Real Estate Glossary M [Part 2]

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Continued from…

:point_right: Real Estate Glossary M [Part 1]

Mechanic’s lien

A lien that secures a claim arising from the provision of services in conjunction with the building or improvement of a property.

For nonpayment of a labor or material debt, a lien is issued.

Material men and mechanics (and architects and designers in some states) are entitled to a statutory lien to secure payment for materials supplied and services rendered during the improvement, repair, or maintenance of real property. Common law didn’t recognize this right. Mechanics are workers, whereas material men are providers.

The mechanic’s lien gives security to individuals who provide labor or furnish supplies in the improvement of the real property (but usually not public property) based on the “enhancement of value” theory. The parties who conducted the work or supplied the supplies should be granted a lien on the property because the value of the property has been increased as a result of their efforts. Subcontractors, materialmen, and laborers are entitled to a lien, but it is not a subrogation of the rights of the original contractor. As a result, anyone who provides labor or materials for the improvement of real estate can claim a mechanic’s lien if the contract is genuine… No charges for tools or office overhead like telephone, stationery, or other comparable expenses are covered by the lien because it only applies to work and materials that are permanently integrated into the structure.

An equitable interest in the property acquired through a contract for deed, as well as an ownership interest in the improvement itself, are all covered by a mechanic’s lien. Although only the lessee contracts for the construction of the building, the lessor is also included in the definition of a “owner” for the purposes of the lease.

When the owner has not paid for the work, or when a general contractor has been paid but hasn’t paid the subcontractors or suppliers, a lien can be used to secure payment. An agreement (express or implicit) with the owner or the owner’s authorized representative is required for the work to have been completed.

Mechanics’ liens are governed by the laws of the state where the property is located. It is possible in some states to give priority to mechanics’ liens, rather than previously recorded liens, such mortgages. Unless a claimant takes action to enforce a lien within a set period of time, usually one or two years, the lien will expire. A court action is typically required to foreclose the lien and generate funds to satisfy the lien through the sale of real estate.

If enough work has been done to give notice that the property is being improved or is going to be improved, the lien becomes effective at that point in time. If the property is transferred after the lien is effective, but before the filing of the notice of lien, the mechanic’s lien takes priority. Thus, a good-faith purchaser for value who is without notice of the evident commencement of activities accepts title subject to the potential of a subsequent notice of lien. A savvy purchaser should obtain sufficient title insurance (an extended coverage policy) as protection against this type of danger.

In many states, mechanics’ and material men’s liens have precedence over all other liens of any kind, except (1) liens in favor of any branch of the government; (2) mortgages, liens, or judgments recorded or filed before visible beginning of operations; and (3) mortgages recorded before the date of completion, under which all or a portion of the monies advanced and secured up to that point have been used to pay for the improvement. Such a statement must be included in the mortgage.

Once a mechanic’s lien has been paid off, a formal notice (usually termed a satisfaction of lien) shall be filed in the right court at the expense of the lienee (owner) (owner). The satisfaction of lien must be submitted with the registrar of titles if the liened property is registered under the Torrens system.

In most cases, a “notice of nonresponsibility” posted or recorded by the property owner protects the owner from mechanics’ liens for work allowed by a lessee or vendee (under contract for deed). For the contractor, the notice said that he would be responsible for payment only to the person who had authorized the job.

Construction and other renovations to real estate might result in liens.

Any person who contributes labour or material to the construction of an improvement on land that has not been appropriately compensated is entitled to a statutory lien under the law.

Mechanical engineer

An engineer who specializes in the design and construction of heating, ventilation, and air-conditioning systems, as well as other mechanical systems.

Median

the number in the midst of a group of numbers

The figure in the middle of a set of numbers. The median would be $90,000 if the sales prices were $70,000, $90,000, and $180,000, respectively. Some lenders consider eligible income to be 80% or less of the area median income.

When the values in a data set (or sample) are put in order, the mean is the value in the middle (by size ranking, in ascending or descending order). Note that when there are an odd number of values in an ordered set of data, the median is the value that divides the set into two equal-sized sets on either side of the median. When there are an even number of numbers in order, the median is just the number in the middle between the two middle numbers. Note that the following formula can be used to find the position of the median value in an ordered set of n observations: position of the median = n/2 + 1/2.

Median house price

The average cost of all houses sold over a specific time period is called the median house price (monthly, yearly etc).

Median price

Property prices are arranged in either ascending or descending order, and the middle figure is chosen to represent the median price. It is not typical.

Mediation

An alternative dispute resolution process in which an impartial third party assists two disputing parties in resolving their differences. If the mediation is successful, it should be reduced to a legally binding written agreement. If mediation fails, the next step is usually binding arbitration.

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Meeting of the minds

Consensus or agreement between the parties to a contract about what the contract is about. If both parties say and do things that show they want to be bound by a contract, they can be held responsible. So, even if the parties don’t mean to be legally bound by a contract, they may be seen as being so by the law because of how they act. There can’t be a contract unless both parties agree on the terms. This means that there has to be a good offer that is properly accepted.

An agreement reached by all contracting parties.

Megalopolis

Interest rates, demographics, employment levels, vacancy rates, and absorption levels are just a few examples of market characteristics to consider.

Menace

The use of violence to obtain a contract. Threatening a contract, like duress and undue influence, is grounds for contract voidance.

Merchant’s Association

A group of merchants at a shopping mall formed to promote the tenants’ companies.

A group formed by shopping center tenants to facilitate joint advertising, promotion, and other activities that benefit the entire center.

Merger (fusion)

The merging of two or more interests or estates into one. When a servient and a dominant estate merge, an easement may be extinguished. Example: Samir, the owner of servient estate lot 1, grants Sonja, the owner of dominant estate lot 2, an easement to cross over lot 1. Sonja thus obtains ownership of 1. If Sonja later sells 2 to Milan, the easement is no longer valid; it has been merged into l and must be recreated.

When a greater and a lesser estate become vested in the same person, the lesser estate generally merges into the greater estate. When a landlord sells property to a tenant, the leasehold estate merges with the original freehold estate. Obviously, the lease has been terminated, and the tenant is no longer required to pay rent. This is also true when the leased fee is inherited by the tenant.

Unless otherwise provided in the contract or the deed, when a deed is delivered pursuant to a contract for deed, all terms of the contract for deed are merged into and superseded by the deed. As a result, if a vendor wants representations, warranties, or restrictions in the contract for deed to continue and survive the deed, he or she must include them in the deed or specify which covenants and conditions in the contract are to survive delivery of the deed or assignment of the lease. In essence, the contract merges with the deed and disappears. Also, if a sales contract requires something to be done after the closing and delivery of the deed, such as the installation of a sewer system, this requirement will usually survive and be enforceable; that is, matters collateral to the conveyance are not merged.

A contract’s merger clause states that this writing constitutes the entire agreement between the parties; all prior negotiations and representations are not included in the contract.

Meridian

Land surveyors employ a set of imaginary lines that run north and south as a reference in the government survey method of property description.

Mesne conveyance

An intermediate or middle conveyance is any conveyance that occurs between the first and most recent conveyances in the chain of title.

Mesne profits

Land that was wrongfully taken over and used to make money. Usually, the legal owner can get back mesne profits.

Messuage

A house and the surrounding buildings and land that are used by the household.

Metadata

Data about data describes the data’s substance, quality, condition, and other attributes.

Metes and bounds

A way of defining real property borders by references to long-lasting landmarks.

A mete is a unit of measurement (foot, mile) and a bound is a boundary marker in a method of representing real estate. A sequence of directed distances that define the property’s limits.

The boundary lines of a parcel of land, as well as their terminal points and angles, are described in a land description.

A common way to describe a piece of land that uses terminal points and angles to describe the shape and size of the parcel’s boundaries. A metes-and-bounds description starts at a well-marked starting point and follows the boundaries of the land by courses and metes (measures, distances, compass direction) and bounds (landmarks, monuments) and then goes back to the starting point. Most of the time, though, monuments are more important than courses and distances when checking such a description. A description is wrong if it doesn’t close off an area by going back to where it began. If there is a difference between the distance between two monuments and a straight line measurement, the distance between the two monuments is what counts. This is an example of a “metes and bounds” description:

The following is a description of a piece of land in Red Skull, Virginia: Starting at the point where the east line of Jones Road meets the south line of Skull Drive; going east along the south line of Skull Drive for 200 feet; going south 15° east for about 216.5 feet to the centre of Red Skull Creek; going northwest along the centre line of Red Skull Creek until it meets the east line of Jones Road; going north about 105 feet along the east line of Jones Road to the point where it all started.

When describing a piece of property in a town or city, a metes-and-bounds description can start with:

Starting at a point on the south side of Kent Street, I walked 100 feet east from the corner where the southside of Kent Street meets the east side of Broadway. From that point, I drew a line to…

A metes-and-bounds description can start with:

That part of lots 7, 8, and 9 in Block R of Lightwater’s Subdivision in the NW1/4 of the SE1/4 of Section 16, Township 39 north, Range 12 east of the 5th principal meridian.

Metes and bounds is a way of describing land that includes measurements like distance and orientation.

Meth labs

The locations where illegal methamphetamines are manufactured, which can include a wide range of structures and enclosures, from RVs to motels, apartments, and upscale residential houses. The chemicals used to manufacture methamphetamines, as well as the byproducts of the process, are highly toxic, contaminating the buildings and the grounds surrounding them more than many federally designated toxic waste sites. One pound of methamphetamine production can generate five to seven pounds of toxic waste while emitting poisonous gases into the atmosphere.

Metropolitan statistical area (MSA)

An MSA is made up of one or more urban counties that form a single labor market region centered on a metropolis with a population of at least 50,000 people.

The area surrounding a major city. The Chicago metropolitan area, for example, is frequently interpreted to include certain areas in western Indiana as well as the surrounding suburbs in Illinois.

In general, the area surrounding a major city. An MSA is defined by the Office of Management and Budget (OMB) as a city with a population of at least 50,000 or an urbanised area with a population of at least 50,000 and a total metropolitan population of 100,000.

Mezzanine

A floor that sits between the ground and first floors.

A floor that connects two main stories of a building or the floor and ceiling of a one-story structure. A mezzanine typically occupies a small portion of the total floor space.

Mezzanine Debt

After a first mortgage, debt that is paid off.

Mezzanine finance

A high-yielding investment in real estate development that bridges the gap between bank loans and the developer’s own equity, sometimes with a second mortgage on the property

Mezzanine loans

A means of getting additional leverage in addition to a conventional first mortgage. This loan is frequently secured by the pledge of an equity stake in the borrower’s partnership or firm, rather than a lien on the property.

Microclimate

A tiny space’s climate, such as an inner city, a residential sector, or a mountain valley.

Microeconomic risk factors

Risk that is related to a certain property or local market and that the owner/investor can control. This risk can be mitigated by diversifying one’s holdings.

Microeconomic theory

Small economic unit theory. Known colloquially as the firm’s theory.

Middleman

A person who brings together two or more parties but doesn’t do the negotiating for them. The so-called middleman exception is an exception to the rule that a real estate broker can’t get a fee from both parties without their permission first. The middleman exception doesn’t apply if the broker has any power or discretion to negotiate on behalf of the principal. In this case, the broker just brings the parties together so they can negotiate their own contract. In real life, though, true middleman status doesn’t happen very often.

Midmonth convention

The acquisition of an income-producing property is assumed to occur on the 1st of the month, regardless of the actual transaction date, according to a tax law.

Midrise

A structure of four to fifteen stories.

A building with four to seven stories.

Midrise apartment buildings

Apartment buildings of four to nine floors in height.

Mile

A unit of linear distance that is equal to 1,760 yards, 5,280 feet, or 1.609 kilometres.

Milestone

A key event or point in time in the project that represents the start and/or completion of a major deliverable.

Military clause

A clause in some residential leases that allows a military tenant to terminate the lease in the event of transfer, discharge, or other appropriate circumstances. Following is some sample language.

It is expressly agreed that if the lessee herein receives official orders releasing him or her from duty at Fort Shafter or from active duty in the army, or ordering him or her to live in service quarters, he or she may terminate this lease by providing written notice of intent to do so. Such termination will take effect 30 days after the notice is served on the lessor. If the date of such termination falls between the days on which rent becomes due, a proportionate part of the rent due but for such termination shall accrue on the first day of the rental period in which termination takes effect.

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Mill

A tenth of a dollar. Some states use a mill rate to figure out how much sales tax and property tax to charge. For example, if the mill rate is 52 and the property is worth $40,000, the tax would be 0.052 times $40,000, or $2,080. You can also say or figure out that this tax is $52 per $1,000.

Units of measurement used to express the amount of a property tax assessment; the number of dollars per $1,000,000. Twenty mills equals $20 for every $1,000,000.

Millage

One-tenth of a penny is a rate used by municipal taxing bodies.

Millage rate

The amount of tax levied per $1,000 of property value. A millage rate of 20 indicates that a person who owns a property with an assessed value of $100,000 would pay 20 X 100,000 = $2,000 in tax.

Mineral rights

Subsurface rights, including rights to oil, gas, coal, and other mined commodities, can be separated from land ownership.

Profits and rights to subsurface land. Unless the grantor agrees otherwise, the grantee of real estate usually receives all of the land’s rights and titles, including its surface and subsurface features.

Mini warehouse

A building that houses self-storage units. A mini warehouse is typically found in an industrial park and is designed to provide individuals and small businesses with small, secure storage (10 to 200 square feet). Operators must follow legal procedures when disposing of goods that appear to have been abandoned by the renter. A mini storage facility is another name for it.

A warehouse that provides business and domestic users with tiny storage facilities.

Minimum lot area

A rule in a zoning ordinance that sets a minimum size for a lot on which a building can be built.

Minimum property requirements

Before the FHA will back a residential mortgage loan, the property must meet certain minimum standards. It must be habitable, well-built, and in a good area. To meet these requirements, a broker should take repair costs into account when figuring out the seller’s closing costs. Parties to an FHA loan can’t get out of having to meet FHA requirements by using a “as is” clause.

Minimum rent

Base rent is the smallest amount of rent due from a tenant under a lease with a varying rent schedule.

Mini Perm loan

An intermediate lender loan that provides funding during the construction phase, the lease-up period, and for several years after the lease-up stage.

Ministerial acts

Acts that can be done without forming an agency relationship, but may still need a real estate license. They are simple tasks that are done for customers on a regular basis and don’t require judgment, discretion, or advice. For example, a licensee who works for a seller might show the property to the buyer, help the buyer find a lender, and do the paperwork needed for closing. In most states, you need a real estate license to do these things, even though they don’t involve clients.

Minor

Someone who has not reached the age of majority; a person who is still considered a minor in the eyes of the law. State laws set the legal age of majority, which can be different depending on the law’s purpose, such as the legal age to drive, drink, or sign contracts. Most contracts that a minor signs, with the exception of those for things like food and clothes, can be broken by the minor. But if the minor doesn’t back out of the contract within a reasonable amount of time after becoming an adult, the contract is fully binding on him or her. For example, if a minor lists a property with a broker, the broker could not get a commission if the minor decides to back out of the listing contract when the broker finds a buyer who is ready, willing, and able to buy. In any case, a minor couldn’t sell the property without the court’s permission, because they don’t have the legal ability to transfer ownership of property or make a valid will.

Even if the minor lies about his or her age, the minor can still back out of the contract, but the lie could lead to a claim for fraud damages.

A deed signed by a minor can be revoked, but a minor can be a grantee and can get property as a gift or inheritance. Most people think that a minor can’t give someone else the power to sell his or her property, so any power of attorney signed by the minor is invalid.

If a minor’s land needs to be sold to pay for the minor’s care or to make an investment, the court must be asked to appoint a guardian. The minor then becomes a ward of the court. If the guardian posts a bond, the court can give the guardian a special license to sell the property (the guardian does not need a real estate license).

Most of the time, a minor can’t get title by adverse possession unless the adverse possession continues for the prescription period after the minor turns 18.

Minority

A subgroup that seems to be outnumbered by other groups. Often used to group people of a different language, sex, colour, nationality, religion, culture, ethnicity, or way of life. In the context of fair housing laws, “minority” meant people who had been treated unfairly in the past and for whom it is now illegal to do so. The word “minority” isn’t always accurate, because a small group of people can sometimes become the largest group. Today, the preferred term is “protected classes,” which means any group designated by HUD as a protected class against which real estate licensees or sellers cannot discriminate. Federal fair housing laws make it illegal to treat people differently because of their race, colour, religion, national origin, sex, family situation, or disability (handicap). For example, white males are clearly in the minority (in terms of numbers), but they have not been named a protected class.

Misdemeanor

A crime that isn’t as bad as a felony and is usually punishable by a fine or a year or less in jail.

Misnomer

A mistake in a name. To fix a mistake in a deed, you should make and record a correction of the deed so that there are no title disputes in the future. A mistake in the name of a corporation in a deed is not a big deal if the corporation can still be found, like when the deed says “Abby, Ltd.” when the real name is “Abby, Limited.” If the seller’s deed to the grantee has a covenant of further assurance, the seller can be forced to sign a correction of deed.

Misplaced improvement

An improvement that is not in the best place or that was not planned well enough so that it is too expensive or doesn’t make the best use of the site. One example is a modern house built next to a group of Victorian mansions.

Misrepresentation

A lie or a deliberate attempt to hide a fact that is important in order to get someone else to do something. If the misrepresented fact is material to the transaction, a court will grant relief in the form of damages or rescission. A positive statement, such as “This house does not have termites,” can be misrepresented. It can also refer to the concealment of a material fact known to one party who is aware that the fact is not reasonably ascertainable by the other party. As an example, consider a seller who is aware of a serious defect in the support beams but fails to disclose this information to the buyer. This failure to disclose is referred to as “negative fraud” at times. However, if the buyer clearly does not believe or rely on the misrepresentations, or conducts his or her own investigation and relies solely on this investigation, the contract cannot be canceled on the grounds of misrepresentation.

Opinion statements are not normally material facts. “This house is a great buy at $50,000 because it is worth much more than that,” for example, is an opinion statement, also known as “puffing.” Take note of the distinction between the statements “Taxes are low” and “Taxes are $500,” where actual taxes are $1,000. It would be no defense to a broker if the seller told him the taxes were $500–information the broker should confirm. However, if the person making the representation has superior knowledge, the representation is treated as fact, even if it is an opinion. If a builder says, “The foundation appears to be properly laid,” he or she may be held liable if it is not.

Courts have ruled that a broker who represents that he or she does not believe the property is on filled land may be held liable if the land is filled and the buyer suffers damages as a result. Although misrepresentations are typically oral or written statements, they can also be as simple as a nod of the head, pointing out false boundaries, or displaying a forged map - in other words, any action that may convey a false message. Statements about easements, sewer connections, high water, proposed special assessments, number of legal units, and roof condition are common subjects for misrepresentation lawsuits.

A person does not have to intentionally misrepresent a fact. A broker or salesperson is liable if he or she is aware of, or should have been aware of, the falsity of a statement. Thus, if a broker negligently misrepresents a material fact in order to induce a buyer to buy, and the buyer relies on that fact to the buyer’s detriment, the broker is liable. The seller is also liable because the statement was made within the scope of the agency’s authority by the seller’s agent. When a broker fails to disclose a material fact, a dissatisfied buyer usually has a successful case against the broker if:

  • The broker is aware of facts unknown to or beyond the buyer’s reach that have a material impact on the property’s value or desirability, and the broker fails to disclose these facts.
  • Through such nondisclosure, the broker intends to defraud the buyer.
  • As a result of the misrepresentation, the buyer suffers actual damages.

The following are some of the consequences of misrepresentation:

  • The real estate licensee’s license may be suspended or revoked.
  • The defrauded party may seek restitution or have the contract terminated.
  • The seller may not have to pay a commission to a broker who misrepresented the transaction.
  • A misrepresenting broker may be jointly and severally liable to the purchaser under the federal Interstate Land Sales Act.
  • As a result, buyers may be able to keep their properties and sue sellers for any difference in value.
  • The buyer may be able to recover damages for expenses incurred as a result of the misrepresentation.

Mistake

An error or misunderstanding. A contract can be broken if both parties make a mistake that is material, unintentional, and not caused by negligence. For example, if both parties honestly agree to buy a different lot in a subdivision, the contract can be broken (mistake of fact). Most of the time, innocent mistakes don’t break a contract. A party can’t use the word “mistake” to get out of a contract by saying that they didn’t read the contract they signed and were therefore wrong about its important terms. Ignorance or bad judgment are not mistakes of fact. Also, a party can’t say they made a mistake because they didn’t know the legal consequences of signing the contract (mistake of law).

When there is a misunderstanding and one person knows about it but doesn’t tell the other person, the other person’s interpretation usually wins.

Miter

Ends of two boards of the same form that are cut at an angle and fitted together to make an angular shape in carpentry.

Mitigation

A method of reducing the influence of a certain action on the natural or human environment.

Reducing the causes of environmental risks and limiting their influence on the environment and on human life. For example, radon mitigation involves installing a system of pipes and fans in the right way to lower the amount of radon.

Mitigation Banking

The process of constructing excess acreage of compensation credits through wetland replacement, augmentation, restoration, and/or preservation in wetland mitigation design.

Mitigation of damages

A contract law principle that says a party who has been hurt has to take reasonable steps to reduce or get rid of the amount of damages that party is owed. For example, a landlord may have to try to find a new tenant for a space that was left empty or left by a tenant who broke the lease.

Mixed-asset portfolio

A portfolio that includes a range of assets, such as stocks, bonds, and real estate.

Mixed-use

A condominium building with both residential and commercial units. It could include retail, office, and residential space, as well as industrial, office, and residential space.

Mixed-use development

A development that incorporates at least three substantial revenue-producing uses that are physically and functionally integrated and constructed in accordance with a cohesive plan, whether in one building or numerous structures.

Mixed-use project

At least two distinct types of real estate developments are engaged in this proposed development.

MLS (multiple listing service)

A computerized database shared by real estate agents that displays houses and condominiums that are now for sale or have just sold.

Mobile home

Before June 15, 1976, prefabricated trailer-type housing units were commonly applied to manufactured housing, but this is no longer the case.

Supply and demand economic dynamics and their effects on real estate profits, risks, and valuations are studied.

Mobile home park

A zoned area designed to accommodate mobile or manufactured homes, with water hookups and sewage disposal for each home. All utilities, streets, parking, and amenities are included in the mobile home park. Mobile home parks are parks and communities that were built before 1980.

A factory-built home on a permanent foundation that is linked to local utilities and is situated on a set lot.

CONTINUED-AT

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