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Real Estate Glossary A [Part 2]
Ad Valorem
A Latin phrase that refers to the taxation of property based on its monetary worth.
Latin: “according to value,” which is usually used to talk about a tax or assessment. Real property tax is an ad valorem tax that is based on how much the property is worth. Each piece of property is taxed based on its value, not on how many units there are, like a tax on a gallon of gas or a package of cigarettes.
Identifies a tax or stamp duty levied against a property. Literally based on worth.
Ad Valorem Tax
A property tax based on the property’s current value.
Property taxes levied on the basis of the property’s market value.
ADA
The Americans with Disabilities Act is a civil rights law that prohibits discrimination against people with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the public.
Adaptability
The ability to easily change the physical design of residential or commercial units in the future to meet the needs of people who have limited mobility in the future. Putting reinforcements in the walls of a bathroom makes it easy to put in grab bars later on.
Adaptive Reuse
A conversion in which the emodeling results in a creative reuse of the building that is not related to its original use.
Adaptive Use
Putting an ancient but sound structure to new use.
ADC Loan
People who want to buy, build, and develop a project get loans to pay for all of that.
Add-Back
For a loan that lets you put off paying some of the interest, that money is added to the amount you’ll have to pay at the end.
Add-On Interest
Interest is calculated on the total principal balance for the chosen term, regardless of any principal repayments. The borrower is charged interest on the full principal amount for the duration of the loan (not on the declining balance), despite the fact that the principal is decreased monthly. Additionally referred to as block interest.
For example, a $10,000 loan with 12% add-on interest payable over three years would need equal annual interest payments of $1,200 regardless of the amount of unpaid principal. As a general guideline, double the reported add-on interest rate to obtain the effective rate of interest (true annual interest). Thus, the true yearly interest rate on the $10,000 loan in the example would be about 24 percent.
Addendum
A proposal to alter contract terms or bid information.
Additions that are added to and become part of a document. If there isn’t enough space on the sales contract form to write down all the details of a deal, the parties will add an addendum or supplement to the contract. The sales contract should include the addendum by referring to it as part of the deal, so it should be there. If there is an addendum to the sales contract, it should be dated and signed or initialed by all of the people who signed the contract.
Addition
When a building gets bigger or has a big change made to it, that’s a renovation. If you add another floor to a one-story house, that’s an addition.
Any construction or alteration to a building that enlarges its overall footprint.
Additional Charge Mortgage
A type of mortgage that is used to get more money from the person who owns the house after the person who owns the house gets a loan from the person who owns the house. There should be no question about whether the two debts are linked.
Additional Deposit
The extra money the buyer gives to the seller or to an escrow account as a part of a deal to buy something. The extra deposit is usually paid within a short time after the offer is accepted. With her offer to buy the seller’s $150,000 condo unit, the buyer might deposit $1,000. She might also agree to pay an extra deposit of $4,000 in five working days after the seller accepts her offer. If the buyer doesn’t keep their end of the deal, the seller can keep all of the money they’ve put down, including the extra deposit.
It might be possible for the seller to end the contract if a court rules that the buyer didn’t pay on time was an important breach of the contract. There are many ways for the seller to make sure this happens. One way is to make the seller’s acceptance contingent on timely payment of the extra deposit.
Additional Repayment
Additional money is deposited into the loan over and above the required minimum payments.
A lot more money was put into the loan than the minimum payment.
Additional Space Option
Tenants have the option to expand the space they rent during the term of their lease, as long as they do so in a way that is set out in their lease.
Address
The address might refer to a person’s home or the location of a business or organisation.
Adhesion Contract
A one-sided contract that benefits the party who authored the deal. Indeed, an adhesion contract might be so one-sided that doubts about its being a voluntary and uncoerced agreement arise due to the implication of a significant negotiating power imbalance. Courts will not enforce adhesion contract clauses that are unjust or oppressive toward the party who did not draught the contract. Additionally referred to as a take-it-or-leave-it contract.
Contracts containing extensive fine language, such as franchise agreements, mortgages, and leases, are occasionally challenged as adhesion contracts on the grounds that the non-drafting party was not given an opportunity to bargain over the agreement’s many elements.
Additionally, an insurance contract (property, title, or life) is occasionally contested as an adhesion contract. Courts have concluded that any ambiguity should be construed in the insured’s favor, and that any exclusion from coverage must be disclosed plainly and prominently. Additionally, courts will employ the notion of unconscionability.
Adjudicated
It is something that has been decided by a court or government body.
Adjunction
The act of annexing a piece of land to a larger piece of property.
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Adjustable Rate Loan
There are many types of loans that can have different rates and terms. Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, the Comptroller of the Currency, and the Office of Thrift Supervision have all issued guidelines that allow real estate loans with provisions to change the rate of interest at certain intervals (e.g., every six months) and within a certain range to be made (e.g., 1 percent).
People now use adjustable-rate loans, which can change their interest rates based on changes in the market. The ranges for time intervals, percentage increases or decreases, and total increases or decreases can change as the market changes. There is a cap on the biweekly payment loan that you can see.
The adjustable-rate loan has its own set of terms, like the following:
Current index: In this case, the current value of a well-known index as it is calculated and reported nationally or regionally. The value of the current index changes all the time. This value is used to figure out the new note rate on each rate adjustment date.
Fully indexed note rate: At the time of application, add up the index value at that time, as well as the gross margin in the note that says that.
Gross margin: When the rate changes, an amount of percentage points is added to the current index value to get the new note rate. In the loan document, the gross margin is written down.
Initial rate: The low rate for the first adjustment period was meant to entice people to borrow money (the “teaser rate”).
Initial rate discount: When you apply for a loan, you need to know how much money you make and how much debt you have.
Life of loan cap: A limit that the note rate can’t go over over the life of the loan is called a “cap.”
Note rate: The rate that determines how much interest the borrower will pay each year, or how much they will pay each month. The accrual rate, the contract rate, or the coupon rate is also called the note rate, but these are different names.
Payment adjustment date: Borrowers may have to pay more or less each month.
Payment cap: At the payment adjustment date, there is a cap on how much the borrower’s monthly principal and interest will go up at that time. If the interest rate rises by more than the payment cap percentage, this rule comes into play. In most cases, the borrower can choose whether or not to follow this rule. Negative amortisation could happen.
Payment rate: It is the rate at which the borrower pays back the loan. This rate is based on buydowns or payment caps.
Periodic interest rate cap: A cap on how much the note rate can change at each rate change, which limits how much the borrower’s payment will change at each rate change.
Rate adjustment date: Loan rates may change on this date.
Subsidy buydown: The money, usually from the builder or the seller, is used to make the selling price of a home a little sweeter by lowering the monthly principal and interest payment for a short time.
Adjustable Rate Mortgage (ARM)
The interest rate on a mortgage loan fluctuates on a regular basis.
A mortgage whose interest rate is linked to a floating index. At predetermined intervals, the interest rate is modified.
Alternative mortgage form in which the interest rate is tied to an indexed rate during the life of the loan, allowing borrowers and lenders to share interest rate risk.
A loan where the interest rate on the note is changed periodically based on an index that shows how much it costs the lender to borrow money on the credit markets.
Adjusted Average Rate Of Return Method
A modified rule of thumb that uses an average income or cash flow figure while accounting for the predicted sales price or equity reversion.
Adjusted Basis
Equal to the initial cost basis plus any extra real estate or personal property capital expenditures, less the total amount of tax depreciation absorbed after the property was placed in operation.
The sum paid for the property plus any further capital expenditures made to improve it, less any tax deductions for depreciation or cost recovery allowances.
The property’s initial cost basis is decreased by some deductions and enhanced by certain improvements. The taxpayer’s initial basis, as established at the time of acquisition, is reduced by the amount of permissible depreciation or depletion allowances accepted and by the amount of any uncompensated property losses sustained. The cost of capital improvements is then added, as are some carrying expenses and assessments. The taxpayer recognises gain or loss on the sale of property by deducting the adjusted basis on the date of sale from the adjusted sales price.
Adjusted Gross Income
The gross taxable income is a set of specified deductions outlined in the Internal Revenue Code.
Adjusted Rate Of Return
A customized version of the internal rate of return that is intended to remove issues related to negative cash flows.
Adjusted Tax Basis
The sales price less costs and commissions on which a capital gain or loss is calculated.
Adjustment Date
In an adjustable-rate mortgage, the date on which the interest rate is adjusted.
Adjustment Interval
The frequency at which an adjustable-rate mortgage loan’s interest rate and monthly payment amount can be changed.
Adjustment Period
The number of initial years that an ARM remains set before the interest rate can be modified.
Adjustments
Additions or subtractions from similar sale price or cost necessary to make the comparative properly more directly comparable to the subject properly.
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In appraisal, the adjustments made to the sales price of a comparable property in order to arrive at an indicative value for the subject property. Adjustments may be necessary for a variety of reasons. The first adjustment is made for seller concessions or terms of sale; the second adjustment is made for financing terms. Another is for the date of sale, if market circumstances have changed since the similar transaction. Adjustments are subsequently made for location and dissimilarities in the subject’s physical qualities and the comparable property’s physical attributes. For each difference or dissimilarity, the stated value is increased or decreased. (For further information, see appraisal, comparables, and the direct sales comparison approach.)
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In real estate closings, the settlement statement’s credits and debits, such as real property taxes, insurance, and rent prorations.
Rates, taxes, body corporate fees, rent, and insurance prorated to the date of possession or settlement.
Admeasurement Of Dower
Shares are determined and split up. A dower admeasurement is the legal remedy of an heir who thinks that the widow has been given more than she should have under her dower right. In valuing the widow’s dower interest, standard annuity tables of mortality are used to figure out the value of her future life interest, which is then used to figure out how much of the widow’s share of the estate she gets.
Administrative Law Judge
In the United States, the administrative law judge (ALJ) is the person who runs the administrative hearings where both sides present evidence. A lot of the time, the ALI can administer oaths and affirmations, rule on evidence, take depositions, regulate the hearing, and make or recommend decisions. The ALJ has a lot of power when it comes to making suggestions.
Administrative Regulations
Regulations that have the force and effect of law, made by an administrative body. The state’s real estate commission often makes rules to go along with the licensing law.
Administrator
A person appointed by a court to manage the estate of someone who died intestate.
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A person who is chosen by the court to settle the estate of someone who died without leaving a will (leaving no will). People sometimes call this person their “personal rep.”
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One who is in charge of securities.
A person appointed by a court of probate to settle the estate of a deceased person without a will.
Administrator’s Deed
A deed that transfers the property of a person who died without leaving a will.
Advance
To think about something before it is due. In this case, money is given by one party (like a mortgagee or a seller) to cover costs that were not paid by the other party who was in default. These costs include taxes and insurance. These amounts are added to the account of the person who gave them. For example, a second mortgagee might pay the borrower’s first-mortgage payments in order to keep the property from being foreclosed on.
Lenders need to know if a recorded mortgage that secures future loans takes precedence over a later mortgage that was recorded before the date of the loan but after the first mortgage was recorded. Other advances include money that is paid out under an open-end mortgage or money that is given to a developer-borrower by a construction lender. See also: Draw, extra charge mortgage. A fee that is paid before any work is done. People who want to sell their homes or businesses might agree to pay a broker a nonrefundable fee in advance to pay for advertising, but the broker doesn’t guarantee that a buyer will be found. Brokers must keep good records of their expenses.
Advance Fee
A fee paid before any work is done. People who want to sell their homes or businesses might agree to pay a broker a non-refundable fee in advance to pay for advertising, but the broker doesn’t guarantee that a buyer will be found. Brokers must keep good records of their expenses.
Adverse Financial Change Condition
Agreement: If the borrower loses their job, for example, the lender can cancel the loan. This is called a “cancellation clause.”
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Adverse Possession
Acquisition of title to property where an occupant has been in actual, open, infamous, and continuous usage for a period of time prescribed by state law.
Wrongful possession of real estate in a way and for a period of time specified under state legislation. The opposing possessor then obtains title by operation of law, independent of any previously documented title to the property.
Involuntary transfer of real property rights by an individual who demonstrates a usage that is (1) antagonistic to the owner’s crests, (2) actual, (3) open and infamous, (4) continuous, and (5) exclusive.
Acquiring the right to a piece of land that someone else owns by having open, hostile, and continuous possession for a set amount of time. There is a main goal of adverse possession laws: to make sure that land is used to its fullest and most productive capacity. It’s up to the people who own the land to show that four conditions were met: A claim of right has kept them there. (2) They were in real, open, and obvious possession of the property, which should have given the record owner enough notice. (3) Possession was both exclusive and hostile to the title of the owner. That is, it was done without the owner’s permission and showed that the owner wanted to keep the claim of ownership against anyone who might challenge it. (4) At least for the prescriptive period set by state law, the person who had the land had it for at least that long. In this case, the occupancy of the premises by people who are successors in interest (that is, by contract or descent) can be added together to meet the requirement for continuous use of the premises. For example, a man’s father occupies a piece of land for four years. When his father dies, his son takes over and “adds” to his father’s four-year ownership. Two words can help you remember: POACH: Possession is open, real, continuous, and hostile. CANOE: Possession is not (possession is continuous, actual, notorious, open, and exclusive).
Under the law, anyone who is legally incapacitated (such as insanity) or who has a legal right to get rid of someone who owns something doesn’t have to go through with the process. Because a life tenant has a life estate, someone who is a “adverse possessor” could get title to that person’s property. But the remainderman has no right to the property until the life estate ends.
People who claim to own something by “adverse possession” don’t have a marketable title until they get a judicial decree “quieting” the title or get a quitclaim deed from the person who took it away. When all of the rules are met, the owner’s title is cancelled and a new title is given to the person who took it from them. A new title comes into effect when the first person who doesn’t like it comes forward. Thus, the former owner can’t sue for trespass, profits, or rents during the time that the new owner was in charge of the land.
In most states, the person who claims the property doesn’t have to have paid taxes on it for a certain amount of time. In some states, if the person who claims the property pays taxes, that may shorten the prescriptive period. However, a court might think that failing to pay taxes is proof that the claimant didn’t really claim to own the property.
Usually, courts don’t let people make claims of adverse possession if they have a close relationship with the owner, like father and son or husband and wife. This is because it’s hard to prove hostile claims in this case. Cotenants usually can’t sue each other unless one cotenant is evicted by another cotenant in a very clear and real way.
Prescriptive rights in general aren’t very popular with the law, because they make other people give up their rights. As a general rule, people think that if they take someone else’s property, they did so with their permission.
In most cases, you can’t own land in the state or the federal government if you take it illegally. As a result, the federal Color of Title Act says that someone can get a patent if he or she meets all four tests of adverse possession on public land. If the land doesn’t exceed 160 acres and all taxes are paid, he or she can get a patent. The United States, on the other hand, owns all rights to the coal and minerals on the land. In addition, title to Torrens-registered property can’t usually be taken by someone else taking it over.
Adverse Selection
When an adviser has an activity to filter the available investment options, it is similar to an agency problem. retaining the more viable ones and providing the less hopeful ones to 1hc investors
Adverse Use
It’s when you get the right to use someone else’s land for a limited amount of time, like by getting a path easement across someone else’s land. People who want to get an easement through “adverse use” usually have to meet the same requirements as people who want to get an easement through “adverse possession,” including the prescriptive period. Most easements can’t be lost just by not using them, but an easement that was created by someone else using it in a bad way can be lost if they don’t use it for the prescriptive period of their use.
Advertising
Getting the word out about one’s products and services In real estate, advertising is regulated by rules and regulations set by federal, state, local, and private bodies. Many of the same rules apply when property is advertised on Websites over the Internet, like when it’s put on a billboard or billboard.
To advertise a property, the broker needs written permission from the client. In any offer, the price must be the same as the one the owner agreed on with the broker. Many state license laws say that real estate brokers can’t use blind ads, which are ads that are placed on behalf of the seller but don’t say who the real estate broker is. In sales, people can’t just use their own name to advertise. You can’t see the ad, or it’s not true.
When it comes to advertising real estate, three things are very important:
Condominiums and subdivisions: Condominium, time-share, and subdivision laws in many states control how advertising for condominium and subdivision sales can be done. These laws say that ads can’t make false or misleading claims, and they say that no part of a public report or public offering statement can be used for advertising unless the report is used in its entirety. In addition, some state agencies require that all real estate ads be checked by them before they can be published; other states have strict rules for real estate advertising. In many states, a developer may not be able to advertise new projects until he or she has met certain state registration rules first.
Discrimination: Federal rules say that ads for housing can’t discriminate on the basis of race, colour, religion, sex, disability, family status, or national origin. Some state and local rules also ask about marital status, age, sexual preference, or source of income.
Truth in lending: Federal truth-in-lending law says that if an ad has specific financing terms or credit terms, it must say what those terms are.
Aeolian Soil
It is a type of soil that has been made by wind-blown solids, like sand dunes and volcanic ash deposits. Also, soil that moves with the wind.
Aerator
The screened round screw on the tip of a sink spout. It combines water and air to create a smooth flow.
Aerial
Of, relating to, or happening in the air or atmosphere.
Aerial Photograph, Oblique
Aerial shot made with the camera axis oriented between horizontal and vertical:
(1) high oblique-an oblique image with the horizon visible;
(2) low oblique-an oblique photograph without the horizon visible.
Aerial Photograph, Vertical
An aerial image shot with the camera’s optical axis almost perpendicular to the earth’s surface and the film as nearly horizontal as possible.
Aesthetic Value
In the process of valuing residential property, an intangible benefit of a home that is very attractive or pleasing, rather than just functional. The government can use its police power to protect things like a hillside site that looks out over the ocean, for example, by putting in place a zoning ordinance.
Affected Valuation Basis
The value of a piece of land that takes into account the effects of blight or damage to the land, for whatever reason, and usually because of planning concerns (e.g. motorways, airports).
Affiant
An affidavit is made by someone who says they are telling the truth.
Affidavit
It’s when you get the right to use someone else’s land for a limited amount of time, like by getting a path easement across someone else’s land. People who want to get an easement through “adverse use” usually have to meet the same requirements as people who want to get an easement through “adverse possession,” including the prescriptive period. Most easements can’t be lost just by not using them, but an easement that was created by someone else using it in a bad way can be lost if they don’t use it for the prescriptive period of their use.
Affidavit Of Title
Agent. A written document that says under oath that a seller is the real owner of a property. A person who has been given permission by a principal to act for that principal.
An oath is a written statement made by the seller or grantor and signed by a notary public. The grantor (I) identifies herself and states her marital status; (2) certifies that there are no judgments, bankruptcies, or divorces against him or her, no unrecorded deeds or contracts, no repairs or improvements that have not been paid for, and no known defects in the title; and (3) certifies that there are no known defects in the title. Often used in a number of states.
Affiliate Licensee
The licensee who works in real estate with the help of a broker. According to state law, affiliate licensees may be able to work as a sales person or a broker. Because the agency relationship is between the broker and the consumer, affiliate licensees may receive compensation for their real estate activities only from their employing broker, not directly from a consumer.
Affirmation
a statement that says that a certain thing is true. As an alternative to an oath, affirmations are used when the person who is being sworn or testifying doesn’t want to take an oath because of their own or religious beliefs. A voluntary proactive programme designed by the U. S. Department of Housing and Urban Development (HUD) to inform all buyers, including those “least likely to apply,” of homes for sale without discrimination and t9 provide real estate licensees with procedures and educational materials to assist in compliance with the law. Affirmative marketing doesn’t have any specific goals or quotas.
Affirmative Covenant
A mutual agreement made by neighbors that a property will be utilized in a specific way.
Affirmative Marketing Program
Local associations of REALTORS® can meet with HUD to discuss the National Fair Housing Partnership Resolution to ensure equal opportunity in housing for all. This approach emphasizes the importance of local participation and community action programmes in this approach.
AFFO
Recurrent revenue given by REIT-owned buildings adjusted for non-real estate depreciation and amortisation, as well as a straight-line rent adjustment
Affordability Index
A standard set by the National Association of REALTORS® to see how well people can afford to buy a home. It says that a family making the national median income has enough money to get a mortgage on the median-priced house.
Some economists say that every one-point rise in the interest rate on a home mortgage reduces home sales by 300,000.
Affordable Housing
Housing units designed to serve households earning less than 60% (rent) or 80–120% (purchase) of a metropolitan area’s median income.
Those who make less than a certain percentage or less than the median income for the area, as determined by HUD and adjusted for family size, can live in this type of home. Affordable housing projects are usually built with help from the government or as part of a development agreement with the right government agency.
The goal of affordable housing projects is to recognize that there is a real shortage of housing and to help people who can’t afford to live somewhere else. There may be certain restrictions and conditions on how affordable housing units can be resold or how many people can live in them.
Affordable Housing Allocation
A provision that encourages or requires a “reasonable and equitable” component of new housing construction for low-income families.
Affordable Housing Loans
Loan purchase programmes were made available by Fannie Mae and Freddie Mac to 10 leading mortgage marketel lenders exclusively for low and moderate-income customers.
After Tax Cash Flow (ATCF)
Cash flow created by a property after deducting all current operational expenditures, debt servicing obligations, and income tax repercussions.
The remaining claim on the property’s cash flow after the mortgage lender(s), as well as the state and federal governments, have been paid their fair share.
The amount of money left over after all expenditures, including taxes, have been paid.
After Tax Cash Flow Multiplier
The equity split by the after-tax cash flow is used to calculate the payback method.
After Tax Equity Reversion (ATER)
The equity reversion before taxes. defined as the net selling price minus the outstanding mortgage debt at the time of sale, less taxes owed at the time of sale
The net selling price minus any outstanding mortgages and any taxes owed at the time of sale.
After Tax Rate (ATR)
The after-tax cash flow divided by the equity yields a rate of return.
After Tax Real Rate Of Return
Adjusted for inflation, the amount of money an investor can keep after paying any taxes on a sale.
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