Monday, December 10, 2018, 1:29 PM
Site: America's Real Estate Academy, Inc.
Course: America's Real Estate Academy, Inc. (AREA)
Glossary: Real Estate Glossary

4-3-2-1 rule

is a theory that the most value should be attributed to the front of the site in the following proportions. The front quarter of the standard site receives 40% of the total value. The second quarter receives 30% of the total value. The third quarter receives 20% of the total value; and the rear quarter receives just 10% of the total value.

abstract of title

is the work summarizing the ownership interests and documents found during the title search of a subject property. The abstract will identify ownership transfers and liens placed against the property; and whether or not they have been released or satisfied – as well as any other pertinent information found in the search. Based on the abstract, the title insurance company or its attorney/agent will issue a certificate of title.

acceleration clause

This clause says that the lender may declare the entire debt due and payable immediately if the borrower defaults. Without this clause, the lender would have to sue the borrower every time a payment was overdue.


acquiring title to additions or improvements to real property as a result of the annexation of fixtures or the accretion of alluvial deposits along the banks of streams.


is the process or natural action of wind and water occurring from a body of water, such as a lake or river, slowly depositing soil on the edges of the land which may cause an expansion of the land.

accrued depreciation

is the sum of all diminished value associated with the improvements. That is, any loss in value suffered by the improvements from any and all causes would be included in accrued depreciation. Accrued depreciation measures actual value loss and not theoretical value loss. Accrued depreciation is the difference between the cost new of improvements and the present worth of those improvements.

There are only three categories of accrued depreciation. Accrued depreciation can be categorized as physical depreciation, functional obsolescence, or economic obsolescence.

accrued items

Expenses to be prorated (such as water bills and interest on an assumed mortgage) that are owed by the seller but will be paid late by the buyer. Therefore, the seller pays for these items by giving the buyer credits for them at closing.


is an affirmation by the preparer of a document in front of a notary public (or other judicial official) that the signature is that of the preparer and the signature was given freely and willingly usually for the pupose of making the document legally valid.

actual age

refers to the chronological age or actual 'physical' age of an improvement and does not account for any maintenance, repair or upkeep of structure.

Adjustments for differences in actual age of the improvements accounts for value differences associated with different amounts of depreciation taking place in the improvements. Those differences are most notable in the first 15 to 20 years of the improvement’s existence.

actual agency

is an agency when an agent is in fact employed by a principal