A mention of an older title report on a certain piece of real estate. Many title companies keep copies of older policies in their title plants. If there is a starter on a property, the title searcher doesn’t have to go back to the original source of title again. The person doing the search only needs to look through all relevant records from the date of the starter up to the date of the search for things that affect the title.
A person’s first home or any other investment in real estate.
A term used to describe the number of residential units started in a given time period.
An appraiser accredited or licensed in accordance with state certification requirements that are consistent with those defined by the Appraisal Qualification Board of the Appraisal Foundation and authorized by the federal Financial Institutions Examination Council. The certificate may be general or residential.
Before moving in, a renter signs a paper that identifies any prior damage to the flat.
If you plan on selling your subdivided land via interstate commerce, you’ll need to submit this document with your HUD registration application. Detailed information about the property, the site, and the developer is required in the lengthy statement of record, including the names and addresses of anyone with an interest in the property, a legal description of the property, general terms and conditions of contracts, prices, and descriptions of access to the property and public utilities, as well as any and all liens. Also needed are copies of the developer’s corporation or partnership documents and other instruments pertaining to the property. The developer is required to provide financial statements in addition to the statement of record (certified in certain cases).
A narrative description of the goods or services to be provided under the contract.
Using data from a sample to draw conclusions about a larger group.
Making predictions about the future based on a measured record of the past.
A state legislation that requires certain types of contracts, engagements, and/or transfers of real estate interest to be in writing in order to be enforceable in court.
A law made by Congress (federal law) or a state legislature (state law), as opposed to judicial or common law; statutory law, as opposed to case law.
All states have approved a provision stating that all deeds, long-term leases, and mortgages must be in writing in order to be legally binding. The term derives from the original Statute of Frauds, which was established in 1677.
For certain contracts to be legally binding, they must be in writing and signed by the person that will be held responsible for the agreement. The original English Statute for the Prevention of Frauds and Perjuries is the model for the majority of state fraud statutes ( 1677). In most cases, contracts for the sale of land or any interest therein (and some listings) must be in writing. For a period of one year or less, oral leases are generally enforceable. It is not necessary to have one formal contract; it is sufficient to have a memo-randum of the contract or numerous pieces of correspondence if the material terms agreed upon are specified. On the back of one broker’s business card, the commission terms were scrawled down and signed by the seller. An earlier oral contract may be confirmed by a written agreement (“this letter is to confirm our prior telephone understanding”).
Written agreements can be voided by subsequent oral agreements, according to the law. This is because the statute of frauds only applies to contracts that have been signed.
As long as the real estate contract is not in writing, the parties to it may have a legally binding agreement (i.e., one that contains all of the essential parts). Only the remedy is covered by the statute of frauds, not the contract itself. To put it another way, the statute of frauds does not apply to parties to a fully executed or completed oral agreement. If you are suing for the enforcement of an oral contract, the Act can only be used as an affirmative defense.
In order to protect against fraud, the statute of frauds is designed to prevent the enforcement of a contract that was never signed; it is not designed to prevent oral contracts from being fulfilled. The statute of frauds does not apply in all cases, primarily when asserting the statute of frauds as a defense against an oral contract would result in fraud, unjust enrichment, or unconscionable harm to the other party involved. Sometimes, the statute of frauds can be avoided if an oral agreement is partially fulfilled. For example, if the buyer, in reliance on a seller’s oral commitment to sell the property, pays part or all of the purchase price, takes into possession, and makes major renovations on the property, the contract will be “taken out” of the statute of frauds. Some courts do not allow the seller to invoke the statute of frauds as a defense against the buyer’s action to force the seller to execute the terms of the oral agreement to sell.
Contracts for the sale of personal property exceeding $500 must be in writing, according to the Uniform Commercial Code. Regardless of whether the fixture is worth $500 or less, it must be indicated in the contract that the seller intends to retain it.
Those rules governing when certain actions must be taken to court and how long they must last. An action must be brought (i.e., the complaint must be filed) within a predetermined time of the occurrence of the cause of action to protect the vigilant from stale claims. The claim is said to be “outlawed” and can no longer be enforced in court after the time period has passed. It is the belief of the statute of limitations that litigation must come to an end at some point in the future. People say that stale witnesses and stale records produce little truth and lead to unintentional justice, if any is achieved at all.
It is possible to make a partial payment and restart the time period before it has expired. Unless the payment is made subsequently, the debt will remain barred and unable to be paid back.
The amount of income that is not subject to the alternative minimum tax.
Unlike case law, which is made by a judge’s decision, statute law is made by the government.
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A legislative entitlement that gives a defaulting mortgagor a second chance to reclaim repossessed property. State legislation sets a time limit.
This is the privilege given to a defaulting mortgagor in foreclosure to reclaim the foreclosed property for a period of time following the foreclosure sale by paying the full amount of the defaulted debt plus the foreclosure legal expenses. This option isn’t available in every state. It can last anywhere from a few days to several years in states where it exists.
A place outside at a construction site or inside a building, usually near the loading doors, where materials, tools, equipment, or goods are gathered or put together before being moved to where they will be used or stored.
A lease with a fixed rent for the first part of the term and rent increases at set intervals or based on regular evaluations. Step-up leases are usually longer than fixed leases because their main goal is to protect against inflation. It takes into account increases in taxes, insurance premiums, and maintenance costs, as well as inflation ( often keyed to federal cost of living indexes). A step-down lease is a contract that says the rent will go down at certain times.
For federal estate tax purposes, the value of property transferred on the date of death, or at an alternate valuation date (six months after the date of death), or the fair market value if no federal estate tax return is filed, is equivalent to the new basis of property received from a deceased.
A change in the adjusted tax basis of property, which is allowed for certain transactions, is referred to as a change in the adjusted tax basis.
A house constructed without the use of prefabricated components. Also known as conventional construction.
Wood frame building is a method of construction.
A term for a builder who works on-site and builds with raw materials that are brought to the site. This is also known as “built from scratch.” Then, skilled craftspeople measure, cut, and put the parts together.
A set of moral rules made by the National Association of REALTORS Professional ®’s Standards Committee. Some parts of the REALTORS® Code of Ethics are expanded in these Standards of Practice. A charge that a REALTOR® is accused of breaking the Code of Ethics should say that the REALTOR® is accused of breaking one or more articles of the code. You can only bring up a Standard of Practice to prove that the article was broken.
A contract’s terms and conditions are spelled down in writing.
A lease condition that specifies a maximum amount of running expenditures that the tenant is responsible for.
Payments of interest are only made periodically over the duration of the note, and the principal payment is due in one big sum at maturity. Short-term non amortized notes are known as “straight notes,” and they can be renewed at the end of the period. Term mortgages, often known as straight-term mortgages, are used to secure a single note.
The Internal Revenue Service (IRS) allows for depreciation to be computed by dividing the depreciable base by the useful life as established by the Internal Revenue Code.
A technique of calculating depreciation or cost recovery allowances that claims the allowance in equal yearly increments.
A way to figure out the amount of depreciation is to divide the property’s adjusted basis by the number of years the property is expected to be useful for. This method is also called the age-life method. So, the cost of the property is taken out in equal amounts each year. For example, if the depreciable basis is $100,000 and the estimated useful life is 25 years, the annual depreciation deduction is $4,000 for each year of the asset’s useful life.
The title system used for units, flats, apartments, and some townhouses and villas, which limits title to each individual unit while putting ownership, administration, and upkeep of the block’s exterior and common property areas under the responsibility of the body corporate.
a title for a section of a property, such as a flat, unit, or office, that has multiple owners.
Units that are part of the owner’s company are called “units.”
A person who buys property on behalf of another person who prefers to remain anonymous.
A person who buys property on behalf of another in order to conceal the identity of the true buyer; a dummy purchaser; a nominee; a front.
Previously, an owner who wanted to change a title from severalty to joint tenancy had to convey the property to a straw man, who would then convey it back to the owner and joint tenant. Many states no longer require joint tenancy to be created simultaneously by the same instrument. Thus, without using a straw man, an owner can convey to himself and another party as joint tenants, or convey to herself and a spouse as tenants by the entirety.
When several parcels of land are being assembled for development, confidentiality is important, which is why nominees and straw men are useful. However, a federal court has ruled that if the nominee misrepresents the identity of the principal, knowing that the seller would not have negotiated if the true facts were known, the seller has the right to cancel the transaction. Furthermore, if the nominee or straw man has any managerial control over the property, he may be considered the true owner for tax purposes.
If a broker or salesperson attempts to use a straw man to purchase property listed by the broker or salesperson, this relationship with the buyer must be explicitly disclosed to the seller in writing. Failure to do so may result in the suspension or revocation of your license.
In a condominium presale, a developer must typically achieve a certain percentage of purchases before a lender commits to lending money; straw men are occasionally used to meet this minimum requirement, though this practice is clearly against the lender’s policy and would be illegal in connection with VA and FHA loans.
A stream’s relative position, or rank, in a drainage network. Streams with no tributaries, generally minor ones, are considered first-order; streams with two or more first-order tributaries are considered second-order; and so on.
A road that goes all the way through and serves local or minor collector traffic.
Foreclosure is performed by transferring the title of a defaulting mortgagor straight to the mortgagee.
One of a staircase’s sloping enclosed sides that supports the treads and risers.
A horizontal beam connecting the uprights of a frame.
A straight line of stores in a retail shopping complex, generally narrow in proportion to its length.
Any modification to the supporting parts of a building, such as bearing walls or partitions; columns, beams, or girders; or any structural modification to the roof, but typically excluding extension or enlargement.
Damage to the load-bearing portion of a house that prevents it from being used as a residence because of the effect it has on the home’s load-bearing function. In addition to earthquake and flood-related damage, shifting soil can also result in property loss.
The relationship between the total area of a building’s ground floor and the total area of its land. About one-third of the space in a general-purpose industrial building is taken up by people.
An engineer who specializes in the design of buildings and other structures that are functional while also meeting sturdiness and safety criteria.
Any site enhancements that have been built.
One that has been put in place and improved upon. “anything that is more than 18 inches from the ground and cannot be lifted by a person without mechanical aid,” or “any production or piece of work, artificially built up, or formed of parts and put together in any prescribed manner,” are examples of local building codes. A building permit is required before any construction can begin.
A poorly written limitation prohibiting the construction of any structure without developer approval raises an intriguing question, such as whether a swimming pool, fence, or tennis court constitutes a structure.
A wall covering made of cement or plaster that is applied wet and dries to a hard surface. Several lawsuits have been filed because of property damage caused by certain synthetic materials.
A vertical piece of wood that goes between the horizontal bottom plate and the vertical top plate.
When building a wall, these are the vertical pieces that the horizontal pieces are attached to. Studs are spaced 16 to 24 inches apart and hold up the roof and/or second floor.
Contract for deed between the original seller and the new buyer of an agreement of sale. With such a deal, there is no legal connection between the new owner and the purchaser (subvendee) (original vendor).
It is a transfer to the new buyer of the previous vendor’s rights, title or interest in that arrangement, which is called an assignment. Although the original vendor and the new buyer are bound by the terms of the original agreement of sale, a sub-agreement is a totally new contract. It is important that the sub agreement of sale does not include clauses that are detrimental to the original vendor; otherwise, the original vendor may withhold their assent and prolong the transaction.
It is recommended by many attorneys that all parties sign a new contract outlining their rights and responsibilities, as well as a collection account to manage all the payments, in order to avoid potential issues.
A broker’s agency position is extended to one or more other brokers, who also become fiduciaries for the principal and are authorized to act on his or her behalf. Any commission earned by the subagent is split with the original broker. In the case of multiple-list services, this agency chain may extend through numerous agents.
One assigned by an agent to execute some function related to the agency, in whole or in part.
A person who acts as an agent for a person who already has an agent. The original agent can give power to a subagent if doing so is either explicitly allowed or common in the trade. For example, it is common for listing brokers to give subagents tasks that are more like errands, like showing the property and looking for buyers.
Many multiple listing services were built on the idea that a listing is an offer of subagency to members and that members who work on such listings do so as subagents of the listing broker. In 1993, they made an offer to work together and pay them.
When it’s clear that the principal gave the agent permission to hire subagents, the subagent and the principal have the same relationship as the principal and the agent. A lawfully appointed subagent works for the principal in the same way as the prime agent. Some courts say that the main agent is not responsible for what the sub-agent does to third parties.
The ownership structure of a corporation is determined by a federal tax election made with the unanimous approval of the shareholders. An S corporation provides the same limited liability protection for its stockholders as a C corporation, but it is not treated as a separate taxable entity by the Internal Revenue Service.
A corporation having a small number of investors that chooses to be taxed differently than a conventional corporation. Individual stockholders can profit from the tax advantages. Limited liability for corporations is still available.
A person who works on a contract basis for someone who has a larger contract to do the job. For example, electrical work on a new house may be done on a subcontract for the contractor who is in charge of the entire construction of the house.
Companies or individuals who specialize in specific construction operations such as the installation of heating, ventilation, and air-conditioning systems, elevator systems, painting, carpet installation, and a variety of other building components are classified as specialty contractors.
A builder or contractor who makes a deal with a developer or the prime contractor to do a specific part of the construction work, like wiring, plumbing, or installing air conditioning. The subcontractor does not work directly with the owner. However, if the main contractor does not pay the subcontractor, the subcontractor can file a mechanic’s lien against the property within a certain amount of time after a notice of completion is posted.
Someone who works as a general or specialty contractor for another general contractor.
A person who buys undeveloped land wholesale, divides it into smaller chunks, and sells it retail.
The owner of land that has been divided into two or more lots and is for sale. Under the Uniform Land Sales Practices Act, a subdivider can also be a dormant owner’s main agent. When a subdivider makes improvements to the property in the future, they become a developer.
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A lot, tract, or parcel of property divided into two or more lots, tracts, or parcels for sale or development.
A plot of property subdivided into smaller title lots, typically for residential construction
the subdivision of a piece of land into construction lots; this obviously necessitates multiple governmental permissions.
A parcel of land is subdivided into building lots. Streets, parks, schools, utilities, and other public infrastructure may also be included.
Land that is split or is planned to be split into two or more lots, parcels, units, or interests so that it can be sold. Subdivision is usually used to describe any land, whether it’s connected or not, where two or more lots, parcels, units, or interests are sold as part of the same marketing and sales plan. So, the law would apply to the sale of a half’s undivided share of a big piece of land.
A person who wants to build a subdivision must first follow the subdivision rules of the county or city where the property is. After getting approval from the local government and putting up any required completion bonds for improvements, the subdivider usually has to register the subdivision with the right state agency before he or she can start selling. Under the federal Interstate Land Sales Full Disclosure Act, the person who is dividing the land may also have to register the subdivision.
A parcel of property that has been surveyed and subdivided into smaller lots for selling or development.
Regulations implemented by several levels of government to regulate or restrict subdivision operations.
Laws that require subdivision registration protect potential buyers from the tricks and abuses that used to be common when more unimproved lots were sold without any rules. There are usually a lot of ways to avoid having to register, like if the consumer is protected enough by other rules (like condo laws or local building codes) or if there are only a few buyers or lots.
If there are fewer than 100 lots in the subdivision and the U.S. mail or another form of interstate commerce is used to sell the lots, the subdivider may have to register the subdivision with the federal Department of Housing and Urban Development (HUD). The subdivision doesn’t have to follow HUD rules if each lot is at least 20 acres in size, including any easements.
To register a subdivision, the sub-divider must send a form application to the right state regulatory agency. The application must include a legal description of the property, the names, occupations, and interests of the applicant’s officers and directors, a current title policy, copies of all proposed documents the prospective buyer is to sign, a statement of zoning, advertising materials, the proposed public offering statement, and a current financial statement.
If the registration is accepted, the subdivider can sell the lots using a public offering statement. This statement is meant to tell a potential buyer all the important and relevant facts about the subdivision in a full and accurate way. As with any disclosure tool, there is a constant back and forth between the subdivider, who sees the public offering statement as a marketing tool, and the attorney who prepares it, who sees it as insurance against future lawsuits for failing to disclose accurate material facts. If the subdivider does not use the current public offering statement, the regulatory agency can issue a cease-and-desist order to stop all sales and revoke the registration. Most of the time, it is illegal to sell or offer an interest in nonexempt, subdivided land without first registering the subdivision, giving the potential buyer a current public offering statement, and giving them a chance to look at it and sign a formal receipt.
Most of the time, a buyer who gets hurt can get back what he or she paid, plus interest from the date of payment, property taxes paid, costs, and reasonable attorney fees, minus any income received. Under these laws, the scope of liability is very wide and usually includes not only the subdivider but also all officers, employees, real estate salespeople, and brokers. All of these people are jointly and severally liable unless they can prove that they did not know about the facts that are said to be the reason for the liability.
As a foundation for the finished flooring, boards or plywood sheets are fastened directly to the joists. Although some houses have concrete subflooring, it is more common to find rough planks.
The support that the earth’s surface gets from the layers below it.
The persons who have the requisite (technical) skills for the project.
The item for which a fair market value appraisal has been prepared.
The location and/or building that is being studied or appraised.
A reference to the subject matter of the discussion or the subject matter of the appraisal.
When a buyer purchases a home that already has a mortgage loan and begins making the required payments without taking personal responsibility for the loan.
To purchase a home with an existing mortgage while avoiding personal liability for the loan.
The provision in a contract for sale that specifies any contingencies or special conditions of purchase and sale, such as an offer made and accepted contingent upon obtaining financing, receiving approval for leases, and securing particular zoning criteria. The seller may sell the property subject to existing leases, specific liens, particular restrictions, or other restrictions. If exceptions are not specified in the “subject to” clause, any encumbrance renders the title unmarketable, and the seller may be required to clear the encumbrance.
When a grantee acquires a piece of property “subject to” a mortgage, the mortgagee is not obligated to collect from the grantee. It is possible to lose property and equity if the grantor/mortgagor fails to pay the note, but this is a rare event.
For example, if Dudley had a $50,000 mortgage on a farm valued at $75,000, he could sell it to Eugene for $75,000, subject to the loan. The monthly mortgage payments would be covered by Eugene’s earnings. If Eugene defaults, the bank cannot sue him for any unpaid mortgage debt; he would only be evicted from the property.
Fortunately, most mortgages include acceleration provisions that allow the mortgagee to choose between declaring the debt due upon sale, allowing for assumption (usually at a fee), or permitting the borrower to sell the property while still owing on the loan. The term “alienation” or “subject to clause” are both used to describe this particular acceleration clause. Obtaining an estoppel or reduction certificate from the lender is the best way to ensure that the loan has not been defaulted on, that all payments and interest have been made, and that the interest rates are consistent with the seller’s claims.
As is customary in a contract for deed or a wraparound mortgage, the sale is also “subject to” the existing mortgage obligations.
Because they plan to resell the property in the near future and don’t want to be associated with too many mortgages, real estate agents will sometimes purchase real estate subject to existing mortgages. To ensure that the sellers are aware of all the possible consequences of selling a property with a mortgage, brokers must be especially vigilant.
An opinion or prediction as to the likelihood of each conceivable outcome of an unknown event for a collection of possible outcomes of an uncertain event.
The worth of an asset to its current owner or a prospective buyer. This is analogous to the economic concept of value in use.
The amount of money a certain person would be willing to pay to own a property. This is also called “personal value.” Compare subjective value with objective value, which is what a reasonable person would pay for the same thing.
A lease in which the original tenant (lessee) retains a leasehold interest while subletting all or a portion of the property to another tenant (subtenant). Because the original lessee is caught in the middle of the lessor and the subtenant, this type of lease is often referred to as a “sandwich lease.”
Occurs when the original tenant (lessee) transfers a portion of his or her rights under the lease to another tenant while the original tenant (lessee) remains responsible to make payments.
A property that has already been leased is leased again, but only for the remainder of the original lease term.
A lease granted by a tenant to another for a portion of the leased premises or for a specific period of time.
A lease that a lessee gives for a portion of the leasehold interest while keeping some reversionary interest for himself. As long as the lessor still has some interest in the property, the sublease can be for all or part of the property, for the whole term or for part of it. Most leases have a clause that says you can’t sublet without the landlord’s permission. The rent is usually paid by the sublessee to the lessee and then from the lessee to the lessor. The lessee is still responsible to the lessor for the rent. The sublessee does not have to pay rent to the original lessor because of a contract.
But if the lessee gives away all of her rights to the lease, this is called a “assignment of lease.” In an assignment, the person who gets the property is in privity of estate with the person who gave it to them. This means that they are both responsible for the terms of the original lease that run with the land.
Real Estate Glossary S [Part 6]