To sell at a loss; the difference between face and cash value.
Some businesses specialize in buying discounted mortgages and real estate contracts (also known as paper). Often, the original lender will sell the mortgage at the current announced mortgage discount rate in order to pay out on the debt. If the discount rate is 12%, the lender might sell a $100,000 mortgage for 88 percent of its value ($88,000 or 12% below par).
Discounting any sort of loan usually raises the lender’s effective yield and/or the buyer’s interest expense.
A registered real estate broker who offers brokerage services at a reduced cost than the majority of brokers. Some discount brokers offer limited services, such as not sitting open houses or paying for advertising.
A specialized retail mall or a huge single store that focuses on inexpensive costs. Only qualifying members get access to some discount stores (“closed-door discount stores”).
A loan fee that is added by the lender to make a loan with a lower interest rate than the market rate more competitive with loans with higher interest rates. Borrowers often pay discount points up front to get a lower interest rate over the long term. This is helpful if the buyer plans to keep the loan for a long time, but not so much if the loan will only be held for a few years. Each point is worth 1% of the amount of the loan. The points can be paid by either the buyer or the seller. Even if the seller pays the points, most of the time they can be used to lower taxable income in the same year they were paid. This is a benefit to the buyer.
The amount a borrower must pay to a lender in order to get a mortgage with a specified interest rate.
A decrease in net loan revenues to bring the effective interest rate up to par with the current market rate.
Lenders impose upfront financing fees in order to improve the yield on a loan.
When a borrower makes a single payment to a lender, the lender gives the borrower interest.
Money that can be invested, or money that is more than what is needed for basic needs.
Making a differentiation in favor of or against a person based on the group or class to which the individual belongs; failing to treat people equally under the law. Discrimination based on race is prohibited under the Civil Rights Act of 1866. In Jones v. Alfred H. Mayer Company, the United States Supreme Court maintained the 1866 federal legislation, ruling that it “prohibits all racial discrimination, private and public, in the sale and rental of property.”
The federal Fair Housing Act of 1968, found in Title V III of the Civil Rights Act of 1968, went a step further than the 1866 law, making it illegal to discriminate on the basis of race, colour, religion, sex, or national origin when selling or leasing residential property or vacant land for the construction of residential buildings. Discrimination based on sex is prohibited under the Housing and Community Development Act of 1997. The Fair Housing Amendments Act of 1988 forbids discrimination based on physical and mental disabilities, as well as familial status, and empowers HUD to enforce fair housing rules while also increasing fines and punishments.
Discriminatory techniques in real estate transactions, including related financial practises, are forbidden under the law. Several federal laws prohibit discrimination in financing transactions, including the Equal Credit Opportunity Act, Title VIII of the federal Civil Rights Act, the Community Reinvestment Act, and the Home Mortgage Disclosure Act.
The following are exempt from the statute and its amendments:
- The sale or rental of a single-family home by an individual who does not own more than three such homes at any given time, even if the owner is not present at the time of the transaction or was not the most recent occupant. Individuals are only allowed to make one such sale per 24 months, and it must not involve a real estate licensee or discriminatory advertising.
- The renting of rooms or apartments in an owner-occupied building that can accommodate four or less households. If participation in the religious organisation is not restricted on the basis of race, colour, sex, or national origin, dwelling units owned by religious organizations and not managed commercially may be confined to people of the same religion.
- A private club that is not available to the public may limit the rental or occupancy of its accommodations to its members if the lodgings are not operated commercially.
- Children are not permitted in dwelling units in eligible elderly home circumstances.
Blockbusting, guiding, and redlining are likewise prohibited by the federal Fair Housing Act of 1968. The secretary of the Department of Housing and Urban Development is in charge of enforcing the statute. Within one year following an alleged discriminatory act, an aggrieved person may submit a complaint with the secretary or a delegate of the secretary. Conferencing, conciliation, and persuasion are the secretary’s only options for resolving the conflict. A number of state and local fair housing legislation have been found to be “substantially equivalent” to the federal law. All complaints in that state or locality are referred to and handled by state agencies, including those filed with HUD.
An aggrieved party may also sue the alleged offender in federal or state court, depending on whether the state’s fair housing rules are substantially equal. In circumstances when accused violators of federal law engage in a pattern of discrimination or behaviors that create an issue of wide public significance, the US attorney general may file a lawsuit. The Civil Rights Act of 1866 requires that complaints be handled immediately to a federal court.
Fair housing regulations must be followed by both real estate licensees and property owners.
Brokers should tell principals about the law’s obligations and terminate the agency relationship with any principal who continues to discriminate. Many state and local governments have passed antidiscrimination legislation, which has an impact on real estate professionals. If there is a conflict between federal and local laws, the more restricted statute usually takes precedence.
Discriminatory restrictive covenants are prohibited by FHA and VA regulations for persons who participate in their respective lending programmes. Furthermore, racially restricting terms in deeds are not enforceable under the United States Supreme Court’s ruling in Shelley v. Kraemer.
Affirmative marketing agreements have been formed by the Justice Department, HUD, and the National Association of REALTORS® to ensure that protected classes have free and open access to housing through comprehensive, voluntary programmes.
Housing discrimination on the basis of race, color, religion, national origin, sex, family status, or handicap is illegal under federal and state law.
Individuals investing their own money instead of putting their savings in banks, savings and loan associations, and other similar organizations to be invested by those organizations. Investors avoid banks when they can get higher returns on safe investments like high-quality corporate bonds, money market funds, and government securities than they can on savings deposits. Disintermediation has a direct effect on the fact that there isn’t enough money for mortgages because savings that are used for other things rarely end up in mortgages.
People who, in search of higher returns, remove their funds from big institutional lenders and invest directly in financial markets.
The emergence of situations in which the growth of deposits in banks and savings organizations turns negative as a result of alternative, more appealing direct investment options.
A legal notion utilized in federal discrimination proceedings to demonstrate a violation even when the defendant’s acts have no obvious connection to a protected class. In a case involving disparate impact, intent to discriminate is not required. The disparate impact doctrine forbids a neutral restriction from having a statistically higher impact on a protected class than on other classes. Once a plaintiff establishes that there is a significant disproportionate impact on a protected class, the burden shifts to the defendant to establish that the statistical imbalance is due to a reasonable nondiscriminatory purpose.
For example, the United States Supreme Court has ruled that aptitude tests, which are required for employment yet fail far more African Americans than whites, have a disproportionate impact. A disparate effect analysis could be used to the house rules of a condominium association and their influence in a familial status or handicap issue.
Earnings from customers outside the target service region who make purchases (represents a revenue gain for retail establishments as sales are generated from consumers who reside outside the local trade area).
Waste from a septic tank is dispersed in a drainage region that is not close to the water source. Tile and gravel are used to drain the waste into the earth.
Eviction of someone who is not legally in possession.
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The removal or improper possession of someone who is legally in possession of real property.
The Real Estate Educators Association confers this professional title on its members (REEA).
A common-law notion that allows a landlord to confiscate a tenant’s goods in exchange for unpaid rent. The majority of states now require a court order. Also known as a landlord’s warrant or distress for rent owing.
A landlord’s legal right to confiscate a tenant’s personal property in order to collect unpaid rent.
The interest of the fee owner, lessee, or mortgagee in different parts of a whole property.
Due to inadequate financial flow, a property is going to be foreclosed on or has already been foreclosed on.
A septic system that distributes the sewage from the septic tank to the absorption area.
The hub of a large shopping centre in a suburb
A term for the centre of a city or suburb’s main shopping centre. It is much bigger than a shopping centre for everyday things.
A physical or biological alteration that has an influence on the environment, such as forest clearance.
Unsystematic risk that can be reduced in a portfolio by having securities and other assets with returns that are not completely connected.
Investing in a variety of sectors so that the overall investment program’s success is not jeopardized by average outcomes.
Total risk is reduced by owning a variety of property types and spreading ownership across a large geographic area.
Allocating portfolio resources across various assets in order to lessen the risk of portfolio returns.
A way to lower risk by investing in things that have nothing in common with each other.
An interest in multiple parts of a whole property, such as a fee owner’s, lessee’s, or mortgagee’s interest.
A digital representation of cartographic information; digital vectors derived from maps and other sources.’
An industrial structure with a main floor that is high enough to allow direct loading onto the beds of trucks parked at ground level outside.
A common law tradition that states that if a person is aware of a claim or regulation, he or she can be bound by it.
A legal document such as a conveyancing document (deeds, leases, mortgages), contract (options, swaps, purchase agreements), or other legal form (wills, bills of sale).
“Domus” is Latin for “house.” The state in which a person has her genuine, permanent home and primary business establishment, and where she intends to return whenever she is away from it. A domicile is never lost after it has been created, unless there is a combination of particular purpose to forsake the old domicile, specific intent to acquire a new domicile, and actual physical presence in the new domicile.
It is possible to have only one domicile, even if a person has dwellings in several states and visits them at different periods of the year. Because domicile requires both physical presence and the intention to make the state one’s permanent abode, factors such as local auto registration, driver’s license, voting, paying taxes, membership in local organizations, local bank accounts, and local business interest are all important in proving the required intent.
The estate said to attach to and profit from the servient estate as a result of an easement appurtenant. An easement road, for example, goes over an owner’s land (the servient estate) to provide access to a nearby piece (the dominant estate). The dominant estate is typically adjacent to the servient estate.
An easement appurtenant property that benefits from a servient tract.
Land that benefits from an easement.
Land that has an easement attached to it.
The person who receives a gift.
A person who makes or offers a gift. The donee is the person who receives the gift.
The person who gives a present.
A piece of the door frame that holds it in place.
The case around a door that it opens and closes into and out of.
A garage door opener that opens by itself.
When the door is shut, the door slab rests on this piece of wood.
A device that is mounted on the wall or the floor to keep a door from opening too far and damaging the wall.
A digital picture having orthographic projection qualities; produced from a digitized vertical aerial shot with image displacement due by camera tilt and relief of terrain removed or corrected. Orthophotos combine the photographic picture features with the geometric elements of a map.
A protrusion constructed from the slope of a roof, used to house windows on the higher story and offer more headroom. Common dormer types include the gable dormer and the shed dormer.
A roof opening with a slope, where the framing sticks out to make a vertical wall for windows or other openings.
In a settlement or closing statement, the act of writing a dollar amount down as both a debit and a credit. For example, taxes paid late would be split so that the buyer would get a credit and the seller would get a debit. Other things, like the money you put on deposit, only show up once on the statement.
Two escrows on the same property, in which the seller seeks to utilize the buyer’s money to obtain title to property X in one escrow so that title to property X can be conveyed to the buyer in the second escrow. In some places, a double escrow is banned unless both the buyer and the seller have been fully informed that the buyer’s money in the second escrow are being used to complete the seller’s purchase in the first escrow, usually at a profit.
Example: Assume a seller had a $240,000 contract in escrow to acquire a certain property. The seller then signs a contract to sell the identical property for $250,000, the buyer deposits $10,000, and a new escrow is opened. The seller intends to utilize the buyer’s funds to obtain title in the first escrow and then transfer title to the buyer in the second escrow. The seller is compelled to default on the original $240,000 contract when the buyer fails to put the balance of the purchase price in escrow. The buyer requests a refund of the $10,000 deposit, and the court rules that because the seller failed to place the deed in escrow, the seller was also in default and could not keep the buyer’s deposit because, “The delivery of the deed and the payment of the purchase price are both dependent and concurrent conditions in a real estate sale contract. Neither party could put the other in default unless the other could or would perform.”
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Two pieces of glass are used to make a window or door.
A window with two sashes that slide vertically and move up and down together.
There are two horizontal boards on top of the studs. The plate gives the rafters a place to stand.
Two or more taxes paid on the same asset or financial transaction; typically used in reference to corporate income taxes and dividend income on earnings transferred to shareholders. A company, being a separate legal taxable entity for income tax purposes, must pay tax on its earnings under the corporate form of ownership. Earnings given to investors are subject to normal income taxation.
Pass-through firms, such as S corporations, real estate investment trusts (REITs), limited liability companies, mutual funds, and partnerships, are exempt from corporate taxes, essentially avoiding double taxation.
Double taxation also refers to the condition of paying two different taxes on the same property, such as state and federal taxes in different states. It could also apply to a circumstance in which federal estate taxes are paid twice: first on the death of one joint tenant and again on the death of the surviving joint tenant.
The frame’s comer is formed by two vertical studs linked at right angles. The double studs are thicker and more supportive than conventional studs.
An accelerated depreciation technique that takes twice the yearly straight line depreciation.
As in many hotels, a building design in which residential units are positioned on both sides of a corridor. A single-load corridor has only one side with units.
Two boards laid on the edge of a door or window to make the top part.
In some states, a wife acquires a legal claim or interest in property held or acquired by her husband at any time during their marriage. The dower is an anticipated, or inchoate, interest during the husband’s life that does not become a legal estate (called consummate dower) until the husband’s death. The couple must be legally married (note that some states recognize common-law marriages). In states that still recognize dower, the wife must sign a release of her dower in order for the husband to pass clear title to his own property.
Dower rights have been repealed in many states, and dower has been replaced by the surviving spouse’s entitlement to an elective share following the death of one spouse in states that have adopted the Uniform Probate Code.
The interest of a wife in her husband’s property.
A common law clause that awards a woman a one-third life estate in all of a dead husband’s real property.
The share of a deceased person’s property that is handed to the surviving family members.
A wife’s stake in her husband’s property is protected by a legal life estate.
The sum of money that a buyer will pay at the moment of purchase. Even though the earnest money deposit is frequently included in the down payment, the phrases are not interchangeable. Earnest money is applied to the total cash down payment payable at the time of closing.
At the time of closing, the first equity paid on a piece of property.
The difference between what the house sold for and how much was owed on the mortgage.
Rezoning a property to allow for a less intense use.
The possibility of an investor losing money in a given business.
Rainwater is sent from the eaves to the ground by a vertical pipe composed of cement, metal, clay, or plastic.
A metal pipe used to carry rainwater from the roof’s horizontal gutters to the ground.
The conversion of one zoning classification to another, such as from residential to conservation or from multifamily to single-family use, from a higher to a lower or more active to less active classification. In these instances, there is no taking by eminent domain and, as a result, no compensation is provided to the aggrieved landowner, who remains helpless as the value of his or her property diminishes.
A mortgage provision in which numerous properties are pledged as collateral, and a default on one property results in a default on the others.
Information (both proven and rumoured) about how much inventory will be taken off the market by the end of the forecast period.
A pipe that drains surplus water from the foundation by being buried at the bottom of the foundation wall.
A method of progressively removing water and moisture from land, either naturally or intentionally, using pipes and conduits.
The land area that contributes to runoff in a stream, river, or lake.
A network of stream channels that are often linked in a hierarchical form.
Liability insurance for incidents involving the consumption of alcoholic beverages.
A “Giro” is a loan of money. In a construction loan agreement, a “draw” is the term for when money is given out over time. Also, a real estate brokerage company will sometimes give money to its more experienced salespeople in advance. This money can be used to pay for commissions that have been earned but not yet paid out or to pay for commissions in the future. When the commission is less than the advance, courts have said that a broker can’t get back the difference between the advance and the commission.
The amount of progress billings that are currently available to a contractor who has a contract with a fixed payment schedule.
Loan funds are taken out at the time of settlement.
The amount of time that funds is taken from investors to invest in deals.
Any inducement—whether access to facilities such as good education systems and places of amusement or underlying social, economic, and environmental characteristics—that fosters growth and development in a geographic area.
A rail track segment that serves as a link between a main line and private industrial property’s own industry tracks (spurs).
A part of a cornice or other horizontal exterior finish course that sticks out farther than the other parts so it can throw water away.
Allows water to drip from the outside of a door or window frame by using a metal flashing on the outside of the frame.
A way to estimate the trade area (and sales/revenue potential) of a given retail establishment or centre based on the central place theory concept of range and how far people are willing to travel to get retail goods, as measured by drive time or mileage.
A federal legislation enacted in 1988 that gives federal drug enforcement officials the authority to confiscate real property where unlawful drug activity is taking place. Owners must prove either that they had no awareness their property was being utilized for unlawful drug activity or that they had information and made reasonable attempts to cease the illegal usage to avoid forfeiture of title.
Real estate licensees serving as property managers for absentee owners must be diligent in informing owners about unlawful drug activities on the managed property. Simultaneously, the manager must avoid falsely accusing a renter of unlawful drug involvement. Some states have their own regulations for seizing and forfeiting property used in criminal activity.
Except for the final step of disbursing monies and providing documents, a closing is complete. The parties have completed their signing and payment requirements, leaving the closure to be completed by the escrow agent.
A crystalline form of carbon dioxide Bricks are primarily cleaned using this.
The black roofing felt is being put on the roof.
A nonrecourse mortgage is a mortgage or deed of trust in which the lender turns entirely to the real property for debt collection in the event of failure; that is, there is no personal accountability for any deficiency upon foreclosure.
A nonrecourse loan is one that does not need repayment.
Fungus-caused wood rot that turns wood into a fine powder.
A fungus-caused decay of seasoned wood.
A piece of wood used to make an interior wall.
Any type of interior wall construction that does not use plaster as a finish. Drywall is typically made of wood paneling, plywood, plasterboard, gypsum board, or other types of wallboard.
A circumstance in which a person or corporation has an agency and fiduciary connection with both parties to a transaction - the seller and buyer.
A circumstance in which an agent (or agency in some states) represents both parties to a transaction. States that permit dual agency typically require licensees to obtain permission to the “potential” for dual agency early in the relationship. Generally, the written approval of both parties is required prior to the drafting and submission of an offer.
Some states restrict dual agency; instead, licensees may continue to engage with both parties as a transaction broker.
In the early 1980s, dual agency became a concern. Previously, under sub-agency, all licensees represented the seller and were supposed to act equitably with the buyer as customer. Common-law agency principles emphasize the fiduciary responsibility of loyalty owed by an agent to a principal. Thus, possible conflicts of interest exist when a broker represents both the seller, who desires the highest price, and the buyer, who desires the lowest price.
In many brokerage offices, the office represents the seller when taking the listing, so obligating each licensee to represent the seller. Similarly, if one licensee represents a buyer, all other licensees in the office also represent the buyer. Dual agency occurs when the represented buyer desires to pursue an office listing (in-house).
In an effort to avoid dual agency for internal transactions, certain jurisdictions now accept “designated/appointed agency.” The broker may choose one licensee to represent the seller to the exclusion of all other licensees and another licensee to represent the buyer to the exclusion of all other licensees. Thus, designated/appointed agency avoids in-house multiple agencies unless the selling agent also represents the buyer.
The fact that a broker is compensated by one party does not necessarily make the broker the sole agent of that party.
A broker or salesperson who acts as both the buyer and the seller in the same deal.
An illegitimate or fraudulent contract for the purchase of real estate that has terms and financial circumstances that differ from the original or true agreement and misrepresents the parties’ true intentions. The forged dual contract might then be presented to a lender in the hopes of securing a greater loan. Kiting is a term used to describe this fraudulent behavior. A contract like this might have the parties show a lower purchase price than was actually agreed on so that the buyer is eligible for the maximum FHA loan, or the broker may accept a large earnest money deposit in the form of a check, agreeing never to deposit it, in an attempt to impress the mortgage company with the buyer’s financial resources. The broker must take steps to guarantee that the mortgagee is not misled in addition to advising the seller of the agreement not to deposit.
A broker who assists in the creation of a dual contract in any way may face license suspension or revocation, a misconduct fine, or civil penalties. Furthermore, the broker cannot be a party to the misleading consideration’s name.
Some brokers have been accused of employing an addendum that compels the seller to deliver a sum of money to the purchasers at closing for carpet replacement or fence repairs when the money will not be used for the claimed reason. Instead, the buyers transfer the monies to the closing agent as part of or all of their equity investment in the property. Because such a kickback significantly lowers the purchase price for buyers who are not providing an equity investment with their own finances, such an addendum is not included with the FHA application. This type of dual contract practice is a federal criminal violation when a federally chartered lender is involved.
The practice of giving two contracts for the same transaction, which is prohibited.
A tube, pipe, or channel used to transport fluids, cables, wires, or tempered air. Telephone and electricity wires are frequently routed through underfloor duct systems.
Air from the furnace is sent to rooms in the house through pipes made of metal.
A payment deadline specified in a note or contract. The payment is past due if it is not received by the agreed-upon deadline. Most contracts stipulate that late payments are permissible during a grace period. The delinquency date is the last day of the grace period.
Real Estate Glossary D [Part 5]