNMENT OF CONTRACT One party in a contract substitutes another party in his place.  The original party retains secondary liability for the performance of the contract.  It does not require the agreement of the other original party in the contract.
ASSIGNMENT OF LEASE A contract that substitutes a new tenant in the lease.  The assignee becomes liable for the remaining term of the lease.  Unless prohibited by the lease contract, this can be done without the approval of the lessor, but the original lessee retains secondary liability.
ASSOCIATE BROKER A person with a broker's license who works under the supervision of an employing principal broker.
ATTACHMENT The legal process when real or personal property is seized by the court and held as security for satisfaction of a judgment.
ATTORNEY IN FACT A person who has been given power to sign in behalf of another.
ATTORNEY'S OPINION A lawyer's examination and evaluation of the history of title.  It includes a brief summary of all recorded instruments which have affected the title, including records of taxes, special assessments, judgments, mortgages and trust deeds.
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B
BALLOON MORTGAGE A loan with a balloon payment at the end of its term.  It could be a partially amortized or a straight loan or note.
BALLOON PAYMENTS Required payments larger than the regular payment.  These payments are often made at the end of the loan, retiring the loan early; but large payments can be made at other times during the term of the loan.
BARGAIN AND SALE DEED This deed makes no guarantees as to the condition of the title, but unlike the Quit Claim Deed, the grantor implies some actual interest in the property.
BASELINE An east-west line which intersects the meridian and creates a point from which land can be measured under the Government or rectangular survey method.
BENEFICIARY The lender under a Trust Deed & Note.
BEQUEST OR LEGACY A gift of personal property given in a will.
BILATERAL CONTRACT A contract wherein a promise is exchanged for a promise, thus making the contract binding on both parties.
BILL OF SALE Evidence of transfer of ownership of personal property.
BLANKET MORTGAGE A loan that uses two or more parcels of real property as security.
BLIND AD An advertisement which fails to indicate that the advertiser is a real estate brokerage or sales agents or brokers selling their own property.
BLOCKBUSTING The illegal practice of inducing panic selling in a neighborhood by starting rumors involving minorities moving in.
BOARD OF ADJUSTMENT The body to which one would appeal in order to obtain a variance to do something contrary to the current zoning law
BOARD OF EQUALIZATION The body of appeal if you think your property tax appraisal is too high.
BOOT Personal property or money needed to make up a difference in value when exchanging real property.
BRANCH OFFICE Any remote operation of the main real estate office which will be in operation more than 12 months and must be registered with the Real Estate Division.  
BRIDGE, SWING OR GAP LOAN A short term loan to help the buyers have up-front funds to get into their new home, when the sale on the old one is going to close later than the closing to purchase the new one.
BUFFER ZONE An area established by the zoning and planning commission to separate commercial and industrial areas from residential.  Its purpose may be safety or economic.
BUILDING CODES Rules set by government to establish  minimum standards of construction.
BUNDLE OF RIGHTS All rights and interests that can be legally held in real property.  They are separated into Possession, Use & Control, Quiet Enjoyment and Disposition.
BUSINESS PLAN A written overview that reveals the basic philosophy and strategy of an investment property.
BUYDOWN A financing technique in which a borrower is able to obtain a lower interest rate by paying discount points at the time the loan is originated.  (1 point = 1% of the loan amount)
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C
CC&R'S The abbreviation given to covenants, conditions and restrictions created in the Uniform Declaration of Restrictions for condominiums.
CAPITAL GAIN The taxable profit derived from the sale of a capital asset, such as real property.
CAPITALIZATION RATE OR CAP RATE The ratio created when the net operating income is divided by the value of the property.  It is also called the rate of return.
CAVEAT EMPTOR The philosophy that says "Let the buyer beware."
CERTIFICATE OF ELIGIBILITY Endorsement from the Veterans Administration indicating the right of a veteran to obtain a VA loan and the amount of his eligibility.
CERTIFICATE OF REASONABLE VALUE The document required for a VA loan that verifies the value of property being used as security for the VA loan (VA appraisal).
CERTIFICATE OF SALE The document given to the individual who successfully bids and purchases a property at a Sheriff's Sale.  It does not convey title to the property.
CHAIN OF TITLE OR ABSTRACT OF TITLE A historical record of land ownership and liens or encumbrances against the property.
AMERICANS WITH DISABILITIES ACT (ADA) An act designed to eliminate discrimination against handicapped persons in employment, government services, and all facilities and services offered to the public.
CHANGE, CYCLE OF OR NEIGHBORHOOD CYCLE This appraisal principle involves a cycle of activity which goes from growth or integration to equilibrium to disintegration and perhaps to growth again.
CHATTEL A synonym for personal property.  It comes from the word "cattle."
CHATTEL MORTGAGE A loan secured by personal property.
CLOSING When any loan funds are received from the lender(s) and the applicable documents are recorded.  This comes after the settlement.
CLOUD ON THE TITLE A term that refers to any kind of lien or encumbrance against the title.
CODICIL An addition or change to an existing will.
COLLATERAL A term that refers to security used for a loan.  It may be real or personal property. 
COLOR OF TITLE To all outward public appearance, or from a document that seems to be valid, the possessor of the property would seem to have ownership.
COMMINGLING A broker puts personal funds in excess of $100 into the real estate trust account.
COMMISSION One entity of the Division of Real Estate composed of five people, one of whom is a chairman.
COMMUNICATION The process of notifying the offeror that the offer has been accepted.
COMMUNITY PROPERTY A form of ownership between husband and wife where each has an equal interest in property obtained during their marriage.  The only way either can hold separate property is to obtain it before marriage, after the marriage is ended, or during the marriage by gift or inheritance.
COMPETENCY OR CAPACITY The ability to understand the terms of a contract and to make a rational decision as to whether or not to enter into it.
COMPETITION An appraisal principle:  When a particular use of property is bringing a high return, others enter into the same business or purchase property for the same purpose.
COMPLAINT, FILING A The legal process initiated in the courts to begin foreclosure under a mortgage.
COMPOUND  INTEREST Interest is paid on earned interest as well as on the principal.  It is used in savings accounts.
CONDEMNATION ACTION A legal action initiated by the government to seek the right to purchase land from a private individual by eminent domain.
CONDOMINIUM One owns the air space of one's own unit and an undivided interest in the common area.
CONDOMINIUM OWNERSHIP ACT The act which governs ownership and related issues when one owns airspace and undivided interest in the common area.
CONFORMITY An appraisal principle which states that because all homes in a particular area are harmonious in design and value, their value is sustained and tends to increases over time.
CONSIDERATION The process wherein each party to a contract makes a sacrifice and each party receives a benefit.  It is an essential element of any contract.
CONSTRUCTION LOAN An open ended loan funded in installments as various portions of the work are completed.
CONSTRUCTIVE DELIVERY The process of transfering a deed from the grantor to the grantee by recording the deed at the county recorder's office.
CONSTRUCTIVE EVICTION When the landlord violates the terms of the lease by not keeping the property liveable or habitable, the tenant can legally vacate the property and not be held liable for further rent payments.
CONSTRUCTIVE FRAUD A party misrepresents innocently, with no evil intention, but that misrepresentation could have been avoided with reasonable care.
CONTINGENCY CLAUSE Sometimes known as a "subject to" clause, it requires completion of certain acts before the contract is fully binding.
CONTRACT A legal agreement between two or more parties to do or not to do certain things.  It may be oral or in writing.
CONTRIBUTION The appraisal principle which states that an improvement to a property must add its cost to the value.
COOPERATIVE A form of ownership in multiple unit housing where the owner purchases shares of stock in the entire development, then obtains exclusive use of a unit by means of a propietary lease.  
CORPORATION A legal person.  It cannot die or go to jail.
CORPOREAL Something that is physical or tangible, such as land or buildings.
CORRELATION See Reconciliation.
COST What you paid for the product or property when you bought it.
COST APPROACH An approach to appraisal which considers the price of resources necessary to build the same or a similar property.  It is the only approach which places a separate value on the land.
COST BASIS What you originally paid for the property.
COST PLUS A contract where payment is for material and labor, with a profit factor added.
COST RECOVERY (DEPRECIATION) An income tax deduction.  It allows the owner of residential investment property to treat the improvements as though they will waste away in a certain number of years.  It cannot be applied to raw land or a personal residence.
COUNTER OFFER A response to an offer wherein the offeree changes one or more of the terms of the contract, becomes the offeror, and sends the offer back to the original offeror.
COVENANT AGAINST ENCUMBRANCES This covenant in a deed assures the grantee that the title has no liens or encumbrances except those that have been revealed by the grantor.
COVENANT OF FURTHER ASSURANCE In the event someone makes a claim of ownership, the grantor has the full responsibility to defend the title against the claimant.  This includes producing proper documents to substantiate the ownership of the grantor, and going to court, if necessary.
COVENANT OF QUIET ENJOYMENT Gives the pledge that no one will make a claim of ownership of the property that is being deeded.  It says no person has stronger claim to title than that being transferred by the grantor.
COVENANT OF SEIZIN This covenant in a deed guarantees the grantor holds clear title to the property and has the right to convey it to a grantee.
COVENANT OF WARRANTY FOREVER If the grantor were to lose in defense of the title, this covenant guarantees payment for the defense of the title and for damages caused the grantee, including buying the property back from the grantee if necessary.
COVENANTS, CONDITIONS & RESTRICTIONS See C C & R
CREDIT An amount of money which will reduce what the buyer has to bring to closing, or increase the amount the seller gets at closing.
CUBIC FOOT METHOD Under the Cost Replacement Approach, this method determines the cost per cubic foot and then multiplies it by the number of cubic feet.  It is most often used with warehouses.
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D
DAMAGES A money adjustment ordered by the court for actual losses suffered.
DEBIT An amount of money which will increase what the buyer brings to close, or will reduce what the seller gets at closing.
DEBT SERVICE Mortgage payments of principle and interest.
DEDICATION A private individual's gift of property for public use.  It may be voluntary (giving land for a public park) or statutory (subdivider giving land for roads).
DEDUCTIONS Items which the IRS allows to be subtracted from your gross taxable income in order to determine your taxable income.
DEED The document that serves as evidence of ownership of real property, as well as the document of the conveyance.
DEED IN LIEU OF FORECLOSURE A legal procedure where the borrower conveys title to the property to the lender.  In return, the lender forgives the loan on the property.
DEFEASIBLE FEE ESTATE (DETER-MINABLE FEE ESTATE) A fee simple estate which has conditions attached, the violation of which could cause the grantee to lose title.  If written in the deed with the words "so long as,"  it automatically reverts back to the grantor or his heirs if the conditions are violated.  It may also be referred to as "Fee Simple Qualified."
DEFEASANCE CLAUSE A clause in most loans written in favor of the borrower.  It  requires the lender to reconvey all interest in the property after the loan has been paid off.
DEFERRED MAINTENANCE When physical deterioration is repairable, but hasn't yet been repaired.
DEFICIENCY JUDGMENT A judgment obtained when a foreclosure sale fails to completely pay off a debt.
DELIVERY The process of the grantor giving the deed to the grantee.
DEPRECIATION When property loses value, regardless of the reason for the loss.  When this loss of value is an accounting process used for investment properties, it is referred to by the IRS as cost recovery.
DESCENT The laws by which the court determines ownership of property of a person who has died intestate, but who has heirs.
DESIGNATED AGENCY The principal (buyer or seller) who is hiring an agent specificies exactly which person(s) will act as agent or subagent and exercise fiduciary care in representing their best interest.
DEVISE A gift of real property given in a will.
DEVISOR/DEVISEE The individuals who give and receive gifts of real property in a will.
DIRECTOR OF R.E. DIVISION One of the entities in the Real Estate Division.  A full-time position responsible submitting a budget for the Division's operation.
DISCOUNT POINTS Money paid when a loan is initially obtained which is considered prepaid interest and lowers the interest rate.
DISCOUNT RATE The rate charged by the Federal Reserve to member banks for money they borrow.  It, along with reserve requirements, is one of the ways the Federal Reserve controls the economy.
DISCOUNTED LOAN OR NOTE Selling a loan to the secondary money market for less than its face (original) value.  This increases the yield (profit) on the loan.
DOCUMENT RECEIPT A confirmation by the buyer and seller that they received a copy with all signatures.
DOMINANT TENAMENT The name given to a property that encumbers a neighboring property with an easement.
DOUBLE COMMISSION The seller pays a commission to the listing agent, as per their contract, and also a commission to the selling agent.
DOUBLE CONTRACT The buyer and seller enter into a second sales contract in order to deceive the lender and enable the buyer to obtain a larger loan.
DUAL AGENT When the agent is representing both principals in a transaction with their informed consent.  (Also known as a limited agent.) 
DURESS OR UNDUE INFLUENCE The application of force to obtain agreement.  It can be physical or emotional.
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E
EARNEST MONEY DEPOSIT The deposit a buyer makes when submitting an offer to purchase real property.  It shows he's serious in the offer and will serve as liquidated damages if he defaults on the contract.
EASEMENT A nonpossessory interest which one person has in land owned by another, allowing limited use or enjoyment of the owner's land.  This right of use must be conveyed in writing, and can be referred to as a physical use or condition.
EASEMENT APPURTENANT An easement which attaches to the land and/or the deed, and passes from owner to owner with the deed.
EASEMENT BY IMPLICATION An unexpressed, but legally binding understanding regarding a right of way between the parties, created by their actions.
EASEMENT BY NECESSITY Created by a court of law in situations where justice and need, not convenience, dictate the appropriateness of the easement; such as the case of land locked property.
EASEMENT BY PRESCRIPTION An easement created by adverse use.  The use must be adverse, hostile, open, notorious and continuous.  This type of easement can be prevented by giving permission to the user, or by ordering the user to discontinue the use before the statutory period passes. (It requires 20 years in Utah.)
EASEMENT IN GROSS An easement which is personal in nature and does not pass with the deed or the land.  It runs with the persons who agreed to it for the term of their lives, or with the need for which it was created, such as a utility easement.  
ECONOMIC LIFE The period of time during which improvements give a return on investment.  It is generally considered to be shorter than physical life.
ECONOMIC OR EXTERNAL OBSOLESCENCE A form of depreciation caused  by forces outside the property boundaries.  It includes such things as a run-down neighborhood, increases in property taxes, etc.  It is considered to be incurable.
EFFECTIVE AGE An age placed on property for appraisal purposes, based on the condition of the property.  It may be more or less that the actual chronological age.
EGRESS Leaving a property by traveling across the servient tenement property.
EMBLEMENTS Crops nurtured in the year of the transfer or sale of the property.  They are considered personal property.
EMINENT DOMAIN The right of the government to take title, at fair market value, to land owned by a private individual.
ENCROACHMENT The unauthorized intrusion of a building, tree, or other improvements onto a neighbor's property.
ENCUMBRANCE Anything which burdens the title to real property so as to restrict, limit, or otherwise affect an owner's rights.
ENFORCEABILITY The issue of whether a contract dispute could be taken into the court to be settled.
ENVIRONMENTAL PROTECTION AGENCY The government entity which deals with the impact of commercial, industrial and residential development on the environment.
EQUAL CREDIT OPPORTUNITY ACT OF 1974 Federal act which prohibits discrimination in financing, based on race, age, sex, or marital status.
EQUITABLE PERIOD OF REDEMPTION In foreclosure, the period of time during which the borrower can reinstate the loan before the foreclosure sales takes place.  It is sometimes referred to as equity of redemption.
EQUITABLE TITLE The legal interest held in a property by the buyer between the time the contract is signed and his receiving the actual deed.
EQUITY The market value of a property minus the debts secured by the property.
ESCALATION CLAUSE A clause written into a loan or lease that allows for payments to be increased at specified times by stated amounts.
ESCROW A neutral depository to handle real estate closings, or a situation where a neutral third party is used to hold money or documents.
ESTATE FOR YEARS OR TENANCY FOR YEARS A lease which contains a termination date. Its term can be for any agreed-upon period of time.  (It can be more or less than one year.)
ESTOPPEL CERTIFICATE A document provided by a lender which reveals all the terms of a loan as requested by the borrower or ordered by the court.
ESTOVERS The right  of a tenant to use natural resources on leased land, such as timber, water, etc. when required as necessities.
EXECUTIVE DIRECTOR, DEPT. OF COMMERCE The person who appoints the Director of the Utah Division of Real Estate.
EXCEPTION AND RESERVATION CLAUSE Usually found in a deed, it retains part of the real property for the grantor and is another name for the habendum clause.
EXCHANGE See Tax Deferred Exchange
EXCLUSIVE AGENCY LISTING One broker is named as the exclusive agent of the seller, but the seller reserves the right to locate a buyer without paying a commission.
EXCLUSIVE RIGHT-TO-SELL LISTING One principal broker is designated to represent the seller and receive a commission when the buyer is found, regardless of who finds the buyer.
EXECUTE To put a contract into effect by signing it.
EXECUTED CONTRACT A contract with all of the terms completed by all parties.
EXECUTOR The title of a person named in a will to carry out the terms of the will after the death of the testator.
EXECUTORY CONTRACT A contract that is not fully performed, but which is not in default.
EXPRESS AGENCY Agency created through words, written or oral, between the principal and the agent, such as a listing agreement.
EXTENDED COVERAGE TITLE INSURANCE Covers claims both on and off the record.  It includes a site visit to give protection against unrecorded liens and encumbrances, such as mechanic's liens, as well as defects in the land itself, such as unrecorded easements, encroachments, and information based on incorrect surveys.  It can be obtained by private individuals.
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F
FAIR MARKET VALUE What a willing buyer is willing to pay, and a willing seller is willing to accept, with neither of them under duress and the property has been on the market for sufficient time to verify its value.
FAMILIAL STATUS One of the protected classes under Fair Housing referring to families with children under 18.
FEDERAL FAIR HOUSING ACT OF 1866 This body of law stated no discrimination based on race in the sale or lease of real estate is allowed and all people are to be treated the same as white people.
FEDERAL FAIR HOUSING ACT OF 1968 Extended the Federal Fair Housing Act of 1866 by adding the prohibition of discrimination according to color, sex, religion, and natural or national origin.  It specifically stated that no discrimination should take place relative to sale or rental of real estate, or real estate brokerage services.
FEDERAL FAIR HOUSING AMEND-MENT ACT OF 1988 Added two new protected classes to Fair Housing:  handicapped and familial status.
FEDERAL RESERVE BANK The bankers' bank; it regulates the money supply by establishing discount rates (cost of money to lending institutions) and setting a reserve requirement (how much cash lenders must keep on hand).
FEE SIMPLE, FEE ESTATE, FEE SIMPLE ABSOLUTE The highest or most complete form of ownership that can be held under the law.  The ownership rights go on forever.
FEE SIMPLE DEFEASIBLE See "Defeasible Fee Estate."  Also sometimes called "fee simple qualified."
FHA LOAN A government loan with a low down payment, insured by the borrower's payment of the Mortgage Insurance Premium (MIP). 
FHLMC (FREDDIE MAC) Federal Home Loan Mortgage Corporation; serves as a secondary money market for Savings & Loan associations.
FIDUCIARY The word which describes the responsibility of an agent toward the principal, involving trust, loyalty, confidence, care and diligence.
FIXED COST A contract where the price is established up front and there is no allowance for overruns.
FIXTURE That which is attached without losing its identity.  They are always real property.
FLAT LEASE The lessee makes periodic, equal rent payments.
FNMA  (FANNIE MAE) Federal National Mortgage Association, a major secondary money market.  It is privately owned, but Federally regulated.
FORECLOSURE The legal  process a lender uses to recover the investment from a defaulting borrower where the loan was secured by the property.
FORMAL WILL Most valid form of a will, usually prepared by an attorney.  It is the least likely form of a will to be challenged.
FORFEITURE One of the options to the holder of a Uniform Real Estate Contract in the event the borrower defaults.  The seller can evict the buyer, causing the buyer to forfeit the property.
FRAUD An act intended to deceive or misrepresent in order to gain some unfair or dishonest advantage over another and induce someone to give up something of value.
FREEHOLD ESTATE An interest in property in which some form of ownership is held.
FULLY AMORTIZED LOAN A loan that requires payments of both principal and interest.  When the last payment is made, the loan is retired.
FULLY DISCLOSED PRINCIPAL The "other party" knows there is a principal, knows who it is, and that there is an agent.
FUNCTIONAL OBSOLESCENCE The item in question is working fine, but is not what people want in their homes any more.  Examples are a poor floor plan, four bedrooms and one bath, inadequate insulation, insufficient electrical outlets, etc.
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G
GENERAL AGENT An agent hired by contract to use the agent's expertise to fulfill the objectives of the principal.
GENERAL OR FULL WARRANTY DEED A deed that contains all five covenants and covers the period of time from the date of transfer back to the date of the patent deed.
GENERAL PARTNER A partner who has full authority to make decisions, act for the partnership,  and has full liability for the business dealings of the partnership.
GENERAL PARTNERSHIP A partnership composed only of general partners.
GIFT DEED A transfer of ownership made for love and affection.  Creditors of the donor could still use the property for payment of the grantor's debts if it can be shown that the donor was insolvent and transferred the property to evade creditors.
GNMA (GINNIE MAE) Government National Mortgage Association. A Federal corporation which operates in the secondary market.
GOOD CONSIDERATION Consideration given in the form of love, friendship, loyalty, etc.
GRADUATED LEASE A lease where the rent will increase periodically in amounts specified in the lease,  as contained in the escalation clause.
GRADUATED PAYMENT MORTGAGE (GPM) A loan utilizing reverse or negative amortization.  Payments begin below the normal, fully amortized payment and are then increased at a fixed rate for a set period of years.  The low payment generates unpaid interest which is added to the balance of the loan.  It is effective when the value of property is appreciating and the salary of the borrower is increasing.
GRANT DEED A type of deed used in some states  that contains no warranties, the title insurance is considered sufficient cover any necessary warranties.
GRANTEE One who receives property or property rights from a grantor.
GRANTOR One who conveys property or property rights to a grantee.
GROSS LEASE The tenant pays a set amount of rent.  From this rent, the lessor is required to pay some or all operating expenses.
GROSS OPERATING INCOME (GOI) The total income received from an investment property after subtracting vacancies and lost rents.
GROSS RENT MULTIPLIER A "quick and dirty" estimate of value based only on a relationship between the value of the property and the gross rents.  The formula is to divide the selling price by the gross rents.  It is referred to as the GRM.
GROSS SCHEDULED INCOME (GSI) What an investor would receive if there were no vacancies or lost rents.
GROUND LEASE The landlord leases the land to the tenant, and the tenant builds the improvements on the leased land.
GROWING EQUITY MORTGAGE A loan where payments increase each year, thereby allowing the loan to be paid off many years sooner and a substantial amount of interest dollars to be saved.
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H
HABENDUM CLAUSE Known as the "to have and to hold clause," and sometimes as a "subject to" clause, it defines and limits the estate which the grantee will receive when the property is transferred.
HABITABILITY CLAUSE If not actually written in the lease, there is a written or implied warrant of this in every lease, that says the property is liveable.
HAZARD OR HOMEOWNERS' INSURANCE An insurance policy which indemnifies real property against loss resulting from physical damage to the property such as fire, vandalism, etc.
HIGHEST AND BEST USE The appraisal principle which states that value should be based on the utilization of the property which will bring the greatest return to the owner.  That use must be legal and feasible.
HOLDER OF LIFE ESTATE The receiver of a life estate who has the property for the duration of the grantee's own life.
HOLDOVER TENANT The tenant had an estate for years which has now terminated.  The lessor accepted a rent check so now the tenant is on periodic tenancy basis.
HOLOGRAPHIC WILL A handwritten will, which must be dated, written entirely in the handwriting of the testator, and does not have to be witnessed in order to be valid.  It can pass both real and personal property.
HUD 1 SETTLEMENT STATEMENT The required form to be used whn closing a real estate transaction.
HYPOTHECATION Using property as collateral or security for a debt without giving up possession of the property.
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I
IMPLIED AGENCY See Ostensible Agency.
IMPOUND, RESERVE OR ESCROW ACCOUNT A trust account established to set aside funds for future needs relating to a parcel of real property.  Those needs typically include such things as property tax and hazard insurance.
IMPROVEMENTS A term that refers to any additions to the land made by man.  It includes buildings, roads and utilities and landscaping.
INCOME OR CAPITILIZATION APPROACH An appraisal approach based on the cash flow the property produces.  It addresses the question, "How much will a potential investor pay for the cash flow?"
INCORPOREAL RIGHTS Intangible or nonpossessory rights in real property, such as easements, licenses, mining claims, etc.
INCURABLE DEPRECIATION Physical deterioration that cannot be repaired in a cost-effective manner.
INDEX LEASE Rent payments are periodically adjusted based on an economic indicator, such as the consumer price index.
INGRESS Entering by travelling across the servient tenement property.
INJUNCTION Legal action taken to enforce the restricitve covenants given through the Uniform Declaration of Restrictions or to prevent a neighbor from encroaching
INTEREST RATE Money paid during the term of a loan that is profit to the lender.  It represents the return, or yield, on the lender's investment.
INTERMEDIATE THEORY A combination of Title Theory and Lien Theory that allows the lender to sell the property in case of default, but does not allow him to keep any equity.
INTESTATE The name given a person who dies and leaves no will.
INVERSE CONDEMNATION The legal process by which a private individual sues to have the property taken by eminent domain.
INVESTMENT PROPERTY Property which is generating a cash flow, such as a strip mall or a single or multi-family rental property.
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JOINT TENANCY A form of concurrent ownership where all owners have equal rights of possession, equal interest, took title at the same time,  there is  one deed, and each owner has full rights of survivorship.
JOINT VENTURE A "temporary" partnership between individuals and/or companies to accomplish a particular project or business activity.
JUDGMENT The decision given by a court after a case has been heard.
JUNIOR LIENS Any loans or encumbrances which come after the one which was recorded first against the property.
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LAND CONTRACT, INSTALLMENT SALES CONTRACT, OR CONTRACT FOR DEED A document wherein the lender (usually the seller) retains title to the property until the debt is paid.  It is known in Utah as a Uniform Real Estate Contract.
LATERAL SUPPORT The duty to give support to a neighbor's property, such as building a retaining wall.
LEASE A contract for a less-than-freehold estate or right in real property.  Rent is paid for the right of possession in someone else's property.
LEASE WITH OPTION TO PURCHASE A lease contract which allows the lessee the right to purchase the property.  Sometimes a portion of the rent will apply to the down payment if the right is exercised.  The rent is the non-refundable consideration.
LEGAL NONCONFORMING USE The right of an individual to continue a use of land contrary to current zoning regulations because the use existed prior to the establishment of the current zoning category.
LEGAL PURPOSE The essential element of a contract that protects the public.
LESS THAN FREEHOLD An estate or legal interest in real property that is a less than ownership interest.
LETTER FORM REPORT An appraisal report that provides a short, written statement giving the bare essentials of the appraisal.
LEVERAGE Using as much of other people's money and as little of your own as possible in order to buy property.
LICENSE INTEREST A limited, revocable interest in property.  It grants a privilege, not a right, and is often an oral agreement granting a short term use of real property.  Examples would include an owner allowing someone to hunt, boat, or fish on his property; or attendance at movie theaters and sporting events.
LICENSE RENEWAL Two years after the month in which a licensee receives a real estate license this action is necessary to continue practicing real estate.
LIEN An encumbrance which is secured by real estate.
LIEN THEORY A legal doctrine or theory of mortgage law, used in most states, which allows the lender to hold a lien against the property and force the owner to sell the property to pay the debt in the event of default.
LIEN WAIVER When the owner of the property pays the general contractor for the work done, this form should be given by the mechanic who did the work.
LIFE ESTATE A form of freehold estate wherein the holder acts as though he owns the property so long as he lives.
LIFE ESTATE PUR AUTRE VIE A life estate based on the life of a person other than the holder of the life estate.
LIMITED PARTNER A partner who has no authority to make decisions or act for the partnership.  He is financially liable only for the amount of his investment.
LIMITED AGENT See Dual Agent
LIMITED PARTNERSHIP A partnership with at least one general partner and one limited partner.  Beyond that, there can be as many general or limited partners as desired.
LIQUIDATED DAMAGES In anticipation of a particular default, clauses are sometimes written into a contract to specify the default and its penalty.
LIS PENDENS It  gives constructive notice that an action affecting a particular parcel of property has been filed in court.  The property can be sold, leased, or otherwise disposed of, but all transactions are subject to the outcome of the court action.
LISTING An agency agreement between a seller and a principal broker.  The owner authorizes the broker to place the property on the market and seek a ready, willing, and able buyer and to pay consideration if the broker is successful.
LITTORAL RIGHTS Rights of an owner of property bordering a lake, river, ocean or body of water subject to tides.
LOAN TO VALUE RATIO OR L-T-V-R The amount of debt secured by the property compared to the worth of the property, expressed as a percentage.
LOT, BLOCK, AND PLAT A method of land description using a lot number or letter, a block designation, and then the subdivision or area where the lot and block are located.
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MANAGEMENT CONTRACT An employment contract between a property manager and an owner.
MARKET DATA OR COMPARISON APPROACH An appraisal approach that compares the subject  property to other  properties that have recently sold.  Adjustments are made to account for variations between the comparables and the subject property.
MARKETABLE RECORD TITLE ACT The law that allows the simplification and stabilization of title searches by allowing old liens and encumbrances to be removed from the deed after 40 years.
MECHANIC'S LIEN A lien placed by a person who has integrated labor or materials into a property and has not been paid.
MEDIATION A non-binding process of meeting with a disinterested third party to try to resolve a dispute between the two principals in the transaction or contract.  It is much less time consuming and costly than the legal process of going to court.
MERGER The joining of two contiguous properties so as to extinguish a lesser right.  For instance, this process can terminate an easement.
MERIDIAN A north-south line which intersects a baseline and creates a point from which land can be measured under the Government or rectangular survey method.
METES AND BOUNDS A method of land description that uses measurements and monuments and utilizes angles.
MILE 5,280 linear feet
MINERAL RIGHTS Subsurface rights of an owner of real property which extend downward to the center of the earth.  These rights are considered part of the real property.
MONUMENT A fixed surveyor's marker for a metes and bounds description.  It can be natural or man made and marks the corners of the property.
MORTGAGE A document used to secure a loan.  It is a judicial agreement, meaning if non-payment takes place, the holder of the promissory note can take it to court and the court will order the sheriff to foreclose.
MORTGAGEE One who receives a mortgage as security for a loan or debt.
MORTGAGOR A borrower who hypothecates property as security for a loan through the use of a promissory note and a mortgage.
MUTUAL AGREEMENT The essential element of a contract achieved through the offer and acceptance process.
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NARRATIVE REPORT The longest form of appraisal report which uses a variety of supporting documentation.
NATURAL PERSON An individual.  The opposite of a legal person.
NEGATIVE (PASSIVE) INTENTIONAL FRAUD When a person covertly hides facts, thus leading the other contracting party to believe certain things which are not true.
NEGATIVE OR REVERSE AMORTIZATION A loan that requires payments of no principal and only part of the interest.  The unpaid interest is added to the principal.  This technique is used on some graduated payment mortgages.
NET LEASE The tenant pays the landlord rent; and, in addition, also pays the operating expenses (such as utilities).
NET LISTING An illegal listing wherein the seller identifies an acceptable amount for the property and everything above that figure will be commission to the agent.
NET OPERATING INCOME (NOI) The profit that remains after the operating expenses have been subtracted from the gross effective income.
NON-DISTURBANCE CLAUSE A clause in a mortgage which protects the rights of the lessee if the property should be foreclosed by the lender upon the owner's default.
NON-HOMOGENEOUS A term that means no two parcels of land are exactly alike.
NON-INVESTMENT PROPERTY A property that has no cash flow; for example, your home or a vacant lot.
NON-RECOURSE LOAN The terms of the loan stipulate that even if the lender receives less than the balance owed as a result of a foreclosure action, the debt is satisfied and the lender may not go after the borrower's personal assets.
NON-RESIDENT LICENSE A real estate licensee from another state acquires this kind of a license to enable him/her to practice real estate in Utah.
NOTICE OF DEFAULT The action filed to initiate foreclosure under a Trust Deed and Note.
NOTICE OF INTEREST Holders of junior liens against a property would file this. If the senior lien holder foreclosed, they would be notified and could protect their interest.
NOTICE TO QUIT The action a lessor must take against a tenant before filing an Unlawful Detainer action with the courts.
NOVATION The substitution of a new party or a new obligation in a contract.  This process requires the agreement of all original parties in the contract, but once it has been agreed to, the original obligatee is released from liability.
NUNCUPATIVE WILL Oral will, written down by someone and witnessed by two non beneficiaries.  It can only convey personal property.
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OPEN END MORTGAGE A loan which can be increased up to an agreed upon maximum, similar to the way a credit card works.  It is often used for construction loans and home equity loans.
OPEN LISTING A listing agreement that can be given to as many principal brokers, on the same property, as the seller desires.  It is a non-exclusive listing.
OPERATING BUDGET A projection of the financial operation of an investment property.
OPTION CONTRACT A contract wherein a seller agrees to sell property for a set amount and specified terms, if the buyer chooses to exercise that right to purchase during the contracted period of time.  In return for the seller taking his property off the market, the buyer pays valuable, non-refundable consideration.
OPTIONEE One who receives an option; a potential buyer who may or may not buy by the end of the term of the option.
OPTIONOR One who gives an option; the potential seller.
ORIGINATION FEE A fee (profit) charged by the lender to initiate a loan.
OSTENSIBLE AGENCY Agency which is created through implication, or the actions of the parties, rather than through an express agreement.
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PACKAGE MORTGAGE A loan that uses both real and personal property as security.
PAR The interest rate charged on a loan when there are no discount points involved.
PAROL EVIDENCE RULE Prevents the admission into court of oral agreements reached prior or subsequent to the written contract and which contradict the terms in the written contract.
PARTIALLY AMORTIZED LOAN A loan requiring payments of both principal and interest, but when the final payment is made, a balloon payment is required to retire the loan.
PARTIALLY DISCLOSED PRINCIPAL The "other party" knows who the agent is, knows there is a principal, but is not told who the principal is.
PARTICIPATION LOAN A loan where the lender becomes an investor or owner in the project for which the money is being loaned.
PARTITION SUIT A court process where property owned concurrently can be divided into distinct portions so each co-owner may hold his or her portion in severalty.  The court may order the property sold.
PARTY WALL A common wall between two properties, usually involving a zero lot line.
PATENT DEED OR PUBLIC GRANT  The deed issued when the property is first conveyed from public or government ownership to a private individual.
PERCENTAGE LEASE A lease used in commercial leasing.  The tenant pays a percent of the net or gross income derived from the use of the property, or the tenant may be paying a flat rate plus a stated percent of the gross or net income.
PERIODIC TENANCY (MONTH-TO-MONTH) A lease which automatically renews itself.  The period for legal notice is established by statute in each state, or can be agreed upon as one of the terms of the lease (15 days in Utah).
PERSONAL PROPERTY The opposite of real property, it is moveable and destructible.  Synonyms are chattel and personalty.
PERSONAL REPRESENTATIVE A term used in Utah for the Administrator or Executor of a will.
PERSONALTY A synonym for personal property.  The opposite of "realty."
PHYSICAL DETERIORATION A type of depreciation that occurs when something wears out and will no longer perform the function or give the service that was originally intended.
PHYSICAL LIFE The time span during which an improvement is in  condition to be utilized and occupied.
PLAIN LANGUAGE POLICY Title insurance covering the borrower, which will cover mechanic's liens, and costs no more than a standard policy.
PLEDGE The borrower gives up possession of the property being used as collateral for the loan (the way a pawn shop works).
PLOTTAGE Combining two or more parcels of land with a resulting increase in total value.
POINT OF BEGINNING In the Metes and Bounds method, this is the corner at which the boundary description starts.
POLICE POWER The right of government, such as in zoning, to exercise control over private individuals without their consent and without compensation.
POSITIVE INTENTIONAL FRAUD When a person deliberately and overtly deceives or misrepresents facts pertinent to a contract.
POWER OF ATTORNEY What an attorney-in-fact holds which authorizes actions in behalf of another person, including signature authority.
POWER OF SALE (BARE, NAKED, LEGAL TITLE) The authority (conveyed from the trustor to the trustee at the time the Trust Deed and Note are signed) to sell the property in the event of default.  It is known as the power of sale.
PREPAYMENT PENALTY This clause in a loan penalizes the borrower for paying off the loan earlier than agreed.  It usually is placed in loans in times of falling interest rates to discourage refinancing.
PREPAYMENT PRIVILEGE This clause in a loan allows the borrower to pay the loan off early. The amount of the monthly payments can be increased, with all of the extra payment applying to the principal; refinance without penalty; or make balloon payments from time to time.  All of these techniques save large amounts of time and interest.
PRICE The amount of money being asked for a product or property.
PRIMARY MONEY OR MORTGAGE  MARKET Those who originate loans of any type, regardless of the priority of the loan, are in this financial market.
PRIME RATE The interest rate that is charged a lender's most favored clients and is established by the major banks or lenders of America.
PRINCIPAL The agent works for this person.  This person is also sometimes referred to as a client.
PRINCIPAL BROKER The broker who manages the offices and is responsible for supervising the activities of the licensed and unlicensed staff.
PRIOR APPROPRIATION OR STATUTORY APPROPRIATION The legal doctrine used in Utah for distribution of water based on the idea that an owner of real property has no right to any water that is on, under, or adjacent to his property simply because he owns the land.  In Utah, one must apply to the State Engineer, Division of Water Rights, to obtain water rights.
PROCURING CAUSE DOCTRINE A doctrine governing who gets the selling portion of the commission.  It says the agent who set up an uninterrupted chain of events that led to the closing earned the commission.
PROMISSORY NOTE The document given as evidence of the loan.  It contains all information relative to the money:  payment, term, interest rate, etc.
PROPERTY MANAGEMENT This activity occurs when a licensee manages investment property for the owner.
PROPERTY MANAGER One who cares for the property of an owner.  A property manager must be licensed.
PROPERTY MGMT. TRUST ACCOUNT Must be opened when a real estate brokerage is handling more than six property management accounts.  
PROPERTY TAX The tax levied by government against real property.  These taxes are due in Utah on November 30 and cover the full calendar year.
PROPRIETARY LEASE Sometimes called an "owner's" lease.  It is held by a person who owns shares in a stock cooperative.  They own personal property which entitles them to the proprietary lease.
PRORATION The process of c