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Real Estate Terms

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AThere are 942 entries in the glossary.Pages: «1 2 3 4 5 6 7 8 9 10 » AtticThe portion of a house between the ceiling of the top floor and the underside of the roof. There must be access to an attic. By inspecting an attic you can check for signs of structural problems in the rafters and joists and ass ure that there is adequate ventilation. Attorney-in-factOne who holds a power of attorney from another to execute documents on behalf of the grantor of the power. AttornmentA tenant's formal recognition of a new landlord. A mortgagee, who becomes an owner by foreclosure, with the tenant recognizing the mortgagee as the new landlord, has a defense against claims for rent by the defaulting mortgago r. Attornment starts a new tenancy between the new owner and the tenant. Attractive nuisance doctrineA legal doctrine holding that a property owner must protect children from injuring themselves by an attractive danger such as a swimming pool. As an example of adhering to this doctrine, a property owner shou ld build a fence around a swimming pool. Automated UnderwritingAfter you complete your loan application with a lender, it is sent to "underwriting" for review. In short, underwriting is the process used to analyze how you have managed credit obligations in the past, whether you have the ability to repay the mortgage loan you are applying for (i.e., your income and assets), and whether the price you are willing to pay for the home is supported by the price of the property. Average life of a mortgageThe average number of years one dollar of principal investment remains outstanding in a mortgage loan. The average life is used in deciding the true yield of a mortgage. A 30-year mortgage is said to have an average life of 12 years; a 10- to 15-year mortgage has an average life of 7 years. Investors base the yield of a mortgage on the average life as opposed to the original term. AvulsionThe sudden removal of land by action of a body of water, such as a river. BackfillingThe act of putting back dirt removed for construction. You backfill by filling the gap between the foundation wall and the yard so that water will drain away from the building. Backup contractA term often used with contracts to buy real estate. A backup contract is a contract that will replace a prior contract in the event of failure to perform or close by the parties of the prior contract. The seller shoul d get a release from the buyer on the first contract before canceling the contract and proceeding with the second, or backup, contract. Balance SheetA financial statement that shows assets, liabilities, and net worth as of a specific date. Balloon MortgageA mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term. Balloon noteA Promissory Note which requires only partial or no amortization (principal reduction.) Balloon Notes result in an eventual Balloon Payment. A Balloon Note may be coupled with an Extendible Rider which allows for the extension of the loan term as long as certain conditions are met. (Such as on 5/25 and 7/23 loans.) Balloon PaymentThe final lump sum payment that is made at the maturity date of a balloon mortgage. BalusterThe support for the rail in a staircase; one of a series of upright posts. Bank Holding Company (BHC)A corporation that owns interests in one or more banks. BankruptA person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee. BankruptcyA proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee. Base lineA surveyor' s term used to show an east-west line. Base rentThe minimum monthly rent due to the landlord. Typically, it is a fixed amount. BaseboardA board that runs along the base of the wall where it meets the floor. BasementThe space that is below the first floor. Basements are usually wholly or partly below the exterior grade. Basements should be checked for signs of water leakage. Dampness in comers is a sign of moisture problems, and water marks along the base of walls or any cabinets suggest that there is or has been some serious water leakage. BasisThe total amount paid for a property, including equity capital and the amount of debt incurred. For a LIHTC project, the initial value that is eligible for tax credits. Basis pointsA term used in relationship to interest rates. One basis point is equal to 1/100 of 1 percent. are used to describe the yield of a debt instrument, including mortgages. The difference between 9\% and 9.5\% i s 50 basis points. BattenA narrow board normally used to cover a joint or space between boards, often called a batten board. BatyThe strip of insulation placed between the studs of a wall or joists of a ceiling or floor. BeamA load-bearing support that can be made of wood, iron, stone or other strong material. Bearer bondA coupon bond payable to the individual who has possession of the bond. BedrockSolid rock for a foundation of a large building. Bedroom community or suburbResidential area for commuters who work at a nearby large city or employment center. Before-Tax IncomeIncome before taxes are deducted. Belly-upA project, business or venture that has failed is said to have gone belly-up. BeneficiaryThe person designated to receive the income from a trust, estate, or a deed of trust. BequeathTo transfer personal property through a will. BettermentAn improvement that increases property value as distinguished from repairs or replacements that simply maintain value. Bill of SaleA written document that transfers title to personal property. Billing cycleThe date a bill is sent out and the payment due. Some bills are sent out on the first of the month, some on the fifteenth, some on other dates. BinderA preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate. Biweekly MortgagesWith a biweekly mortgage, the monthly payment is split in half, resulting in the same total monthly mortgage, but the resulting 26 and sometimes 27 biweekly payments a year translate into 13 monthly payments, or one extra monthly payment per year. Borrowers can qualify for a 30-year monthly payment amount, but get a loan that pays off in approximately 22 years at current interest rates. At higher rates, the actual term declines. If you are looking to build up equity in your home faster without the higher mortgage payments that come with a shorter-term mortgage, you may want to consider the biweekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account. Biweekly Payment MortgageA mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest. BlacktopA paving surface usually made of asphalt. Blanket Insurance PolicyA single policy that covers more than one piece of property (or more than one person). Blanket MortgageThe mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project. Blended rate(1) A first-mortgage lender can use a blended rate in an advertisement to induce mortgagors to refinance and pay off their old low-interest-rate first mortgage. The first-mortgage lender could offer a 10\% interest loan as co mpared to the going rate of 12\% if the mortgagor will refinance the existing mortgage that is at 8 percent. (2) A second-mortgage lender or a wraparound lender will advertise not to pay off the old mortgage with the low rate and short term remaining, but instead, to place a second mortgage or wraparound loan behind the first and have a blended rate below market interest rates for first-mortgage loans. Blighted areaUsually an inner city area where property values are falling and buildings are deteriorating. BlockbustingAn illegal practice of promoting panic-selling in an all-white neighborhood because someone of a minority or ethnic background has moved into or is said to be moving into the neighborhood. The blockbuster will try to gain il legally from depressed prices either by buying or listing the properties at far below market values. BlueprintAn architect's or designer's detailed plan for a building. If you remodel your house, you will probably need a blueprint. Board of adjustmentA government body that hears appeals concerning zoning matters. A Board of Adjustment can grant zoning variances. Board of equalizationA government body that hears appeals concerning real estate tax assessments. If a property owner thinks the assessment is too high, they can appeal to the Board of Equalization. This board can lower assessments, causing a lower real estate tax. Board of Realtors®The local association of REALTORS® who belong to the State and National Association of Realtors.® Board of reviewSee Board Of Equalization. BoilerplatingStandard language found in contracts, deeds or deeds of trust, and in covenants, conditions and restrictions (CC&Rs;). Bona fideIn good faith, without fraud. BondAn interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust. Bond valueThe mortgage bond's cash flow (or underlying collateral) that upholds the value of the bond. The mortgage bond's value is restricted to the mortgage loan's unpaid balance. Bond-type securityAn investment security, especially a mortgage-based one, that has the characteristics of a typical corporate bond, including a long-term, fixed rate of return and repayment of principal at maturity. Book valueAn accounting term used to show the value of a business as a whole or particular asset, such as real estate. You show the value by accounting records that give the cost of the assets plus any improvement minus depreciation. It is the value of an asset. Depending on the reason for valuation, book value may be marked down for a distress sale, but it is normally never marked up to reflect an increase in value. BootSomething of value given to even the exchange of like properties. For example, if parcel A is worth $100,000 and is exchanged for parcel B (worth $80,000) and $20,000 in cash, the boot is the $20,000 in cash. Boring testUsing samples obtained by boring deep holes in the ground to decide the strength of the subsoil for construction purposes. BoroughA section of a city, similar to an incorporated village, that has control over local matters. New York City has five boroughs. Boti'om landLow land situated near a body of water. Bottom lineA phrase that means the net result, such as after-tax cash flow, or the final consequence. BracingPlacing boards between floor or ceiling joists to prevent them from twisting. BreachA violation of any legal obligation. Breach of contractFailure to perform according to the terms of a contract. The party who has not breached the contract can rescind the agreement and sue for damages or for performance. Breach of trustAbuse of the responsibilities or authority as set forth in a trust agreement. Break-even cash ratioEqualization of the ratio of operating expense plus debt service to gross income (1:1). Interpreted as the occupancy level that must be achieved to break even. Break-even pointA point when gross income will cover operating expenses and the debt service. BreakpointThe Sales threshold over which percentage rent is due. Bridge financing or bridge loanShort-term mortgage financing between the end of one loan or financing instrument and the beginning of another. Bridge LoanA form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan." British Thermal Unit (BTU)A unit used to measure the efficiency or capacity of heating or cooling systems. A unit of heat required to raise one pound of water One degree Fahrenheit at sea level. BrokerA person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them. BrownfieldsAbandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. Environmental Protection Agency web site at www.epa.gov/swerosps/bf/glossary.htm Brownfields Economic Development InitiatBrownfields Economic Development Initiative (BEDI): BEDI grants enhance the security or improve the viability of a project financed with new Section 108 guaranteed loan authority. HUD intends BEDI and Section 108 funds to finance projects and activities that will provide near-term results and demonstrable economic benefits, such as job creation and increases in the local tax base. HUD web site at www.hud.gov/bedifact.html Brownfields Redevelopment InitiativeBrownfields Redevelopment Initiative (BRI): An interagency initiative to address the financial and legal risks of cleaning up and redeveloping brownfields. To attract private financing, HUD brings together four existing types of assistance that communities can use to clean up and revitalize potentially contaminated sites: annual formula grants allocated through Community Development Block Grants; lower interest loan guarantee authority through the Section 108 Loan Guarantee program; accompanying competitive grants through the Brownfields Economic Development Initiative program; and additional competitive grants provided through the Lead-Based Paint Hazard Control program. HUD web site at www.hud.gov:80/progdesc/brownf.html BudgetA detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses. Budget CategoryA category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category. Buffer strip or zoneLand between two areas of different use, such as commercial and residential. Builder's risk insuranceInsurance used to protect builders against fire and special risks while they have buildings under construction. Building CodeLocal regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards. Building line or setbackDistances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances. Building permitA written permit that must be purchased from the local government by anyone doing remodeling or rehabbing work on a property. BuydownWith a buydown, the seller or borrower pays an amount to the lender so that the lender can offer a lower rate and lower payments, during the earlier portion of the loan term. If the seller pays, he may increase the sales price to co ver the cost of the buydown. Buydowns can occur in all types of mortgages; fixed rate, interim fixed and adjustables. Buydown AccountAn account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect. Buydown MortgageA temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage. Buyer's agentA real estate agent who works for the buyer of a house, not the seller. Cadastral mapA map with legal boundaries and ownership of real property used for title recording. Call OptionA provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason. CapA provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap. CapacityLenders will want to know if you can repay the mortgage debt you incur -- this is known as your capacity. Lenders will base their evaluation on employment information, how long you've worked, and how much you are paid. Lenders will also review your expenses and any other debt obligations you have. This means they'll want to know how many dependents you have and whether you pay any alimony or child support, for example. Cape codA Colonial-style house, usually 1-story in height. The house is small with a single centered front entrance. The entrance usually has one or windows on each side of the front door and is symmetrical. The chimney is often in center of the house, and the roof is a steep gable made of shingles. Capital(1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities. Capital assetAs defined by the IRS, an asset that can receive favorable treatment upon sale. Assets excluded would be inventory, property held for resale property used in a trade or business. Capital ExpenditureThe cost of an improvement made to extend the useful life of a property or to add to its value. Capital gainThe taxable profit from the sale of a capital asset. The gain is the difference from the basis for the capital asset and the value received less adjustments the cost of the sale, e.g., sales commissions, discount points, and closing costs. Capital gains taxA tax owed for selling something at a price that is more than the price the owner bought it for. Capital ImprovementAny structure or component erected as a permanent improvement to real property that adds to its value and useful life. Capital lossWhat a homeowner has if he sells his home for less money than he paid for it. CapitalizationProcess of estimating value by discounting stabilized net operating income by an appropriate rate. Capitalization rateCommonly called the cap rate, the capitalization rate can be used as a division factor to decide the capital value. The net income from an investment divided by the cap rate will equal the capital value, or value. The cap rate is a combination of a return or recapture of the investment and a return on the investment. 

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