Real Estate Glossary E [Part 2]
Equity of redemption
A period of time given by courts in every state that allows delinquent mortgage debtors to make outstanding payments and bring their mortgage current before foreclosure is completed.
Prior to a foreclosure auction, a mortgagor has the right to regain property that has been lost because of a mortgage default. If the borrower pays out the entire amount, including escalator clause interest and costs, the property can be reclaimed by the lender as collateral. Requiring the borrower to give up his or her redemption rights is against public interest and, as such, is unenforceable and void. Equity of redemption has been ruled to be a real estate interest and is thus subject to the usual rules and laws regarding conveyances, including the statute of frauds.
The right to redeem following a foreclosure sale must be established by law. Nonjudicial foreclosure statutes are used for the majority of foreclosures in states where a power of sale can be included in the mortgage contract. The right to redeem a property once a foreclosure sale is canceled.
A borrower’s right to get back the title he or she gave up after defaulting and before a foreclosure sale by paying off the debt in full, plus interest and the lender’s costs.
It is the agreement between the potential purchaser and the investment company in which an equity stake is traded to help with the acquisition financing. All or a portion of the down payment, closing costs, or monthly payment can be provided by the investor. Private investors, businesses, mortgage lenders, or even the seller can be investors. On the basis of a suitable allocation of deductions such as mortgage interest, depreciation, and property taxes, it is essential to seek out qualified tax guidance.
A sort of real estate investment trust that focuses its resources on real estate equity holdings.
A real estate investment trust (REIT) is a company that invests in the ownership of income-producing real estate.
Real estate investment trusts that buy and manage income-producing assets.
A loan-to-value ratio of 50% or less indicates that the owner has at least 50% equity and is considered to be equity rich.
Equity sharing loan
With an investor-owner who contributes to the down payment, monthly payments, and tax write-offs, a loan in which a resident-owner splits his or her equity or rises in the value of the home with an investor-owner.
Equity yield rate
On recovered capital, interest is generated.
The return on the part of an investment that was paid for by the investor’s own money.
Equivalent level rent
Fixed monthly payment with the same current value as real lease payments after concessions or expense reimbursement revenue over the same duration.
ERISA (Employee Retirement Income Security Act of 1974)
Legislation in the United States that establishes the level of risk that is reasonable and acceptable for private pension plan investments.
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Erosion is the removal of rock debris by moving water, wind, or another agent; in general, erosion is the shaping or wearing down of the land by erosional processes.
Ascension is the reverse of accretion; the movement of currents, tides, and winds causes the gradual loss of soil.
Land that has been worn down by water, wind, or other natural forces.
Errors and omissions (E&O) insurance
A sort of insurance that compensates experts if they make a mistake in their profession or omit anything critical from their assessments.
A type of insurance that covers a real estate office or escrow company’s responsibilities for errors, blunders, and negligence in the normal listing and selling activities. However, it excludes claims based on transactions for a real estate agent’s personal account for fraud, punitive damages, or other damages. E&O insurance is essential for real estate licensees and appraisers because of the wide-ranging liability provisions of the law. Typically, insurance policies for errors and omissions are set up to pay out only when a claim is made (i.e., the insured is covered only if the claim is made during the period of the policy).
It’s possible for a landlord to pass on increases in real estate taxes and operating costs to tenants, with each paying a proportional share. Also, there is a clause in a mortgage note that lets the lender raise the interest rate based on the terms of the note.
A provision in a contract that requires a price increase.
A part of the rental agreement that gives the owner of the house the right to raise the rent in the future.
Payments made in accordance with an escalation agreement.
Lease provision requiring tenants to pay all running expenditures in excess of the amounts indicated in the lease.
Contract language that allows for a third party to change payments up or down to account for unanticipated circumstances. During periods of inflation, an escalator clause raises the yield to safeguard the lessor’s investment position against a decline in the rate of return. A clause in many long-term commercial leases, such as fixed-rental net leases, includes a provision that allows the parties to agree to an adjustment of rent based on predetermined increases in taxes, insurance, maintenance, and other costs. Rent can also be linked to an inflation index to account for increases in maintenance costs, and it can be raised at predetermined intervals as a result.
A promissory note escalator clause can also be used to raise the interest rate if a payment is late or the borrower defaults on the loan.
One should not confuse the escalator clause with an alienation or due-on sale clause. “Voluntarily” agreeing to an increase in the stated interest rate is common when a borrower is selling a mortgaged property and does not want to risk having the lender call in their loan under the due-on sale provision.
This clause may read: “At any time from the date hereof, and at any time thereafter, the legal holder of this note may decrease or increase the interest rate of this note that is in effect, provided that after receipt of any notice to increase the interest rate within such three months, the undersigned may within such three months’ period prepay the balance remaining unpaid hereunder without payment of any prior prepaymentmen.”
When a specified contingency does not materialize, a contract clause that relieves one party of responsibility for failure to perform is included. Because mutuality of obligation is missing in such a condition, a contract cannot be enforced if one party has the right to cancel it for any reason at all. As a result of unforeseen circumstances, we must be prepared for the unexpected.
A provision in a tenant-proprietary stockholder’s lease allowing the tenant to return the stock and lease it back to the cooperative association, so ending the tenant’s ongoing liability for lease payments.
A rock or piece of land with a long, steep face.
When an intestate owner (one who died without a will) dies with no heirs, property ownership reverts to the state.
When a person dies intestate with no heirs to inherit the property, or when the property is abandoned, state or county law provides for the property’s reversion to the state or county. A bank account that has not been utilized for seven years is forfeited in some areas.
When a property owner dies without a will or heirs, the property reverts to the state.
The government has the right to seize the property of a decedent who left no testament.
A third party’s possession of anything of value that is the subject of a contract between two other parties until the deal is executed.
The status of real estate transactions that are completed with the assistance and assistance of a third party known as an escrow agent. The deed is given to the escrow agent, who will provide it to the buyer if a condition is met (payment of the purchase price).
A third party holds property or other compensation in line with an agreement.
A third party (a stakeholder) keeps money and/or documents until the terms and conditions of the escrow instructions (as written by the parties to escrow) have been met, in various regions of the country. Once these conditions are met, the escrowed monies and documents will be delivered and transferred.
When a legally binding and enforceable contract of sale and a completely executed deed are deposited with the escrow holder, the escrow is established. Documents and assets are held in trust by the escrow holder until specific requirements are met. Escrow instructions are supplied by both parties, and the agent of the holder operates in accordance with them.
Documents deposited into an escrow account cannot be altered by the depositors, and hence the escrow is unaffected by one party’s death or disability. According to the terms of the contract, the other party is entitled to escrow as a result of the decedent’s performance.
It is usual practice to use the services of an escrow business or a licensed title company or lending institution rather than a real estate broker in various areas. Legal documents are not prepared or reviewed by an escrow agent; rather, escrow simply accepts instructions from the parties to the contract and acts on them in a confidential way. The escrow agent should not be relied upon by any party to detect any problems in the transaction. In the event that the transaction is not handled by an established escrow business, a lawyer should be engaged.
It is not uncommon for information that is known only to one party to be withheld from the other because of the escrow’s restricted disclosure obligations and the secrecy of the transaction as a whole. The nature of the dual agency alters when the escrow transaction’s conditions are met, and escrow then becomes the agent for the seller in regards to money and the buyer in regards to deed. As the “clearinghouse” for the transaction’s data, escrow serves as an intermediary between parties. Only by mutual agreement may an agreement to amend, change, or revoke the agreement be made for an escrow.
Sales, mortgages, and exchanges; contract for deed; and lease of real estate are all examples of real estate transactions that can be closed using escrow. Licensees in the real estate industry are generally in charge of advising parties and drafting the purchase agreement. In most cases, escrow instructions for both the seller and buyer are based on the terms of the sales contract, which specifies who is responsible for different costs, the proration date, and the like. Due to the poor quality of the contract, escrow companies may have to delay or even halt the transaction altogether.
The escrow business can handle tasks such as paying liens, computing prorations, ordering title evidence, preparing new documents, drawing up closing statements, obtaining appropriate signatures, recording papers, and receiving and disbursing monies while closing a real estate transaction. As long as the buyer and seller have both paid their closing charges, they can rest comfortable that they will receive a clear title and the corresponding sum of money. Escrow fees are typically split 50/50 between the buyer and the seller.
In most cases, an escrow isn’t opened until after the selling contract’s principal contingencies have been met. New finance or the approval of a debt assumption, a building permit, zoning change, or the like are examples of important contingencies that could affect the outcome of the project. The appliance check, the termite inspection, and the signing of bylaws or home rules can all be taken care of once the escrow process begins. In the context of escrow, the term “back-to-back escrow” refers to the practice of escrows being held in tandem. instructions for escrow A document signed by both the buyer and the seller that outlines the steps necessary to complete the sale and gives instructions to the escrow agent on how to proceed. It’s possible that the contract of sale itself serves as the escrow instructions for both buyer and seller. It’s possible for the seller to successfully ask the escrow business to withhold payment of commissions to brokers who do not participate in the arrangement.
The use of a third party to handle money or paperwork on behalf of the buyer and seller.
When a person holds another person’s legal rights, finances, benefits, or any other documents in trust for them in order to ensure that the agreement is carried out.
Brokers’ segregated accounts for the deposit of earnest money (deposit) monies. A lender’s trust account used to pay for property taxes, hazard insurance, or other goods on behalf of a borrower.
An escrow corporation holds a financial item until all conditions are met.
A neutral third party who serves as an agent for the parties to an escrow arrangement.
Escrow agents gather all necessary paperwork and monies for disbursement at the closing and execute the closing function for a fee.
A person who is in charge of an escrow payment.
A contract entered into between the parties to a transaction and a third party acting as an escrow agent. The agreement includes written escrow guidelines that regulate the agent’s actions while performing escrow services.
A mortgage borrower is required to make monthly installments into an escrow account.
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Property expenses can be paid using escrow funds.
In order to conceal the cut out hole in a pipe that extends through a wall, a decorative plate is used.
Air conditioning, fire services, elevators, and electrical equipment are examples of statutorily monitored services within a property that might result in large fines for you, the owner, if you fail to comply.
A place that is sound, stable, and healthy, with all of the land developed.
Real estate interests that involve possession.
- A person’s legal interest or rights in real property, rather than the actual quantity of land, is referred to as “ownership interest.” In order to qualify as an estate, an interest must be one that is (or can be) owned by someone for a long period of time. A freehold estate (sometimes known as a fee simple or a life estate) is a land ownership interest with an unknown term. An estate for years or an estate at will are examples of estates that are less than freehold and encompass all other interests as well as leaseholds.
Estates aren’t the only type of land ownership. However, a mortgage is not an estate since it is a lien or charge on the land, but it is not a lien or charge on the land. Furthermore, an easement is a property interest, but it is not a legal estate because it does not pass to the owner with the property. Legal estates, as opposed to conventional estates or estates created by the parties, are those produced by the operation of law (such as dower). The term “estate” is derived from the feudal system, where a person’s “status” was essentially determined by the extent of their landholdings.
- The property of a deceased person may be subject to probate administration, federal and state taxes, and claims from creditors.
The degree to which a person is interested in real estate.
The entire value of all of a person’s possessions throughout the course of their life.
Estate at sufferance
When a renter occupied a property after his lease has ended without permission.
Keeping a property even after the legal right to do so has ended.
Estate at will
The tenancy of a property for an indeterminate amount of time. It can be ended at any time by either side.
Estate for life
A property interest that expires upon the death of a certain person.
Estate for years
A leasehold interest that is valid for a set amount of time after which it automatically expires.
An interest in land that permits for the temporary ownership of the property for a set length of time.
Estate in reversion
An estate left by a donor that continues after the grantor’s estate has been terminated.
Estate of inheritance
A fee simple absolute, for example, is a freehold estate that can be handed on following the death of the owner via descent or will. A life estate differs from an intestate estate in that it cannot be passed down through the generations.
Estate subject to a condition precedent
An estate that is established (rather than terminated) when a particular condition occurs.
The tax levied on the value of a decedent’s property.
Estate tax, federal
The federal government imposes an excise tax under the Internal Revenue Code on the transfer of property from the estate of a deceased to a beneficiary upon, or as a result of, the decedent’s death. The federal estate tax may apply to all property in which the deceased had an interest, including jointly held property, life insurance proceeds, and property in which the decedent kept a life estate. The federal estate tax applies to less than 1% of all -estates. The 2012 act maintains the $5 million estate, gift, and generation-skipping transfer exemption levels (indexed for inflation), but raises the applicable tax rate from 35% to 40%.
A similar rate system governs both gift and estate taxes. Lifetime transfers in excess of the yearly gift exclusion and transfers effective at death are aggregated for estate tax purposes; however, any gift tax paid is deducted from any estate tax due. The value of inherited property at the time of the decedent’s death or six months later (the alternate valuation date), whichever is lower, is the basis.
Tax extensions may be granted upon a petition demonstrating that the estate would have to sell an asset at a “sacrifice” price. Beneficiaries inheriting a family farm or business, for example, may be given a delay to pay the inheritance tax. Where this extension is granted, the United States
Because the Treasury maintains a lien on the property, lenders may be hesitant to lend money to owners of such property. The Treasury can now subordinate its lien to a bank’s lien. The preliminary title report will raise the exception of unpaid estate taxes in the sale of real estate.
Competent legal counsel, prudent estate planning, the right choice of ownership form, and the use of inter vivos trusts can all help to reduce the estate tax burden and the cost of probate administration.
An effort to quantify the amount of time or money needed for an activity.
Adding the costs of labour, materials, and other things to a new project is a way to figure out how much it will cost.
The method used to figure out how much something will cost.
Estimated closing costs
A rough estimate of all the expenses that will be incurred at a real estate closing. Typically, the estimate is produced by a lender in line with the Real Estate Settlement Procedures Act.
A legal doctrine that prohibits a person from asserting rights or facts that contradict a previous stance or representation made by act, conduct, or silence. A mortgagor, for example, who certifies that he has no defense against the mortgagee is barred from later asserting any defenses against a person who purchased the mortgage in reliance on the mortgagor’s certificate of no defense. A waiver is a voluntary surrender or relinquishment of a known right, whereas estoppel produces an inability to assert a defense or right.
If one party to an agreement engages in conduct that misleads another, and the first party relies on that conduct, an estoppel is generated to prohibit the first party from rejecting the effect of her conduct (called estoppel in pais). When a grantor transmits more interest in land than he actually has and then gains complete title, the grantor may be precluded from denying the grantee’s full interest in the land by estoppel. When a real estate owner allows another person to act as the true owner, and an innocent purchaser purchases the land from that other person, the true owner is barred from asserting ownership.
A landowner is sometimes estopped in border litigation from asserting that the genuine boundary line differs from the line previously agreed upon by the owner and the adjoining property owner. This is especially true if the neighbor built a fence or road, planted crops, or performed improvements based on the landowner’s assertions of the location of the line.
When the buyer has gone into possession, paid money, or made renovations, and the buyer can establish irreparable loss and hardship if the contract is not enforced, the seller is sometimes estopped from claiming the statute of frauds as a defense to the buyer’s suit for specific performance.
A developer who obtains a building permit but later discovers that the government has down zoned or changed the property use may argue equitable estoppel.
A purchaser of rental property may have existing tenants sign estoppel declarations admitting their commitment to pay the right amount of rent in accordance with the conditions of their leases.
A legal theory barring a party from refuting facts that they previously admitted were accurate and that others had accepted in good faith.
Estoppel by deed
A legal notion that applies to a person who transfers property to another without having legal title to the property and then gains good title to the property. The grantor is then barred from denying any lack of title at the time of the original conveyance, instantly vesting the grantee with complete legal title. Also known as title by estoppel.
Tenants or the underlying lender sign a form declaring any and all claims they may have against the property owner. These certificates shield the buyer against any claims brought by any of these parties at a later period.
A document that a lending institution has signed.
A legal requirement, such as a tenant’s right to utilize any wood on the property to meet his or her minimal fuel, repair, and tool needs.
And others, in Latin.
et alii is a Latin acronym for “and others.”
The Latin acronym for et uxor, which means “and wife.”
“Also my hubby,” in Latin.
An organized set of moral principles, regulations, and guidelines for behavior. In real estate, ethics are more critical than in other transactions, where the clients may be more familiar with the services being provided. Fidelity, honesty, and competence are the three pillars of a sound ethical code.
The study of how people should act, with a focus on figuring out what is right and wrong. The basic rules for doing the right thing. The moral standards that a profession sets up to make sure that its members are trustworthy. Professional rules say what is fair and what isn’t fair in how people act toward their professional group, each other, clients, and the general public.
Language, culture, and/or habits that distinguish a group of individuals as belonging to a single ethnic or cultural group.
The rise in biomass of a water body, resulting in basin infilling and the eventual removal of open water.
A component of your home’s cooling system that removes heat from the air.
Water loss from the soil due to evaporation and transpiration.
- Removal of a tenant from a property for non-compliance with a lease agreement by means of legal action.
A partial eviction results in the renter losing access to a portion of the property. Unless the agreement provides a survival clause declaring that the tenant’s duty for rent survives eviction, the tenant is no longer accountable for paying rent upon eviction.
When a landlord decides to evict a tenant, common reasons include nonpayment of rent, unlawful use of the premises in violation of the lease’s use provisions (such as running a business out of a rental unit that was solely leased for residential purposes), and noncompliance with health and safety codes.
- Disruption of the leasehold rights of a tenant through the actions of the landlord or a third-party claim of a superior title.
A legal way to get a renter to leave a place.
The act of getting someone to give up their property. Forcing out: For example, if a tenant doesn’t follow a condition of the lease, the landlord can end the lease and take back the property. When this can’t be done by mutual agreement, the tenant is kicked out of the house by the law.
When a renter fails to meet their rental responsibilities, they are issued a notice. Evidence of title is a document that proves who owns a piece of property.
The eviction of an individual from a property by force or by legal means.
When a lessor terminates a lease because the property is inappropriate for the reasons for which it was leased.
Evidence of title
Evidence that a good and marketable title is being transmitted as part of a real estate transaction. Abstract with attorney’s opinion and title insurance commitment are the two major formats that are approved.
A property seller must provide the buyer with a marketable title to the property in order to complete the transaction. As long as the contract does not explicitly provide that a buyer must be provided with proof of good and marketable title, sellers are not obligated to do so. A lawyer’s abstract of title or title insurance policy may be paid for by either party (or both parties) in some states. This is normally determined by the contract’s terms and conditions, which are based on regional custom and practice.
Examination of title
From public records, make a report on a property’s title.
To become a licensed real estate agent, you must pass a written exam in every state and show that you have a basic understanding of real estate principles, paperwork, and state licensing rules. Salespeople and brokers typically take different exams. The licensing officials in each state can provide details and qualifications for each state’s exam, which differs from state to state. For state-certified or licensed appraisers, licensing examinations are required.
- As used in property transfers, the exclusion of some portion of a property from the transfer In accordance with the original title rights, the donor retains ownership of the withdrawn component. If Bob Lee was given a 10-acre piece by Grant Park with “a strip of property ten feet wide running along the northerly boundary,” then it was a legal exemption. " If an easement or life estate in the conveyed property is reserved by the grantor, this is an exception rather than a reservation since an exception creates new rights arising out of what the grantor has already granted.
- Title insurance policies exclude coverage for lienors and encumbrances.
- “Subject to the following exceptions,” the seller commits to deliver a clear and marketable title “subject to the following exceptions” in the contract of sale.
Exceptions and reservations clause
A provision in a deed that might include a wide range of restrictions on the property interest conveyed.
Excess accumulated earnings tax
A penalty tax paid on enterprises with earnings in excess of their necessities.
Excessive appropriation of land in order to fulfill the public aim of condemnation After the project is completed, the remaining materials are sometimes auctioned off to the public.
Excess cost recovery allowance
Actual cost recovery allowance claimed, less what would have been claimed if the taxpayer had followed the straight-line cost recovery approach from the start.
The amount by which allowed tax deductions (including depreciation) surpass the property’s rental revenue.
Real Estate Glossary E [Part 4]