Pledge before a notary or other official who takes it very seriously. A person who swears an oath is known as an “affiant.” Oaths frequently take the form of an appeal to God or another deity, such as: “You solemnly swear that the contents of this declaration, to which you subscribe, are true.” If the affiant does not raise his hand or place it on a Bible, the notary must take the oath. An affirmation may be used instead of swearing if the affiant objects to the term “swear” for religious or personal reasons.
In the event of nonpayment of taxes, insurance premiums, or overdue interest, a bond signed by a mortgagor in excess of the loan amount serves as a safeguard for the lender.
Individual who promises to pay a certain amount under the provisions of a promissory note. Usually a borrower.
A person who is obligated to someone else.
Individual to whom a promissory note is issued with a commitment to pay a specific sum. Usually a lender.
An oath-breaker; a person who promises to fulfill another’s legal obligation (the obligee). An obligor is a person who owes money to the recipient of a promissory note. The obligor is the contractor in a performance bond. Securing the performance of an obligation is the role of the surety; they are sometimes referred to as guarantors.
A person who owes money to someone else.
Depreciation is calculated using this method. Depreciation is calculated by subtracting the reproduction (or replacement) cost of new improvements to a property from each of three factors: physical deterioration, functional obsolescence (curable or incurable), and external obsolescence to arrive at a total depreciation figure.
Changes in design, technology, taste, or demand cause a decrease in property value.
A thing that makes a property lose value. Functional obsolescence is when something loses value because of a structural flaw, like old plumbing or fixtures that were not made well. One bathroom in a house with five or six bedrooms is an example of functional obsolescence. External obsolescence is when a property’s use or value goes down because of things that happen in the neighborhood but not on the property itself, such as a change in zoning, the loss of jobs, or other bad things that happen outside of the property.
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A deal in which the seller agrees to let the buyer live in the property before the closing of the escrow in exchange for the buyer paying the seller a daily prorated rent. When a buyer, seller, and broker all agree on the terms of a rental agreement in writing, there is less room for misunderstandings. Before the escrow closes, the buyer should not be allowed to move in without a written occupancy agreement; in most cases, the buyer should first waive any purchase contingencies. A homeowner’s insurance policy or an endorsement on the seller’s policy should be obtained by the buyer in this situation. There has been a lot of litigation over whether or not the premises are habitable in disputes between sellers and buyers who move in early.
The proportion of available space that is currently rented.
In order to prove that a property is safe and habitable, the appropriate governing body issues a permit.
The amount of rented space compared to the amount of space that can be rented.
The rent paid divided by the income that could be made if all the rooms were rented.
The operational expenditure ratio, which is calculated by dividing operating expenses by gross effective income.
Purchase of a property before it has been finished or, in some situations, before construction has begun.
A shopping complex made up of retail establishments that sell name-brand products often available in specialized shops and department stores for 20 percent to 70 percent less than the manufacturer’s suggested retail price.
The absence of an obvious flaw in the ownership of real estate as evidenced by public records. If a recorded document was forged, never delivered to the grantee, or signed by an incompetent party, it cannot effectively transfer title to property. Even if a forged deed is recorded, the owner of the property who signed it retains legal title and can enforce that title against a good-faith buyer for value. Off-the-record risks are not covered by a certificate of title. Off-record risks should be covered by title insurance for the buyer’s peace of mind.
Expenses incurred by the developer for the construction of sewers, streets, and other infrastructure, but not for the construction of the building itself or its on-site costs.
There are some property management tasks that can be done away from the property. Some of these tasks are keeping track of the rents collected and paying the bills.
The parking spaces are on private property, usually in an area set aside for that purpose. There are enough spaces for vehicles to move around and get in and out of the property.
Buy an apartment off the plan means agreeing to buy an apartment that hasn’t been built. You can look at the design and building plans, but there is no real property that you can see or check out there.
A promise by one party to act or do something in a certain way if the other party acts or does something in the same way. When you make an offer, you show that you want to sign a contract. This is different from a listing contract, which just asks for other offers. When you make someone an offer, you give them the power to say yes. A potential buyer’s offer to buy the seller’s property is sent to the seller through the sales contract (also called a proposition).
Every offer should include a date. This is especially important if a deal doesn’t have a clear end date. Most of the time, the courts say that an offer should be open for a reasonable amount of time, unless it is withdrawn. This needs proof that an offer was made at a certain time and date.
If the parties think that the acceptance will be sent electronically, it’s best to include a clause that says the acceptance will be considered to have happened when the message is sent.
In order for a contract to be enforceable, both parties must agree to the terms of it. An offer is a declaration of one’s desire to reach a deal. Real estate contracts require that the offer be communicated to the prospective buyer and must be a clear and specific one, with all terms written down. The person to whom the offer is communicated gains the ability to accept it. A legally binding contract is formed when the offeree accepts and is made aware of all of the terms of the offer. Offerors have the option of rescinding their offers at any time before the offeree has accepted them, but unless the offer is an option, a revocation usually does not take effect until it has been accepted. The offeree loses the ability to accept the contract as soon as the revocation takes effect. If the offeree or the offeror fail to respond within a reasonable amount of time, or if the offeree or the offeror die or become insane, the offer is void.
There should be no wiggle room in accepting an offer. As long as the acceptance is unqualified, it constitutes a counteroffer, and a contract can only be formed when the original offeror accepts this counteroffer. A written acceptance signed by the party to be bound is required in all real estate transactions. Adding the date of acceptance is also a good idea. If you’re doing business, it’s almost universally assumed that a written offer must also be accepted in writing.
The sales contract is where most offers to buy real estate are made. An earnest money deposit is not required by law, but this is the most common practice. To ensure that the offeree has enough time to consider the offer before making a decision, the offeror gives the offeree a deadline. Even if you accept the offer, you have the option of withdrawing it at any time during this time period. There is an exception to this rule, which is when the offeror’s agreement to keep the offer open is backed up by separate consideration like the exercise of an option. Acceptance after the deadline would constitute a counteroffer.
When an offeree accepts a written offer and mails it back to the offeror, the contract is formed. Since the acceptance has been mailed, the offeror has no way of retracting the offer before it has been received by the offeree. The rationale behind this is that the offeror has designated the mail as his agent, and the offeree is deemed to have effectively communicated his acceptance to the offeror when he delivers it to the agent (i.e., mails it).
Lessee and lessor sign a contract to lease commercial space on agreed-upon terms and conditions in this document. A formal lease agreement is signed by the lessor and the lessee at the time of the closing.
A buyer’s purchase offer, which becomes a legally binding document if accepted.
Most condominium and subdivision laws use a broad definition of “inducement” that includes any attempt to get someone to buy property or get an interest in property.
Under the various licensing laws, you need a valid real estate license to offer to sell, buy, rent, or buy options on real estate for other people in exchange for money.
Under federal and state securities laws, a “offer to sell” is any specific talk about an investment that can be bought. In non-registered securities transactions, the law may limit how many of these offers can be made or how they can be made.
A document designed to thoroughly reveal the nature of a security’s private offering.
One-page summation of the loan’s most important aspects. Analyzing why a mortgage loan was requested by a lending correspondent is made easier with this executive summary provided to the investor.
An offeror is the person who makes an offer to another person.
A building that is typically divided into individual offices, used primarily by businesses for their operations.
When it comes to valuing a business, an office building is no different than any other type of rental property. For an office building to be valued, there are many issues to consider. An appraiser must take into account the local economy when valuing a property. There are a number of specific factors to consider, such as population growth, monthly industrial payrolls, total bank clearances, building permits over a period of years, school enrollment, public utilities, transportation facilities, rentals of comparable properties, vacancy percentages, and the type of tenancies…
A listing that the seller refuses to submit to a multiple listing service; a listing that is held by one real estate office to the exclusion of other brokers. The seller, in essence, wants only the listing broker to show the property to interested parties.
Sometimes, the MLS will write to sellers inquiring about listing their property with them, outlining the benefits and asking them if they’d like to reconsider doing so. The listing broker must receive a copy of any such letter. While the listing broker is still required to work closely with other members in selling the property, he or she does not have to share any compensation for doing so. Following the rules of the REALTOR® Board of Directors as well as the NAR Code of Ethics, we’ve taken this action.
To enforce federal laws prohibiting discrimination against job applicants and employees on the basis of their race, colour, religion, national origin, gender (including pregnancy), age (40 years and older), disability or genetic information is the Equal Employment Opportunity Commission.
Agency in charge of overseeing cross-border land transactions. The agency was established in 1969 as a part of HUD in order to prevent public abuse, such as fraud and misrepresentation, in the promotion and sale of recreational property across state lines. It was established.
Financial institutions that are regulated by the Federal Deposit Insurance Corporation (FDIC).
Previously, a division of the Treasury Department that took over regulation of the thrift sector from the Federal Home Loan Bank Board. Because of a requirement in Section 312 of DODFrank, which took effect in July of this year, OTS was required to merge with OCC, FDIC, FedBoG, and CFPB in order to better protect consumers’ financial interests. The OTS has been abolished.
Reduces loan interest expenses by tying the loan to a deposit account. The transaction account balance ‘offsets’ the loan principle. The interest is then computed on the loan principal less the account balance. For example, if the loan amount is $180,000 and there is $5000 in the transaction account, interest is calculated solely on $175,000.
This is a written statement from a lienholder or property owner notifying the buyer of any outstanding liens that exist on the property.
An agreement between a landlord and a renter, outlining the rent and security deposit, as well as any other terms and conditions.
The exclusive right to extract oil and gas from beneath the surface of land. In the event of production, the payment of royalties, the initiation of drilling operations on or before a specified date, and the completion of a certain amount of development work within a specified time frame are all conditions that must be met in order for the lease to be valid. Typically, a written or implied easement is granted to enter the property in order to conduct drilling operations.
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Torrens Title’s forerunner. Old system title, which consists of a description of the property and its roots from the initial grant or purchase, is still found in some older suburbs.
A market structure defined by a small number of producers, into which new producers find it particularly difficult to enter.
An ombudsman in Australia helps people who have problems with their banks to get them taken care of by someone else.
The use of the Internet to buy, sell, and bid on real estate. This includes both distressed properties and voluntary sales.
A clause in a contract that specifies a deadline for completing a specific act, such as making a payment or completing a transaction. Prepayment of a promissory note may be permitted if the provision is written in such a way that there is no penalty. This means that the closing date should not be set for “on or before January 1, 2014” if, for example, a seller wants to close a transaction in 2013 for tax purposes.
properties that are available for purchase.
A hybrid of modular construction and non-removable steel frames. In general, these are not built in accordance with HUD Code (red label).
It’s an increase in the value of your home by building a house or other improvement within the boundaries of your property.
There are a number of property management tasks that must be completed on the property. Rental unit showings, repairs, and evictions are all examples of on-site management functions.
A commission arrangement between a real estate broker and a salesperson who is treated as an independent contractor in which the salesperson receives the full net commission on certain real estate sales if the salesperson meets specified sales quotas and/or pays the broker for specified administrative overhead costs. The state real estate commission closely examines such arrangements to ensure continued compliance with the licensing law requirement of adequate supervision of all salespeople by the managing broker.
When compared to other locations in a market area, this is the place where a retail store would generate the largest sales volume.
Accurately conveying one’s claim to a piece of property so that a reasonable person looking at it would recognize it as theirs. Adverse possession does not result in the loss of property unless the owner is aware of the occupant’s claim to the property. Open and notorious possession can only be established by the construction of buildings or the fencing and cultivation of land, not by the posting of a No Trespassing sign.
The standard real estate practice of making a listed property available to the public at predetermined times.
Existing housing that does not discriminate on the basis of gender or sexual orientation or physical or mental disability or any of the aforementioned factors. In order to ensure that housing is available to everyone who can afford it, both federal and state antidiscrimination laws are in place
A contract between a property seller and a broker in which the broker receives a commission if the property is sold. The broker receives no exclusive protection.
A listing that is made available to any number of brokers for the purpose of selling the owner’s property at the same time. In order to earn a commission, a broker must secure a buyer who is prepared to buy at the listed price and terms. Any brokers who were interested in the property before it was sold are not obligated to find out.
An open listing, in contrast to an exclusive listing, does not require a specific end date. After a predetermined amount of time, the ad is removed from the site. The agency can be terminated at any time by either party in good faith. However, it’s worth noting that some states require all listings to include expiration dates as a matter of policy.
Contractors and builders frequently use this type of ad. As long as nothing specifies otherwise, a listing is taken to be a unilateral contract.
A listing agreement in which the broker’s compensation is contingent on the broker finding a buyer before the owner or another broker sells the property.
At any time, a borrower may pay off their mortgage in full without incurring a penalty from their bank.
A mortgage that has reached the end of its term or is past due, putting it in risk of foreclosure at any time.
A piece of land that hasn’t been built on and is kept in its natural state or used for farming or recreation, like parks, squares, and the like.
Land in a subdivision that is set aside as a park. This is usually a requirement for a developer to get a building permit from the city or county. HUD gives money to communities to cover up to 50 percent of the cost of buying, developing, and keeping land for parks, recreation, conservation, science, and historic uses.
A tax law that uses a “current-use assessment” to encourage the protection of qualified lands. Some types of agricultural land, timberland, open space, or unused land are eligible for a lower assessment. This means that the assessed value goes down a lot, which means that taxes go down.
Once the land has been classified, it can’t be used for anything else. If it is used for something else without permission, it will be taken out of its classification and an extra tax will be added. This extra tax is the difference between what the land was taxed as open space and what it would have been taxed as if it hadn’t been classified.
Components for walls made in a factory. Local officials can inspect the insulation, wiring, and plumbing after the exterior sheathing has been installed at the factory. On-site drywall installation has begun.
A situation in which a promise to pay back the construction loan has not been made ahead of time.
A loan that can be increased. The borrower is given a cap on how much they can borrow, and each increase is backed by the same mortgage. The advances can be up to, but not more than, the original limit on how much you could borrow. This reduces the costs of closing on future loans under the same mortgage, as well as the costs of refinancing and appraising. Most of the time, the terms of an open-end mortgage are better than those of a home improvement loan, which has a much higher interest rate and must be paid back in a shorter amount of time. Note that the interest rate on new money borrowed through an open-ended mortgage may be the market rate at the time the money is given out. Before each small advance on an open-end mortgage, the lender should require a lien search or title update to make sure that no other recorded liens have taken priority over the mortgage. This type of loan is sometimes used by farmers to cover their seasonal operating costs, just like a line of credit. It is also called a mortgage for future advances.
A real estate fund that allows investors to demand that their money be redeemed or returned. New investors can frequently subscribe for new units for cash at these events.
A mortgage established to ensure the advance of additional cash beyond the amount originally disbursed.
A budget that is typically produced a year in advance and lists the estimated costs of building upkeep and repair.
Income, expenses, net operating income prior to debt service, and cash flow, all broken down by line item. Costs are divided into two categories: those that cannot be changed, like salaries, taxes, and insurance premiums, and those that can: things like emergency repairs, supplies, and equipment replacements.
A property manager for an investment property is typically responsible for developing an operating budget to give the owner an idea of the cash yield to expect from the property over a predetermined period of time. / (typically a year). For the manager, the budget serves as a guide and a measure of the property’s past performance. The manager of a property should be cautious when predicting future income. The owner’s long-term plans for the property should be reflected in the budget.
A clause in a commercial lease that says the tenant has to pay for any increases in one or more operating costs compared to a base year.
Operating expenditures as a proportion of effective gross income
Annual operating costs are calculated by dividing operating expenses by effective gross income.
Operations expenditures divided by potential revenue.
Total operating expenditures divided by effective gross income is known as the ratio of total operating expenses to effective gross income.
Cash outlays necessary to keep a property in good enough condition to generate effective gross income.
The expenses incurred in operating and maintaining an income-producing property.
The costs of owning and operating a property.
Those regular costs that are needed to keep a property running and in good shape. Operating costs are usually split into three groups: fixed costs, like real estate taxes and building insurance; variable costs, like utilities, payroll, administration, and property management fees; and replacement reserves. Things like mortgage payments, capital expenses, and depreciation are not part of operating costs.
A sublease is a contract between a lessee and a person who actually occupies and utilizes the property.
A financial strategy in which a little increase in gross income leads to a significant rise in net operating income.
The financial statement for an income property that shows the revenue and costs.
A term for how a person gets rights and (sometimes) duties just because the rules of the law are applied to a certain situation, even though the person didn’t do anything. For example, a buyer of land next to a stream that can’t be crossed has certain “riparian rights.” These rights are not given by contract. Instead, state law makes them belong to the buyer automatically.
Words used to signify a desire to transfer title to real estate.
An attorney’s written opinion on the tax and legal implications of particular aspects of syndication.
A professional’s assessment of a property’s record title status, such as that of a title attorney. A title opinion does not imply ownership. In examining the abstract of title, examiners only claim that they are competent in doing so and that they have done so with due care and diligence.
A certificate, generally signed by an attorney, stating that the title to the property being sold is legal.
The riskiest investments are those in non-traditional property types, such as speculative development, that seek high internal rates of return and have debt levels above 70% of the property value. They have property assets with low economic occupancy, significant tenant turnover, are located in secondary or tertiary markets, and have investment arrangements with little control. Opportunistic real estate investments include foreclosed assets, debt on distressed properties, and debt on development projects.
The return on an alternative investment of equal risk that the investor foregoes in order to invest in the asset under consideration. In other words, it is the return an investor could earn on his next best alternative of comparable risk.
Opportunity to earn income on funds committed to other assets is foregone.
Real Estate Glossary I [Part 3]