Real Estate Glossary E [Part 2]

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Continued from…

:point_right: Real Estate Glossary E [Part 1]

Eminent domain

A public authority’s authority to condemn and confiscate property for public purpose in exchange for appropriate compensation.

Private property owners have the right to compensation from the government, public businesses (school districts, sanitation districts), public utilities, and public service corporations (railroads, electricity companies). Although the law generally does not enable compensation for lost earnings, annoyance, loss of goodwill and similar, severance damages may be given for a loss of value to the remaining property that is not formally condemned. It is possible for the government to acquire land through eminent domain for public purposes such as roads, parks, public buildings, and rights-of-way. The government’s power extends to all private property.

Condemnation can be used by the government if the property owner and the government cannot reach an agreement on a voluntary acquisition. There are a number of reasons why a property owner can object to a condemnation procedure, including a lack of public benefit or an unfair assessment. Easements are preferred over taking in fee simple because the courts believe that only a portion of a property can be appropriated.

When determining if a take is for a public interest, the standard of review is broad. According to Keio v. City of New London, a 2005 Supreme Court ruling, governments have the power to condemn an urban degraded region for the purpose of selling it to a private developer for personal gain. States are free to prohibit the acquisition of property for such initiatives, however, according to the court’s rulings.

Eminent domain refers to the process of acquiring private property by force of law, in exchange for a monetary reward. It is not an unrestrained regulation of property usage that is not compensated (as in the case of restrictive zoning). Mortgagees, for example, must now rely on the government’s award of condemnation money to pay their debts as a result of the transfer of ownership to the government.

Recognition of gain earned from condemnation money can be deferred under IRS 1033 when an owner’s property is seized by eminent domain. According to the type of property, a replacement property must be found and/or purchased within two to three years of a property’s taxable gain realization. In most circumstances, the replacement property must be of a similar or related use to the original property in order to qualify (“like-kind” property).

When a major section of the leased property is occupied, a lessee is frequently offered the option to terminate the lease. Condemnation awards in long-term leases are normally split between the lessor and the lessee based on their respective estate values.

The government’s or a public utility’s right to buy property for public use.

Both the federal and state governments have authority to appropriate private land for public purposes without the owner’s agreement.

The authority of the government to seize private property for a public purpose in exchange for reasonable recompense to the owner.

A government’s right to take private property for public use as long as it pays the property’s fair market value.

Employee

A person who works under the direction and control of another person. The broker employs the real estate salesperson for the purposes of state licensing requirements. The salesman may be considered an independent contractor for tax purposes. An independent contractor.

Employment ratios

The number of office space users in a company or industry as a share of all employees.

Empty nester

An elderly family whose children have grown up and gone their separate ways.

Enabling legislation

If a federal housing programme gives you the capacity or authority to do something that has never been done before, such as create a new form of ownership called a condominium, you might say that the law gave you that power or authority.

Encasement

The coating that goes over all parts of a building, inside and out.

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Encroachment

Invasion of another’s property by an improvement or other real property, which reduces the value and size of that property. This includes roofs that extend over the property boundary or fronts that extend over setback lines or onto a neighbor’s land. Encroachments are common. More often than not, encroachments are the product of negligence or poor planning rather than malicious intent, such as a driveway or fence constructed without a survey to determine the property border.

Encroachments that aren’t revealed in the listing could make a title unmarketable, therefore it’s important to note them and make the sale contingent on their existence.

Overhanging tree branches are an example of an intrusion since they violate the neighbor’s airspace and constitute a trespass. Eviction, quiet title, or an injunction and damages can be sought by the harmed party in a court of law. The encroachment can be removed by a court order. Even if an encroachment is substantial, a court may opt to award money damages instead of ordering it to be removed if the removal is too expensive and the encroachment was accidental.

Buyers should have their own surveys if they have any doubts about probable encroachments, because an accurate land survey will reveal most encroachments. Buyers are entitled to compel a seller to remove encroachments (or reduce the purchase price) uncovered by a survey, and to pay for the survey, if the encroachment was not previously revealed. Encroachment agreements are sometimes signed by neighbors, providing permission to continue building on a neighbor’s property.

Because encroachments are not usually included in the chain of ownership, they aren’t covered by title insurance. Most typical title insurance policies, on the other hand, do not cover issues that a proper survey would uncover. Encroachments are often covered by an extended-coverage title policy.

A structure or component of a structure that physically encroaches on another’s property.

Studies of the impact of a new development on the region’s economy or environment.

Stepping on someone else’s land through a building or any other object is called trespassing.

Taking something that belongs to a neighbour without permission. Usually, an encroachment is a fence or part of a building put up by one person on the land of a neighbouring person, or a building that hangs over the land of a neighbour. A street can also have an encroachment happen.

Encumbrance

It is a right or interest in a property held in the name of a person who is not the legal owner but who has a claim or lien attached to and enforceable on real property. It is also known as a burden or a burden.

For the purposes of this discussion, encumbrances can be broken down into two categories: those that affect the title and those that affect the physical condition of the property. The former category includes things like judgments, mortgages, mechanics’ liens, and other charges on property used to secure a debt or obligation.

A covenant against encumbrances ensures that the property is free of any encumbrances other than those that have been explicitly stated. The buyer can proceed with the purchase on the presumption that there are no encumbrances if none are revealed in the contract of sale.

The description of the property should be followed by a list of encumbrances on the deed.

A debt or liability that affects a property’s fee-simple title.

A lien, charge, or claim against real property that reduces its value but does not prevent title from transferring.

Property with a claim or liability connected to it.

End loan

A loan backed by a mortgage on a finished structure that completes a series of loans used to finance land acquisition and construction. A permanent loan is also known as a takeout loan.

To finance the acquisition of a new condominium unit or a lot in an already established complex, a takeout financing is commonly used. To “take out” a developer when a construction project is done and sold, the lender that arranges the development or interim loan may also provide permanent financing to individual unit buyers. Hence, terminology like takeout finance and end loan.

This is a long-term loan.

End loan commitment

A lender’s promise to deliver an end loan subject to the fulfillment of all circumstances stated by the lender.

Endangered Species

A species that is in immediate danger of extinction in all or a considerable portion of its range, as defined by the United States Endangered Species Act.

Endangered Species Act

It was originally designed to safeguard endangered species on federal territory, but it has subsequently expanded to govern land used for the protection of specific fish, animal, and plant species. Many protected species’ habitats may not be damaged or modified by this legislation, which could have an impact on farm and development land listings. Environmental experts should always be consulted by licensees when selling or buying a property.

Endorsement

  1. The act of writing the owner’s name on the back of a negotiable instrument, such as a check or promissory note, in order to transfer title. A blank endorsement is a guarantee of payment to the next owner. Without recourse endorsements do not guarantee payment to future holders. To whomever the instrument is payable, a particular endorsement must be added.

  2. The addition of a new notation to an instrument after it has been played in order to alter or explain the substance of the document… Endorsing a policy might limit or widen the policy’s coverage. When it comes to title insurance, for example, there are more than a thousand additional endorsements. FHA loans are covered by the National Housing Act through the placement of an FHA endorsement on the note. Indorsement is also known as endorsement.

Engineering breakdown method

Depreciation on important building components, such as the roof, elevators, and air conditioning, can be estimated using this method.

Enjoin

An act can either be prohibited or mandated. You can approach the court to order a neighbor to clean up your backyard once it has become an unhealthy nuisance, for example. Discrimination in real estate transactions can be prohibited through injunctions issued by the courts. Injunctive powers are generally available to both federal and state governments to sub-dividers who illegally sell land.

Enrolled agent

A federally-licensed tax expert who represents taxpayers in their dealings with the Internal Revenue Service. As an enrolled agent, you can represent your clients before all administrative levels of the Internal Revenue Service (IRS).

Enterprise zone

An area where enterprises can benefit from reduced taxes in exchange for establishing in economically distressed areas.

Entitlement

  1. One’s legal obligation to pay back an amount due.

  2. The percentage of a VA-guaranteed loan that protects the lender if the veteran fails to repay their obligation. Veterans Affairs [VA] Loan Certificate of Eligibility the legal entity Anyone who may sue or be sued and has the legal power to enter into contractual arrangements, which may result in debts or other obligations, is considered a legal entity. Consider the tax and liability implications before making a final decision on the proper entity to hold the title for all buyers, including investors.

Entrepreneur

Promotor or developer: A person who takes the initiative to organize, start, and run a company or business, incurring a significant percentage of the risks and losses and profits; promoter or developer.

Environment

The collective factors that influence the presence or development of a site’s inherent qualities.

Environmental Assessment

A preliminary study or examination of a proposed activity (project) and its potential environmental impact; generally undertaken to identify the need for more extensive environmental impact analysis.

Environmental audit

To ensure that all lands, facilities, and operations under the jurisdiction of the Interior Department are in conformity with all applicable federal, state, and local laws and regulations, systems, programmes, and policies.

Environmental conditions

Features or conditions of the physical environment, as well as the surroundings, factors, or forces that affect or change it.

Environmental hazards

Any natural or physical condition or event that could hurt people.

Environmental impact statement (EIS)

A piece of paper that is required by the State Environmental Quality Review Act and explains how a proposed action will affect the environment.

A report mandated by the National Environmental Policy Act (NEPA) of all federal agencies that propose projects that potentially significantly affect the environment locally and regionally. The EIS is a decision-making instrument detailing the project’s positive and negative effects and providing feasible alternatives. Federal agencies file environmental impact statements with the Federal Council on Environmental Quality and get the council’s approval for all proposed federal actions. Government activities have been constructed to comprise anything from approval of a federal license or permit to policy determinants, provisos, and planned legislation. The following details must be included in any impact statements:

  • Planned actions are outlined in depth
  • A discussion of the environmental impact of the activity, both direct and indirect.
  • Environmental consequences that cannot be avoided are being sought out and identified.
  • Possible alternatives to the planned action should be evaluated.
  • Long-term and cumulative effects on the earth’s surface are described here.
  • Resources that may be permanently depleted by the action are to be identified prior to taking the action.

Environmental impact study

An expert’s appraisal of a particular land-use scheme’s long-term environmental effects

Environmental impacts

The effects of a particular activity or land use on the physical and social environment, such as pollution, waste disposal, water and power use, etc.

Environmental protection agency (EPA)

The Health and Environmental Protection Agency (HEPPA) was established by Congress in 1970. Air and water pollution, solid waste management, pesticides, radiation and noise are all concerns that the EPA deals with. Environmental laws are enforced by the EPA in these areas, which set standards, establish schedules for polluters to comply, and enforce environmental laws. The EPA conducts an extensive environmental research program; provides technical, financial, and managerial help to state, regional, and municipal pollution-control agencies; and allocates funds for sewage-treatment facilities. To further the EPA’s original mandate, additional laws were passed between 1970 and 1972, including the Federal Water Pollution Control Act, Federal Environmental Pesticide Control Act, Noise Control Act, and Marine Protection Research and Sanctuaries Act. The Clean Air Amendments were enacted in 1970, and the Resource Recovery Act was enacted in 1972. In addition, in 1980 the Safe Drinking Water Act and the Comprehensive Environmental Response, Compensation and Liability Act were passed.

A government group in charge of how land is used.

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Environmental regulations

Air, water, noise, and other environmental conditions are regulated, and dangerous chemicals are cleaned up, according to EPA and state health department standards.

Environmental risk

Hazardous and non-hazardous environmental circumstances, such as wetland and endangered species. An environmental addendum is frequently included in appraisal reports by appraisers in order to make a note of any environmental issues that could have an impact on a property’s value.

Environmental site assessment (ESA)

Environmental engineering or other well-qualified specialist examination to discover whether there are any environmental dangers or problems that affect the use of a property or impose future financial liabilities. The ESA helps both the seller and the buyer make informed decisions about the property. Before agreeing to a loan, lenders frequently require an ESA.

Environmental Site Characterization

The delineation or portrayal of the important elements or qualities existent in a place or site selected for a specific application, function, or study, including all of the conditions, influences, and circumstances.

Environmental Systems Research Institute (ESRI)

GIS and mapping software catalog, including ARC/INFO and ArcView; online bookstore; GIS news and conferences; GIS education and training possibilities

Ephemeral Stream

A stream that has no baseflow and only runs during or after rainstorms or snowmelt occurrences.

EPRA

The European Public Real Estate Association.

Equal Credit Opportunity Act (ECOA)

Credit is granted on the basis of a person’s ability to pay back the loan, regardless of a borrower’s ethnicity, race, religion or national origin. It is also granted without regard to a borrower’s marital status, age, gender, or whether the borrower is receiving public assistance (such as food stamps or Social Security). For example, income, expenses, debts, and credit history all come into play when determining whether or not a borrower is eligible for a loan.

Anyone who frequently extends or arranges for the extension of credit is covered by the legislation. Creditor status is granted to real estate licensees who frequently assist sellers in analyzing the creditworthiness of potential buyers in land contracts and purchase-money mortgages. Provisions of Regulation B, which administers the law, exempt some businesses, stocks, and public utility credit from certain procedural requirements. Many federal and state authorities are involved in ECOA enforcement, but the FTC is by far the most important.

Creditors are required by law to notify applicants of the following: “It is against the law for credit providers to discriminate against applicants for credit under the Federal Equal Credit Opportunity Act. This [insert suitable description-bank, business, etc.] is regulated by the [name and address of the appropriate federal agency].”

It is possible for applicants who feel they have been denied credit because of discrimination to sue. Actual damages, up to $10,000 in punitive damages, and the lesser of $500,000 or 10% of the creditor’s total assets may be claimed from the creditor. Court expenses and attorney fees may also be awarded by the court.

This statute outlaws lending discrimination based on race, color, religion, national origin, sex, marital status, age, or because an applicant’s income is derived entirely or partially from a public assistance programme.

Everyone is entitled to credit under a federal statute that prohibits lenders from discriminating against anyone.

Equal dignities rule

A rule of law designed to grant the buyer under an executory contract of sale title to the property before the closing date for specific circumstances. Because a court of equity “regards as done that which ought to be done,” the doctrine of equitable conversion states that the seller keeps the legal title for the buyer, who has the benefit, equitable ownership immediately after the contract is signed.

As a result, the seller’s interest (the legal title of the real estate) is changed into an interest in personal property (the money to be paid to purchase the property). The buyer’s interest (buying money) becomes an interest in real estate, on the other hand, As a result, if the seller is still in possession of the property at the time of the contract’s execution (as is usually the case), he has a legal obligation to protect the property for the benefit of the buyer and must ensure that the property does not suffer harm.

If the value of the seller’s interest at death is in question, as well as if the premises themselves are in danger of being lost or destroyed, the doctrine is applicable. For instance, a seller agreed to sell her farm for $100,000 but passed away before the sale could be completed. In her will, she had left her personal goods to Mike Waters, and her real estate to Pat Parker. The seller’s interest in the farm is recognized as personal property, and hence the sale earnings would flow to Waters through the equitable conversion concept.

Equalization board

One who has the authority to make corrections to unfair tax assessments in a given county or state. Equivalence is the adjustment of property values in a taxing district to bring them into line with those of other districts. Equalization factors are established by review authorities to ensure that all property owners in the state pay an equal and uniform share of the state tax. Inequities may develop if the state taxes are based on local assessments conducted by local assessors under local laws… When a county’s assessments appear to be 15% lower than the state average, this underestimation can be addressed by applying an 11.5 percent factor to each assessment in that county, for example.

A governmental body that assesses the fairness of any taxes imposed on a property.

Equilibrium

A steady, balanced, or unchanging economic system. A situation in which there is no chance of anything changing.

Equilibrium point

The price at which the amount being sold is equal to the amount being asked for.

Equilibrium price

The price at which there will be enough of a commodity to fulfill the wants of all customers while leaving no excess on the market; the market clearing price.

Equitable conversion

Rule of law allowing the buyer of a property under an executory contract for sale to hold title to it for certain reasons prior to the date fixed for the closing. It is a common law theory that the seller holds the legal title for the purchase, while the buyer retains the beneficial, equitable ownership.

As a result, the seller’s interest (legal title to the real estate) is changed into an interest in personal property (the money to be paid to purchase the property). In the other direction, the interest of the purchaser (the money they paid for the property) becomes a stake in it. It is common for sellers to be in possession of the property at the time of contract execution, therefore they are legally required to ensure that the property does not suffer any harm for buyers.

A seller’s interest in real property can be valued based on the seller’s death benefit, and the same rule applies if the property itself is at risk of being destroyed or lost. As an illustration, a seller agreed to sell her farm for $100,000 but passed away before the deal could be finalized. Personal property was left to Mike Waters, and real estate was left in trust for Pat Parker. The seller’s interest in the farm is recognized as personal property, and hence the sale earnings would flow to Waters through the equitable conversion concept.

Equitable lien

A lien resulting from a written agreement between two parties indicating that they intend to use a specific piece of property as collateral for a debt or obligation. In cases when the parties intended to create a lien, but the mortgage instrument was not properly executed, a court may rule that an equitable lien exists. Equitable liens include a vendee’s lien, which the buyer retains against a property when a seller defaults in the performance of a sales contract, and a vendor’s lien that serves as the security lien behind a purchase-money loan that isn’t backed by a mortgage, respectively. Even though the loan is insecure, the borrower must agree not to transfer or encumber any of the borrower’s real estate as a condition of receiving the loan.

Equitable right of redemption

The legal right of a borrower, or the borrower’s heirs or assigns, to redeem mortgaged property after default for a certain period of time. Also known as redemption equity.

Equitable servitude

Restrictive covenants that do not run with the land can be enforced as if they were part of the land through an equitable easement of use. In order to enforce equitable servitudes, it must establish that the restrictive covenants are meant for the benefit of lot owners in a particular subdivision or tract, that there is a dominant or benefitted property, that there is a general scheme or plan of improvement or development for the entire tract, and that the covenants are intended as restrictions on the land conveyed and incident to its ownership, the purchaser accepting the lot subject to that burden. A homeowner could use the equitable servitude theory to block the construction of an apartment building on land intended for single-family residences.

Equitable title

The right to receive complete, legal title to real estate if the terms and circumstances of the instrument generating equitable title (often a contract for sale) are met.

The equitable right to attain absolute ownership of property when legal title is held in the name of another and is held by a vendee through a purchase contract, contract for deed, or installment purchase agreement. For example, a vendor’s heirs and beneficiaries are entitled to this interest upon his or her death. Legal title is retained by the vendor, but the purchaser has the right to demand that it be transferred upon full payment. In other words, if the seller refuses to sell after a contract of sale is signed and the buyer submits performance, the buyer can sue in equity for particular performance. In certain circumstances, the courts say that the buyer becomes “the equity owner of the land.” Sellers benefit from any increase in value that occurs between signing a contract and delivering the deed. Any unfavorable conditions, such as a rezoning, are also the responsibility of the vendor.

One state’s trust deed gives trustees absolute ownership, while others provide trustors equitable ownership.

A party’s interest in a property that they have committed to buy but have not yet completed the transaction.

Equity

The idea of fairness and justice was applied to the section of common law pertaining to individual rights and obligations. Also, the monetary worth of what is possessed, calculated by deducting all debts from the ownership value to arrive at a net ownership value number.

the proportion of an asset that is owned outright. This is the current estimated value minus any outstanding debt.

the proportion of a property that an owner owns after deducting outstanding loans from the market value

That percentage of an ownership interest in real estate or other securities that is not financed, that is, the component that is owned outright.

The difference between how much you owe and how much your home is worth today.

  1. A property’s remaining interest or value after all liens and other liabilities against it have been paid. Over and beyond the mortgage indebtedness, an owner’s equity in a property is typically defined as the monetary interest that the owner retains. The value of a property encumbered by a long-term mortgage increases with each monthly primary mortgage payment and appreciation.

In the early years of a mortgage, equity is slowly built up because the majority of the monthly payment goes to interest rather than principal. The less risk a mortgagee who lends money based on the security of the property has, the more equity an owner has.

  1. For circumstances in which monetary damages would be insufficient to appropriately compensate the offended party, a court of equity was established under English common law as an alternative forum to hear complaints. One of the only legal options available to a buyer whose property was declined by a seller is to sue for money damages. It is possible for a court of equity to force a contract to be fulfilled. There are still important differences between legal and equitable remedies for specific performance and actions that do not constitute injury, despite the fact that most jurisdictions have combined courts of equity and law. The federal bankruptcy courts continue to function as courts of equity in the United States federal system.

After all debts have been paid off, the ownership stake in a property is calculated.

How much “value” you have in your home.

The borrower’s equity in the property, minus the amount owed on the mortgage.

The difference between how much the property is worth on the market and how much is still owed on the mortgage. This will go up as the loan is paid off or as the market value of the property goes up.

Equity build-up

The collection and expansion of the monetary worth of one’s possessions. That is, a growth in a single property’s net financial interest.

Amortization is the process of paying down a loan’s principal over time, usually in periodic installments. Such payments increase the difference (equity) between the property’s market worth and the amount of debt that remains.

The amount of net value gained as a result of paying off a mortgage.

Equity Dividend Rate

Before-tax cash flow calculated as a percentage of the original equity cash expenditure required.

The equity “capitalization rate.” It is calculated by dividing pre-tax cash flow by the value of invested equity capital. The dividend rate/yield of the property, often known as the “cash-on-cash return.”

A simple return is calculated by dividing the cash flow dividend before taxes by the equity.

Equity kicker

A lender’s share of the cash flow or resale revenues received in exchange for providing a loan.

Equity lease

A type of joint venture in which an owner signs a contract with a user who agrees to use a space and pay rent as a tenant, but also gets a share of the ownership benefits, such as periodic cash flows, interest and cost recovery deductions, and maybe even a share of the sales proceeds.

Equity mortgage

Borrowers can obtain a home equity line of credit. Any remaining mortgage balance is subtracted from the home’s appraised value to arrive at the equity percentage. It is not based on the owner’s creditworthiness, but rather on a second open-end mortgage on the house.

CONTINUED-AT

Continued at…
:point_right: Real Estate Glossary E [Part 3]