Real Estate Glossary

It is very important to understand real estate definitions.

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1: Number one real estate school – Rowlett Real Estate School

ADA: ADA
(See Americans with Disabilities Act),

APR: (See Annual Percentage Rate.)

ARM: Acronym for Adjustable-Rate Mortgage. A mortgage with periodic adjustments in interest rate, usually every six months.

ATCF: Acronym for after-tax cash flow. It is equal to the cash throw-off (CT) or before-tax cash flow (BTCF) minus income taxes: BTCF – Income taxes = ATCF.

ATCF: Acronym for after-tax cash flow. It is equal to the cash throw-off (CT) or before-tax cash flow (BTCF) minus income taxes: ATCF = BTCF – Income taxes.

Absentee owner: Out of area owners that delegate the management of real estate investment property.

Abstract of title: A collection of all recorded documents that affect the title to a parcel of real estate.

Acceleration clause: A clause in a mortgage contract stating the right of the lender to accelerate the payment of all principal and interest when the borrower misses a payment.

Acknowledgment: A formal declaration that a contract was signed freely and voluntarily.

Acre: 43,560 square feet.

Actual notice: The process of “giving notice to the world” that a transaction took place by advertising the transaction publicly.

Ad Valorem: Is a Latin expression for “On the Value”. Taxes are called ad valorem because they are calculated on the value of the property.

Adjudication withheld: A court decision at any point after the filing of a criminal complaint, to continue court jurisdiction but stop short of pronouncing judgment. The person, although technically guilty of the charge, will not be convicted of the crime or “adjudicated as guilty.- This opens the possibility that the records of the case may be expunged or sealed at a later date.

Adjustable-Rate Mortgage (ARM): A mortgage with periodic adjustments in interest rate, usually every six months. ARM rates are calculated against a money index, such as the six-month Treasury bill (T Bill) rate index, or at specific intervals over the maturity of the loan to reflect and be more closely aligned with the changes in the Prime Rate.

Adjustment interval: The period between one rate change and the next on an adjustable-rate mortgage.

Advance fee: A fee charged to a developer by a broker to market and advertise a listing.

Adverse possession: The act of taking title of a piece of property by long-term, hostile, unauthorized use of the land.

Agent: A person entrusted with someone else’s business.

Agricultural: Defined in FS 475 as more than 10 acres of land zoned for farm use.

Alienation: the complete and voluntary transfer of title to real estate from one person to another.

Americans with Disabilities Act (ADA): A civil rights law enacted in 1990 prohibits discrimination against people with disabilities in the areas of employment, transportation, telecommunications, and public accommodation. It addresses access issues such as wheelchair ramps.

Amortize: To write off gradually and systematically a given amount of money over a specific number of time periods.

Amortized mortgage: A mortgage contract where a portion of the monthly payment is applied to the interest and another portion is applied to repay the principal. At the end of the life of the loan, the original note is either partially paid (amortized) or paid in full (fully amortized).

Annual percentage rate (APR): The total annual cost of credit, including interest, fees; discount points, and other loan costs.

Appraisal: The process of estimating the value of real property. In Florida, 475 FS and 61J1 FAC regulate appraisal. A real estate broker can perform an appraisal, as long as the document is not used in a federally related Transaction and he or she does not represent himself or herself as a state-certified appraiser.

Appraiser(s): who are state-certified or licensed appraisers can perform this service for a fee for federally-related loaning institutions.

Appreciation: The increase in the value of a property over time.

Appurtenances: When something is installed onto a property, it can be called an appurtenance. Meaning it is passed on to a new owner if the property is sold. An appurtenance can be something tangible like trees or a shed or something abstract such as an easement.

Arbitration: The process in which a third party makes a binding decision for two parties who are in a dispute. The parties usually have an opportunity to provide information regarding their claims and points of view.

Arm’s length transaction: A transaction among parties who are each acting in his or her own best interest.

Arrears: Items that are paid in arrears are paid at the end of the period to which they refer. Taxes are paid in arrears after the use of the property such as property taxes.

Asbestos: a heat-resistant fibrous silicate mineral having insulating properties. Asbestos is used in fire-resistant and insulating materials such as brake linings. Asbestos was used for heated pipe insulation.

Assemblage: The combining of adjoining properties into one large tract.

Assessed value: The valuation placed on a property by a public tax assessor for the purpose of taxation.

Asset: The resources and property owned by an individual or a corporation. Real property, securities, savings, and other things of value are assets.

Assignment: A document with the authorization and instructions to transfer one parties’ rights and or obligations to another. A contract is made assignable by including the words “and/or assign- to the name of the buyers. Normally permission of the seller is required to make a contract assignable.

Assumable: A mortgage that is assumable allows a new home buyer to undertake the obligation of the loan with no change in loan terms. This type of loan does not have a due on sale clause.

Assumable mortgage: An assumable mortgage allows a new home buyer to undertake the obligation of the loan with no change in loan terms. This type of loan does not have a due-on-sale clause.

Assumption: The process in which a buyer assumes or takes responsibility for a loan that was originally issued to someone else. It is extremely difficult to find an assumable loan.

Automated underwriting: The electronic process for determining the credit risk classification of a loan on the secondary market by using a software application produced either by Fannie Mae or Freddie Mac.

Balance Sheet: A financial statement showing a company’s assets, liabilities, and net worth on a given date.

Balloon Payment: A mortgage loan in which the borrower pays only interest or a small portion of the principal. At the end of the life of the loan, the outstanding principal balance must be paid in a single payment.

Bargain and sale deed: A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. Warranties may be added to the deed at the discretion of the grantor.

Base industries: The primary industries or businesses that attract outside investment and/or outside money into the area.

Base line: Lines on the earth that run east/west. Used by surveyors for reference when describing land under the government survey method.

Basis: The total cost of acquisition of a property. Usually referred to as adjusted basis, it is calculated by adding the cost of the improvements to, and subtracting the depreciation from, the original sale and purchase price.

Benchmark: A permanently affixed mark that establishes the exact elevation of a place. It is used by surveyors in measuring site elevations, or as the starting point for surveys.

Bequest: A gift of personal property awarded under a will.

Bilateral contract: A bilateral contract is a legally binding document that calls for both parties to perform. A sale and purchase contract is a bilateral contract.

Biweekly mortgage: A mortgage payment plan in which half of the monthly premium is paid every other week, 52 weeks per year, netting 26 half payments to the lender per year. As result, the borrower has made one extra full payment, shortening the life of the loan.

Blanket mortgage: A mortgage that covers multiple parcels or building lots, usually in land development projects.

Blind advertisement: An advertisement or commercial without the name of the Real Estate brokerage corporation.

Blockbusting: The act of soliciting listings by scaring people with the idea that members of a protected class may move into the area.

Broker: Individual or firm acting as an agent between buyers and sellers in a real estate transaction. A commission is usually charged for this service.

Broker Associate / salesperson: A licensee who meets the education requirements of a broker but chooses to work as a sales associate.

Broker’s Price Opinion (BPO): is another form of a CMA and is used by banks when evaluating short sales. The Broker’s Price Opinion (BPO) is the estimated value of a property as determined by a real estate broker or other real estate licensee working under the direction of a broker.

Buffer zone: A strip of land that divides two areas with different zoning. A buffer zone may be a green area with trees.

Building code: The government adopted regulations that specify minimum standards of construction for buildings to protect public safety and health.

Building inspection: A building inspection is an inspection performed by a building inspector, who is employed by either a city, township or county and is usually certified in one or more disciplines qualifying them to make a professional judgment to determine the structural integrity and whether a building meets building code requirements.

Building permit: A document obtained from the local government that conveys permission to construct a building in accordance with the terms of the permit. Local governments exercise control over the quality and types of structures that can be built in a given area by means of building permits.

Bundle of rights: Five rights attached to real property: Disposition, Enjoyment, Exclusion, Possession, and Control. DEEP C

Business broker: Real estate licensees who specialize in the sale, purchase, and lease of businesses.

Business opportunity: Real Estate Law defines “business opportunity” as the sale or lease of the business and goodwill of an existing business enterprise or opportunity. The sale almost always includes the inventory, fixtures, lease assignment, and goodwill. This is normally done by a broker that specializes in business opportunities.

Buyer brokerage agreement: An employment contract between a buyer and a broker.

Buyer’s market: A market in which there is an excess of housing that allows buyers to negotiate prices downward

Canceled: A canceled license is an ineffective license.

Capital Gain: Profit made on the sale of assets.

Cash flow: The amount of cash derived over a certain period of time from an income-producing property. A positive cash flow is large enough to pay the expenses of the property while a negative cash flow does not cover all operating costs.

Cease to be in force: A license ceases to be in force when some formal requirements aren’t fulfilled by a licensee.

Certificate of occupancy: A document obtained from the local government conveys permission to use a building. It states that the building is fit to be occupied. Gives the electric company permission to connect electricity to the building permanently. It is also known as a COO.

Chain of title: A chain of title is the chronological arrangement of deeds and conveyances transferring title to a particular parcel of real estate starting from the first source of title to the present holder.

Check: A check is a government survey method of land description. It is a 24 square mile unit containing sixteen townships arranged in a square of four townships east to west and four townships north to south. This term is NOT used in a legal description of land.

Citation: A citation is an order from the local government that identifies a violation when there is no substantial threat to the public health, safety, or welfare or if a violation is in the process of being corrected. Specified violations carry a fine as a penalty. Citations can only be issued on an initial, single violation. Repeated violations can precipitate a formal hearing.

Civil Rights Act of 1866: Federal law prohibits any type of discrimination based on race in any real estate transaction.

Civil Rights Act of 1964: Federal law prohibits any type of discrimination based on race in any real estate transaction.

Client: The person to whom an agent owes fiduciary duties. This relationship is created when a seller or buyer hires an agent to exclusively represent him or her.

Co-mingle (co-mingling): To co-mingle (co-mingling) literally means “mixing together”. Used in a legal sense it is a breach of trust in which a fiduciary (broker) mixes funds that he holds in the care of a client with his own funds. This is a violation under 475 F.S. and is prohibited.

Collateral: Assets that are pledged as security of repayment or performance of an obligation. It is usually something of value to the borrower. If the borrower defaults, the collateral may be taken and sold to fulfill the obligation. There are four types of collateral that are commonly used in secured lending: trade goods, paper (negotiable instruments), intangibles, and business proceeds (cash). In some cases, as in mortgages, the collateral is the asset (real estate) being financed.

Collateralized Mortgage Obligation: Debt obligations are secured by pools of mortgage loans or by mortgage-backed securities. The underlying securities are issued primarily by the GNMA (Ginnie Mae), FNMA (Fannie Mae), and FHLMC (Freddie Mac). The mortgage pools are separated into different maturity classes or trenches, and they pay out at different interest rates. Acronym: CMO.

Commercial: The classification of real estate includes income-producing properties. Examples are office buildings, shopping centers, hotels, motels, gasoline stations, and parking lots.

Commingle: Literally mixing the principal’s money with the broker’s money. In Florida, the broker can keep up to $ 1,000 of his personal funds in a sales escrow account, and up to $ 5,000 of his own money in a rental operating escrow account.

Common Stock: Units of ownership of a public corporation. Those investors who hold common stock have the right to collect dividends based on the profitability of the business and elect directors. While common stockholders may be exposed to more risk than preferred stockholders or bondholders, they generally have more control and may realize bigger gains.

Community Association Manager (CAM): manages the workings of associations such as Homeowner Associations. CAMs are NOT the same thing as a property manager. The licensing requirements for a community association of more than ten units or a budget of $100,000 or greater must be licensed with the Department of Business and Professional Regulation (DBPR) as a Community Association Manager.

Comparative Market Analysis (CMA): The comparative market analysis is an analysis of a property’s value by evaluating similar, recently sold, properties to indicate a reasonable

Compensation: Money or valuable consideration paid, promised, or expected for goods or services.

Compensatory damages: Damages are awarded according to the amount of actual harm suffered by the plaintiff.

Competent: To be competent means legally fit, having sufficient ability or authority to make business decisions and judgments. Possessing the necessary reasoning abilities or legal qualifications, qualified, capable and sufficient abilities to act for one’s self.

Complaint: A complaint is an accusation or charge that a person named has committed a specific offense. The pleading that initiates a civil action. A statement of disagreement or discontent. concurrency (concurrent estate) in real estate is a concept in property law that describes the various ways in which a property is owned by more than one person at a time. They are referred to as co-owners, co-tenants, or joint tenants.

Concurrency provision: The provision of Florida’s comprehensive planning act requires necessary services and infrastructure to be in place before new developments can be constructed.

Condemnations: Condemnations are an administrative or judicial process by which real property of a private owner is taken without his or her consent for public use.

Condominium: A condominium is a concept of ownership of a single residential or commercial unit in a multi-unit structure which can be acquired. The owner holds title directly in his or her individual unit and a proportionate interest in common areas of the structure and the underlying land.

Conflicting demands: Conflicting demands are when a buyer and seller demand that the broker release escrowed funds which are termed an escrow dispute. If the broker receives conflicting demands for escrowed funds or if the broker has good faith doubt over which person is entitled to the escrowed property. The brokers must give written notice to FREC within 15 days of the last party’s demand and institute an authorized settlement procedure within 30 days.

Conforming loan: A conforming loan is a mortgage loan that conforms to GSE guidelines. In general, any loan that does not conform to GSE in a non-conforming loan. Since 1970, Fannie Mae was authorized by the United States Government to purchase residential mortgage loans. Fannie Mae worked with Freddie Mac to develop uniform mortgage documents and national standards for what is now called a conforming loan.

Consent to transaction: A consent to transaction is a requirement of the seller to the transaction. An agreement between the seller and a buyer that requires the seller to consent to any transaction by the buyer and to verify the contract is current and not in default.

Consideration: Anything of value is given to induce entering into a contract. Real Estate Contracts are not valid without consideration.

Construction lien: A construction lien is a lien filed against a commercial or residential property by a contractor, sub-contractor, or supplier who has not been paid in full for work already completed. When there is a lien, the property can not be sold until the lien is paid off. All 50 states have lien laws. In Florida, there is a time limitation for filing the paperwork which must be observed for the lien to be valid.

Construction loans: The loans given to builders to start a project.

Construction notice: The construction notice is that which the law regards as sufficient to give notice and is regarded as a substitute for actual notice.

Contiguous: Having a common boundary or edge.

Contract: A contract is an oral or written agreement between two or more parties that establishes, changes, or ends a legal relationship. It is basically an enforceable promise to do or not to do a certain thing.

Contract for deed: contract of deed is sometimes known as a “land contract” or an “installment sale agreement”. It is a contract between a seller and a buyer of real property in which the seller provides financing to buy the property for an agreed-upon purchase price and the buyer repays the loan in installments. Under the “contract for deed,” the seller retains title until the loan is repaid. Often there is a balloon payment to cut down the fully amortized installment period.

Conversion: Conversion is an unauthorized act of using funds or property of another for personal use. The action is a form of fraud.

Cooperative (apartment): A cooperative (apartment) is a specific unit in an apartment building in which a person has received a proprietary lease through the purchase of shares in the cooperative (corporation), trust, or partnership which holds title to the entire building.

Corporation: A corporation is created under the laws of the state as a separate legal entity that has the privileges and liabilities that are distinct from those of its shareholders. There are many types of corporations.

Cost-depreciation: The cost-depreciation approach is based on the principle of substitution. No one would pay more for an existing property than the cost to purchase land and have comparable improvements constructed on that land, assuming no unusual time delay. The value of the subject property can be estimated using “reproduction costs” or “replacement costs”.

Counselors: Professionals who advise clients on a variety of real estate investment, development, and problem issues.

Credit: Credit is (1) the ability of a person to borrow money or obtain goods on time because of the favorable opinion the lender or supplier has to his/her reliability and solvency. (2) in a closing statement that which is due to the buyer or seller, the opposite of a debit

Credit score: A statistical method of assessing an applicant’s creditworthiness. It is determined through an applicant’s credit card history; the amount of outstanding debt; the type of credit used; bankruptcies or late payments; collection accounts and judgments; too little credit history, and too many credit lines with the maximum amount borrowed.

Culpable negligence: Recklessly acting without reasonable caution and putting another person at risk of damage, injury or death (or failing to do something with the same consequences)

Curable: Curable, in terms of real estate, is the portion of physical deterioration due to normal wear and tear from use, negligence, or aging of a building. If it can be repaired and add value to the building that is more than the cost of the repair, then it is curable; otherwise, it is incurable.

Curable defects: Minor problems in a real property that can easily be remedied without a large outlay of money. Examples are peeling paint or rusted hardware on kitchen cabinets.

Current mailing address: The place where the U.S. Postal Service delivers mail to a licensee.

Customer: The customer (also known as a client, buyer, or purchaser) is the recipient of a good, service or product, or an idea obtained from a seller, vendor, or supplier.

Datum: A point, line, or surface used as a reference in surveying or mapping.

Debit: A debit is an accounting term. It is the left side entry in double-entry accounting on a balance sheet. Credits are on the right side of a balance sheet. Debits and credits are a system of notation used in bookkeeping to determine any financial transaction. In financial accounting or bookkeeping, DR (Debit) is the left side of the ledger, and CR (Credit) is on the right side of the ledger account

Debt service: Debt service is the cash that is required for a particular time period to cover the repayment of interest and principal on a debt. Debt service is normally calculated on a yearly basis. Making payments on a mortgage is one form of debt service.

Declaration: Formal pleadings by a plaintiff as to the facts and circumstances that gave reason to the legal action, OR a legal document used to create a condominium.

Declaratory Decree: Submission of claims to a court so that the court can establish the rights of the parties under a contract such as an escrow agreement.

Declaratory judgment: Submission of claims to a court so that the court can establish the rights of the parties under a contract such as an escrow agreement.

Dedication: Dedication is a deliberate transfer of land by its owner for public use and accepted by the public.

Deed: The deed is a written agreement that has been signed and delivered, by which one individual, the grantee, conveys title to real property to another individual; the grantor, a conveyance of land, tenements, or hereditaments from one individual to another.

Deed in lieu of foreclosure: A deed in lieu of foreclosure is an alternative to a foreclosure sale. A mortgagee who is in default can voluntarily deed the property to a lienholder in lieu of payment of a debt.

Deed restriction: A deed restriction is a clause in the deed that limits the use of land. A deed restriction could be that alcoholic beverage cannot be sold on the land for 20 years but restrictions that prohibit people of a certain ethnic group is unenforceable and illegal.

Defeasance clause: A clause in the mortgage that gives a borrower the right to redeem the property after default, usually by paying full indebtedness and fees incurred.

Defer: To postpone, to put off.

Demand: Demand is the desire to own anything; the ability to pay for it and the willingness to pay for it. It is how much of a product (real estate) is desired by buyers. Demand can move between low and high depending on the amount a buyer is willing to buy at a specific price.

Denominator: The expression written below the line in a common fraction indicates the number of parts into which one whole is divided.

Department of Business and Professional Regulation (DBPR): The body of the Florida government that ensures the compliance of “regulated professions” with Florida Law. It creates standards for licensure, continuing education, and other matters.

Deposit: Deposit is money or other valuable security, or real property entrusted to a person as security of the performance of a contract. If the depositor fails to fulfill his/her obligation or performance of a contract, they generally lose their deposit.

Deposit: An amount of money or other forms of consideration left with a real estate broker for a real estate transaction.

Depreciation: Depreciation is a decline or loss in value of an asset with the passage of time, due in particular to wear and tear. Depreciation of assets or investment property can be offset against income over a specific period of time.

Description by government survey: Creates legal description of property by subdividing land by means of a grid of rectangular lines. The government survey system is also called the U.S. System of Rectangular Surveys.

Designated sales associate/person: A designated sales associate/person under Florida Statute 475.2755. Any commercial real estate transaction where the buyer and seller both have assets of over one million or more. The broker, at the request of the customer, may designate sales associates to act as single agents for customers in the same transaction.

Development of Regional Impact (DRI): A project that will have a substantial impact on the health, safety, or welfare of citizens in more than one county in the state.

Devise: – Real property transferred to an heir by a will.

Devisee: The person who is the recipient of real estate in a will.

Disclosure: A document that defines the nature of a relationship between several parties.

Discount points: Discount points are a type of pre-paid interest mortgage borrowers can purchase that lowers the amount of interest they will have to pay on subsequent payments. Each discount point generally costs 1% of the mortgage loan amount and, depending on the borrower, each point lowers your interest rate by one-eighth percent of your interest rate. Discount points are tax-deductible only for the year in which they were paid.

Disintermediation: disintermediation is the act of removing funds from a savings bank and placing them into short-term investments on which the interest rate yields are higher i.e., one may remove $10,000 from his/her savings account and invest it to buy stock without the bank’s permission.

Disposition: Right to dispose of the interest in the real property, in whole or in part. This includes the right to mortgage, lease, sell, give away, dedicate, or in some other way dispose of the property.

Division of Real Estate (DRE): performs all functions related to the regulation of general real estate in Florida.

Double entry: An entry in an account or ledger that shows the items entered into the account and the items taken out of the account.

Dual agency: A dual agent is when one real estate agent represents both the home buyer and seller in a fiduciary transaction. A dual agent must be loyal to both the buyer and the seller. Dual agency is illegal in Florida.

Due Diligence: Any effort to uncover or research the true character of a company, individual, or property. Also, a mailing done by a record-keeping agent or issuer as an attempt to locate shareholders due to unclaimed property (e.g. checks, certificates, etc.) prior to the property begin escheated to the state.

Due on sale clause: The due on sale clause is a clause in a promissory note that stipulates that the full balance may be called due upon sale or transfer of ownership of the property used to secure the note. The lender has the right, but not the obligation, to call the note due in such circumstances.

Due on sale clause: A clause in a mortgage contract stating that if the mortgagor (borrower) sells the property used as collateral for the mortgage loan, he must also repay the balance of the loan to the mortgagee (lender).

Earnest money: A earnest money deposit is sometimes called earnest payment or simply earnest or, alternatively, a good faith deposit toward the purchase of real estate or a publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the real estate transaction.

Earnings: The company’s profits that are available to the holders of ordinary shares.

Easement: An easement is a right held by one property owner to make use of the land of another property owner for a limited purpose as a right of passage. Property law defines it as the right to enjoy a limited use of his neighbor’s land, as by crossing it to reach his property.

Economic base studies: Studies of employment in the major industries in a particular region.

Economic life: The useful life of a property; the period of time during which it can be expected to perform profitably.

Effective Gross Income: Consists of the Potential Gross Income of a property minus vacancy and collection losses, plus other income.

Effective age: the age of a property based on the amount of wear and tear it has been subject to.

Egress: The right to come and go across the land (public or private) of another.

Elective share: The elective share is a term used in American law relating to the inheritance which describes a proportion of an estate that the surviving spouse of the deceased may claim in place of what they were left in the decedent’s will. It may also be called the “widow’s share”, “statutory share”, “election against the will” or “forced share”.

Eminent Domain: Right of government or a public utility to acquire property for necessary public use by condemnation. The owner must be fairly compensated.

Encroachment: Encroachment is an illegal intrusion of a building or structure which is in whole or in part on a neighbor’s property or infringing on another person’s property illegally. A current survey is required to determine if an encroachment exists.

Encumbrance: Any interest in or right to land that affects its value, such as unpaid taxes, easements, mortgage loans, and deed restrictions.

Enjoyment: Right to use property without interference. Also called right of quiet enjoyment.

Environmental impact: environmental impact is an assessment of the possible positive or negative impact that a proposed project may have on the environment together consisting of natural, social, and economic aspects including air quality, water pollution, noise pollution, waste management, radiation, etc.

Equity: Equity is the value or interest an owner has in real property over and above any mortgage indebtedness or other liens against the property. In residential real estate, it is the difference between fair market value and unpaid mortgage balance.

Equity of redemption: Equity of redemption refers to the right of a mortgagor in law to redeem his property once the liability secured by the mortgage has been discharged.

Escheat: The procedure used by the State of Florida to take possession of a parcel of real estate when a person dies intestate with no legal heirs. If rightful owners or heirs later appear, they can claim the property.

Escrow: Escrow is generally money held by a third party on behalf of transacting parties until the terms and conditions of the escrow instructions made by the parties to the escrow are completed or otherwise terminated.

Escrow account: An escrow account is an account at a bank established by a broker under the provisions of the license law for the purposes of holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction or a trust account held in the borrower’s name to pay obligations such as property taxes and insurance premiums.

Escrow disbursement order (EDO): A method for determining how disputed deposits should be distributed.

Estate: All of the property, monies, securities, real estate and debts of a person at the time of death. The estate is distributed to heirs according to the dictates of the person’s will or, if there is no will, a court ruling.

Estate for years: Estate for years is an estate, interest in real property, held under a rental agreement by which the owner gives another the right to occupy or use the land for a period of time.

Estoppel certificate: An estoppel certificate is a contract clause in which one party asserts that mortgage debt, collateral pledged, and so on, is correct on the date the agreement was made. This prevents the borrower from claiming differently at a later date. Also called an estoppel clause.

Exclusion: The right to control access to a property.

Exclusive right to sell listing: a contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else, except that the seller(s) may name one or more individuals or entities as exemptions in the listing agreement and if the property is sold to any exempted individual or entity, the seller(s) is not obligated to pay a commission to the listing broker.

Exclusive right to sell listing: A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else, except that the seller(s) may name one or more individuals or entities as exemptions in the listing agreement and if the property is sold to any exempted individual or entity, the seller(s) is not obligated to pay a commission to the listing broker.

Exclusive-agency listing: Form of listing contract where the seller is obliged to pay commission only if the listed property is sold by the action of a real estate broker.

Exculpatory clause: A clause in a mortgage which releases the mortgagor from personal liability for a loan upon surrendering the property claimed as collateral to the mortgagee. In this case, the mortgagee cannot go after any of the mortgagor’s other property.

Executive power: Leadership or management authority. In the case of FREC, the ability to regulate professional practices, set educational policies for licensees, and govern the publishing of materials.

Executor: An Administrator of an estate who gathers the estate assets. Files estate tax returns and final personal income tax returns. Administers the estate by paying debt of and charges against the estate. Distributes the balance in accordance with the terms of the will.

Executory contract: A contract which has not yet been completely fulfilled by one or more of the parties.

Exempt property: Properties that have been deemed free or released from taxation obligations or other claims. These properties must re-qualify for exemption every year.

FAC 61-J2: Chapter 61-J2 of the Florida Administrative Code. It contains the rules of the Florida Real Estate Commission.

FAR: Acronym for Florida Association of Realtors.

FAR/BAR contract: Standard sales contract developed by the Florida Association of Realtors in collaboration with the Florida Bar Association.

FDIC: Acronym for Federal Deposit Insurance Corporation. An agency of the federal government that insures depositors’ accounts at most commercial banks and mutual savings banks. Supervises insured state chartered commercial banks that are not members of the Federal Reserve System.

FREC I course: The pre-licensing course for sales associates that is approved by the Florida Real Estate Commission.

FREC II course: The pre-licensing course for brokers that is approved by the Florida Real Estate Commission.

Fair Housing Act: An act contained in Title VII of the Civil Rights Act of 1968. It created protected classes of people and prohibits discrimination on the basis of race, color, religion, sex, national origin, familial status, or handicap status when selling or renting residential property.

Familial status: Familial status is a characteristic determined by a person’s household type, such as marriage and existing or prospective children. Referred to in the fair housing law and Fair Credit Reporting Act, it prohibits denying rights to people under 18 who live with a parent or guardian. Pregnant women are specifically covered. A landlord can not refuse to rent to someone based on familial status. So, for example, a single mother could expect fair treatment.

Fannie Mae: A nickname for Federal National Mortgage Association (FNMA). A privately owned company that adds liquidity to the residential mortgage market by buying mortgages from the original lenders, such as savings and loans, banks, and insurance companies. Fannie Mae buys mortgages guaranteed or insured by government agencies, as well as conventional mortgages. To raise funds, it sells corporate debentures, notes, and mortgage-backed certificates to the investing public and occasionally to the US Treasury.

Farm area: Real estate farming is the strategy where real estate agents work in a particular area to position themselves as the go-to resource for a particular neighborhood.

Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac): was created to promote the sale of mortgages to the public in the secondary market in order to increase the supply of money available for new mortgages. Freddie Mac’s are medium- and long-term debt instruments which are pools of fixed and adjustable rate mortgages. Income pays principal and interest.

Federal Housing Administration (FHA): Responsible to the Department of Housing and Urban Development (HUD). The FHA insures residential mortgages. It also settles claims for defaulted mortgages in cash or registered, transferable debentures which have an unconditional US guarantee. Acronym: FHA.

Federal Housing Authority (FHA): Responsible to HUD, the department of Housing and Urban development. FHA insures residential mortgages. Settles claims for defaulted mortgages in cash or registered, transferable debentures which have an unconditional US guarantee.

Federal National Mortgage Association (FNMA, Fannie Mae): A privately owned company which adds liquidity to the residential mortgage market by buying mortgages form the original lenders, such as savings and loans, banks and insurance companies. Fannie Mae buys mortgages guaranteed or insured by government agencies, as well as conventional mortgages. To raise funds, it sells corporate debentures, notes and mortgage-backed certificates to the investing public and occasionally to the US Treasury.

Federal Reserve Bank: Known as “the Fed”, the Federal Reserve Bank is part of the Federal Reserve System, which is a central banking system that regulates the nation’s supply of money. It includes 12 regional Federal Reserve Banks and their branches and supervises those state banks which are members.

Federally related transaction: A federally related transaction is any real estate-related financial transaction that a federal financial institutions regulatory agency (FFIRA) has either contracted for or regulates and requires the service of an appraisal. A real estate-related financial transaction involving the sale, lease, purchase investment in or exchange of real property, including interests in property or financial thereof. Also, refinancing of real property using real property as security for a loan or investment including mortgage-backed securities.

Federally related transaction: Any real estate transaction involving a federally insured institution. A real estate appraisal used in a federally related transaction must be performed by an appraiser licensed by the state.

Fee simple estate: Also referred as fee absolute, or fee simple, or fee simple absolute, it is the absolute ownership of real property. The owner is entitled to the entire property and is fully entrusted with all four rights that come with property ownership. At the owner’s death, his heirs will inherit the property.

Fee simple estate (fee simple ownership): Fee simple estate (fee simple ownership) is where the law recognizes this form of estate (ownership) in real estate as the highest form. The property owner is entitled to the full enjoyment of the property limited only by zoning laws, deed or subdivision restrictions, or covenants. Also known as “free ownership” and “estate of inheritance”.

Fiduciary: A fiduciary is a term that refers to a legal relationship that is confidential between two parties. The real estate agent’s responsibility is to protect the privacy of the client and to keep all of the client’s information confidential. A real estate agent has a fiduciary relationship with their principals only.

File the complaint: A written complaint about a real estate licensee may be filed with the DBPR.

Final order is issued by the FREC: Based on the recommendations of the administrative judge who heard the case in a complaint, the FREC decides on any penalties or corrective actions to be taken again.

Financial Statement: A written record of the financial status of an individual, association, or business organization. The Financial Statement includes a Balance Sheet, and an Income Statement (or Operating Statement or Profit and Loss Statement) and may also include a Statement of Cash Flows, a Statement of Changes in Retained Earnings and other analyses.

Finders fee: A fee or rent credit provided to a person for introducing or arranging an introduction between parties to a transaction involving the rental or lease of an apartment unit.

Fixed assets: Permanent assets that are not intended to be “turned over” in the normal business cycle or activities. Fixed assets include items with a useful business life of greater than one year, such as land, buildings, machinery and furniture.

Fixture: A piece of property attached to real estate. Personal property becomes a fixture by the process of annexation.

Floor area ratio: The ratio between the total floor area of a building and the total land area of the lot on which it is sited. Floor area ratios are often controlled by municipal zoning ordinances.

Florida Bar: The organization of all lawyers who are licensed by the Supreme Court of Florida to practice law in the state. Any lawyer desiring to practice law in Florida must be a member of The Florida Bar.

Florida Real Estate Commission (FREC): Administratively a part of the Department of Business and Professional Regulation. The Florida Real Estate Commission protects the public through regulation and fosters the education of real estate licensees and permit holders.

Florida resident: For application and licensing purposes, the FREC rules define a resident of Florida as a person who has resided in Florida continuously for a period of four calendar months or more within the preceding year. This pertains to mutual recognition.

Follow-up: Usually referred to as the art of keeping in touch with clients and customers. A professional licensee usually inquires about the satisfaction of his or her former customers and about their real estate needs and future expectations.

Formal complaint: A formal complaint is an outline of the charges against a licensee that must be answered within 21 days.

Formal hearing: A hearing before an administrative law judge in which the respondent (the accused party) may be represented by an attorney.

Fraud: The intentional use of deception to cause another person to suffer loss or harm.

Freehold estate: A form of ownership of real estate without a predetermined time span.

Further assurance: Further assurance is a provision in a deed containing a covenant or warranty to perform any further acts the grantee (buyer) might require to a perfect title to the property.

General agent: A general agent is a representative authorized by the principal to perform only acts related to a business or to the employment of a certain kind (i.e. legal, real estate, banking, etc.)

General lien: A lien that includes all of the property owned by a debtor, rather than just specific property.

General partnership: A general partnership is an association of two or more persons for the purpose of jointly conducting a business, each of the partners is liable for all of the firm’s debts and the actions incurred in the conducting of that business.

General warranty deed: A deed in which the grantor agrees to protect the grantee against any claims to the property’s title. In Florida, the general warranty deed is expected to be used in residential transactions unless agreed otherwise.

Ginnie Mae: A nickname for Government National Mortgage Association (GNMA). A corporation wholly owned by the US Government which buys mortgages from banks and other private lenders at prices better than available in the market. These mortgages are resold to investors at market prices. Ginnie Mae issues and guarantees mortgage-backed bonds and pass-through certificates. Participation certificates issued in earlier years are also outstanding.

Going concern value: Going concern value is the value of a business or enterprise, including real estate, goodwill, and earning capacity.

Good faith doubt: Good faith doubt is when a broker has doubt as to which party should receive the escrowed property.

Goodwill: Goodwill is an accounting concept meaning the value of an entity over and above the value of its assets resulting in an intangible asset perhaps from the reputation the firm enjoyed with its clients.

Government lot: A government lot is a fractional piece of land of less than a quarter section, resulting from geographical features (e.g., lakes, streams) interfering with land surveying.

Government survey system: The government survey system subdivides land into identifiable descriptions using surveying lines developed by the federal government.

Grantee (buyer): The grantee is the party who receives title to real property from the seller (grantor) by deed.

Granting clause: Granting clause is the portion of an instrument of conveyance, such as a deed that specifies the names of the parties involved, the words of conveyance, and a description of the property.

Grantor (seller): The grantor is an individual who conveys or transfers ownership of property. In real property law, an individual who sells land is known as a grantor.

Green Belt Law: Green Belt Law Legislation authorizes county property appraisers to assess land used for agricultural purposes to be valued as agricultural land.

Gross income multiplier (GIM): The gross income multiplier (GIM) Is for estimating the market value of commercial and industrial properties. The ratio to convert annual income into market value.

Gross lease: A gross lease is when the tenant pays a fixed base rental amount and the landlord pays for all property expenses regularly incurred by the ownership. Most apartment leases are gross leases.

Gross rent multiplier (GRM): gross rent multiplier is the ratio of the price of a real estate investment to its annual rental income before expenses. Property values may be estimated using the following formula: Sale price x potential gross income = GRM

Ground lease: A ground lease is an agreement for the tenant to lease the land-only and erect a building on the land usually for 50 to 99 years.

Group license: A group license is a single real estate license that can be obtained if the sales associate or brokers associate work various properties owned by affiliated entities under one owner-developer.

Growth Management Act: Florida Statute 163, Part II, entitled “The Local Government Comprehensive Planning and Land Development Regulation Act.” Mandates comprehensive planning throughout the state. It requires all of Florida’s local governments to adopt Local Government Comprehensive Plans that guide growth and development.

HUD: Acronym for the federal Department of Housing and Urban Development. Notes and bonds are issued by local communities to fund public housing for urban renewal. HUD guarantees approved securities for payment of interest and repayment of principal.

HUD-1 settlement statement: Also called a uniform settlement statement, the HUD-1 or HUD-1A is a summary of the financial portion of the real estate transaction. It lists the purchase price, loan amount, and closing costs for both buyer and seller, and shows all prorations and sums being disbursed by the settlement agent to all parties. It also clearly summarizes the total cash due from the buyer. It must be used for every federally related mortgage transaction.

Habendum clause: The habendum clause in a deed defines the type of interest and rights to be enjoyed by the grantee. The habendum clause usually begins with the words “to have and to hold”. Its provisions must agree with those stated in the granting clause.

Handicap status: Handicap status is a protected class as defined in the Fair Housing Act and the Americans with Disabilities Act consisting of a physical or mental impairment that substantially limits one or more major life activities.

Health ordinance: Health ordinances are local codes that regulate the maintenance and sanitation of public spaces.

Health ordinances: Health ordinances may vary from place to place but are generally established to set rules and regulations regarding public health i.e. sanitation rules, water quality, air quality rules, restaurant food storage rules, and form the needed health standards (rules) that keep the public in a healthy and working environment.

High-risk: Exposure to a higher chance of loss.

Highest and best use: The highest and best use is the key appraisal and zoning principle in valuing any parcel of land or property using a principle of value that focuses on the most profitable legal use to which a property can be put.

Home equity loan: A home equity loan is a type of loan in which the borrower uses the equity in their homes as collateral. They are most often used to finance major expenses such as home repairs, medical bills, or college education. A home equity loan creates a lien against the borrower’s house and reduces the actual home equity. There are two basic types of home equity loans: fixed-term and home equity line of credit which is variable.

Home equity loan: A home equity loan is a mortgage secured by a personal residence. It provides a line of credit or a home improvement loan for draws when needed by the homeowner.

Homestead: Homestead is defined by the Florida Constitution as any real property owned by the head of the household who resides on and in the property. There are three separate but related situations:(1) a tax exemption, (2) a tract of land limited in size, and (3) a statutory condition designed to protect the interests of a spouse and lineal descendants. The Constitution also exempts homestead property from the execution and forced sale of the property to satisfy personal judgment liens such as personal loans, credit card debt, etc., but can be foreclosed on if the debts are related to the property and can be foreclosed on for non-payment.

Homestead exemption: The homestead exemption is a partial or total exemption from the taxes assessed on a homeowner’s principal residence.

Household: A household is a domestic unit consisting of the members of a family who live together along with non-relatives such as servants. A person or group of people occupying a single dwelling. A household could be one person.

Hyperlink: A link in an electronic document that brings you to another location or resource when activated. Hyperlinks usually appear as underlined text and are printed in contrasting colors.

Hypothecation: hypothecation is the pledging of real or personal property as security for a debt or obligation without giving up possession of the property

Illiquidity: The difficulty of converting an asset into cash.

Immune property: Immune property is a property owned by local, state, and federal government and is immune and not assessed or subject to taxation when used to provide government services. However, government-owned properties that are leased to a private business are not immune from taxation.

Implied listing: A contract that results from the actions of a broker and a seller. It may be enforceable, even though it has not been spelled out orally or in writing.

Improvement(s): Additions to raw land that increase value: buildings, streets, sewers, etc.

Income: Revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Also known as earnings.

Income Statement: A financial statement that summarizes the revenues generated and expenses incurred by an entity during a period of time.

Income capitalization approach: The income capitalization approach is an appraisal term based on the assumption that the value of a property is related to the amount of income it generates in the future. This approach is based on the appraisal principles of substitution and anticipation. The principle of anticipation states that the present value is based on the benefits it can produce and its future income. Capitalization is a mathematical process that converts future income into present value.

Incurable: incurable in real estate terms refer to a physical deterioration in a building that would not replace or increase value by repairing it. It is an incurable physical problem. Repairs that add value or replace lost value are curable.

Index: The statistic that indicates a current or financial condition. Indexes are used to adjust mortgage, wage, and rental rates, as well as the number of government benefits.

Index (lease): Index lease in real estate is a leased property with the rent tied to the national consumer price index. The index approach is often found in leases of office space. The rent is adjusted to conform to any upward or downward movement. It has a variable rent based on the movement of the index. The rent is adjusted according to changes in the CPI.

Industrial: Properties used for manufacturing, warehousing, research and development, and the like. Industrial properties usually are sited in industrial parks, redeveloped central areas, or on industrial acreage.

Ineffective (license): An ineffective license is a void license and, hence, rendered ineffective and cannot be used to provide real estate services. If a broker’s license is suspended, revoked, or otherwise void or ineffective, the licenses of all persons licensed under that broker become automatically inactive. They are not able to use their license to provide real estate services until they replace or find another broker to hire them.

Informal hearing: A presentation of the facts of the case before the Florida Real Estate Commission.

Installment sale: Another name for contract for deed, in which the seller accepts a small down payment from the buyer and finances the rest of the purchase price. The title remains with the seller until the loan is repaid.

Insulation: are materials in a home that can dramatically affect utility costs. The materials are measured by their R-value. The higher the R-value, the better the insulation characteristics. The R-value is the measure of the ability of the materials to resist the flow of heat and is expressed in BTUs (British thermal units) through the thickness of the material in 1 hour. An R-rating of 30 is twice as good as one with 15. Building codes have minimum requirements for walls and ceilings.

Insurance Premium: The amount of money payable to put a life insurance policy in force and keep it in force. It could be a one-time payment or a series of payments.

Intangible asset: An asset that cannot be seen or touched.

Interest: Interest is a fee paid by the borrower of an asset to the owner as a form of compensation for the use of the assets. It is most commonly the price for the use of borrowed money or money earned by deposited funds. In a mortgage loan, interest is typically a percentage of the principal loan paid monthly or yearly until the principal is paid; the cost of borrowing.

Interest rate cap: A clause in the contract for an adjustable-rate mortgage that limits the increase of the rate.

Intermediation: Intermediation is a process whereby financial middlemen consolidate many small savings accounts belonging to individual depositors and invest those funds in large, diversified projects providing mortgages to buyers to pay sellers.

Intermediation: intermediation is a situation in which a financial institution stands between counterparties in a transaction. For example, in the sale of a house, a bank usually serves as a financial intermediary by providing a mortgage to the buyer to pay the seller.

Interpleader: An interpleader is an equitable proceeding brought on by a third party to have a court determine the ownership rights of rival claimants to the same money or property that is held by the third party. An interpleader is a form of equitable relief. Interpleader is employed when two or more parties seek ownership of a “stake” (money or property) held by a third party (stakeholder). It is often called a bill of interpleader.

Intestate: A person who dies without a will.

Intestate: is when a person dies and leaves no will. He/she died intestate (no will).

Investigated by the DBPR: The DBPR investigates complaints about licensees. It also routinely investigates real estate brokerages to ensure compliance with regulations.

Investment: The outlay or use of money in order to realize a profit. Investments are usually expenditures of cash that will yield a return over a period of time. Each investment brings with it a certain level of risk.

Investment value: The value of a specific real estate investment to a particular investor, based on his or her risk profile, desired rate of return, and so on. It may be more or less than market value.

Involuntary alienation: Loss of property for nonpayment of debts such as taxes or mortgage foreclosure.

Involuntary inactive: is when a licensee does not request a renewal, pay the required fine, or maintain his or her continuing education requirements and will automatically be placed on involuntary status. The status is only for a maximum of 2 years.

Involuntary lien: A lien imposed against a property without the owner’s consent for unpaid taxes or unpaid special assessments, etc.

Jalousie (windows): are sometimes called “Miami windows” and have a series of horizontal glass panels from top to bottom of the window frame. They operate by a crank that opens and closes the panels simultaneously. This type of window was generally used before air conditioning and is not energy efficient and is not often used in new construction.

Joint tenancy: is a type of ownership of real or personal property by two or more persons in which each owns an individual interest in the whole. The individuals, who are called joint tenants, share equal ownership of the property and have an equal, individual right to keep o dispose of the property. Joint tenancy creates the right of survivorship.

Judicial review: After the FREC has issued a final order in a complaint, the respondent (accused) may petition for a judicial review of the decision in a civil court.

Just value: is the estimated or appraised worth of any object or property, calculated in money.

Key lot: is a type of real estate lot that is similar in shape to its name. It has narrow front access with a larger and wider portion towards the back of the lot, tapering from a narrow front to a wider back.

Kick back: which the federal authority called RESPA (Real Estate Settlement Procedures Act) prohibits a broker from receiving a fee, kickback, or rebate in a real estate transaction unless certain criteria are met. He/she must provide a service entitling him/her to receive the fee and have the appropriate licenses to perform the services. All parties in the transaction must be advised of the fee.

LTV (loan-to-value): Acronym for loan to value ratio, the ratio between the loan amount and the value of the property. A piece of real estate purchased for $ 100,000, with $20,000 as cash deposit, and financing in the amount of $80,000, has a loan-to-value (LTV) ratio of 80%.

Land: is real property, real estate, and all that grows on it and the minerals underneath and the air space over it. Improvements on the land are called leaseholds. The rights to use the air above are subject to local, state, and Federal ordinances.

Land contract: is sometimes known as a “contract for deed” or an “installment sales agreement” and is a contract between a seller and a buyer of real property in which the seller provides the financing to buy the property for an agreed-upon price and the buyer repays the loan in installments. Under a land contract, the seller retains the legal title to the property while permitting the buyer to take possession and use of the property except for legal ownership. Payments are made in periodical payments often with a balloon payment at the end. Once payments have been completed and all interest, the seller is obligated to convey the title to the property to the buyer.

Law of agency: The body of law that is involved with agency relationships. It consists of both common law and statutory law.

Lease: Contract in which an individual entitled to the possession of real property (lessor) transfers those rights to another (lessee) for a specified period of time, for a payment called rent.

Leasehold estate: is a type of ownership of a temporary right to land or property in which a lessee or a tenant holds rights of property by some form of property tenure where one party buys the right to occupy land or a building for a given length of time.

Legal description: (land) in the United States is the legal description of a property that is legally acceptable and uses one of the following methods:
1)            government rectangular survey method
2)            the metes and bounds method
3)            recorded plat (lot and block number
The metes and bounds method is most commonly the one used for legal property descriptions.

Legally sufficient (complaint): is a complaint that alleges a violation of law or rule has occurred and contains sufficient evidence supporting the complaint. The DRE must investigate all legally sufficient complaints. level payment plan (mortgage) refers to a type of mortgage that requires the same dollar payment each month or pay period. Level-payment mortgages allow borrowers to know exactly how much they will have to pay on their mortgage each pay period. This stability makes it easier for them to create budgets and stick to them. They can be either fixed-rate or variable-rate loans.

Lender’s title insurance: Title insurance issued for the unpaid mortgage amount in order to insure the lender against defects in the title.

Level-payment plan: Amortizing a loan by paying the same amount each month.

Leverage (financial): is a financial term (sometimes referred to as gearing or solvency in other countries) is a general term for any technique to multiply gains. Common ways to attain leverage are borrowing money (mortgage loan) and buying an asset (a home). The borrowed money is the leverage you are using.

Liabilities: All the outstanding claims against a corporation: accounts payable, wages and salaries, dividends declared payable, accrued taxes, fixed or long-term liabilities such as mortgage bonds, debentures, and bank loans.

License (real estate): is issued by the DBPR (Department of Business and Professional Regulations) certifying that the person (licensee) is or was duly licensed for the license period indicated thereon. It can also mean the right to enter on land, generally granted by parole (oral) agreement but is not assignable, being personal and temporary, and which can be revoked by the licensor at any time.

Lien (real estate): is a legal claim against an asset (real estate) that is used to secure a loan and which must be paid when the property is sold. Liens can be constructed in a variety of ways. In some cases, the creditor will have a legal claim against the asset (property) but not actually hold it in possession while in other cases, the creditor will actually hold on to the asset until the debt is paid. The former is most often the type of lien employed in residential liens.

Lien history (lien theory): is the oldest form of mortgaging which allows the borrower to retain the ownership of the property during the loan period. The lender records the mortgage, creating a lien against the property. Under lien theory, the foreclosure process is more involved than under title theory; the borrower is given the right to use the default instead of forfeiting the property. Florida observes the lien theory method. The concept originated from English common law.

Lien theory (legal): is the concept that a mortgage is a form of lien on the property that does not grant the mortgagee any ownership rights until a foreclosure occurs.

Life Insurance: Life insurance is a way of guarding against financial risks. Life insurance policies are purchased as a way to ease the economic impact of death.

Life estate: is a concept used in common law and in statutory law to designate the ownership in land for the duration of a person’s life. In legal terms, it is an estate in real property that ends at death when there is a “reversion” to the original owner. The owner of a life estate is called a “life tenant”

Life tenant: The person is allowed to use the property for the life or lifetime of another person.

Lifetime cap: is the maximum interest rate that can be charged on an adjustable-rate mortgage (ARM) that may be charged at any point over the life of the mortgage. It is usually expressed as the original percentage of the original interest rate. If the original rate was 4% and the cap rate is 8% then the rate cap is 4%.

Like kind exchange: Under chapter 1031 of the Internal Revenue Code (IRC) the owner of an investment property can “exchange” his property for a property fulfilling the same purpose (for example, investment) in order to defer the capital gain taxes on the sale of the original property. “Exchange” does not literally mean exchange but refers to the process of buying and selling the same kinds of properties.

Limited liability company: is a company in which shareholders limit their liability exposure to their percentage of ownership or equity interest in the company. Shareholders’ personal assets are protected in the event of a business-related lawsuit.

Limited liability partnership: is a form of general partnership that provides individual partner protection against personal liability for certain partnership obligations. An LLP provides each of its individual partners protection against personal liability or certain partnership liabilities.

Limited liability partnership (LLP): A form of partnership in which the partners are protected from personal liability for the debts of the company. Limited liability partnerships are subject to fewer legal restrictions than many other business entities.

Limited partnership: is a special type of partnership commonly used when people need funding for a business or when they are putting together an investment in real estate. A limited partnership requires a written agreement between business management who are the general partner or partners and all of the limited partners. Each limited partner makes an investment of funds into the partnership and is supposed to receive a pre-stated share of the profits, which is ordinarily greater than that of each of the general partner(s) up to a point (such as a return of their individual investment) and, thereafter, receive a lesser amount than the general partnership.

Limited representation: is when a broker is presumed to be acting as a transaction broker unless a single agency or no broker relationship has been established by a written agreement with a customer. The transaction broker is to provide a limited representation to the buyer, the seller, or both in a real estate transaction. Limited representation allows a licensee to facilitate a real estate transaction by working with buyers and sellers equally. The broker has no fiduciary responsibility to either party and neither the buyer nor seller is responsible for the actions of the broker.

Line of credit: A bank’s moral commitment, as opposed to its contractual commitment, is to make loans to a particular borrower up to a specified maximum during a specified period, usually one year. Because a line of credit – also known as a bank line – is not a legal commitment, it is not customary to charge a commitment fee. It is common, however, to require that compensating balances be kept on deposit – typically 10% of the line, with an additional 10% of any borrowings under the line. A line about which a customer is officially notified is called an advised line or confirmed line. A line that is an internal policy guide about which the customer is not informed is termed a guidance line.

Liquidated damages: are damages agreed upon and specified in the contract. The parties have agreed to the penalty to be imposed in the event of a breach by either party. This usually involves the seller retaining the deposit in the event of a buyer’s default.

Liquidation: Conversion of assets into cash, or inventory into accounts receivable, to meet the current obligations of the organization or service long-term debt obligations. Also, termination of a business by selling and distributing its assets to meet the claims of its creditors and current liabilities.

Liquidation analysis: is an analysis usually done by a business broker to determine the value of the business upon liquidation. An accountant and lawyer usually work as part of the analysis team. The broker must have knowledge of classes of assets and liabilities, income statement analysis, balance sheet analysis, cash flow analysis, asset depreciation methods, and taxation. Liquidation value is the value that remains after liquidating all assets of the business and satisfying all the liabilities.

Liquidity: is the state of being liquid; the quality of being readily convertible into cash. Available cash or the capacity to obtain it on demand.

Lis pendens: is Latin for “a suit pending”; a written notice that a lawsuit has been filed when there are concerns regarding the title of real property or some interest in that real property. This lis pendens (or notice of pending action) is filed with the clerk of the court, certified that it has been filed, and then recorded with the county records.

Listing: An authorization by an owner for a broker to advertise and sell, rent, or exchange the owner’s property

Litigation: A legal proceeding in a court; a judicial contest to determine and enforce legal rights.

Littoral rights: Rights pertaining to the access to and use of shore areas of a large body of water.

Loan: Something lent for temporary use. OR A sum of money lent at interest.

Loan origination fee (activation fee): is a payment associated with the establishment of an account with a bank, broker, or other company providing services handling the processing associated with taking out the loan. Origination fees are usually between o.5% (half a point) to 2% (2 points) of a given loan.

Loan servicing: is the process by which a mortgage bank or subserving firm collects the timely payments of interest and principal from the borrower.

Loan to value ratio: measures financial risk in investment by comparing the mortgage loan amount to the price or value of the property. This ratio indicates the percentage of the property value represented by debt. A higher loan-to-value ratio increases the risk of the borrower’s default.
Loan-to-value ratio = loan amount/property value

Lot and block (survey system): is a survey system used in the United States and Canada to locate and identify land, particularly for lots in densely populated metropolitan areas. Lot and block survey systems are sometimes referred to as the “Recoded PLAT Survey System” or the Recorded Map Survey System.

M.I.P. (Mortgage insurance premiums): are required on any insured F.H.A. mortgage loan. It includes payment of both an esp-front mortgage insurance premium (UPMIP) and an annual mortgage insurance premium (AMIP). The UPMIP is usually 1.5% of the mortgage amount. The AMIP is paid on a monthly basis and is calculated by multiplying the remaining principal balance by 0.5% and dividing by 12.

MBS: Acronym for Mortgage-Backed Securities. Certificates backed by a pool of mortgages. Such certificates, issued by Ginnie Mae, Freddie Mac, or Fannie Mae, are secured by individual mortgages whereby investors receive payments out of the interest and principal on the underlying mortgages. Ginnie Mae’s guaranteed payment of interest and principal by the government.

Mansard (roof): is also called a “French roof” and is a four-sided gambrel-style hip roof characterized by two slopes on each of its sides with the lower slope, punctured by dormer windows, at a steeper angle than the upper. The design was originated by French architect Francois Mansart in the 16th century.

Margin: in finance, is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty (most often their broker or an exchange). The margin can be in the form of cash or securities.

Market Value: The most probable price that a property should bring in an open market. The value in dollars that an educated buyer will pay for a property, and the lowest price that a seller would be willing to accept for it.

Marketable: A marketable title is a title essentially free from defects so that if challenged in a court of law, the court will enforce the title’s acceptance by a purchaser.

Mediation: The process of attempting to reconcile a dispute by means of an impartial third party.

Meeting of the minds: also referred to as a “mutual agreement”, mutual assent or consensus ad idem which is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract. This condition or element is often considered a necessary requirement for the formation of a contract.

Merger: A combination of two or more corporations through the combining of the common stock of the corporations, or a cash payment to the corporation being acquired, or both. A merger is called an acquisition when one of the parties takes over the other (usually, but not always, the larger takes over the smaller) and consolidates the two organizations into one.

Metes and bounds: is a system or method of describing the land, real property, or real estate. This system has been used in England for many centuries and is still used there in the definition of general boundaries. Typically, the system uses physical features of the local geography along with directions and distances to define and describe the boundaries of a parcel of land

Mill: is the tax rate system used in Florida. A mill is a decimal; the equivalent of 1/1000 of a dollar. There are ten mills in a penny, 10 pennies in a dime and 10 dimes make a dollar. Mills are written in decimals rather than whole numbers.

Monument (survey method): is a method used in legal descriptions (monument method) which uses physical and topographical features of the land to identify boundaries of the property. The monument can be natural or man-made references, points such as rocks, riverbanks, roads, etc. This method of legal description is the oldest and least accurate method of land description.

Mortgage: is a loan secured by real property through the use of a mortgage note that evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage that secures the loan. However, the word mortgage alone, in everyday usage, is most used to mean mortgage loan.

Mortgage Backed Security: Certificate backed by a pool of mortgages. Such certificates, issued by Ginnie Mae, Freddie Mac, or Fannie Mae, are secured by individual mortgages whereby investors receive payments out of the interest and principal on the underlying mortgages. Ginnie Mae’s are guaranteed as to payment of interest and principal by the government. Acronym: MBS.

Mortgagee: is an entity that lends money to a borrower for the purpose of purchasing a piece of real property. By accepting a mortgage on the real property, the lender creates security in the full repayment of the loan in the future.

Mortgagor: is the borrower in a mortgage contract who mortgages the property in exchange for a loan and gives the title to the property to the mortgagee.

Multiple Listing Service (MLS): is where information about properties listed for sale by real estate agents are compiled into a database. The information there is shared with other agents through the system.

Multiple licenses: is where a broker is issued additional licenses in two or more capacities by requesting multiple licenses. The broker must show the additional licenses necessary for legitimate business reasons. The request for issuance of multiple licenses cannot be prejudicial to the broker’s business associates or the public. Sales associates or broker associates cannot obtain multiple licenses under (475.215, F.S.)

Mutual assent: Agreement shared by two or more parties.

National Flood Insurance Program (NFIP): Instituted by Congress in 1968, the National Flood Insurance Program was created to reduce the economic and social cost of flood losses. This program makes flood insurance available in communities that agree to manage their floodplains in such a manner that additional flood-prone structures are not built.

Negative amortization: occurs when the payment made by the borrower is less than the interest due and the difference is added to the loan balance.

Net (net, net) lease: is a triple net lease and is a type of commercial leasing agreement. In a triple net lease, the leaser pays taxes, insurance, and maintenance in addition to the rent.

Net Asset Value: The net asset value-per-share equals the net assets of a company divided by the number of shares it has issued.

Net listing: is a real estate listing in which the agent’s commission equals the difference between the selling price and the net sale price stipulated by the owner.

Net operating income (NOI): Income from property or business after operating expenses have been deducted, but before deducting income taxes and financing expenses. The formula is NOI = gross income – operating expenses.

New York Stock Exchange: The New York Stock Exchange is the oldest and largest stock exchange in the United States, located at 11 Wall Street in New York City. It is also the most influential stock exchange, totaling 1300 members, listing securities of the largest corporations in the U.S. It is a self-regulating organization as well, with a board of governors who regulate the trading activities of its members.

Nolo contendere: is a legal term from the Latin “I do not wish to contend”. It is also referred to as a plea of “no contest” in some trials. It is a plea where the defendant neither admits nor disputes a charge. It is an alternative to pleading guilty or not guilty.

Non-conforming loan: is a loan that does not meet a bank’s criteria for funding for various reasons: insufficient collateral, lack of sufficient credit, etc. Non-conforming loans can be obtained by “hard money lenders” or private money, usually with high interest and stringent terms.

Non-conforming use: is a type of zoning where a parcel of land may be given an exception from current zoning ordinances due to improvements made by a prior owner or before the current zoning ordinances made the desired use non-conforming under local law.

Non-representation: is a no-broker relationship notice and must be described and disclosed in writing before showing a property. A customer may choose not to be represented in which case, the broker must provide the customer with a separate written “no broker relationship” disclosure form (usually a for-sale-by-owner).

Note (promissory): is a negotiable instrument wherein one party (the maker or issuer) makes an unconditional promise in writing to pay a determinate sum of money to the other (the payee) either at a fixed or determinable future time or on demand of the payee, under specific terms.

Notice of noncompliance: A notice of violation is issued by a DBPR inspector to correct informalities that do not endanger the public. It is usually accompanied by a fine.

Novation: The act of buying mortgaged property under another mortgage. A common example is at closing when a buyer pays off the original note and records a new mortgage under his or her name. Also, the substitution of new parties, and/or obligations, in the place of preexisting ones.

Novation: is a substitution of liability for repayment of mortgage debt. The original borrower is replaced with that of another party willing to assume the debt. When a mortgage is assumed, the original mortgager’s personal liability may be released and transferred to a second mortgagor.

Numerator: The expression is written above the line in a common fraction to indicate the number of parts of the whole.

Open listing: is, in real estate, a listing given to any number of brokers without liability to compensate anyone except the one who first secures a buyer who is ready, willing, and able to meet the terms of the listing or secure the sellers’ acceptance of another offer. The sale automatically terminates all open listings,

Operating expenses: Normal costs of maintaining property such as utilities, property taxes, employee salaries, and insurance. Does not include depreciation or financing.

Opinion of title: Certificate attesting to the validity of title to a property being sold, usually prepared by an attorney.

Option (contract): is the right to buy a property during a specified period of time, at a specific price. It is not an obligation to buy the property. Options are unilateral contracts. To obtain an option, a party must pay a definite valuable consideration. The consideration must be paid and is called option money.

Optionee: A term used to describe the holder of an option.

Ostensible partnership: In Florida it is illegal. It is doing business together with somebody else without disclosing the fact. A broker and a mortgage broker who share an office and refer business to each other, but do not disclose that they actually work together as a team, may mislead the public.

Over-improvement: is an improvement to real property which by reason of excess or cost is not the highest and best use of the parcel on which the improvement is located.

Overall capitalization rate: The ratio between the net operating income (N0I) and the value (sale price) of an investment property.

Owner’s title insurance: Title insurance protects the new owner against unexpected challenges to the title; usually issued in the amount of the purchase price of the property.

PITI: is annual real estate taxes and hazard insurance. It must also include homeowner’s or condominium association dues if applicable.

PITI: An acronym that stands for principal, interest, taxes, and insurance. It is the monthly payment that a mortgagee is required to make in a residential transaction.

Package mortgage: includes both real and personal property as security for a loan. The purchase of a home often includes personal property items such as refrigerators, ranges, dishwashers, etc. If these items are part of the security offered in the mortgage, it creates a package mortgage.

Partially amortized mortgage (balloon payment mortgage): is when the loan obligation is only partially amortized. It is commonly called a balloon payment mortgage when the liability or obligation is only partially amortized, leaving the balance paid upon completion of the term, in a lump sum (balloon payment).

Passive Income: Income from business activities in which the taxpayer does not materially participate, and all rental activities (except those of qualified real estate professionals). Income from rents, royalties, dividends, interest, and gain from the sale of securities is considered passive.

Payee: The recipient of funds. Person or organization receiving monies.

Payment cap (clause): is a clause in an adjustable-rate mortgage (ARM) limiting monthly payment adjustments, usually restricting the increase to a percentage of the previous payment. For example, an ARM with a 7.5% interest pay cap and monthly payment of $100 can increase to no more than $107.50 in the first adjustment period and $114.56 in the second adjustment, etc.

Percentage lease: is a lease of property in which the rental is based on a percentage of the volume of sales made in the leased premises. There is usually a minimum rental plus a percentage, This type of loan is regularly used for retailers who are tenants.

Periodic cap (interest rate cap): is a part of an interest rate cap structure on loans and mortgages. The periodic interest rate cap limits the amount by which the interest rate on an ARM (adjustable-rate mortgage) can adjust at specific adjustable dates.

Personal property: is a property that is moveable as opposed to real property or real estate; any property that can be moved from one location to another.

Planned unit development (PUD): is a type of ownership where a unit or the whole building is owned by an individual who lives in the unit and where the ownership of common spaces is shared by other members of the homeowner’s association for the benefit of all owners.

Plat of survey method: Creating a legal description of the property by using a subdivision plat map, which subdivides land into lots. The plat survey method is also called the ‘recorded plat method’ and the lot and block method.

Plottage: is a real estate term referring to the process of combining adjacent parcels of land to form one large parcel. Typically, the value of the whole parcel will be greater than the sum of the individual smaller parcels.

Point of beginning: is a surveyor’s mark at the beginning location for the wide-scale surveying of land; the beginning point of a public land survey.

Point of contact: information is when any person in the United States who knows you can verify, if necessary, your identity. If you do not know a person in the U.S. personally, you may enter the name of a company or organization you plan to visit during your visit.

Police power: is the authority conferred upon the states by the Tenth Amendment to the U.S. Constitution and which the states delegate to their political subdivision to enact measures to preserve and protect the safety, health, welfare, and morals of the community. It allows the government to restrict the use of land to protect the public.

Policy Manual: The collection of rules and regulations, usually in book or notebook form, that spell out standards, policies, and procedures for operation in an office.

Policyholder: The owner of any type of insurance policy.

Portfolio: A collection of securities owned by one organization or individual, and managed as a collective whole with specific investment goals in mind. Trust departments manage customer portfolios, buying and selling security issues as deemed appropriate by the portfolio manager.

Possession: Right to occupy a property in privacy and to have legal control over it.

Potential gross income (PGI): The amount of income that a real property could produce, assuming no vacancies, and not including miscellaneous income.

Power of Attorney: A written document that authorizes a person to perform certain acts on behalf of the person signing the document. It becomes void at the death or the signer.

Pre-closing inspection: is an inspection of the property before closing to ensure that the house they are buying is in the same condition it was in when they first inspected it; sometimes referred to as the “final walk-through”

Pre-payment clause: is a clause in a bond or mortgage that gives the borrower the privilege of paying the mortgage indebtedness before it becomes due. Sometimes there is a penalty for prepayment with a waiver of interest that is not yet due.

Pre-payment penalty: is a penalty in the provisions of your contract with the lender that states that in the event you pay off the loan entirely, you will pay a penalty. Penalties are usually expressed as a percentage of the outstanding balance at the time of prepayment or a specified number of months of interest. Usually, the penalty declines or disappears with the passage of time. Seldom do they apply after the fifth year.

Preferred Stock: The portion of a corporation’s stock that pays dividends at a specified rate and has priority over the common stock in the distribution of dividends and assets.

Premises –: A section of a deed that contains the names of the parties of the deed, the date of execution, the consideration given, the legal description of the property, and the granting clause.

Prima facie evidence: in law, describes facts that, unless successfully refuted, would be sufficient to prove a fact. In both criminal and civil trials, the side with the burden of proof must establish a prima facie case. If both sides fail to do so, the case is dismissed, and the other side does not need to present its’ evidence.

Principal: is the party with whom a real estate broker enters into a single agent relationship (475.01(1) (h).F.S.)

Principal meridian: is one of the prime meridians used in government rectangular survey methods of land description to locate range lines. The principal meridian for Florida intersects with the baseline at the Tallahassee Principal Meridian, sometimes called the Prime Meridian.

Principal of substitution: is when a buyer will not pay more for a property than the amount necessary to acquire an acceptable substitute. This principal is the basis for all mathematical methods used by appraisers to estimate value.

Principal residence: The place a person lives most of the time. According to the IRS, an owner must reside at the property for at least two of the preceding five years to qualify as a principal residence.

Private mortgage insurance: Mortgage insurance that is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. Most lenders generally require PMI for a loan with a loan-to-value (LTV) percentage in excess of 80 percent.

Pro forma income statement: A projected income statement. An income statement is the same as a profit and loss statement, a financial statement that shows sales, cost of sales, gross margin, operating expenses, and profits.

Pro-rata: Proportioned according to an exact calculable factor (such as share or liability)

Probable cause: Probable cause exists when “the facts and circumstances relative to a potential violation are sufficient to warrant a prudent person to believe that a suspect has committed, is committing, or is about to commit a violation.” A reasonable belief that a person has committed a violation of license law.

Probable cause: in the United States, the criminal court system refers to facts or evidence that would make a reasonable person believe that a crime or wrongdoing has been or will be committed. The term was taken from the Fourth Amendment of the U.S. Constitution.

Probate: The process that transfers legal title of property from the estate of the person who has died.

Procuring cause: The act of a broker leading to the meeting of minds between the parties to a transaction or the consummation of a transaction.

Profit (investment): is the positive gain from an investment or business operation after subtracting all expenses. Profit is the opposite of loss.

Prog: An appraisal term that states that the value of lower-end real estate can be enhanced by the proximity of higher-end properties.

Progression: is making progress towards better conditions, employing or advancing more enlightened or liberal ideas such as in a progressive community.

Promissory Note: A written promise to pay, frequently used in installment and commercial loans. As legal evidence of debt, it may be transferred to a third party as a negotiable instrument.

Property management: is the operation, control, and oversight of commercial, industrial, or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored, and accountability is given for its useful life and condition; similar to the role of managing a business.

Property manager: The primary objective is to protect the owner’s investment and to maximize the owner’s return. A property manager is charged to generate the greatest amount of net income while at the same time maintaining the property in good condition.

Property report: is a written report which provides property and ownership details, surrounding area data, and important verification information.

Proprietary lease: is sometimes known as an owner’s lease; a proprietary lease is a type of lease agreement that is commonly utilized as a part of a stock cooperative. The model is often utilized when a household chooses to purchase an apartment or condominium that is owned by a cooperative. As part of their purchase, they receive stock in the cooperative and earn a return from the stock as long as they own the residence; commonly used in metropolitan areas.

Prorate: is to divide, share or distribute proportionally.

Public accommodation: is a private entity that owns, operates, or leases to a place of public accommodation. It includes a wide range of entities such as restaurants, hotels, theaters, retail stores, etc.

Publicly Held Company: A company whose common stock has been registered with the Securities and Exchange Commission and sold to the general public.

Puffing: Comments or opinions that may or may not be accurate but are not sufficient grounds for misrepresentation because they are not made as a representation of fact.

Purchase money mortgage: is a mortgage given to any party or institution when the proceeds of the loan are used to purchase real property.

Quasi- judicial: Powers similar to those of a court of law. In the case of FREC, the authority to discipline licensees for violations of real estate law and administrative rules.

Quasi-legislative: Powers similar to those of a legislature. In the case of FREC, the authority to establish rules and regulations, make decisions on questions of the practice of real estate, and imprint records with the FREC seal to validate them.

Quiet enjoyment: is a covenant that promises that the grantee or tenant of the estate in real property will be able to possess the premises in peace, without disturbance by hostile claimants.

Quit claim deed: is sometimes erroneously referred to as a “quick-claim” deed and is a legal instrument prepared by a lawyer by which the owner of a piece of real property, called a grantor, transfers his interest to a recipient called a grantee. The owner/grantor terminates (“quits”) his rights and claims to the property, thereby allowing the claim to transfer to the recipient/grantee.

R-Value: is the rating system used to measure the insulation characteristics of a material. The R-value is the measure of the ability of the material to resist the flow of heat and is expressed in BTUs (British thermal units) that can be transmitted through one thickness of material in one hour. The higher the R-value, the better the insulation characteristics. R-values are established by the building codes.

REALTOR® (NAR): is the largest trade organization in the world. The NAR promotes ethics and education in the real estate industry.

REIT: Real estate investment trusts are publicly traded companies that manage portfolios of real estate to generate profits.

RESPA – Real Estate Settlement Procedure Act: which regulates the process of closing a real estate transaction.

RRES: The acronym for Rowlett Real Estate School founded in 2008. RRES.com

Range (lines): is the government survey method. The range lines are called the meridian lines which run north and south at six-mile intervals from the principal meridian line in Tallahassee. The vertical areas east of Tallahassee are called a range.

Real estate: is physical, tangible, and immobile. It includes the earth’s surface, sub-surfaces, and the air above the surface. It also includes anything growing on the land, anything permanently attached to the land, and all improvements on and to the land (there are certain exceptions). It includes anything provided by nature (i.e. mineral rights, timber, fish, and so on).

Real estate brokerage services: (ES. 475.01) specifies that the services of real estate must be performed by a person who possesses a current and valid active Florida real estate license. They are appraising, auctioning, business brokering, buying, counseling, exchanging, leasing, listing, property managing, advertising, renting, selling, syndicating, and time-share unit sales.

Real estate business: A commercial activity in which licensed parties sell, purchase, lease, exchange, or manage property for compensation, either acting for themselves or for others.

Real property: is all land, structures, firmly attached and integrated equipment (such as light fixtures or well pump); anything growing on the land, and all “interests” in the property.

Recommendation order: must be included within 90 days follow-up conclusion of a hearing. The administrative law judge submits a recommendation order based on the findings of fact and the conclusion of the law. The findings of fact and conclusions of the administrative judge must be based on clear and convincing evidence. Copies are then delivered to all parties.

Reconciliation (final value estimate): is done by an appraiser after the valuation process of determining the three appraisal value methods: the sales comparison approach, the cost depreciation approach, and the income capitalization approach. The appraiser analyses the data from the three valuations that give weight to the one he/she feels best reflects the value and reconciliation and the final value is estimated.

Redlining: is against the law. It is a discriminatory practice involving lenders who refuse to lend money or extend credit to borrowers in certain “struggling” areas of a town. It is against the law to discriminate against borrowers based on race or income level among other factors such as redlining.

Registration: is the placing and keeping of records of names and addresses of an individual or business. The Division of Real Estate maintains a registration list of all brokers and sales associates and businesses that employ licensees engaged in the real estate business.

Regression (principal of): applies when a higher-priced property is constructed in an area of lower-priced property The high-priced property will regress in value (decrease) toward the level of less expensive properties in the area.

Remainderman: is the person who inherits property when someone passes away and has executed a “life estate deed”. For example, Bill owns a house; he deeds it to himself for life, then Jane, upon his death is the remainderman.

Rental agent: also known as leasing agent, find a tenant for a property for a fee, while property managers continue to manage the property once a tenant is secured, which is fully outlined in a management agreement.

Replacement cost: The amount of money required to construct a building that has the same utility as the building being appraised.

Reproduction cost: The amount required to duplicate a property exactly, at a given date.

Resident: The Florida Real Estate Commission defines a resident of Florida as a person who has resided in Florida continuously for a period of four calendar months or more within the preceding year; or any person who presently resides in Florida with the intention of residing continuously in Florida for four months or longer, beginning on the date the person established the current period of residence. The person can reside in a recreational vehicle, hotel, rental unit, or any other temporary or permanent location.

Residential: Property intended for four or fewer residential units, or ten or fewer agricultural acres.

Residential sale: is defined as a residential transaction:
1)            the sale of an improved residential property of 4 units or less
2)            the sale of an unimproved property intended for 4 units or less
3)            the sale of an agricultural property of ten acres or less
4)            the lease with options to purchase all or a portion of improved property of four or less residential units
5)            the disposition of business interests involving property of four units or less

Restrictive covenants: Restrictions on land use placed in the public record by developers to protect the value of properties in a subdivision. Restrictive covenants set conditions for land use such as minimum square footage, construction type, and architectural style or design.

Return on investment (ROI): The amount of profit (return) based on the amount of resources (funds) used to produce it.

Reverse annuity mortgage: is an arrangement in which a homeowner borrows against the equity in his/her home and receives regular monthly tax-free payments from the lender; also called a reverse mortgage or home equity conversion mortgage.

Reversion: The right of a lessor to possess leased property upon the termination of the lease.

Right of survivorship: is the power of the successor(s) of a deceased individual to acquire the property of that individual upon his/her death, a distinguishing feature of joint tenancy.

Right to reinstate: is a right retained by the grantor at the time land is conveyed to the renter and to take possession of the land if a certain condition occurs or fails to occur.

Right-of-way: The right to cross private land.

Riparian rights: Rights pertaining to the use of a river, stream or water adjacent or under one’s land.

Risk: The possibility of losing, or not gaining, value on assets. There are two basic categories of risk: static and dynamic. Static risk includes dangers that can be controlled or minimized by purchasing insurance. Hurricanes, fire, theft, and flood are examples. Dynamic risk includes dangers that cannot be controlled or minimized. Competition from other businesses, inflation, and economic downturn are examples.

Sale: Finance: income received in exchange for goods and services recorded for a given accounting period, either on a cash basis (as received) or on an accrual basis (as earned). Securities: in securities trading, a sale is executed when a buyer and a seller have agreed on a price for the security. In general: any exchange in goods or services for money.

Sales comparison approach: In appraisal, a method for estimating the value of a property by comparing the sale prices for properties similar to the subject property.

Sales comparison approach: is an appraisal term used frequently that compares recently sold local similar properties to the subject property. Price adjustments are made for differences in the comparable and subject property

Salesperson (sales associate): is a person who is engaged by a real estate broker as an employee or an independent contractor to perform the services of real estate for the broker for compensation. He/she is an agent of the broker. A sales associate can also be employed by an owner-employer but, as such, can only provide real estate services for the owner-employer.

Satisfaction of mortgage: is a document releasing a mortgage lien, indicating the borrower has paid the debt in full; also known as a discharge of mortgage or mortgage release. The release of the lien is also noted in public records.

Section: One square mile in the government or rectangular survey system. There are 36 sections in a 6-mile square township. One section contains 640 acres.

Section (survey section): is used in the government survey system. There are 36 square sections in a township. A township is 6 miles square hence, a section is one square mile in size. The section numbering starts in the northeast corner of the township with section 1 and proceeds in a westerly direction to include sections 1 through 6. Section 7 is immediately south of section 6 and proceeds easterly and so on. The final section #36 is in the southeast corner of the township.

Seisen: is the ownership of real property under a claim of freehold estate. A freehold estate is an estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

Sellers’ market: is a market where there are more buyers than sellers; higher prices result from the excess of demand over supply.

Separate property: under community property law, a property that is owned solely by either spouse before the marriage acquired as a gift or inheritance after the marriage, or purchased with separate funds after the marriage is called “separate property” from communal property.

Service industries: Secondary businesses that provide services to individuals and other businesses. Their focus tends to be local and they include such businesses as retail stores, restaurants, for profit health care providers, financial services and more.

Set back: The minimum distance a building must be from the lot line or curb.

Severalty: Ownership of land by one individual.

Share: The partial ownership of the Corporation and/or the stock certificate evidencing that ownership.

Shareholder: A person owning shares of stock in a corporation. Also called a stockholder.

Shed roof: is a type of roof design that has only one side that slopes from the highest one of the roof structure.

Single agent (special agent): is a broker who represents a fiduciary, either the buyer or the seller, but not both, in the same transaction (475.01(1) (K) F.S.

Site plan: Comprehensive map showing the planned use of a particular property.

Situs: is the economic attributes of a location, including the relationship between the property and the surrounding properties. Situs is the aspect of location that contributes to a property’s market value.

Sole proprietorship: is a business opened up by an individual. The individual is personally liable for his/her actions and can be sued individually. The sole proprietor is also responsible for the acts of his/her employees if within the scope of the business. A purchase of real estate for the business can be made but it is held in his/her personal name.

Special agent (single agent): is an agent that is authorized by the employer to perform a single act. The employment contract between the employer and agent establishes the limit of authority granted.

Special assessment (lien): is a tax levy to pay for specific public improvements that add value to the property. Special assessments that have been announced but not completed are called pending assessment liens and those that have been concluded are called certified special assessment liens.

Special exception: is a request for a special exception to depart from the use provided for by zoning ordinances. Uses other than that specified that are not deemed to be undesirable or incompatible are listed in the zoning ordinances. An example would be a church in a residential area.

Special flood insurance (areas): is special coverage for areas that have the highest probability of flooding (coast areas, river shores, low-lying areas, and zone “V” areas) which are highlighted on the flood maps distributed by FEMA. These areas have the highest probability of flooding and severe damage as a result. FEMA (the Federal government) underwrites flood insurance through FEMA. These areas “V” and “A” must obtain special flood insurance to qualify for mortgaging.

Special purpose property: is a property with a building with limited use and marketability such as a school, theater, or church.

Special warranty deed: A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property.

Specific liens: Liens that do not affect all of a debtor’s property but apply only to specific property. Examples include mortgage liens, property tax liens and special assessment liens.

Sprawl: A haphazard and disorderly form of urban development; unplanned development of open land.

Statute of fraud: is the part of state law that requires certain instruments such as deeds, real estate sales contracts, and certain leases to be in writing to be legally enforceable.

Statute of limitations: is a state law limiting the amount of time within which legal action may be taken.

Steering: is the illegal practice of channeling home buyers to particular areas to maintain the homogeneity of an area or to change the character of the area. Subagency is the relationship under which a sales agent attempts to sell a property listed with another agent. Sub-agency is common under multiple listing service arrangements.

Stockholder: The owner of shares in a stock company. Also called a shareholder.

Sub agency: Subagency is a kind of agency established when there is one principal, two brokers, and one customer. If the single agent for the seller is the listing broker, and this broker is cooperating with a selling broker who does not represent the buyer, the selling broker is a subagent for the seller, because he or she is acting on behalf of and for the best interest of the seller.

Sub-divided land (plat book): is the division of land into blocks, lots, and parcels and indicating the dimensions of individual parcels.

Sub-lease: is a lease from a lessee to another lessee. The new lessee becomes a sub-lease or tenant.

Subdivision plat map: is a map of a town, section, or sub-section indicating the location and boundaries of individual properties.

Subject property: is the property under consideration and analysis to either buy or sell. In an appraisal, the subject property valuation and price are the subject of the estimations and comparables.

Subject to: is acquiring property with an existing mortgage but not becoming personally liable for the debt.

Sublease: A lease contract that transfers the interest in a parcel of real estate or a fraction of it, from the original tenant to a third party.

Subordination agreement: is a written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

Subordination clause: A clause in a mortgage stating which loan has priority, and in relation to which, all other loans have secondary rights.

Subpoena: is a court order requiring an individual to testify in court.

Summary suspension: is considered to be a temporary penalty. The seriousness of the violation determines the length of the suspension. A second suspension for a violation can result in the revocation of a real estate license. The maximum suspension in Florida is 10 years.

Supply: The amount of a real estate available for sale or rent in a particular market.

T-Bill (US Treasury Bill: A federal bearer obligation issued to denominations of $10,000 to $1 million with a maturity date usually of three months to one year. It is fully marketable at a discount from face value (which determines the interest rate).

T-Bond (Treasury Bond): An obligation of the federal government with a maturity ranging from 10 to over 40 years. Available in registered and book entry form; bearer form sales were ended January 1, 1983. Issued in denominations of $500 to $1 million, carries a fixed rate of interest. These notes are issued, quoted, and traded as percentage of their face value.

T-lot: is a type of lot that is shaped somewhat like the letter “T” with a narrow entrance access to the property with improvements located to the rear.

Target marketing: Real estate brokers and sales associates often specialize in a geographic area or property type. This is a method of target marketing

Tax Identification Number: For all institutions, organizations, and trusts, a tax identification number is the number used to report the receipt of dividends and other income.

Tax certificate: Represents the right to gain possession of someone else’s property until the owner of the property fulfills a legal duty to the person holding the lien, such as payment of property taxes.

Tax rate: describes the burden ratio (usually expressed as a percentage) at which a business or person is taxed.

Tax roll: The official list showing the amount of taxes levied against each taxpayer or parcel of property. The list includes owners’ names, assessed value of each property, municipal addresses, legal descriptions and assessment roll number.

Tax shelter: is a legal method of minimizing or decreasing an investor’s taxable income and, therefore, his/her tax liability. The tax shelter can range from investments or investment accounts that provide favorable tax treatments to activities or transactions that lower taxable income. The most common type of tax shelter is an employer-sponsored 401(k) plan.

Taxable income: is the amount of income subject to income tax; found by subtracting the appropriate deductions (IRA) contributions, alimony payments, unreimbursed business expenses, some capital losses, etc., from adjusted gross income.

Taxable value: is the amount on which a property owner pays property taxes. Taxable value is the lesser of Assessed Value (SEV) or the prior years’ taxable value minus losses, increased by the lesser of 5% or the Inflation Rate; multiplier, plus additions.

Taxation: Charge against a citizen’s person or property or activity for the support of government.

Teaser rate: is a low initial mortgage rate that lenders charge for an Adjustable Rate Mortgage (ARM). The rate is less than the rate charged for standard fixed-rate mortgages and lower than fully-indexed rates on adjustable-rate mortgages. The lower rate (teaser rate) makes mortgage financing more available to more potential homeowners. The rate is typically reset to the market rate after a period of time, usually six months to a year.

Tenancy at sufferance: is a non-freehold estate that arises when a tenant occupies the real estate of a landlord in the absence of any agreement. The most common example is when a tenant “holds over” after the expiration of a lease. The arrangement (tenancy at sufferance) can be terminated by either party without notice.

Tenancy at will: is a non-freehold estate with the tenant in lawful possession of the property under an agreement with the landlord, but with no definite time limit for the rights to terminate. The agreement can be oral or written and is referred to as a “period-to-period” tenancy.

Tenancy by the entireties: is an estate for a husband and wife only. The marriage is considered to be the owner of the property with each spouse having a right of survivorship. Upon the death of one spouse, the surviving spouse will own the property in fee simple.

Tenancy in common (estate in common): is a fee estate held by two or more persons. Each person has an undivided interest in the whole property. Interests can be equal or unequal, however, all owners have equal rights of use and possession.

Term mortgage: (Also non-amortizing mortgage or straight-term mortgage.) – A mortgage in which the borrower pays interest only until the term of the mortgage expires, and then either pays all of the principle or refinances.

Terminus: in a survey is the final point, the end. It can be a stone or marker boundary identifying the final point in determining boundaries.

Testate: is a person who has died having made and left a legally valid will.

Testator: Man who has made out the will and determined how his estate will be devised.

Testatrix: Woman who has made a will and determined how her estate will be devised.

Thrift Institution: Thrift institutions are savings and loan associations, mutual savings banks, cooperative banks and homestead associations that accept time deposits and demand deposits. They also grant long term mortgage loans.

Timeshare: is a form of ownership or right to use a property or the term used to describe such properties. These properties are typically resort properties (condominium units) in which multiple parties hold rights to use the property and each share is allotted a period of time (usually one week and almost always the same time every year) in which they may use the property.

Title: means ownership. When a party owns the property, he/she has title to it. It is the legal term for a bundle of rights in a piece of property in which a party may own either a legal interest or an equitable interest. The title is distinct from possession, a right often encompasses ownership but is not necessarily sufficient to prove it.

Title insurance: An insurance policy that protects the holder against losses resulting from defects in title.

Title search: An examination of the public record to determine the chain of ownership of a property and discover any encumbrances to the title.

Title theory: is a property-law doctrine that a mortgage transfers title to a property to the mortgagee, who holds it until the mortgage has been paid off, at which time the title passes to the mortgagor. Florida is not a title theory state. Only a few states use title theory law doctrine.

Township: is simply a geographic reference used to define property location for deeds and grants as surveyed or platted by the General Land Office (GLO). A survey township is normally six miles square or 23,040 acres.

Township line: in surveying is one of two parallel lines running east and west that define the north and south borders of a township.

Township strip: In the government survey system and rectangular survey system, a township is defined as an horizontal strip of land running East West 6 miles wide.

Toxic waste: is a general term used to refer to chemical compounds produced by an industry that, if they are ingested or breathed in by humans, can cause physiological damage. The disposal of toxic waste is a major environmental problem in the U.S.

Trade name: is a word or phrase used in a business under which the business is known other than an individual who may own or operate the enterprise. For example, a brokerage owned by Bill Smith can operate as Blue-Sky Realty which is its’ trade name providing the name is registered with all the proper authorities.

Transaction broker (agent): is a real estate broker (agent) who acts as an intermediary for the exchange of information and negotiations regarding the sale o lease of real estate and who may offer marketing and advertising services but does not represent either party in the relationship.

Transition to transaction broker disclosure notice: It states: Florida law allows real estate licensees who represent a buyer or seller as a single agent to change from a single agent relationship to a transaction brokerage relationship in order for the licensee to assist both parties in a real estate transaction by providing a limited form of representation to both the buyer and the seller.

Triggering terms: Under the Truth-in-lending Act, certain terms require full disclosure of fees associated with a loan, when used in an advertisement. These triggering terms include amount or percentage of down payment, number of payments, term of repayment, amount of finance charges, or amount of a payment.

Triggering terms: Under the Truth-in-lending Act, certain terms require full disclosure of fees associated with a loan, when used in an advertisement. These triggering terms include the amount or percentage of down payment, number of payments, term of repayment, amount of finance charges, or amount of payment.

Trustee: Financial institution (trust company or trust department of a bank) that holds collateral for the benefit of bondholders. The trustee collects principal and interest payments and invests the cash between payment dates, and disburses funds to pay principal and interest on issued and outstanding bonds.

UFMIP: is an acronym for upfront mortgage insurance premium. To obtain mortgage insurance from the Federal Housing Administration, an upfront mortgage insurance premium is required at closing which is equal to a percentage of the mortgage amount.

USPAP: is an acronym for Uniform Standards for Professional Appraisal Standards. It is the accepted appraisal standard for federally related transactions and requires compliance with said standards for State Appraiser Certification Boards.

Unconscionable: A contract or deal which is so unfair to a party that no reasonable or informed person would agree to it.

Underground storage tanks (UST): in the United States, environmental law is an underground tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground.

Underwriting: The process of evaluating a loan application to determine the risk involved for the lender. Underwriting involves an analysis of the borrower’s creditworthiness and the property itself.

Unenforceable: under the Statute of Florida was enacted in England in 1677 and provides protection against fraud in the sale of real property. It requires a contract for the transfer of a right or interest in land to be in writing to be enforceable. Without this contract, it becomes “unenforceable”.

Unilateral contract: is a one-sided agreement (unilateral) whereby one promises to do (or refrain from doing) something in return for a performance (not a promise)

Universal agent: A representative who receives authorization from the principal to perform all the acts that the principal can perform him or herself, and which can be legally delegated to another.

Urea-formaldehyde foam insulation (foam in place): is a type of foam installation which was banned temporarily in 1982 and the subsequent court hearings found a health hazard, but the connection could not be proven.
· Bad publicity from the hearings basically put the type of insulation out of business.

Vacancy and collection loses: An amount that is deducted from potential gross income for expected vacancies due to space not rented, and for losses from uncollected rent due to delinquent tenants.

Vacancy rate: is the number of units in a building without renters, expressed as a percentage of all units in the building. For example, a 100-unit building with 70 renters has a vacancy rate of 30 percent.

Valid (contract): is one that is binding, possessing legal force or strength and is legally sufficient.

Valuation: The determined or estimated market value of securities.

Variable lease: is a lease that has certain variables that can increase or decrease the amount paid. An example would be a percentage lease where the amount paid monthly or yearly can vary from month to month or year to year.

Variable rate: Also known as the Floating Rate, it is an interest rate that is changed regularly, based on a set formula, to reflect changes in market rates. It is usually calculated as so many points above a given interbank rate (for example, the 6-month LIBOR +1%).

Variance (zoning): is a zoning ordinance that gives a license to engage in an act contrary to the usual rule. Issued by the board of variance to contravene the usual rule; to construct contrary to the provisions of a zoning law.

Vendee: A buyer of real estate.

Vendor: A seller of real estate.

Veteran Affairs, Department of (VA): The VA guarantees mortgages to encourage private lenders to make mortgages easily available to veterans and their spouses.

Vicarious liability: The liability of one person for the acts of another. Vicarious liability can result from the acts of independent agents, partners, independent contractors, and employees.

Void (contract): (license) is having no legal force or effect; not legally binding; a contract that is unenforceable, ineffective.

Voidable: in law means a contract capable of being nullified or invalidated. It is capable of being made or adjudged void.

Voluntarily inactive: in real estate is when a licensee’s license is made inactive by his own voluntary action to do so. He/she can do so by request. The inactive licensee must pay the required fee, and complete the Commission prescribed education and renewal prior to expiration to maintain a current voluntary inactive real estate license. The inactive status can remain indefinitely.

Voluntary liens: Claims against a property with the owner’s consent, such as a mortgage.

Warranty forever: is when the grantor assures that grantee will enjoy possession and uninterrupted use of the property.

Will: A will is a legally enforceable document that states how all your property is to be distributed at your death.

Wrap around (mortgage): is a form of secondary financing in which a seller extends to a purchaser a junior mortgage that wraps around and exists in addition to one or more superior mortgages. It’s a form of seller financing.

Writ of supersedeas: A writ of command to suspend the power of an officer or stay proceedings – e.g., punishments – under another writ.

Zero lot: A parcel on which the dwelling is built on one of the borders with no setback.

Zero lot line: is when a building is allowed to construct up to or very near the edge of the property line with the purpose of creating maximum usable space. Townhomes are an example of this type of zoning.

Zoning: Local government regulations restrict the use of real property in order to prevent conflicting land uses and promote orderly development. Using police power, the government places all privately owned land within designated zones that limit the type and intensity of development.

Zoning ordinance: is an act of city or county or other authorities specifying the type of use to which property may be put in specific areas.