Glossary
A | B | C | D | E | F | G | H | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y | Z
______________________________________________________
|
Adverse Possession: A means of acquiring property belonging to someone else without the owner’s consent. All states have various rules and time limits regulating this. Most people scratch their heads at this one, but it is based on the concept that land should be useful and if someone else can use the land more effectively, they should be allowed to do so. A person seeking to adversely possess another’s property must do over a set number of years and pass a certain litmus test involving certain concepts – Exclusive, Continuous, Hostile & Open.
Let’s say there’s an empty lot on the corner of a major intersection. The owner lives out of town and has shown no interest in developing or using this land in any way. Someone comes along and sets up a produce stand. This action is Open to anyone interested. The use of this land must be Continuous over a set number of years as set by the state. The produce stand must be there year round for the entire time as required by law. The produce stand owner cannot have the permission of the owner to be there – therefore, the use is considered Hostile. And the produce stand owner cannot leave and let someone else use the property for a few years and then come back and continue his claim – therefore, it must be done Exclusively by one person(s) intent on possessing the land. At the end of the prescribed amount of time, that person can go to court and file a quit title action to claim the land.
Agency: In real estate, this refers to the relationship between the Principal (Buyer or Seller) and the Broker under a signed written agreement. For a Seller, this relationship is usually created in the Listing Agreement. For a Buyer, it is created in a Buyer Brokerage Agreement. In these relationships, the principal or client is granting a ‘special’ agency to the Broker so that he/she may act on behalf of the client in a specific area i.e. the marketing and acquiring a buyer for their property or in assisting a buyer with finding the right property. Georgia state statute BRRETA governs agency in real estate – read more on this below!
Agreement: we often use this interchangeably with the term contract because essentially, a contract is a legally binding agreement to do something, right? In fact, our GAR contracts for making an offer is called a “Purchase and Sale Agreement” and we refer the Listing contract as the “Listing Agreement.”
Air Rights: When you buy a home, you own more than the house and the land it sits on…technically, you own the land all the way down to the core of the earth and all the way up to the sky. The rights of ownership in the air are called air rights and are restricted somewhat by local or federal zoning for how high you can build, power lines or things like air traffic.
Amendment: Any changes to an existing contract. Think about the Constitution of the United States… while not a contract per se, it makes for a good analogy. The main body of the Constitution was drawn up… but then, over the years, things were added… these are referred to as Amendments, right? The same applies to contracts. Once drawn up, the main contract remains intact and unchangeable. Any changes to that contract must be done so in the form of an amendment, mutually agreed to by the parties and formally attached to the contract.
Anti-Trust: Concept of preventing the domination of the free market by one entity which would effectively reduce competition and choices for the consumer, otherwise known as a monopoly… we’ve all played the game! The primary Federal Anti-Trust remains the Sherman Anti-Trust Act of 1890. In real estate, this applies to everything from conspiring to set any standard rate of commission, listing period, cooperative share, etc., agreeing to boycott certain businesses or other Brokerage Companies, dividing territories among brokerage companies among others.
APR
Attorney-in-Fact: Someone with Power-of-Attorney(POA) over another. It has nothing to do with actual attorneys, despite the term.
|
Blockbusting: An act where real estate licensees/developers encourage homeowners to sell by promoting the idea that their property values will go down due to the change in demographic make-up of an area or instilling panic/fear in homeowners. This type of act violates Federal Fair Housing Laws.
Broker: A status of licensing under state real estate licensing laws. In Georgia, a Broker is the only person authorized to conduct any real estate business and receive commission from the successful close of a real estate transaction. All other real estate licensees must work on behalf of a Broker.
BRRETA: Brokerage Relationship in Real Estate Transaction Act. A state statute in Georgia effective 1994 that defines agency relationships in real estate transactions. It goes to define a Client, Customer, Broker, Transaction Broker and Designated Agency.
Buyer Representation
|
Chain of Title: In doing a title search, the searcher seeks to connect current owner with every owner in the past going back as far as possible to ensure that no one can emerge later to claim ownership.
Chattle: A really old term for personal property but still used primarily in legal circles.
Cloud on Title: Anything on a title that may create an issue in the transfer of real property. It could be a missing link in the chain of title, an undisclosed lien, outstanding claims on property etc. Minor clouds on title can be cleared up using a Quit-Claim Deed. For instance, if Mary Jones purchased the property in her name, and then later got married and changed her name. At the sale of the property, as the Grantor of the deed, her name was drawn up erroneously as Mary Dimplewhacker. While perfectly valid, in later years when the next owner tries to sell and a title search is done, the chain of title will appear broken as Mary Jones bought the property, but Mary Dimplewhacker sold it. This can be cleared up quickly by finding Mary Dimplewhacker and having her sign a Quit-Claim Deed releasing any rights or claims to the property she might have.
Code of Ethics: A set of Codes to establish ethical conduct among the REALTOR® community first adopted by the National Association of REALTORS® in 1913. All REALTORS® are required to take Code of Ethics training every four years.
Contract
Co-Tenant
Condominium: While most people think this is a type of building – it is in fact, a type of OWNERSHIP. Condominiums can be any type of building. Most commonly thought of in terms of residential properties, but condo ownership is quite common in commercial buildings as well, shopping centers, medical buildings etc. The basic concept of condo ownership is that the owner owns his/her unit is fee simple (highest form of ownership) but shares ownership of the common elements like parking lots, amenities, elevators, hallways, etc. with the other owners. Condominiums are created by state laws, involves a master deed for the entire property with each individual owner receiving a separate deed for his/her own unit.
Consideration: Anything of value given in exchange for something else. In a contract, consideration is legally required to make the contract valid. Consideration does not have to be monetary, it can be goods or services as long as they can be assessed to have value. Quite often, property is transferred via a deed to another for ‘love & affection.’ In the purchase of real property, consideration is the purchase price.
Cooperative: A type of ownership where a building is set up as a not-for-profit corporation. Buyers actually purchase stock in the corporation and in exchange receive a proprietary lease on a given unit. Due to the nature of the set-up, co-ops are usually more restrictive than condominiums in how they operate.
Community Property: Concept of ownership based on old Spanish law that considers husband and wife as equal partners/entities in ownership. Everything one person owns is owned by the other equally. Of course, there are exceptions for properties owned by each person prior to the marriage or gained through inheritance during the marriage. Not recognized in all states… but you’ll see a sort of patterns where community property states tend to have some sort of Spanish/Mexican influence in their past history, i.e. California & Texas.
Counter-Offer
Customer: A party who works without a written agency agreement with a Broker. Under BRRETA, a customer can only receive ministerial services from that Broker – in other words, services that do not require the Broker or his representative from offering any advice, counsel, opinions, and expertise.
|
Deed
Deed in Lieu of Foreclosure: Exactly as it sounds… the borrower turns over the deed (and ownership) of the property to the bank rather than (in lieu of) them foreclosing on the borrower. While there is still a credit hit against the borrower, it isn’t as damaging as a full-blown foreclosure. The lender, however, takes the property with all it’s existing liens and obligations. A foreclosure, however, releases the lender of those issues – which is why, in many cases, lenders are opting to simply foreclose.
Default: Condition that occurs when someone violates the terms of a binding contract. This can occur in a real estate transaction when one party fails to act in accordance with the contract and causes the transaction to fail. Example: Buyer fails to provide his lender with the necessary information to complete his loan. Now unable to get financing, he is unable to complete he purchase. Since he was obligated to get financing and did not act accordingly, he is in default and in jeopardy of losing his earnest money or being sued by the Seller. In financing, when the borrower fails to make payments according to the terms of his contract with the lender, the borrower is in default.
Depreciation
Designated Agency: When a Buyer and Seller are being represented by the same Broker – but by different agents working on his behalf. Technically, all real estate licensees can only work on behalf of their Broker. Any clients signing a listing agreement or a buyer brokerage engagement is actually signing on with the Broker not the licensee. Therefore, if the definition of dual agency is that one broker represents both parties, there is a problem with this when two different agents under the same broker are working with the two sides in a transaction. In Georgia, as independent contractors, individual agents are seen as being able to provide the full agency obligations to their clients without conflict despite working for the same Broker so it has been deemed to be allowable and not considered dual agency.
Discount Points
Dual Agency: When one agent/Broker is representing both parties in a real estate transaction. While many states have made this illegal, due to the inherent difficulties in representing both parties and offering them both loyalty, confidentiality, etc. In Georgia, this is still legal but only with the written consent of both Buyer and Seller. Undisclosed dual agency is a major no-no… one of those career jeopardizing no-nos…
Due Diligence
|
|
Earnest Money: Money or something of value that is usually offered along with a purchase to buy which reflects the Buyer’s ‘earnest’ intent to complete the transaction. Normally held in a trust account by a Broker and credited back to the Buyer at closing. If closing does not take place, earnest money can only be released with permission from both Buyer and Seller. In Georgia, if neither party can agree on who should receive the earnest money deposit, the Broker may release the money to one party based on his best judgment with written notice to both parties. If either party contests the Broker’s decision, it must be reconsidered. If the Broker cannot make the decision, he can turn it over to the courts in what is called an Interpleader – basically, the court decides. This is a lengthy and costly process in which the loser not only loses his claim on the earnest money but must also pay the winner’s and Broker’s court costs – not to mention his own legal expenses.
Earnest money is not required but is offered as a show of good faith and gives the Buyer something to lose in the event he defaults on the contract.
Easement: Basically, the right of one party to use another party’s property. This is commonly seen in the form of a driveway easement since by law, no property can be landlocked (i.e. no access to the primary road). It is also used by local governments for utilities and the like such as drainage easements. It can affect title so be aware of any easements on your property!
Eminent Domain: The power of government to seize private property for public use, such as adding new roads or modifying existing roads, government facilities, etc. The government must first try and purchase the property or a portion of the property at market value from the owner. If unable to do so, they can seize it in a process called Condemnation – not to be confused with a building being condemned for violating building code.
Encroachment: When parts of one property extends into another property. For example, if Neighbor Joe builds a fence four feet into Neighbor Sam’s property, there now exists an encroachment on Sam’s property. On the ground, this type of encroachment is called a ‘trespass’. If Neighbor Joe installs a giant antenna on the side of his property and the antenna hangs over Sam’s property, that type of encroachment is called a ‘nuisance’.
Escheat
Escrow
Eviction
Exhibit
|
|
Fair Housing Laws: Prohibits various discriminatory acts in the sale or rental of real property or in lending practices. Some discriminatory acts considered are blockbusting, unequal treatment, setting different standards and steering. Protected classes as defined by law are: race, color, national origin, religion, sex, marital status, familial status and handicap.
Fannie Mae
Fee Simple: The highest form of ownership where one’s rights are not hindered by anything except certain government rights and possibly the rights of other parties with interest in that property like your mortgage lender… to whom you have placed your property up as collateral for that loan to buy the place. Get it?
Fee Simple Defeasible
FHA Loans
Fixture
Foreclosure: Lender’s remedy for default by a borrower. The lender is allowed to force the sale of the property in order to regain the outstanding balance. This is usually done on the courthouse steps. If a buyer purchase the property on the courthouse steps, the sale takes place and the lender regains their money. If no one purchases the property on the courthouse steps, then the bank literally buys back the property and officially becomes the owner of it. This is referred to as Real Estate Owned (REO) or Lender-Owned. They then turn around and sell it themselves.
Depending on the state, foreclosure may or may not require a court order. In states that call for Judicial Foreclosure, the lender must go to court first in order to proceed with the foreclosure. There are other requirements with judicial foreclosure, but once the court order is issued, it proceeds with the sheriff’s sale on the courthouse steps. In states with Non-Judicial Foreclosure, the lender does not need the court’s involvement. They must notify the defaulting borrower of the foreclosure and then advertise in the local paper for a set period of time thus notifying other potential lien holders of the impending action. Then they can go straight into the sheriff’s sale on the courthouse steps.
If the property sells for less than what the defaulting borrower owed, the lender may then sue the borrower for the remaining balance. This is called a deficiency judgment and can be attached to all real and personal property of the borrower.
Fraud:
Freddie Mac:
|
|
Good-Faith Estimate
Grant
|
|
Homeowner’s Association
HUD-1
|
|
Intestate: When someone dies without a valid will. In these cases, the local probate court will appoint an administrator who is responsible for distributing the estate based on the state’s Laws of Descent and Distribution.
Interest: Simply put, the cost for using someone else’s money.
|
|
Joint Tenancy
Judgment
|
|
|
Latent Defects
Leasehold Property
Lien
Lis Pendens
Limited Service Company
Loan Modification
|
|
Marketable Title
Material Defects
Mechanic’s Lien
Millage Rate
Mineral Rights
Mortgage Fraud
Multiple Listing Service
|
|
Nuisance
|
|
Offer
Offeree
Offeror
|
|
Personal Property: We all know this… but you’d be surprised. Things owned… that are mobile… unlike real property which cannot be moved since land is land. Distinction between personal and real property is essential when buying and selling real estate. Also called Chattel.
Police Powers:
Prescriptive Easement
Primary Mortgage Market
|
|
Qualifying Broker
Quit-Claim Deed
|
|
Real Property: The actual legal term for land and whatever happens to be on it… house, trees, lakes, etc.
REALTOR®: A member of the National Association of REALTORS®. The term is a registered trademark of the professional trade association – hence the use of the ® symbol.
Redlining
RESPA: Real Estate Settlement Procedures Act
|
|
Salesperson: In Georgia, this is the initial licensing status of real estate licensees. A salesperson can only act on behalf of a Broker in the business of real estate.
Secondary Mortgage Market: Financial entities who essentially buy loans from the Primary Mortgage Market (banks and such who make the loans with the consumers). The need for Secondary Mortgage markets arose out the popularity of long-term loans which tied up a lender’s funds for a long period of time. By selling loans in the Secondary Mortgage Market, banks free up their fund which allows them to make more loans. The loans purchased are repackage and sold as securities for investors. Fannie Mae and Freddie Mac are two examples of Secondary Mortgage Market entities.
Settlement Statement
Short Sale
Special Stipulation
Steering
Suit for Specific Performance: One of the remedies in the event of default. One party may sue the other and force them to perform the contractual act as agreed to in the binding contract. For example: If the Seller decides two days before closing that he no longer wants to sell his house, the buyer may sue him in court and force him to continue with the sale.
|
|
Tax Assessment
Terms
Testate: When someone dies with a valid will. The will name someone to be the executor who is responsible for distributing the estate among any heirs and handling all the necessary acts as required in the will.
Title
Trespass: A form of encroachment on another’s property applying to things that are physically on the grounds of the property such as a fence inside the other’s property line.
Trust Account: An account set up for the exclusive use of holding other people’s money. A Broker might have a trust account to hold earnest money deposits for a buyer of real property or security deposits for a tenant. Broker’s Trust Accounts in Georgia must be reported to the Georgia Real Estate Commission who is allowed to routinely audit that account for accuracy and proper handling.
|
Underwriting: Lenders’ standards for approving loans which vary from lender to lender. Underwriters follow their companies’ specific guidelines to determine if the applicant is a good candidate for a loan.
USDA:
|
|
|
VA Loans
Variable Rate
Variance
|
|
W
|
|
Yield
|
|
Zero Lot Line: When one side of a house sits on the property line itself, forming the border with the adjacent property. Usually allowable with variance if there are set-back rules in place.
Zoning:
