A

Absorption field

A system of narrow trenches through which the discharge from a septic tank infiltrates into the surrounding soil.

Abstract of title

A history of a title and the current status of a title based on a title examination. Abutting land Parcels of land next to each other that share a common border.

Acceleration clause

A provision in a mortgage or deed of trust that permits the lender to declare the entire principal balance of the debt immediately due and payable if the borrower is in default.

Acceptance

Voluntary expression by the person receiving the offer to be bound by the exact terms of the offer; must be unequivocal and unconditional.

Access

The right to go onto and leave a property.

Accession

For example, an in-law apartment in a residential home.

Accessory apartment

For example, an in-law apartment in a residential home.

Accessory uses

Uses that are incidental or subordinate to the main use of a building such as a laundromat.

Accord and satisfaction

A new agreement by contracting parties that is satisfied by full performance, thereby terminating the prior contract as well.

Accretion

The gradual building up of land in a water course over time by deposits of silt, sand, and gravel.

Accrued expenses

Expenses seller owes on the day of closing but for which the buyer will take responsibil­ity (such as property taxes).

Acknowledgment

A formal statement before an authorized official (e.g., notary public) by a person who executed a deed, contract, or other document, that it was a free act.

Acquisition

The act of acquiring a property.

Acquisition cost

The basis used by the FHA to calcu­late the loan amount.

Acre

Land area containing 43,560 square feet.

Act of waste

A violation of the right of estovers.

Action to quiet title

A lawsuit to clear a title to real property.

Actual age

Chronological age.

Actual eviction

The removal of a tenant by the land­lord because the tenant breached a condition of a lease or other rental contract.

Actual notice

The knowledge a person has of a fact.

Adjoining lands

Lands sharing a common boundary line.

Adjustable rate mortgage (ARM)

One in which the interest rate changes according to changes in a predeter­mined index.

Adjusted sales price

The amount realized minus fix­ up expenses.

Administrative law judge (AlJ)

A judge who hears complaints and makes decisions regarding statutory vio­lations of law.

Administrator

A man appointed by a court to admin­ister the estate of a person who has died intestate.

Administrator’s deed

One executed by an adminis­trator to convey title to estate property.

Administratrix

A woman appointed by a court to administer the estate of a person who has died intestate.

Ad valorem

Latin meaning “according to value”; real property is taxed on an ad valorem basis.

Adverse possession

Latin meaning “according to value”; real property is taxed on an ad valorem basis A method of acquiring title to real property by conforming to statutory requirement; a form of involuntary alienation of title.

Affirmative action

Policy expressed in some form of legislative act with respect to the handling of certain public or private acts or conduct.

Affirmative easement

A legal requirement that a servient owner permit a right of use in the servient land by the dominant owner.

Agency

The fiduciary relationship between a principal and an agent.

Agency disclosure form

See disclosure regarding agency relationships form.

Agent

A person authorized to act on behalf of another person.

Agreement

A contract requiring mutual assent between two or more parties.

Agricultural districts

Created and protected by New York statute; these areas are used for animal grazing and crop production.

Air rights

Right above the surface of land.

Alienage

The citizenship or immigration status of any person who is not a citizen or national of the U.S.

Alienation

Transfer of title to real property.

Alienation clause

A statement in a mortgage or deed of trust entitling the lender to declare the entire principal balance of the debt immediately due and payable if the borrower sells the property during the mortgage term. Also known as due-on-sale clause.

Allodial system

The type of land ownership existing in the United States whereby individuals may hold title to real property absolutely.

Alluvion

Increased soil, gravel, or sand on a stream bank resulting from flow or current of the water.

Americans with Disabilities Act

A federal law pro­tecting the rights of individuals with physical or mental impairments.

Amortization

Applying periodic payments first to­ ward the interest and then toward the principal to eventually pay off a debt.

Amortization schedule

Designation of periodic pay­ments of principal and interest over a specific term to satisfy a mortgage loan.

Amortized mortgage

One in which uniform installment payments include payment of both principal and interest.

Amperage

The amount of current or electricity flowing through the wire.

Annexation

Addition of an area into a city.

Annual percentage rate (APR)

The actual effective rate of interest charged on a loan expressed on a yearly basis; not the same as simple interest rate.

Anticipation

The principle that property value is based on expectations or hopes of the future benefits of ownership.

Antitrust violations

Any business activity where there is a monopoly, a contract, a conspiracy, or a com­bination that negatively impacts an individual’s or a company’s ability to do business.

Apartment information vendor

A licensed individ­ual who is paid to provide information concerning the location and availability of residential real property.

Apartment sharing agent

A licensed individual who is paid to arrange and coordinate meetings between cur­rent owners of real property who wish to share their housing with others.

Apportionment

The division of expenses between buyer and seller.

Appraisal

An estimate of value of particular property, at a particular time for a specified purpose.

Appraisal report

Documentation containing an esti­mate of property value and the data on which the estimate is based.

Appraiser

One who estimates the value of real property.

Appreciation

An increase in property value.

Appurtenances

All rights or privileges that result from ownership of a specific property and move with the title.

Appurtenant easement

Area variance

Permission to use land in a manner that is not normally allowed by the dimensional or physical requirements of a zoning ordinance.

Arrears

Delinquency in meeting an obligation; or, paid at the end of a period (e.g., at the end of the month) for the previous period. Payments in arrears include interest for using the money during the previous period.

Article 9-A

A section of the New York Real Property Law addressing the purchase or lease of vacant subdi­vided lands sold through an installment contract within or without New York.

Article 12-A

The section of the New York Real Property Law pertaining to real estate salespersons and brokers.

Article 78 proceeding

An appeal brought forth because of a ruling by a government agency.

Asbestos

A fibrous mineral found in many building materials and when improperly disturbed can cause seri­ous lung illnesses.

“as is”

Words in a contract of sale indicating that a property is sold without warranty as to condition.

Assessed value

The dollar amount of worth to which a local tax rate is applied to calculate the amount of real property tax.

Assessment

A levy against property.

Assessor

An official of local government who has the responsibility for establishing the value of property for tax purposes.

Assignee

One to whom contractual rights are trans­ferred.

Assignment of lease

Transfer by a lessee of the entire remaining term of a lease without any reversion of interest to the lessee.

Assignor

The person transferring contractual rights to another.

Associate real estate broker

A licensed real estate broker who chooses to work under the name and super­vision of another licensed broker.

Assumable mortgage

One that does not contain an alienation clause and can be transferred from one party to another.

Attorney-in-fact

A person appointed to perform legal acts for another under a power of attorney.

Auction

A form of property sale in which people bid against one another.

Availability

An economic characteristic of land de­ noting that land is a commodity with a fixed supply base.

Avulsion

Sudden loss or gain of land as a result of water or shift in a bed of a river that has been used as a boundary.

B

Balloon framing

Method of construction that uses a single system of wall studs that run from the foundation through the first and second floors to the ceiling support.

Balloon mortgage

One in which the scheduled pay­ment will not amortize the loan over the mortgage term; therefore, to fully satisfy the debt, it requires a final pay­ment called a balloon payment, larger than the uniform payments.

Bargain and sale deed

A form of deed with or with­out covenants of title.

Base rent

The fixed or minimum rent portion in a percentage lease.

Bearing walls

Walls that support the ceiling and/or roof.

Beneficial title

Equitable title to real property retained by a mortgagor or trustor conveying legal title to secure a mortgage debt.

Beneficiary

(a) Recipient of a gift of personal property by will.
(b) Lender in a deed of trust.

Bequest

A gift of personal property by will.

Bilateral contract

An agreement based on mutual promises that provide the consideration.

Bill of sale

An instrument transferring ownership of personal property.

Binder

A written document for the purchase and sale of real property that does not generally contain all of the essential elements of a valid contract.

Blanket mortgage

One in which two or more parcels of real property are pledged to secure payment of the note.

Blind a

An ad for real property placed by a real estate broker that does not indicate that the advertiser is a broker and does not include the name of the broker and telephone number.

Blockbusting

For profit, to induce or attempt to induce any person to sell or rent any dwelling by repre­sentations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, religion, sex, or national origin.

Blueprint

A building plan that is a detailed architec­tural rendering of the structure.

Board of directors

Governing and decision-making board of a cooperative.

Bona fide

In good faith.

Book value

Dollar worth as it appears on the owner’s books, usually for tax purposes; also known as historic value.

Breach of contract

Failure, without legal excuse, to perform any promise that forms the whole or part of a contract.

Bridge loan

A loan for a short duration of time.

Brokerage

The business of bringing buyers and sell­ers together and assisting in negotiations for the terms of sale of real estate.

Broker’s agent

One who is hired through a broker to work for the principal.

BTU

Abbreviation for British thermal unit. The amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

Building codes

Public controls regulating construction.

Building envelope

The materials of a building that enclose the interior.

Building permit

Permission from the appropriate local government authority to construct or renovate any type of property.

Building specifications

Written narratives that explain the building plan.

Bundle of rights

The rights of an owner of a freehold estate to possession, enjoyment, control, and disposition of real property.

Buydown

The voluntary paying of discount points by a borrower to reduce mortgage interest rate at the time the loan is made.

Buyer agent

A real estate agent who works in the best interests of a buyer.

Buyer brokerage

An agency relationship between a buyer and a broker.

C

Capital gain

The profit realized from the sale of a real estate investment.

Capital improvement

An item that adds value to the property, adapts the property to new uses, or prolongs the life of property. Maintenance is not a capital improvement.

Capitalization rate

The percentage of the investment will receive back each year from the net income m the property.

Cash flow

Income produced by an investment prop­erty after deducting operating expenses and debt service.

Caveat

A warning or caution that may be addended to a contract of sale such as a disclosure that a property lies in an Agricultural District.

Caveat emptor

Latin, meaning let the buyer beware. This theory no longer applies to real estate transactions in New York.

Cease and desist list

A list of homeowners com­ piled by DOS in a cease and desist zone who do not wish to be solicited by real estate agents.

Cease and desist zone

A designation given by DOS to a certain geographic area that has been subject to intense and repeated solicitation by real estate agents. See cease and desist list.

Census tract

Small geographical areas established through cooperation between the local community and the Bureau of Census.

Certificate of occupancy

A document issued by a local government agency, after a satisfactory inspection of a structure, authorizing that the structure can be occupied.

Certificate of title opinion

A report, based on a title examination, setting forth the examiner’s opinion of the quality of a title to real property.

Cession deed

A deed used to relinquish real property to a municipality for a road or something of that nature.

Chain

In land measurement, a distance of 66 feet.

Chain of title

Successive conveyances of title to a spe­cific parcel of land.

Change

The principle stating that change is continu­ally affecting land use and therefore continually altering value.

Chattel

Personal property.

Chlordane

Chemical insecticide and termiticide that was banned in the early 1980s.

Chlorofluorocarbons (CFCs)

Man made chemical substances that were used in hundreds of applications including refrigerators and air conditioners.

Chronological age

Actual age of an item.

Circuit breaker

Devices that switch off the electrical power for a given circuit if the current is above the capacity of the system.

Civil action

A lawsuit between private parties.

Civil Rights Act of 1866

A federal law that prohibits all discrimination on the basis of race.

Civil Rights Act of 1964

Law that prohibited discrim­ination in any housing program receiving federal money.

Civil Rights Act of 1968

See Fair Housing Act of 1988.

Clayton Antitrust Act

Federal legislation including the imposition of civil and punitive damages for antitrust activities.

Client

The principal of the agent.

Closed mortgage

One that imposes a prepayment penalty.

Closing costs

Expenses incurred in the purchase and sale of real property paid at the time of settlement or closing.

Closing statement

An accounting of the funds received and disbursed in a real estate transaction.

Cloud on a title

A claim against a title to real property.

Cluster zoning

A form of zoning providing for sev­eral different types of land use within a zoned area.

Coastal Zone Management Program

A program coordinated by DOS to preserve and protect New York’s coastline.

Code of Ethics

A standard of conduct required by license laws and by the National Association of REALTORS®.

Codicil

A supplement or an appendix to a will either adding or changing a bequest.

Coinsurance clause

A requirement of hazard insur­ance policies that property be insured for a certain percent of value to obtain the full amount of loss.

Collateral

Property pledged as security for payment of a debt.

Color of title

The deceptive appearance of claim to a title.

Commercial property

Property producing rental income or used in business.

Commercial zones

Uses that allow retail stores, restaurants, hotels, and service businesses.

Commingling

Mixing money or property of others with personal or business funds or other property.

Commission

A fee paid for the performance of ser­vices, such as a broker commission.

Commissioner’s deed

A form of judicial deed exe­cuted by a commissioner.

Commitment

A promise, such as that by a lending institution to make a certain mortgage loan.

Common areas

Property to which co-owners hold title as a result of ownership of a condominium unit.

Common elements

See common areas.

Common law

Law by judicial precedent or tradition as contrasted with a written statute.

Common law dedication

An act by an owner allow­ing the public use of the property.

Community-based planning

A form of land use con­trol originating in the grassroots of a community.

Community planning

A master plan for the orderly growth of a city or county to result in the greatest social and economic benefits to the people.

Community property

A form of co-ownership lim­ited to husband and wife; does not exist in New York.

Comparative market analysis

An analysis’ of the competition in the marketplace that a property will face upon sale attempts.

Compensatory damages

The amount of money actually lost, which will be awarded by a court in case of a breached contract.

Competent parties

Persons and organizations legally qualified to manage their own affairs, including entering into contracts.

Competition

The principle stating that when the net profit a property generates is excessive, very strong competition will result.

Complete performance

Execution of a contract by virtue of all parties having fully performed all terms.

Condemnation

Exercise of the power of eminent domain; taking private property for public use.

Condemnation value

Market value of condemned property.

Condition

Any fact or event which, if it occurs or fails to occur, automatically creates or extinguishes a legal obligation.

Condominium

A form of ownership of real property, recognized in all states, consisting of individual owner­ship of some aspects and co-ownership in other aspects of the property.

Condominium declaration

The document that, when recorded, creates a condominium; also called a master deed.

Conforming loans

Those processed on uniform loan forms and according to FNMA/FHLMC guidelines.

Conformity

Homogeneous uses of land within a given area, which results in maximizing land value.

Consent decree

A compromise in civil lawsuits where the accused party agrees to stop the alleged illegal activity without admitting guilt or wrongdoing (called nolo contendere in criminal cases).

Consideration

Anything of value, as recognized by law, offered as an inducement to contract.

Construction loan

A short-term loan, secured by a mortgage, to obtain funds to construct an improvement on land.

Construction mortgage

A temporary mortgage used to borrow money to construct an improvement on land.

Constructive eviction

Results from some action or inaction by the landlord that renders the premises unsuit­able for the use agreed to in a lease or other rental contract.

Constructive notice

One in which all affected parties are bound by the knowledge of a fact even though they have not been actually notified of such fact.

Consumer price index (CPI)

An index of the change in prices of various commodities and services, providing a measure of the rate of inflation.

Contingency

A condition in a contract relieving a party of liability if a specified event occurs or fails to occur.

Contract

An agreement between competent parties upon legal consideration to do, or abstain from doing, some legal act.

Contract buyer’s policy

Title insurance that protects contract buyer against defects in contract seller’s title.

Contract for deed

A contract of sale and a financing instrument wherein the seller agrees to convey title when the buyer completes the purchase price installment pay­ments; also called installment land contract and installment plan.

Contract rent

The amount of rent agreed to in a lease.

Conventional life estate

One created by intentional act of the parties.

Conventional mortgage loan

One in which the fed­eral government does not insure or guarantee payment to the lender.

Conversion

Change in a form of ownership, such as changing rental apartments to condominium ownership.

Convey

To pass to another (as in title).

Conveyance

Transfer of title to real property.

Cooling-off period

A three-day right of rescission for certain loan transactions.

Cooperating broker or agent

One who participates in the sale of a property.

Cooperative

A form of ownership in which stock­holders in a corporation occupy property owned by the corporation under a lease.

Co-ownership

Title to real property held by two or more persons at the same time; also called concurrent ownership.

Corporation

A form of organization existing as an entity.

Corporation franchise tax

A tax calculated on the net profit of the corporation.

Cost

The total dollar expenditure for labor, materials, and other items related to construction.

Cost approach

Appraisal method for estimating the value of properties that have few, if any, comparables and are not income-producing.

Counteroffer

A new offer made by an offeror reject­ing an offer.

Covenant

A promise in writing.

Covenant against encumbrances

A promise in a deed that the title causes no encumbrances except those set forth in the deed.

Covenant for further assurances

A promise in a deed that the grantor will execute further assurances that may be reasonable or necessary to perfect the title in the grantee.

Covenant of quiet enjoyment

A promise in a deed (or lease) that the grantee (or lessee) will not be dis­turbed in the use of the property because of a defect in the grantor’s (or lessor’s) title.

Covenant of right to convey

A promise in a deed that the grantor has the legal capacity to convey the title.

Covenant of seisin

A promise in a deed ensuring the grantee that the grantor has the title being conveyed.

Covenant of warranty

A promise in a deed that the grantor will guarantee and defend the title against lawful claimants.

Credit

In a closing statement, money to be received or credit given for money or an obligation given.

Creditor

One to whom a debt is owed.

Cubic-foot method

A means of estimating repro­duction or replacement cost, using the volume of the structure.

Cul-de-sac

A dead-end street with a circular turn­ around at the dead end.

Cumulative-use zoning

A type of zoning permitting a higher-priority use even though it is different from the type of use designated for the area.

Courtesy

A husband’s interest in the real property of his wife.

Customer

The party the agent brings to the principal as seller or buyer of the property.

D

Damages

The amount of financial loss incurred as a result of another’s action.

Debit

In a closing statement, an expense or money received against a credit.

Debt service

Principal and interest payments on a debt.

Decedent

A dead person.

Declaration

Master deed containing legal description of the condominium facility, a plat of the property, plans and specifications for the building and units, a descrip­tion of the common areas, and the degree of ownership in the common areas available to each owner.

Declaration of restrictions

The instrument used to record restrictive covenants on the public record.

Decree

A court order.

Dedication

An appropriation of land or an easement therein by the owner to the public.

Dedication by deed

The deeding of a parcel of land to a municipality.

Deductible expenses

Costs of operating property held for use in busi11ess or as an investment. These expenses are subtracted from gross income to arrive at net income.

Deed

A written instrument transferring an interest in real property when delivered to the grantee.

Deed in lieu of foreclosure

Conveyance of title to the mortgagee by a mortgagor in default to avoid a record of foreclosure. Also called friendly foreclosure.

Deed restriction

Limitation on land use appearing in deeds.

Default

Failure to perform an obligation.

Defeasance clause

A statement in a mortgage or deed of trust giving the borrower the right to redeem the title and have the mortgage lien released at any time prior to default by paying the debt in full.

Defeasible

Subject to being defeated by the occur­rence of a certain event.

Defeasible fee

A title subject to being lost if certain conditions occur.

Deficiency judgment

A court judgment obtained by a mortgagee for the amount of money a foreclosure sale proceeds were deficient in fully satisfying the mortgage debt.

Delivery and acceptance

The transfer of a title by deed requiring the grantor to deliver and the grantee to accept a given deed.

Demise

To convey an estate for years; synonymous with lease or let.

Demography

The study of the social and economic statistics of a community.

Density

Number of persons or structures per acre.

Department of Housing and Urban Development (HUD)

ee U.S. Department of Housing and Urban Development.

Depreciation

(a) Loss in value from any cause. (b) Deductible allowance from net income of property when arriving at taxable income.

Descent

The distribution of property to legally quali­fied heirs of one who has died intestate.

Description by reference

A valid legal description that may be found on a deed that references a plat of subdivision or other legal document.

Devise

A gift of real property by will.

Devisee

The recipient of a gift of real property by will.

Direct cost

The cost of labor and materials.

Real Property Law

This document must be presented by a licensee and signed by all parties at the first substan­tive meeting with prospective purchasers or sellers.

Disclosure statement

An accounting of all financial aspects of a mortgage loan required of lenders to bor­rowers in residential mortgage loans by Regulation Z of the Federal Reserve Board.

Discount points

A percentage of the loan amount the lender requires for making a mortgage loan. discriminatory advertising

Disintermediation

The loss of funds available to lending institutions for making mortgage loans, caused by depositors’ withdrawal of funds for making invest­ments that provide greater yields.

Distribution box

A part of a septic system that dis­tributes the flow from the septic tank evenly to the absorption field or seepage pits.

Distribution panel

The location of circuit breakers or fuses.

Doctrine !aches

Loss of legal rights because of failure to assert them on a timely basis.

Dominant tenement

Land benefiting from an measurement appurtenant.

Dower

A wife’s interest in her husband’s real property, dual agent A broker/salesperson who attempts to represent both buyer and seller in the same transaction.

Due diligence

Investigation and review of a property to determine any legal liability.

Due-on-sale clause

See alienation clause.

Duress

The inability of a party to exercise free will because of fear of another party.

Duty of disclosure

A responsibility for revealing all information that affects the agency agreement.

E

Earnest money deposit

A deposit a buyer makes at the time of submitting an offer to demonstrate the true intent to purchase; also called binder, good faith deposit, escrow deposit.

Easement

A nonpossessory right of use in the land of another.

Easement appurtenant

A right of use in the adjoin­ing land of another that moves with the title to the property benefiting from the easement.

Easement by condemnation

Created by the exercise of the government’s right of eminent domain.

Easement by grant

Created by the express written agreement of the landowners, usually in a deed.

Easement by implication

Arising by implication from the conduct of the parties.

Easement by necessity

Exists when a landowner has no access to roads and is landlocked.

Easement by prescription

Obtained by use of the land of another for the legally prescribed length of time.

Easement for light and air

A type of negative ease­ment restraining a property owner from developing his or her property so as to block the view of another.

Easement in gross

A right of use in the land of another without the requirement that the holder of the right own adjoining land.

Eave

The lowest part of the roof that projects beyond the walls of the structure.

Economic depreciation

Physical deterioration of property caused by normal use, damage caused by nat­ural and other hazards, and failure to adequately maintain property.

Economic life

The period of time during which a property is financially beneficial to the owner.

Economic obsolescence

Loss in value caused by things such as changes in surrounding land use patterns and failure to adhere to the principle of highest and best use.

Effective interest rate

Actual rate of interest being paid.

Egress

The right to leave a parcel of land entered (ingress) by law.

Electromagnetic field (EMF)

Created when electric­ity flows through a wire.

Emergency Tenant Protection Act

A law in effect in New York City and other municipalities which, in most cases, entitles tenants to a one- or two-year lease renewal.

Eminent domain

The power of government to take private property for public use.

Enabling acts

Laws passed by state legislatures authorizing cities and counties to regulate land use within their jurisdictions.

Encroachment

Trespass on the land of another as a result of intrusion by some structure or other object.

Encumbrance

A claim, lien, charge, or liability at­tached to and binding upon real property.

Enforceable

A contract in which the parties may be required legally to perform.

Environmental impact statement (EIS)

Arequire­ment of the National Environmental Policy Act and the State Environmental Quality Review Act prior to initiat­ing or changing a land use that may have an adverse effect on the environment.

Environmental Protection Agency (EPA)

A federal agency that oversees land use.

Environmental Policy Act

A federal law that requires filing an environmental impact statement with the EPA prior to changing or initiating a land use or development.

Equal Credit Opportunity Act (ECOA)

A federal law prohibiting discrimination in consumer loans.

Equitable title

An interest in real estate such that a court will take notice and protect the owner’s rights.

Equity

The difference between the value of a property and its liabilities.

Equity of redemption

The borrower’s right to redeem the title pledged or conveyed in a mortgage or deed of trust after default and prior to a foreclosure sale by pay­ing the debt in full, accrued interest, and lender’s costs.

Erosion

The wearing away of land by water, wind, or other processes of nature.

Escheat

The power of government to take title to property left by a person who has died without leaving a valid will (intestate) or qualified heirs.

Escrow

The deposit of funds or documents with a neutral third party, who is instructed to carry out the pro­visions of an agreement.

Escrow account

(a) An account maintained by a real estate broker in an insured bank for the deposit of other people’s money; also called trust account. (b) An account maintained by the borrower with the lender in certain mortgage loans to accumulate the funds to pay an annual insurance premium, a real property tax, or a homeowners association assessment.

Estate at sufferance

Continuing to occupy property after lawful authorization has expired; a form of lease­hold estate.

Estate at will

A leasehold estate that may be terminated at the desire of either party.

Estate for years

A leasehold estate of definite duration.

Estate in fee

An estate in fee simple absolute.

Estate in real property

An interest sufficient to provide the right to use, possession, and control of land; establishes the degree and duration of ownership.

Estoppel

Preventing a person from making a statement contrary to a previous statement.

Estoppel certificate

A document executed by a mortgagor or mortgagee setting forth the principal amount; executing parties are bound by the amount specified.

Estovers

The right of a life tenant or lessee to cut timber on the property for fuel or to use in making repairs. evaluation A study of the usefulness or utility of a property without reference to the specific estimate of value.

Eviction

A landlord’s action that interferes with the tenant’s use or possession of the property. Eviction may be actual or constructive.

Exclusive agency listing

A listing given to one broker only (exclusive), who is entitled to the commission if the broker or any agent of the listing broker effects a sale, but imposes no commission obligation on the owner who sells the property to a person who was not interested in the property by efforts of the listing broker or an agent of the listing broker.

Exclusive right to rent

This contract is between an owner or a lessor and a broker/agent in the rental of res idential property.

Exclusive right to sell listing

A listing given to one broker only, who is entitled to the commission if anyone sells the property during the term of the listing contract.

Exclusive use zoning

A type of zoning in which only the specified use may be made of property within the zoned district.

Executed contract

An agreement that has been fully performed.

Execution

Signing a contract or other legal document. execution of judgment Judicial proceeding in which property of a debtor is seized (attached) and sold to satisfy a judgment lien.

Executor

A male appointed in a will to see that the terms of the will are carried out.

Executory

contract An agreement that has not been fully performed.

Executrix

A female appointed in a will to see that the terms of the will are carried out.
Exempt Relieved of liability.

Exercise of option

Purchase of optioned property by the optionee.

Express agency

An agency relationship created by oral or written agreement between principal and agent.

Express contract

One created verbally or in writing by the parties.

Extended coverage

An insurance term referring to the extension of a standard fire insurance policy to cover damages resulting from wind, rain, and other perils.

External obsolescence

Changes in surrounding land-use patterns resulting in increased traffic, air pollu­ tion, and other hazards and nuisances.

F

Fair Housing Act of 1968

A federal prohibition on discrimination in the sale, rental, or financing of housing on the basis of race, color, religion, gender, or national origin.

Fair Housing Act of 1988

A federal prohibition on discrimination in sale, rental, financing, or appraisal of housing on the basis of race, color, religion, gender, national origin, handicap, or familial status.

Fair Housing Amendments Act of 1988

A law adding to the Fair Housing Act provisions to prevent dis­crimination based on mental or physical handicap or familial status.

Fair Housing Initiative Program (FHIP)

Provides funding for testers. Market value A price for property agreed upon between buyer and seller in a competitive market with neither party being under undue pressure.

Fair market value

A price for property agreed upon between buyer and seller in a competitive market with neither party being under undue pressure.

Familial status

Defined under Fair Housing Law as an adult with children under 18, a person who is pregnant, one who has legal custody of a child, or who is in the process of obtaining custody.

Family

A individual, or two or more persons related by blood or marriage or adoption, living together in one dwelling; or a group of up to three people who are not married, or blood relatives or adopted, living together as a single housekeeping unit; or one or more persons living together in a single housekeeping unit as distinguished by a hotel, club, and so on.

Fannie Mae

The shortened name for the Federal National Mortgage Association (FNMA), a privately owned corporation that purchases FHA, VA, and con­ventional mortgages.

Fascia

In house construction, the area of material facing the outer edge of the soffit.

Federal Housing Administration (FHA)

The U.S. agency that insures mortgage loans to protect lending institutions.

Federal Reserve System

The U.S. banking system that regulates monetary policy and, thereby, the money supply and interest rates.

Federal Trade Commission

An administrative that has the power to declare trade practices unfair, particularly with regard to antitrust legislation.

Fee simple absolute

An inheritable estate in providing the greatest interest of any form of title.

Fee simple on condition

A defeasible fee (title), recognizable by words “but if.”

Feudal system

A type of land ownership previously existing in England, whereby only the king could hold absolute title to real property.

FHA-insured loan

A mortgage loan in which payments are insured by the Federal Housing Administration.

Fiduciary

A person, such as an agent, placed in a position of trust in relation to the person for whose benefit the relationship is created; essentially the same as a trustee.

Filtering down

The decline in value of properties in neighborhoods that were once middle or upper income.

Finance charge

An amount imposed on the borrower in a mortgage loan, consisting of origination fee, service charges, discount points, interest, credit report fees, and finders’ fees.

Fire insurance policy

See homeowner’s policy.

First mortgage

One that supersedes later recorded mortgages.

First substantive meeting

The first contact or meet­ing by a licensee when some detail and information about the property is shared with parties who express some interest in the real estate transaction.

Fixed expenses

Expenditures such as property taxes, license fees, and property insurance; subtracted from effective gross income to determine net operating income.

Fixed lease

One in which the rental amount remains the same for the entire lease term; also called flat, straight, or gross lease.

Fixed-rate mortgage

One in which the interest does not change.

Fixture

Personal property that has become real prop­erty by having been permanently attached to real property.

Flashing

A metallic material used in certain areas of the roof and walls to prevent water from seeping into the structure.

Flat lease

One in which the rental amount does not change during the lease term.

Flexible payment mortgage

A loan that allows smaller mortgage payments in the first years after pur­chase and then increases the amount of payment later on.

Flitch beam

A double top plate used to tie the walls together and provide additional support for the ceiling and roof system.

Floating slab

A type of foundation constructed by pouring the footing first and then pouring the slab.

Footing

The concrete base below the frost line that supports the foundation of a structure.

Forbearance

The act of refraining from taking legal action for payment of a mortgage despite the fact that it is due.

Foreclosure

The legal procedure of enforcing pay

Forfeiture

Relinquishing a portion of title to the government without compensation.

Forfeiture clause

A statement in a contract for deed providing for giving up all payments by a buyer in default.

Formal will

A will, in writing, signed by the testator or testatrix in front of two witnesses.

Foundation walls

Poured concrete, masonry block, or good faith estimate

Framing members

Lumber with a nominal dimension of 2″ thick used for constructing the wooden skeleton of a building.

Fraud

An intentional false statement of a material fact.

Freddie Mac

A nickname for Federal Home Loan Mortgage Corporation (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and conventional mortgages.

Freehold estate

A right of title to land.

Free market

An economic condition in which buyer and seller have ample time to negotiate a beneficial purchase and sale without undue pressure or urgency.

Freon

A nontoxic substance used in most home air conditioning units which if released into the air can

G

Gender

Either male or female

General agent

One with full authority

General lien

One that attaches to all of the property of a person within the court’s jurisdiction.

General Obligations Law

See Statute of Frauds.

General partnership

The partners are personally liable for partnership debts exceeding partnership assets.

General warranty deed

A deed denoting an unlimited guarantee of title.

Ginnie Mae

A nickname for Government National Mortgage Association (GNMA), a U.S. government agency that purchases FHA and VA mortgages.

Girder

The main carrying beam of a house that spans the distance from one side of the foundation to the other.

Good faith estimate

Lender’s estimate of borrower’s settlement costs,

Government loan

Mortgage guaranteed, insured or funded by a government agency.

Grace period

In a mortgage, a specified time frame in which the payment may be made without the borrower being in default.

Graduated lease

One in which the rent changed from period to period over the lease term in stair-step fashion. Used for new business tenant whose income increases over time.

Graduated payment mortgage (GPM)

One in which the payments are lower in the early years but increase on a scheduled basis until they reach an amortizing level

Grant

A transfer of title to real property by deed.

Granting clause

The statementm. words of conveyance.

Grantor

One who conveys title to real property

Gross lease

One in which the lessor pays all costs of operating and maintaining the property and real property taxes.

Ground lease

A long-term lease of uni111prov d usually for construction purposes.

Groundwater

Water obtained from underground.

Group boycott

A conspiracy wherein ap group is persuaded or coerced into not doing rs n or with another person or group.

Group home

A residential facility for five adults who have been institutionalized and then released.

H

Habendum clause

The statement in a deed beginning with the words “to have and to hold” and describing the estate granted.

Habitable

Suitable for the type of occupancy intended.

Headers

Wooden reinforcements for the placement of doors and windows.

Hectare

Metric system equivalent to the U. S. mea­surement of 2.47 acres

Heirs

Persons legally eligible to receive property of a decedent.

Heterogeneous

A variety of dissimilar uses of prop­erty; nonhomogeneous.

Highest and best use

The use of land that will pre­serve its utility and yield a net income flow in the form of rent that, when capitalized at the proper rate of inter­est, represents the highest present value of the land.

Holding period

The length of time a property is owned.

Holdover tenant

A tenant who remains in possession of property after a lease terminates.

Holographic will

One handwritten by the testator.

Home Buyer’s Guide

A booklet explaining aspects of the loan settlement required by RESPA.

Home equity loan

A loan against the equity in a home.

Home occupation

A small business or occupation that may be conducted only by the residents of the dwelling and must be incidental and secondary to the use of the dwelling.

Homeowners’ association

An organization of own­ers having the responsibility to provide for operation and maintenance of common areas of a condominium or residential subdivision; also called property owners’ association.

Homeowner’s policy

An insurance policy protecting against a variety of hazards.

Homeowner’s warranty (HOW)

An insurance policy protecting against loss caused by structural and other defects in a dwelling.

Homestead

The land and dwelling of a homeowner.

Homogeneous

Similar and compatible, as in land uses.

HUD Form No. 1

A standard settlement form required by RESPA.

Human Rights law

See New York State Human Rights Law.

HVAC

An acronym that stands for heating, ventila­tion, and air conditioning.

Hydronic system

A process in a heating system where liquids such as water are heated or cooled.

Hypothecate

To pledge property as security for the payment of a debt without giving up possession.

I

Illiquid

An investment that is not easily convertible to cash.

Immobility

Incapable of being moved; fixed in loca­tion; an important physical characteristic of land.

Implied agency

Agency that exists actions of the parties.

Implied contract

One created by deduction from the conduct of the parties rather than from the direct words of the parties; opposite of an express contract.

Implied warranty

One presumed by law to exist in a deed, though not expressly stated.

Improvements

Changes or additions made to a prop­erty, such as walls or roads, and so on. These typically increase the value of a property, except in some cases of over improvement.

Incentive zoning

Offers incentives to developers and property owners to construct amenities that would pro­vide certain types of uses and enjoyment for the residents of the municipality.

Income approach

The primary method used to esti­mate the present value of properties that produce income.

Income property

One that produces rental income.

Incompetent

Describes a person who is not capable of managing his or her own affairs, under law.

Incorporeal

Intangible things such as rights.

Indemnification

Reimbursement or compensation paid to someone for a loss already suffered.

Independent contractor

Workers who hold non em­ployee status under the law.

Indestructibility

A physical characteristic of land describing that land as a permanent commodity that can­ not be destroyed.

Index lease

A method of determining rent on long­ term leases where the rent is tied to an economic indicator such as an index.

Indirect cost

Costs that support a construction pro­ject, such as architectural fees.

Industrial zones

Uses that allow light or heavy man­ufacturing and warehouses.

Inflation

An increase in money and credit relative to available goods resulting in higher prices.

Informed consent

Agreement by a buyer or seller to a type of agency relationship after considering the vari­ous alternatives.

Infrastructure

Services and systems that support a community, such as hospitals, schools, and roadways.

Ingress

The right to enter a parcel of land; usually used as “ingress and egress” (both entering and leaving).

Injunction

A court instruction to discontinue a speci­fied activity.

Installment land contract

See contract for deed.

Installment sale

A transaction in which the seller receives the sale price over a specified period of time.

Instrument

A written legal document such as a con­tract, note, or mortgage.

Insurable interest

The degree of interest qualifying for insurance.

Insured conventional loan

One in which the loan payment is insured by private mortgage insurance to pro­tect the lender.

Insured value

The cost of replacing a structure com­pletely destroyed by an insured hazard.

Interest

(a) Payment for the use of someone else’s money. (b) An ownership or right.

Interim financing

A short-term or temporary loan such as a construction loan.

Interspousal deed

Conveys real property from hus­band to wife or wife to husband.

Interstate land Sales Full Disclosure Act

A federal law regulating the sale across state lines of subdivided land under certain conditions.

Intervivos trust

A trust set up while the parties are living.

Intestate

The condition of death without leaving a valid will.

Intestate succession

Distribution of property by descent as provided by statute.

Invalid

Not legally enforceable.

Investment

The outlay of money for income or profit.

Investment syndicate

A joint venture, typically con­trolled by one or two persons, hoping for return to all investors.

Investment value

The highest price an investor would pay in light of how well he believes a given prop­erty would serve his financial goals.

Involuntary alienation

Transfer of title to real prop­erty as a result of a lien foreclosure sale, adverse possession, filing a petition in bankruptcy, condemna­tion under power of eminent domain, or, upon the death of the titleholder, to the state if no heirs.

Involuntary lien

An act wherein a creditor places a claim on real and/or personal property of another to obtain payment of a debt.

Irrevocable

That which cannot be changed or canceled.

J

Joint tenancy

A form of co-ownership that includes the right of survivorship.

Joint venture

Participation by two or more parties in a single undertaking.

Joists

Wooden framing members used in the construc­tion of floors and ceilings.

Judgment

A court determination of the rights and obligations of parties to a lawsuit.

Judgment lien

A general lien resulting from a court decree.

Judicial deed

One executed by an official with court authorization.

Judicial foreclosure

A court proceeding to require that property be sold to satisfy a mortgage lien.

Junior mortgage

One that is subordinate to a prior mortgage.

Jurisdiction

The extent of authority of a court.

K

Kickback

Payment by a broker of any part of a com­pensation to a real estate transaction to anyone who is not licensed or who is not exempt from the license law.

L

Laches

See doctrine of laches.

Lally columns

Round steel and/or concrete columns that support the main carrying beam of a structure

Land

The surface of the earth, the area above and below the surface, and everything permanently attached thereto.

Land contract

See contract for deed.

Land grant

Conveyance of land as a gift for the bene­fit of the public.

Landl{!ase)

A type of lease that allows a lessee the land for any purpose for a specified period time.

Landlocked

Describes property with no access to a public road.

Land patent

Instrument conveying public land to an individual.

Land trust

Type of trust in which title to land is held by a trustee for the benefit of others.

Land use controls

Governmental restrictions on land use (e.g., zoning laws and building codes).

Lead

A toxic metallic element found in some homes in paint, dust, and water.

Lead agency

The governmental agency that oversees the environmental impact process and makes final decisions.

Lease

A contract wherein a landlord gives a tenant the right of use and possession of property for a limited period of time in return for rent.

Leased fee

Lessor’s interest in leased property.

Leasehold estate

Nonfreehold estate; of limited dura­tion, providing the right of possession and control but not title.

Leasehold mortgage

One in which a leasehold (non­ freehold) estate is pledged to secure payment of the note.

Legacy

A gift of personal property by will.

Legal capacity

The ability to contract.

Legal description

A description of land recognized by law.

Legal entity

A person or organization with legal capacity.

Legality of object

Legal purpose.

Legatee

Recipient of the gift of personal property by will.

Lessee

A tenant under a lease.

Lessor

A landlord under a lease.

Leverage

The use of borrowed funds; the larger the percentage of borrowed money, the greater the leverage.

Levy

Imposition of a tax, executing a lien.

License

A personal privilege to do a particular act or series of acts on the land of another.

Lien

A claim that one person has against the property of another for some debt or charge, entitling the lien­ holder to have the claim satisfied from the property of the debtor.

Lienee

One whose property is subject to a lien.

Lien foreclosure sale

Selling property without con­sent of owner who incurred the debt resulting in a lien, as ordered by a court or authorized by state law, and title conveyed to purchaser by judicial deed.

Lienor

The one holding a lien against another.

Life estate

A freehold estate created for the duration of the life or lives of certain named persons; a non inher­itable estate.

Life estate in remainder

A form of life estate in which certain persons, called remaindermen, are designated to receive the title upon termination of the life tenancy.

Life estate in reversion

A form of life estate that goes back to the creator of the estate in fee simple upon termination.

Life estate pur autre vie

An estate in which the dura­tion is measured by the life of someone other than the life tenant. See pur autre vie.

Life tenant

One holding a life estate.

Limited partnership

An organization consisting of one or more general partners and several partners with lesser roles.

Liquidated damages

Money to be paid and received as compensation for a breach of contract.

Liquidity

The attribute of an asset’s being readily con­vertible to cash.

Lis pendens

Latin, meaning a lawsuit pending. See notice of !is pendens.

Listing contract

A contract whereby a property owner employs a real estate broker to market the property described in the contract.

Litigation

A lawsuit.

Littoral rights

Rights belonging to owner of land that borders a lake, ocean, or sea.

Loan commitment

Obligation of a lending institution to make a certain mortgage loan.

Loan origination fee

Financing charge required by the lender.

Loan-to-value ratio

The relationship between the amount of a mortgage loan and the lender’s opinion of the value of the property pledged to secure payment of the loan.

Location (situs)

An economic characteristic of land having the greatest effect on value in comparison to any other characteristic.

LS.

Abbreviation for locus signilli, a Latin term meaning “in place of the seal.”

M

Margin

Measure of profit.

Marital status

Either married or single.

Marketable title

One that is free from reasonable doubt and that a court would require a purchaser to accept.

Market allocation agreement

An agreement be­tween competitors dividing or assigning a certain area or territory for sales.

Market value

A property’s worth in terms of price agreed upon by a willing buyer and seller when neither is under any undue pressure and each is knowledgeable of market conditions at the time.

Master deed

The instrument that legally establishes a condominium; also called condominium declaration.

Material fact

Important information that may affect a person’s judgment.

Materialmen’s lien

See mechanics’ lien.

Mechanics’ lien

A statutory lien available to persons supplying labor (mechanics) or material (materialmen) to the construction of an improvement on land if they are not paid.

Meeting of the minds

A condition that must exist for creation of a contract.

Merger

The absorption of one thing into another.

Merger clause

Clause in a real estate contract wherein the contract is fulfilled and the conveyed deed supersedes the contract.

Metes and bounds

A system of land description by distances and directions.

Mill

One tenth of a cent.

Mineral rights

A landowner’s ability to take minerals from the earth or to sell or lease this right to others.

Minor

A person who has not attained the statutory age of majority; in New York, age 18.

Misdemeanor

A crime punishable by not more than a year in prison and/or a $1,000 fine.

Misrepresentation

(a) A false statement or omission of a material fact. (b) In real estate, making an inten­tionally false statement to induce someone to contract.

Monolithic slab

A type of foundation in which the footing and slab are poured at the same time.

Moratorium

A delay in allowing development of property within the municipality.

Mortgage

A written instrument used to pledge a title to real property to secure payment of a promissory note.

Mortgage assumption

The transfer of mortgage obligations to purchaser of the mortgaged property.

Mortgage banker

A form of organization that makes and services mortgage loans.

Mortgage broker

One who arranges a mortgage loan between a lender and a borrower for a fee.

Mortgagee

The lender in a mortgage loan, who receives a mortgage from the borrower (mortgagor).

Mortgagee’s title insurance policy

A policy that insures a mortgagee against defects in a title pledged by a mortgagor to secure payment of a mortgage loan.

Mortgage insurance premium (MIP)

A payment for insurance to protect the lender and/or insurer against loss if default occurs.

Mortgage loan value

The value sufficient to secure payment of a mortgage loan.

Mortgage principal

The amount of money (usually the loan amount) on which interest is either paid or received.

Mortgage satisfaction

Full payment of a mortgage loan.

Mortgaging clause

The statement in a mortgage or deed of trust that demonstrates the mortgagor’s intention to mortgage the property to the mortgagee.

Mortgagor

The borrower in a mortgage loan who exe­cutes and delivers a mortgage to the lender.

Multiple dwelling

Residence rented to three or more families.

Multiple listing service (MlS)

An organized method of sharing or pooling listings by member brokers.

Mutual assent

The voluntary agreement of all parties to a contract as evidenced by an offer and acceptance.

Mutual mistake

An error of material fact by both parties.

N

National Association of REALTORS® (NAR)

The largest and most prominent trade organization of real estate licensees.

National Electric Code

National standard for electri­cal installation and service.

Negative amortization

When a loan payment amount is not sufficient to cover interest due, the shortfall added back into principal, causing the principal to grow larger after payment is made.

Negative covenant

See restrictive covenant.

Negative easement

A right in the land of another pro­hibiting the servient owner from doing something on the servient land because it will affect the dominant land.

Negligence

Legal term describing failure to use the care that a reasonable person would use in like circumstances.

Net lease

One in which the lessee pays a fixed amount of rent plus the costs of operation of the property.

net listing

Not a type of listing but a method of estab­lishing the listing broker commission as all money above a specified net amount to the seller; illegal in New York.

Net operating income

Gross operating income less expenses.

New York City Commission on Human Rights

Deals with discrimination in the sale, rental, or lease of housing, land, and commercial space.

New York Real Property law

See Article 12-A.

New York State Association of REALTORS® (NYSAR)

Umbrella board for all of the real estate boards in New York and member board of the National Association of REALTORS®.

New York State Department of Environmental Con­servation (DEC)

An agency whose purpose is to protect the quality of land, water, scenery, and the health and diversity of fish and wildlife and their habitats in New York State.

New York State Energy Code

Regulations that set minimum requirements for the design of energy effi­ciencies for new buildings and renovations to existing buildings.

New York State Human Rights law

Created to eliminate and prevent discrimination in residential and commercial real estate as well as in employment, public accommodations, places of amusement, and educational institutions.

New York State Office of Parks, Recreation, and His­toric Preservation (OPRHP)

Oversees public recreational areas and administers federal and state preservation programs authorized by federal and state law.

New York State Uniform Fire Prevention and Build­ing Code

Provides minimum standards for the construction and renovation of all types of buildings in New York.

Nonconforming use

Utilization of land that does not conform to the use permitted by a zoning ordinance for the area; may be lawful or unlawful.

Non freehold estate

Leaseholds; estates with a length determined by agreement or statute; establishes posses­sion of land as opposed to ownership in fee.

Nonhomogeneity

A physical characteristic of land describing that land as a unique commodity.

Nonpossessory

An individual does not occupy a property; easements imply a nonpossessory interest in land owned by another.

Nonrecourse note

A note in which the borrower has no personal liability for payment.

Non solicitation order

An order issued by the secre­tary of state prohibiting licensees from soliciting listings in certain areas of the state.

Notary public

A person authorized by a state to take oaths and acknowledgments.

Notice of lis pendens

A statement on the public record warning all persons that a title to real property is the subject of a lawsuit and any lien resulting from the suit will attach to the title held by a purchaser from the defendant.

Novation

Substitution of a new contract for a prior contract.

Null and void

Invalid; without legal force or effect.

O

Obligee

One to whom an obligation is owed.

Obligor

One who owes an obligation to another.

Obsolescence

Loss in property value caused by economic or functional factors.

Occupancy

Physical possession of property.

Offer

A promise made to another conditional upon ac­ceptance by a promise or an act made in return.

Offer and acceptance

Necessary elements for the creation of a contract.

Offeree

One to whom an offer is made.

Offeror

One making an offer.

Open-ended listing contract

One without a termina­tion date.

Open-end mortgage

One that may be refinanced without rewriting the mortgage.

Open listing

A listing given to one or more brokers wherein the broker procuring a sale is entitled to the commission but imposes no commission obligation on the owner in the event the owner sells the property to someone who was not interested in the property by one of the listing brokers.

Open mortgage

One that does not impose a prepay­ment penalty.

Operation of law

The manner in which rights and lia­bilities of parties may be changed by application of law without the act or cooperation of the parties.

Opinion of title

See certificate of title opinion.

Optionee

One who receives an option.

Optionor

One who gives an option.

Option to purchase

A contract whereby a property owner (optionor) sells a right to purchase his or her property to a prospective buyer (optionee).

Option to renew

A provision setting forth the method and terms for renewing the lease.

Oral will

A will usually restricted to the granting of personal property because it conflicts with the Statute of Frauds, which states that the conveyance of real property must be in writing.

Ordinance

A law enacted by a local government.

Origination fee

A service charge by a lending institu­tion for making a mortgage loan.

Overimprovement

An improvement to land that results in the land not being able to obtain its highest and best use.

Ownership

The right to use, control, possess, and dis­pose of property.

Ownership in severalty

Title to real property held in the name of one person only.

Owner’s title insurance policy

A policy insuring an owner of real property against financial loss resulting from a title defect.

P

Package mortgage

One in which personal property as well as real property is pledged to secure payment of the note.

Package policy

Insurance coverage for property dam­age and liability loss all within one premium.

Parcel

A specific portion of land such as a lot.

Parens patriae

The right of government to litigate and therefore protect in the name of the public good.

Parol evidence rule

A concept allowing that oral explanations can support the written words of a contract but cannot contradict them.

Participation mortgage

See shared equity mortgage.

Partition

A legal proceeding dividing property of co­ owners so each will hold title in severalty.

Partnership

A form of business organization in which the business is owned by two or more persons, called partners.

Party wall

A common wall used by two adjoining structures.

Payment cap

If the interest rate on the loan changes and therefore the monthly payments increase, the lender allows a payment cap in which the monthly payment remains the same and the money for the higher interest rate is added to the principal.

Percentage lease

One in which the rental amount is a combination of a fixed amount plus a percentage of the lessee’s gross sales.

Percolation

The movement of water through soil.

Percolation (perc) test

A test of soil to determine if it is sufficiently porous for installation of a septic tank.

Periodic tenancy

A lease that automatically renews for successive periods unless terminated by either party; also called an estate from year to year.

Per se illegal

Legal doctrine that states that an activ­ity is specifically not allowable under the law.

Personal property

All property that is not land and is not permanently attached to land; everything that is movable; chattel.

Physical deterioration

Loss in value caused by unre­paired damage or inadequate maintenance.

Pitch

The slope of a roof.

PITI

Acronym denoting that a mortgage payment in­cludes principal, interest, taxes, and insurance.

Planned unit development (PUD)

A form of cluster zoning providing for both residential and commercial land uses within a zoned area.

Planning

A program for the development of a city or county designed to provide for orderly growth.

Plat

A property map, recorded on the public record in plat books.

Platform framing

The most common type of framing in residential construction in which the framing of the structure rests on a subfloor platform.

Pledge

To provide property as security for payment of a debt or for performance of a promise.

Pledged account mortgage

The down payment is deposited in a savings account with the lender and the borrower makes escalating payments to which are added withdrawal forms from the savings account.

Plottage

Combining two or more parcels of land into one tract that has more value than the total value of the individual parcels.

Pocket card

Identification card issued by the Depart­ment of State to real estate licensees.

Points

See discount points.

Police power

The power of government to regulate the use of real property for the benefit of the public.

Polychlorinated biphenyls (PCBs)

A man made, odorless, liquid organic compound and carcinogen ap­pearing in groundwater and soil.

Population density

The number of people within a given land area.

Positive misrepresentation

A person’s actual state­ment that is false and known to be false.

Possession

One who either actively or constructively occupies a property; implies constructive notice that the possessor has certain legal rights

Possessory

The act of occupying a property which implies certain rights. See nonpossessory.

Post-and-beam framing

A type of construction in which the framing members are much larger than ordi­nary studs and larger posts can be placed several feet apart instead of 16″ or 24″ on center.

Power of attorney

An instrument appointing an attorney-in-fact; creates a universal agency.

Prepaid expenses

Costs the seller pays in advance but were not fully used up (such as utility payments or property taxes due) shown as a credit to the seller and debit to the buyer.

Prepaid items

Funds paid at closing to start an escrow account, as required in certain mortgage loans; also called prepaids.

Prepayment penalty clause

A financial charge imposed on a borrower for paying a mortgage prior to expiration of the full mortgage term.

Prescription

A method of acquiring an easement by continuous and uninterrupted use without permission.

Prescriptive easement

One obtained by prescription.

Price

The amount a purchaser agrees to pay and a seller agrees to accept under the circumstances sur­rounding a transaction.

Price fixing

Competitors in a group or industry conspiring to charge the same or similar price for ser­vices rendered.

Prima facie case

A suit that is sufficiently strong that it can be defeated only by contrary evidence.

Primary financing

The loan with the highest priority.

Primary mortgage market

The activity of lenders’ making mortgage loans to individual borrowers.

Prime rate

The interest rate a lender charges to the most creditworthy customers.

Principal

(a) In the law of agency, one who appoints an agent to represent her. (b) Amount of money on which interest is paid or received.

Principal residence

The home the owner or renter occupies most of the time.

Priority liens

Special liens that receive preferential treatment (such as mechanics’ liens).

Private land use control

Regulations for land use by individuals or nongovernmental organizations in the form of deed restrictions and restrictive covenants.

Private mortgage insurance (PMI)

A form of insur­ance coverage required in high loan-to-value ratio conventional loans to protect the lender in case the bor­rower defaults in the loan payment.

Private property

That which is not owned by government.

Privity of contract

An agreement that exists only between lessor and lessee for the right to demand and receive the specific benefit.

Probate

The procedure for proving a will.

Procuring cause

The basis for a direct action that results in successfully completing an objective.

Profit

The right to participate in profits of another’s land.

Promissory note

A written promise to pay a debt as set forth in the writing.

Promulgate

To put in effect by public announcement.

Property condition disclosure form

A comprehen­sive checklist pertaining to the condition of the property including its structure and any environmental hazards in and around the property.

Property description

An accurate legal description of land.

Property management

Comprehensive, orderly, con­tinuing program analyzing all investment aspects of a property to ensure a financially successful project.

Property manager

One who manages properties for an owner as the owner’s agent.

Property report

Disclosure required under the Inter­state Land Sales Disclosure Act.

Proprietary lease

A lease in a cooperative apartment.

Proration

Division of certain settlement costs between buyer and seller.

Prudent avoidance policy

New York advises people to avoid exposure to EMF fields when possible.

Public grant

A grant of a power, license, or real prop­erty from the state or government to a private individual.

Public land use control

Regulation of land use by government organizations in the form of zoning laws, building codes, subdivision ordinances, and environmen­tal protection laws.

Public open space

Land that is not intensely developed for residential, commercial, industrial, or institutional use.

Public property

That which is owned by government.

Public record

Constructive notice, for all to see, of real property conveyances and other matters.

Punitive damages

Court-ordered awards for ex­tremely bad behavior by a party; intended to punish and indicate that the behavior will not be tolerated.

Pur autre vie

Latin meaning for the life of another.A life estate measured by the life of someone other than the life tenant.

Purchase money mortgage

A mortgage given by a buyer to a seller to secure payment of all or part of the purchase price.

Q

Qualified fee simple

A defeasible fee (title), recog­nizable by words “as long as.”

Quasi-judicial

Rulings that are subject to review and change in the state and federal courts.

Quiet enjoyment

Use or possession of property that is undisturbed by an enforceable claim of superior title.

Quiet title action

A lawsuit to remove a cloud on a title.

Quitclaim

A deed to relinquish or release a claim to real property.

Quitclaim deed

A deed of release that contains no warranty of title; used to remove a cloud on a title.

R

Radius

Distance from the center of a circle to the perimeter; part of a metes and bounds description.

Radon

A colorless, odorless, radioactive gas present in the soil that enters a home through small spaces and openings.

Rafters

Wooden framing members used in the roof.

Rate cap

With adjustable rate mortgages, limits on interest rates during the lifetime of a loan.

Ratification

Affirming an implied agency by approv­ing a broker’s actions.

Ready, willing, and able

Describes a buyer who is ready to buy, willing to buy, and financially able to pay the asking price.

Real estate

Land and everything permanently attached to land.

Real estate broker

A person or an organization acting as agent for others in negotiating the purchase and sale of real property or other commodities for a fee.

Real estate investment trust (REIT)

A form of busi­ness trust owned by shareholders making mortgage loans.

Real estate market

A local activity in which real property is sold, exchanged, leased, and rented at prices set by competing forces.

Real estate salesperson

A person performing any of the acts included in the definition of real estate broker but while associated with and supervised by a broker.

Real Estate Settlement Procedures Act (RESPA)

A federal law regulating activities of lending institutions in making mortgage loans for housing.

Reality of consent

Mutual agreement between the parties to a contract; meeting of the minds; to exist and be free of duress, fraud, undue influence, and misrepre­sentation.

Realized gain

Actual profit resulting from a sale.

Real property

The aggregate of rights, powers, and privileges conveyed with ownership of real estate.

Real property tax lien

Taxes levied against real prop­erty by the local government and which have priority over all other liens.

REALTOR®

A registered trademark of the National Association of REALTORS®; its use is limited to mem­bers only.

Realty

Land and everything permanently attached to land.

Reciprocity

Mutual agreement by certain states to extend licensing privileges to licensees in each state.

Recognized gain

The amount of profit that is taxable.

Reconciliation

(a) The process of checking accounting of the settlement statement. (b) The adjustment process in appraising, whereby comparables are adjusted to the subject property.

Recordation

Written registration of an owner’s title in public records to protect against subsequent claimants.

Recording

Registering a document on the public record.

Rectangular survey system

A type of land descrip­tion utilizing townships and sections.

Redemption

See equity of redemption.

Redlining

The refusal of lending institutions to make loans for the purchase, construction, or repair of a dwelling because the area in which the dwelling is located is integrated or populated by culturally diverse people.

Re-entry

The owner’s right to regain possession of real property.

Referee’s deed

Used to convey real property when a court appointed individual (referee) acts as directed by the court in a bankruptcy or similar case.

Referral fee

A percentage of a broker commission paid to another broker for sending a buyer or seller to him or her.

Reference to a plat

A description on a deed that may refer to a plat map and lot number as part of a recorded subdivision.

Refinancing

Obtaining a new mortgage loan to pay and replace an existing mortgage.

Reformation

A doctrine that permits the court to correct a mistake and to rewrite a contract to express the true intentions of the parties.

Regulation Z

Requirements issued by the Federal Reserve Board in implementing the Truth-in-Lending Law, which is a part of the Federal Consumer Credit Protection Act.

Reject

To refuse to accept an offer.

Release clause

A provision in a mortgage to release certain properties from the mortgage lien when the prin­cipal is reduced by a specified amount.

Remainder interest

A future interest in a life estate.

Remainderman

One who has a future interest in a life estate.

Remise

To release or give up.

Repossession

Regaining possession of property as a result of a breach of contract by another.

Rescission

Cancellation of a contract when another party is in default.

Residential Lead Based Paint Hazard Reduction Act

Sets forth procedures to be followed in disclosing the presence of loadbased paint for sale of properties built prior to 1978.

Restrictive covenant

Restriction placed on a private owner’s use of land by a nongovernmental entity or individual.

Reverse annuity mortgage

Used by older people who need additional income and want to take advantage of the equity in their homes.

Reversion

Return of title to the holder of a future inter­est, such as the grantor in a life estate not in remainder

Reversionary interest

A provision stating the owner’s interest-that possession of property will go back to owner at end of lease.

Revocation

Withdrawal of an offer.

R-factor

A wall’s degree of resistance to heat transfer. Also R-value.

Rider

Addendum to cover supplemental issues of an agreement.

Ridge beam

Highest part of framing of a building; forms the apex of the roof.

Right of assignment

Allows lender to sell mortgage at any time and obtain money invested rather than wait for completion of loan term.

Right of first refusal

A statement in a lease or condo­minium articles of association that provides for a lessee or an association to have the first opportunity to pur­chase the property before it is offered to anyone else.

Right of inheritance

The right for property to descend to the heirs of the owner as set out by will or by intestate succession.

Right of survivorship

The right of an owner to receive the title to a co-owner’s share upon death of the co-owner, as in the case of joint tenancy and tenancy by the entirety.

Right-of-way

An easement allowing someone to use the land of another.

Riparian rights

The rights of an owner of property adjoining a watercourse such as a river, including access to, and use of, the water.

Risk factor

The potential for loss.

Risk management

Controlling and limiting risk in property ownership.

Rule of reason

Legal doctrine that means that if an activity is reasonable, then it is allowable under law.

Running with the land

Rights moving from grantor to grantee along with a title.

S

Sale and leaseback

A transaction in which a property owner sells a property to an individual who immediately leases back the property to the seller.

Sales comparison approach

Appraisal approach for estimating the value of single-family dwellings and vacant land; it compares the subject property with other similar properties that have sold recently.

Sales contract

An agreement between buyer and seller on the price and other terms and conditions of the sale of property.

Satisfaction of mortgage

Legal instrument signify­ing a mortgage has been paid in full.

Scarcity

(a) An economic characteristic of real prop­erty. (b) In appraisal, supply of property in relation to effective demand.

Secondary mortgage market

The market in which lenders sell mortgages.

Second mortgage

One that is first in priority after a first mortgage.

Security deposit

A sum of money that the landlord requires of the tenant prior to the lease, to be refunded at the end of the lease based upon the condition of the premises.

Seepage pit

A covered pit through which the discharge from the septic tank infiltrates into the surrounding soil.

Seisin (seizin)

Possession of a freehold estate in land.

Self-dealing

Illegal activity that can occur when a bro­ker has an undisclosed interest in a property.

Seller agent

A listing agent, subagent, or broker’s agent who works in the best interests of the seller.

Separate ownership

Ownership in severalty by one’s spouse.

Separate property

Any property acquired by one spouse during marriage by gift or inheritance or pur­ chased with the separate funds of a husband or wife.

Septic system

A household wastewater treatment system consisting of a house sewer, septic tank, distribu­tion box, and absorption field or seepage pit.

Service drop

Above ground electrical cables that come from the nearest pole connecting to the service entrance conductors of a house.

Service lateral

Underground electrical wiring con­necting to a house.

Servient tenement

Land encumbered by an easement.

Setback

The distance from a front or interior property line to the point where a structure can be located.

Severalty

Ownership by only one person.

Shared equity mortgage

A type of mortgage used in commercial lending where the lender participates in the profits generated by a commercial property.

Sheathing

A material such as plywood or sheetrock, which covers the framing members of a structure; also a type of insulation material.

Sherman Antitrust Act

Federal legislation including imposition of civil and punitive damages for antitrust activities.

Sick building syndrome

A chemical illness that may be caused by the air quality inside a commercial building.

Sill plate

The first wooden member of a structure used as the nailing surface for the floor system.

Single agent

An agent who works only for the buyer or the seller.

Situs

Location of land.

Slab-on-grade construction

A type of concrete flooring that is part of the foundation and is poured on a prepared and graded surface.

Soffit

A wood, vinyl, or aluminum material placed under the roof extension of a structure.

Sole plate

A horizontal base plate, which serves as the foundation for the wall system.

Sole proprietorship

A business owned by individual.

SONYMA (Sonny Mae)

State of New York Mortgage Agency, which raises money from the sale of New York tax-free bonds and uses these funds for mortgage loans.

Special agent

Agent with limited authority to act on behalf of the principal, such as created by a listing.

Special assessment

A levy by a local government against real property for part of the cost of making an improvement to the property, such as street paving, installing water lines , or putting in sidewalks.

Special purpose real estate

Category of real prop­erty created as a result of combining both the land and its improvements for a singular highest and best use.

Special use permit

A permit for a use that is not per­mitted in the zone except with the special permission of the planning board or other legislative body.

Specific lien

One that attaches to one particular prop­erty only.

Specific performance

A court instruction requiring a defaulting party to a contract to buy and sell real prop­erty to specifically perform her obligations under the contract.

Spot zoning

In New York, the illegal rezoning of a certain property in a zoned area to permit a different type of use than that authorized for the rest of the area.

Standards of Practice

Established practices set out in the Code of Ethics established by the NAR.

State Environmental Quality Review Act (SEQRA)

A New York law requiring preparation of an environ­mental impact statement on any projects that require government approval and that may have a significant effect on the environment.

Statute of Frauds

A law in effect in all states; in New York, the General Obligations Law, requiring real estate contracts for more than one year to be in writing.

Statute of Limitations

Law establishing the time period within which certain lawsuits may be brought.

Statutory dedication

When a property owner files a plat marked with portions of the property dedicated to public use.

Steering

The practice of directing prospective pur­chasers toward or away from certain neighborhoods to avoid altering the racial/ethnic makeup of these areas.

Straight-term mortgage

A loan in which the bor­rower pays interest only for a specified term and, at the end of the term, is required to pay the principal.

Studs

Wooden framing members used for forming the wall skeleton of a structure.

Subagent

A person appointed by an agent with per­mission of the principal to assist in performing some or all of the tasks of the agency.

Subchapter S corporation

Corporate formation whereby corporate income and expenses flow through to shareholders as if a partnership.

Subdivision regulation (ordinance)

Public control of the development of residential subdivisions.

Sublease

The transfer of only part of a lease term with reversion to the lessee; a lesser lease estate.

Subordinate

Lower in priority.

Subrogation of rights

The substitution of the title insurance company in the place of the insured for filing a legal action.

Substitution

The principle providing that the highest value of a property has a tendency to be established by the cost of purchasing or constructing another property of equal utility and desirability provided that the substi­tution can be made without unusual delay.

Subsurface rights

Rights to the area below the earth’s surface.

Supply and demand

The principle stating that the greater the supply of any commodity in comparison to demand, the lower the value; conversely, the smaller the supply and the greater the demand, the higher the value.

Survey

Document showing measurements, bound­aries, and area of a property

Survivorship

The right of the surviving co-owner automatically to receive the title of a deceased co-owner immediately without probate.

Suspension

Right of the Department of State to deac­tivate a broker or salesperson license for wrongdoing.

Swing loan

A type of interim loan wherein a borrower uses the equity in one property to obtain the money nec­essary to buy another property.

T

Take-out loan

Permanent financing arranged to re­place a short-term construction loan.

Taking

The act of a government body obtaining a property under its power of eminent domain.

Taking title subject to a mortgage

Accepting a title

Tenant relocator

A person who arranges, for a fee; the relocation of commercial or residential tenants from build­ings that are to be demolished, rehabilitated, or remodeled.

Tenements

Right of ownership of real estate held by a person.

Term mortgage

One that requires the mortgagor to pay interest only during the mortgage term, with the principal due at the end of the term.

Testamentary trust

A trust set up within a person’s will and effective upon the death of the person who cre­ated the trust.

Testate

To have died leaving a valid will.

Testator

A male who has died and left a valid will.

Testatrix

A female who has died and left a valid will.

Testers

Volunteers from state or private agencies who enforce fair housing by claiming to be homeseekers, thereby finding out if brokers deal fairly with all clients or customers.”

Tie-in arrangement

Agreement between a party sell­ing a product or service with a buyer that as a condition of the sale, the buyer will buy another product from the seller, or the buyer will not buy a product or use a ser­vice of another.

Time is of the essence

A phrase indicating that clos­ ing must take place on or before the exact date stipulated in the contract.

Title

Evidence of the right to possess property.

Title closing

The consummation of a real estate con­tract; a meeting in which the buyer, seller, and closing agent meet for execution of documents and disburse­ment of funds.

Title examination

A search of the public record to determine the quality of a title to real property

Title insurance

An insurance policy protecting the insured from a financial loss caused by a defect in a title to real property.

Title transfer tax

A tax imposed on the conveyance of title to real property by deed.

Topography

The physical features and contours of land.

Torrens system

A method of title recordation.

Taxation

A power of government to tax, among other things, real property.

Tax-deductible expense

An amount of money that may be deducted from gross income in arriving at net taxable income before depreciation, if any.

Tax deed

A deed conveying title to real property to a new owner that a municipality obtained from the origi­nal owner’s failure to pay real estate taxes.

Tenancy by the entirety

A form of co-ownership lim­ited to husband and wife, with the right of survivorship.

Tenancy in common

A form of co-ownership that does not include the right of survivorship.

Tract

An area of land.

Trade fixtures

Items that are installed by a commer­cial tenant and are removable upon termination of the tenancy.

Transferability

The ability to transfer property owner­ship from seller to buyer

Transfer of development rights

Purchase of the development rights of another property such as those of a historic property that cannot make use of them.

Trespass

Unlawful entry on the land of another.

Triple net lease

One in which the lessee pays all the expenses associated with the property in addition to the rent.

Trust

A legal relationship under which title to property is transferred to a person known as trustee.

Trustee

One who holds title to property for the bene­fit of another called a beneficiary.

Trustor

One who conveys title to a trustee.

Truth-in-Lending Simplification and Reform Act (TILSRA)

See Regulation Z.

U

Underground storage tanks

Tanks located under­ ground and utilized for the bulk storage of chemicals and petroleum.

Under improvement

Use of land that is not at its high­est and best use and thus does not generate the maximum income.

Underwriting

The act of reviewing loan documenta­tion and evaluating borrower’s ability and willingness to repay the loan and sufficiency of collateral value of the property.

Undisclosed principal

A principal whose identity may not be disclosed by an agent.

Undivided interest

Ownership of fractional parts not physically divided.

Undue influence

Any improper or wrongful influence by one party over another whereby the will of a person is overpowered so that he is induced to act or prevented from acting according to free will.

Unencumbered property

Property that is free of any lien.

Unenforceable contract

One that appears to meet the requirements for validity but would not be enforceable in court.

Uniform Commercial Code (UCC)

A standardized and comprehensive set of commercial laws regulating security interests in personal property.

Uniform irrevocable consent and designation form

Allows the courts to serve a summons or other legal documents on the New York secretary of state in place of personal service on out-of-state licensees.

Unilateral contract

An agreement wherein there is a promise in return for a specific action, which together supply the consideration.

Uninsured conventional loan

One in which the loan payment is not insured to protect the lender.

Unintentional misrepresentation

An innocent false statement of a material fact.

Unity of interest

Created when co-owners all have the same percentage of ownership in a property.

Unity of possession

Created when all co-owners have the right to possess any and all portions of the property owned, without physical division.

Unity of time

Created when co-owners receive title at the same time in the same conveyance.

Unity of title

Created when co-owners have the type of ownership in a property.

Universal agent

Agent that has complete over any activity of principal; for example, attorney.

Urea-formaldehyde foam insulation (UFFI)

of foam containing formaldehyde, a gaseous compound used for home insulating until the early 1980s.

U.S. Army Corps of Engineers

A division of U.S. Army that oversees navigation, water resource activities, flood control, beach erosion, and dredging projects.

U. S. Department of Housing and Urban Develop­ment (HUD)

A federal agency that administers funding for projects related to housing.

Useful life

The period of time that a property is expected to be economically useful

Use variance

Permission to use the land for a purpose which, under the current zoning restrictions, is prohibited.

Usury

Charging a rate of interest higher than the rate allowed by law.

Utility

Capable of serving a useful purpose.

V

Vacancy rate

A projected rate of the percentage of rental units that will be vacant in a given year.

Vacant land

Unimproved land that could include land brought back to its natural state, or land that does not possess improvements necessary to serve some kind of purpose.

VA-guaranteed loan

A mortgage loan in which the loan payment is guaranteed to the lender by the Depart­ment of Veteran Affairs.

Valid contract

An agreement that is legally binding and enforceable.

Valuable consideration

Anything of value agreed upon by parties to a contract.

Valuation

Establishes an opinion of value utilizing an objective approach based on facts related to the property, such as age, square footage, location, cost to replace, and so on.

Value in exchange

The amount of money a property may command for its exchange; market value.

Value in use

The present worth of the future benefits of ownership; a subjective value that is not market value.

Variance

A permitted deviation from specific require­ments of a zoning ordinance because of the special hardship to a property owner.

Vendee

Buyer.

Vendor

Seller.

Vendor’s affidavit

Document signed under oath by vendor stating that vendor has not encumbered title to real estate without full disclosure to vendee.

Vesting options

Choices buyers have in how to acquire property.

Vicarious liability

A person’s being responsible for the actions of another.

Voidable contract

An agreement that may be voided by the parties without legal consequences.

Void contract

An agreement that has no legal force or effect.

Voltage

The electrical pressure that pushes through the wires.

Voluntary alienation

The transfer of title freely by the owner.

Voluntary lien

A type of lien in which individuals consent to placing a security against themselves or their property.

W

Wetlands

Federal and state protected transition areas between uplands and aquatic habitats that provide flood and storm water control, surface and groundwater pro­tection, erosion control, and pollution treatment.

Words of conveyance

Wording in a deed demonstrat­ing the definite intent to convey a specific title to real property to a named grantee.

Wraparound mortgage

A junior mortgage in an amount exceeding a first mortgage against the property.

Writ of attachment

Court order preventing any trans­fer of attached property during litigation.

Y

Yield

The return on an investment.

Z

Zoning

A public law regulating land use.

Zoning board of appeals

A local appointed board that has the power to review administrative rulings made by the planning board or other legislative body.

Zoning map

A map that divides the community into various designated districts.

Zoning ordinance

A statement setting forth the type of use permitted under each zoning classification and specific requirements for compliance.