Real Estate and Mortgage Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #

 

ABANDONMENT:
Abandonment occurs when a person with a right or interest in a property voluntarily gives up that right or interest, either by physically "abandoning" the property or by showing the intention to give up the right or interest.

ABATEMENT:
A decrease or reduction in the price of a property (or in rent chargeable to a tenant). Usually occurs as a result of the discovery of a negative fact about the property, which decreases its value from the price originally agreed upon by the parties.

ABLE:
Quite literally, being capable. A Purchaser is ready, willing and able to complete a transaction when she has funds and has signed the documents required to transfer title to a property. If the Vendor is not ready, willing and able to complete the transaction on the date set for completion, the Purchaser may tender upon the Vendor and sue as a result of the failure to complete the transaction.

ABSENTEE LANDLORD:
An owner of a property who lives elsewhere, leaving tenants in control and occupation of the property.

ABSORPTION RATE
The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

ABSTRACT OF TITLE:
A summary listing of the documents registered in the local land registry office and which affect title (ownership) of a particular property.

ABSTRACTION METHOD   
This method of estimating the value of property uses similar properties available in the same market to extract the value of a parcel of land.

ABUT:
Adjoin or share a common boundary, or share even a small portion of a boundary.

ACCELERATED DEPRECIATION:
Depreciation is the reduction of the value of a property or chattel as a result of the passing of time (i.e. a new car may be worth $20,000.00, $18,000.00 after one year, $16,000.00 after two years etc.). Usually used for tax purposes, the depreciation in the value of a property may be used as a tax deduction. If a property or chattel loses its value quickly, this depreciation rate may be accelerated so that most of the value is lost in the first few years and then the depreciation rate decreases later in the property's life span

ACCEPTANCE:
A positive response to an offer or a counter-offer that creates a binding agreement between the parties. Acceptance may be conditional upon the occurrence of certain events.

ACCESS:
The right to enter a property. Access may be restricted to certain times, to certain persons and to certain purposes (i.e. access for the purpose of inspection).

ACCESSIBILITY:
The ease with which one can reach a certain place, person or thing. A property may be inaccessible because it is located far back along a winding, mountainous road that is often blocked in winter. A property may also be said to have good accessibility to highways, shopping, schools etc.

ACCELERATION CLAUSE   
A provision in a mortgage that gives the lender the right to demand immediate payment of the outstanding loan balance under certain circumstances. Usually when the borrower defaults on the loan.

ACCESSORY BUILDING   
A building separate from the main structure on a property. Often used for a specific purpose, such as a workshop, storage shed or garage.

ACCREDITED ASSESSMENT EVALUATOR (AAE):
A professional designation. A property evaluator who has achieved the requirements of the International Association of Assessing Officers.

ACCRUED INTEREST:
Interest which has already been earned but has not yet been paid.

ACKNOWLEDGEMENT:
A statement by a person to the effect that they are aware of a certain fact. May also be a sworn document to the same effect, which further states that the person signing the document did so voluntarily.

ACQUISITION:
The process of taking title to or ownership of something.

ACQUISITION COST:
The cost to the purchaser of obtaining title to anything, including real property. Acquisition cost includes the cost of the transaction of obtaining title, including legal fees and expenses, interest charges on mortgages, land transfer tax, etc.

ACCRETION   
The natural growth of a piece of land resulting from forces of nature

ACCRUED:
An adjective describing something that has come into existence but has not yet been claimed by or distributed to its rightful owner.

ACRE   
43,560 square feet. A measurement of area.

ACT OF GOD:
When used in insurance policies, an event caused by natural forces such as rain, lightning, floods or earthquakes which results in damage to property or chattels.

ACTION TO QUIET TITLE:
A legal proceeding begun for the purpose of settling competing claims to property and establishing clear legal title in one party.

ACTUAL AGE   
The amount of time that has passed since a building or other structure was built. See also: EFFECTIVE AGE

ACTUAL AUTHORITY:
With reference to an agent or representative. The limits of the power the agent or representative has to bind her principal to an agreement or to a statement.

ACTUAL CASH VALUE:
An insurance term, the value of a building calculated by subtracting the decrease in value caused by age and wear and tear from the cost of replacing the building entirely.

ACTUAL DAMAGES:
An award of the court to compensate an injured party for losses incurred as a result of the actions or omissions of another party.

ACTUAL EVICTION:
Wrongful removal of a tenant from possession of a premises, usually by a landlord, contrary to the terms of the lease.

ACTUAL POSSESSION:
As opposed to constructive possession. When the owner of a property occupies the property on a day-to-day basis. Constructive possession is when the owner takes actions to establish and maintain his ownership of a property without actually occupying it himself (i.e. leasing it to tenants, removing squatters, hiring a security firm).

AD VALOREM:
Latin meaning "according to value." Taxes that are said to be ad valorem are assessed according to the value of the property.

ADC LOAN:
A loan that finances the three major phases of a land development project: (i) acquisition, (ii) development and (iii) construction.

ADDENDUM:
An addition to a document that forms part of it. Similar to a Schedule to an Agreement of Purchase and Sale. May be used to add specific and detailed information material to the contract or upon which contractual terms are based.

ADDITIONAL PRINCIPAL PAYMENT:
A one-time or lump-sum payment made by a borrower in addition to the regular payments on a loan or mortgage which reduces the principal owing on the debt.

ADEQUATE PUBLIC FACILITIES ORDINANCE:
An ordinance by the local level of government controlling development by requiring that infrastructure works (roads, sewers, hydro lines) be completed prior to or concurrent with the building of dwellings or commercial buildings in a new development.

ADJACENT LAND:
An inexact term used to described any property which is situated near or abutting a certain piece of property. Note, an abutting property will always be adjacent but an adjacent property may not be abutting.

ADJUSTABLE RATE MORTGAGE (ARM):
Also known as a Variable Rate Mortgage, a loan secured against land which has an interest rate that changes according to some outside index -- such as the federal prime rate or the interest rate paid on government bonds -- over the term of the mortgage. The change in interest rate will result in a change in the periodic payments due under the mortgage.

ADJUSTED COST BASE:
For the purposes of determining capital gains or losses. The acquisition cost of a property or chattel, plus the cost of any improvements to the property.

ADJUSTED SALES PRICE:
The result of estimating the value of a property by comparison to comparable properties. Take the actual sale price of a property comparable to the subject property, then add the value of any extras which the subject property has but the comparable property did not, then subtract the value of any deficiencies in the subject property not shared by the comparable property.

ADJUSTMENT INTERVAL:
Also known as Adjustment Period. The period of time (i.e. week, month, year) between changes in the interest rate charged on a adjustable-rate mortgage.

ADJUSTMENT PERIOD:
See Adjustment Interval.

ADJUSTMENTS:
In real estate sales, the changes made to the selling price to account for the advantages and disadvantages of the subject property, market conditions etc. When closing a real estate transaction, the changes to the purchase price made as a result of realty taxes over- or under-paid by the Vendor, fuel oil provided, tenant's rental payments etc. (Contained on the Statement of Adjustments).

ADMINISTRATOR:
A person appointed by a Court to deal with the estate of a deceased person who died without leaving a will (who dies "intestate"). Note, an executor is a person who is named in a will to deal with the estate of a deceased person.

ADJUSTMENT DATE   
The date the interest rate changes on an adjustable rate mortgage.

AD VAL OREM TAX   
Taxes assessed based on the value of the land and improvements

ADVANCE:
Verb: to deliver a portion of money borrowed under a mortgage or loan before the loan instrument requires the money to be delivered.
Noun: the money so delivered.

ADDENDUM   
A supplement to any document that contains additional information pertinent to the subject. Appraisers use an addendum to further explain items for which there was inadequate space on the standard appraisal form.

ADJUSTABLE-RATE MORTGAGE (ARM)   
A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

ADJUSTED BASIS   
The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

ADJUSTED SALES PRICE   
An opinion of a property's sales price, after adjustments have been made to account for differences between it and another comparable property.

AESTHETIC VALUE   
The additional value a property enjoys based on subjective criteria such as look or appeal.

AFFIRMATION   
A declaration that a certain set of facts are truthful.

AFFORDABILITY ANALYSIS 
A calculation used to determine an individual's likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

AGENT   
A person who has been appointed to act on behalf of another for a particular transaction.

AMENITY   
Any feature of a property that increases its value or desirability. These might include natural amenities such as location or proximity to mountains, or man-made amenities like swimming pools, parks or other recreation.

AMERICAN SOCIETY OF APPRAISERS   
An organization of appraisal professionals and others interested in the appraisal profession.

AMORTIZATION   
The repayment of a loan through regular periodic payment.

AMORTIZATION SCHEDULE   
The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

AMORTIZATION TERM   
The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

AMPERAGE  
A measure of electric current describing the magnitude.

ANNUAL PERCENTAGE RATE (APR)   
The rate of annual interest charged on a loan.

ANNUITY   
A sum of money paid at regular intervals, often annually.

APPLICATION   
A form used to apply for a mortgage loan that details a potential borrower's income, debt, savings and other information used to determine credit worthiness.

A PRIORI  knowledge refers to a knowledge of the actual population, rather than that estimated by observation.

APPRAISAL   
 A ''defensible'' and carefully documented opinion of value. Most commonly derived using recent sales of comparable properties by a licensed, professional appraiser.

APPRAISAL FOUNDATION   
A not-for-profit educational organization established by the appraisal profession in the United States in 1987. It is dedicated to the advancement of professional valuation and responsible for establishing, improving, and promoting the Uniform Standards of Professional Appraisal Practice (USPAP).

APPRAISAL INSTITUTE   
A world-wide organization dedicated to real estate appraisal education, publication and advocacy.

APPRAISAL PRINCIPLES   
The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

APPRAISAL REPORT   
The end result of the appraisal process usually consists of one major standardized form such as, the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the opinion of value of the subject property and support that opinion with corroborating information.

APPRAISAL STANDARDS BOARD (ASB)   
An independent board of the APPRAISAL FOUNDATION, which writes, amends, and interprets USPAP. The ASB is composed of up to seven appraisers appointed by the Foundation's Board of Trustees. The ASB holds public meetings throughout the year to interpret and amend USPAP.

APPRAISED VALUE   
An opinion of the fair market value of a property as developed by a licensed, certified appraiser following accepted appraisal principals.

APPRAISER   
An educated, certified professional with extensive knowledge of real estate markets, values and practices. The appraiser is often the only independent voice in any real estate transaction with no vested interest in the ultimate value or sales price of the property.

APPRECIATION   
The natural rise in property value due to market forces.

ARMS LENGTH TRANSACTION   
Any transaction in which the two parties are unconnected and have no overt common interests. Such a transaction most often reflects the true market value of a property.

ASSESSED VALUE   
The value of a property according to jurisdictional tax assessment.

ASSESSMENT   
The function of assigning a value to a property for the purpose of levying taxes.

ASSESSMENT RATIO   
The comparative relationship of a property's assessed value to its market value.

ASSESSOR   
The jurisdictional official who performs the assessment and assigns the value of a property.

ASSET   
Any item of value which a person owns.

ASSIGNMENT   
Transfer of ownership of a mortgage usually when the loan is sold to another company.

ASSUMABLE MORTGAGE   
A mortgage that can be taken over by the buyer when a home is sold.

ASSUMPTION   
When a buyer takes over, or "assumes" the sellers mortgage.

ATTACHED HOUSING   
Any number of houses or other dwellings which are physically attached to one another, but are occupied by a number of different people. The individual houses may or may not be owned by separate people as well.