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HUD
Home Buying Glossary - A
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Abatement
-
A
legal action to stop a nuisance. Also can be a reduction
of a property tax assessment.
Absentee
Owner - A person who owns a property and lives
elsewhere, usually in another community.
Abstract
of Title - A written history of the title transactions or conditions
bearing on the title to a designated parcel of land.
It covers the period from the original source of title
to the present and summarizes all subsequent instruments of
public record by setting forth their material parts.
Abstractive
Method - A means of obtaining land value by deducting the
value of improvements from the total property value.
Acceleration
(Clause) - A common provision of a mortgage or note providing the holder
with the right to demand that the entire outstanding balance
be immediately due and payable in the event of default.
Accession
- Obtaining title as a result of attaching or joining property
to other property.
Access
Right - The right of a landowner to enter or leave a tract
of land from a public way, which may be by an easement over
land owned by someone else.
Accommodation
Party - A third person (cosigner) who signs a negotiable
instrument agreeing to be liable personally to the payee.
Accord
and Satisfaction - Act of accepting a different
consideration than agreed; for example, if there is a dispute
as to performance and one party accepts less than originally
bargained.
Accounts
Payable - Money that must be paid out to others.
Accounts
Receivable - Money due a business.
Accretion
- Gradual buildup of soil due to water or wind.
Accrual
Rate - The stated annual rate at which interest is calculated.
On an adjustable-rate mortgage (ARM), the accrual rate
is based on a combination of an independent market index,
which fluctuates, plus a margin, which is fixed, and is
established by the lender.
The accrual rate is also called the note rate, or the
coupon rate, or the contract rate.
Accrued
Depreciation - Total depreciation from the time of
construction up to a specified date.
Accrued
Expenses - Expenses incurred that are not yet payable.
Accrued
Interest - The interest that has accumulated over the time elapsed since
the borrower’s last payment. (See Interest.)
Acknowledgment
- A declaration customarily made before a notary, certifying
that the signing of an instrument is the signer's own free
act.
Acre
- A measure of land that equal 43,560 square feet, 160
square rods or 4,840 square yards.
Action
in Personam - Legal action against a person. When
recorded, a judgment from such an action is a general lien
against all of the debtor's property in the county where
recorded.
Action
in Rem - Legal action against a property. When
recorded, a judgment from such an action, is a specific lien
against the particular property involved in the action.
Action
to Quiet Title - A court action to remove a
"cloud" from the title or to determine the actual
status of the title.
Actual
Age - The total number of years elapsed since a structure
was built.
Addenda
- Plural of addendum (see Addendum).
Addendum
- Something added, for example, a list or other material added
to a document, letter, sales contract, etc.
Add
On Interest
- Interest which is calculated on the original principal for
the full term of the loan and then added to the original
amount borrowed. This
sum is then divided into a number of equal payments.(See
Interest)
Adjustment
Date - See Adjustment Interval.
Adjustable
Rate Mortgage
- A general term for any mortgage in which the interest rate
and generally, the payments change over the life of the loan.
The interest rate is adjusted to match the rise or fall
of a pre-selected interest rate index and the borrower’s
regular payments will increase or decrease accordingly. Different types of adjustable-rate mortgages(ARMs) have
different frequencies for these adjustments.
Some ARMs have limits on payment and interest rate
changes and the maximum interest rate over the life of the
loan. To the
borrower’s advantage, the initial rate of an ARM is usually
low, permitting the purchase of real estate that otherwise
would be unaffordable with a fixed-rate mortgage.
But, there is a risk of higher payments later on.
(See Index, Initial Interest Rate.)
Adjusted
Basis - Acquisition cost less depreciation plus cost of
improvements. The adjusted basis is deducted from the
sales price to determine a gain or a loss.
Adjusted
Gross Income - See Effective Gross Income.
Adjusted
Market Price - The adjustment of a comparable property's
sales price to account for difference in features and
amenities of a property under appraisal (using the market
comparison approach).
Adjustment
Interval - When an adjustable-rate mortgage (ARM) is negotiated,
provision is made for the intervals of interest rate
adjustment. This
allows the lender to adjust the interest rate charged and the
payments required from the borrower at prescheduled times.
Adjustment
- The amount added to or subtracted from the sales price of
comparable properties to obtain an adjusted sales price that
more accurately reflects the subject property’s
value.
Ad
Valorem - "According to the value," used in
connection with taxation.
Advance
Commitment - A lender agreement to provide permanent
financing upon completion of a construction project.
Adverse
Land Use - A land use that has a detrimental effect on the
market value of nearby properties.
Adverse
Possession - The right by which someone occupying a piece
of land might acquire title against the real owner, if the
occupant's possession has been actual, continuous, hostile,
visible, and distinct for a statutory period of time.
Aesthetic
- Relating to beauty, rather than to functional
considerations.
Affidavit
- A sworn statement in writing, usually made before a notary.
Affirmation
- A formal declaration as to the truthfulness of a statement.
Affirmative
Easement - An easement that allows the easement holder a
right of use over the land of another.
After-Acquired
Interest - An interest acquired by a grantor after he or
she has conveyed property.
Age-Life
Method - See Straight-Line Depreciation.
Age-Life
Tables - Appraisal tables that indicate the economic life
for various types of structures.
Agency
- A contractual relationship in which one person (an agent)
represents another (a principal). Also a term used to describe the relationship between a seller
and a real estate agent or a buyer and a real estate
agent. Typical agency relationships include 1) a buyer's
broker, 2) a seller's broker and 3) limited dual
representation.
Agency
by Estoppel - An agency created when the principal's
conduct led another to believe in the agency and thereby act
to the other's detriment.
Agency
by Ratification - An agency created by a principal
approving an unauthorized act of another.
Agent
- A person who represents a buyer or seller in the purchase of
a home.
Agreement
of Sale - Also known as a sales contract, it is a written
agreement by which a buyer agrees to buy and a seller agrees
to sell a particular property under defined terms and
conditions.
Air
Rights - The right of a property owner to the reasonable
use of the airspace over his/her property. Air rights
are considered to be real property and can be separately
leased or conveyed.
Alienation
- The voluntary transfer of one's real property.
Alienation
Clause - See Due on Sale Clause.
All-Inclusive
Mortgage - See Wrap-Around Mortgage.
Allodial
System - Ownership by individuals rather than the
government. The U.S. follows the allodial system of
ownership.
Allowance
for Vacancy and Collection Losses - The percentage of
potential gross income that will be lost because of vacant
units, collection losses, or both.
ALTA
- See American Land Title Association.
Alteration
- Modification of a contract or note by one party without the
consent of the other.
Alternative
Mortgage Instruments
- Mortgage
instruments that may help qualify borrowers who otherwise may
not be able to qualify for a standard 30 year, fixed-rate
mortgage loan.
Amend
Escrow Instructions - A change in the escrow instructions
after they have been signed. The signatures of both the
buyer and the seller are required to amend the instructions.
Amenity
- An aspect of a property that enhances its value.
For example, off-street reserved parking within a
condominium community, the nearness of good public
transportation, tennis courts or a swimming pool.
Amenities
- See Amenity.
American
Land Title Association
- A national
association of title insurance companies, title abstractors
and attorneys who specialize in real estate law.
The American Land Title Association (ALTA) establishes
standard procedures and uniform title abstract and insurance
policy forms.
Amortization
- The systematic and continuous repayment of an obligation
through periodic installments until the debt has been paid off
in full.
Amortization
Period - That period of time over which a calculated mortgage payment
will fully repay a set loan amount at a set interest rate.
Amortized
Loan - See Amortization.
Anchor
Bolt - A bolt that ties the mudsill (the lowest board in a
house) to the foundation.
Anchor
Tenant - A major tenant, usually located at on end of a
shopping center. Lesser shops benefit by being between
anchor tenants.
Ancillary
- Something that is in addition to the main body or subject.
Ancillary
Probate - A probate for real property located in a state
other than the domicile of the deceased.
Annexation
- The joining of one property to another.
Annual
Percentage Rate
- The actual interest rate the borrower pays when all the costs
of obtaining credit are included.
Annum
- A year (i.e. per annum).
Annuity
- An amount paid at regular intervals for a set period of time.
Mortgage payments are a form of an annuity paid to the
lender.
Anticipatory
Breach - An action or statement of a party prior to
performance due date that indicates the party will breach the
contract. The other party can bring suit upon
anticipatory breach without waiting for an actual breach.
Antimerger
Clause - A mortgage clause to the effect that the
lienholder will retain priority over junior liens in the event
of merger of title (a deed given in lieu of foreclosure).
Applicant
- One who applies for a real estate loan (the prospective
borrower/mortgagor).
Application
- A form used by a borrower to submit pertinent financial and
property information concerning a borrower/mortgagor and the
proposed security.
Application
Fee - A one-time fee charged by a mortgage lender for the
processing of an application for a loan. Most lenders do
not charge this fee.
Appraisal
- A report made by a qualified appraiser setting forth an
opinion or estimate of value.
Appraised
Value - An estimation
of property value made by a qualified expert.
Appraiser
- An expert qualified by education, training and experience who
sets forth an opinion or estimate of a property, based on
available facts and an inspection of that property.
Appreciation
- An increase in the value of a property. Appreciation may be the result of an increased demand for a
property, any improvements or additions made, improvements to
the neighborhood, etc.
Appurtenance
- Anything that is or becomes part of the property because it
is attached or closely related to the land.
It may be a structure such as a well, barn or garage;
or it may be a right or interest enjoyed by the previous
owner, such as an easement.
Appurtenant
Easement - Beneficial easement that transfers with land.
APN
- See Assessor's Parcel Number.
APR
- See Annual Percentage Rate.
Arbitrage
- Taking advantage of interest rate differential by buying at
one interest rate and selling at a higher interest rate by
either land contract or use of a wrap-around mortgage.
Arbitration
- Nonjudicial process for resolution of disputes whereby the
parties agree to abide by a decision made by a third person.
ARM
- See Adjustable-Rate Mortgage
ARM
Margin - See Margin.
Arm's
Length Transaction - A transaction in which both the buyer
and the seller act willingly and under no pressure, with
knowledge of the present conditions and future potential of
the property, and in which the property has been offered on
the open market for a reasonable length of time and no unusual
financing or other circumstances exists.
Arrearages
- The total, accumulated, delinquent principal, interest, taxes
and insurance (PITI) amount
that a borrower owes a lender.
As
Is - A term used in a real estate contract used to
express that a property is sold as the buyer sees it. In
other words, a seller is making no representation as to the
condition or quality of the item and promises to make no
repairs in the event that there is a problem with the
property.
Assemblage
- The act of bringing adjacent parcels of land under one
ownership; the opposite of subdividing. Assemblage
usually results in an increase in value. (See Plottage).
Assessed
Valuation - The value a
taxing authority places upon real or personal property for the
purpose of collecting payment of taxes on the property.
Assessed
Value - See Assessed Valuation.
Assessment
- Tax on real property either by an annual property tax based
on current fair market value or via special assessments for
sewers, public improvements, etc.
Assessor
- A public official who evaluates property for the purpose of
taxation.
Assessor's
Parcel Number - The number assigned by a county assessor
to define a particular parcel or tract of land.
Asset
- An item, such as real property or personal item, that has
value.
Assign
- To transfer all of one's interest in a property.
Assignee
- The person who is receiving interest in a property.
Assignment
- The complete transfer of one person's rights to
another. The assignee takes over the rights and duties
of the assignor.
Assignment
of Mortgage - A legal document that evidences a transfer
of ownership of a mortgage from one party to another.
Assignment
of Rents -
A legal document, sometimes included in the mortgage,
that assigns all rents and income from a property to the
mortgagee. If
properly invoked after default, the mortgagee has a right to
assume management of the property and collection of the rents
from the subject property.
Assignor
- The person who is giving interest in a property.
Assumpsit
- A promise to do an act or make a payment.
Assumption
- A means by which the title/mortgage may be transferred to
another party with or without release of liability on the
note.
Assumption
Agreement - See Assumption.
Assumption
Fee - The fee charged by a lender for a person to assume
another person's mortgage.
Attachment
- A seizure of a defendant's property by court order as
security for any judgment a plaintiff may recover in a legal
action.
Attestation
- The act of witnessing; to attest is to bear witness.
Attorney-in-Fact
- A person operating as an agent (not an attorney-at-law)
under a power of attorney.
Attornment
- An agreement between owner and sublessee that the owner will
recognize the sublease and the sublessee will pay the owner
should the sublessor's interest be foreclosed.
Attractive
Nuisance - Doctrine holding the owner of land liable for
injury to children due to unsafe conditions of property where
a property is likely to attract children as trespassers.
Avulsion
- The removal by erosion of soil from one property to another.
Axial
Growth - City growth along transportation routes from the
city center (represents the spokes of a wheel).
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