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4

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.

A

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.


accession

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.

accretion

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.


acknowledgment

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


actual notice

one of the three ways the law presumes an indivual has notice of an event. Actual notice occurs when an individual has been informed in some way of the event, such as; overhearing a conversation, presented a document, or in some other way being made aware of the fact that the event occurred.

ad valorem tax

a tax levied according to value, generally used to refer to real estate tax.

Adjustable-rate mortgage (ARMs)

Mortgages originate at one rate then can change over the course of loan based upon different factors.


adverse possession

is a statutory means of acquiring title to the land of another by occupying the property. A claimant under adverse possession must actually be in possession of the property in such a manner as to satisfy the statutory requirements. Possession must be open, notorious, hostile, exclusive, and continuous.

The precise period required for a claim of adverse possession varies depending on the state.

agency

is the relationship between a licensee and the person he/she is representing.


agency coupled with an interest

an agency relationship in which the agent is given an estate or interest in the subject of the agency (the property).

agent

the person who acts on behalf of another person under a contractual relationship


air lots

is a desgnated airspace over a piece of land. An air lot, like surface property, meay be transferred.

air rights

the right to use the open space above a property, usually allowing the surface to be used for another purpose.

alienation clause

also known as a resale clause, due-on-sale clause, or call clause, this provides that when the property is sold, the lender may either declare the entire debt due immediately or permit the buyer to assume the loan at an interest rate acceptable to the lender.


allocation method

is the process of identifying how the market allocates value between the land and the improvements made to the land. This method is based on the economic principle of balance, which states that maximum values are achieved when the agents of production (land, labor, capital management) are in balance. Simply put, there is an identifiable relationship or ratio between the value of the improvements and the value of the land.

allodial

is a concept of land ownership which recognizes complete or absolute ownership of real estate by individuals. This ownership is considered free and clear with no encumberances or claims including government taxation.

alluvion

is the soil that is deposited on a lands edge from the process of accretion.

Americans with Disabilities Act (ADA)

A federal law that is to eliminate discrimination against people with disabilities by allowing equal access to jobs, public accommodations, government services, public transportation, and telecommunications.


amortized loan

The payment in an amortized loan partially pays both principal and interest. The word amortize literally means to kill off so they are paid off slowly, over time, in equal payments.


annexation

process of converting personal property into real property.

anticipation

the value associated with a real estate purchase anticipates that the need or desire satisfied by the purchase will continue for the foreseeable future. Buyers also anticipate that the property will appreciate and that they will achieve financial rewards as their equity increases in the property. The principle of anticipation is a factor in the selection process as the typical purchaser chooses from among the comparable or substitute properties.

antitrust laws

laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Examples are price-fixing and allocation of customers or markets.

appraisal process

is an orderly procedure followed by appraisers when estimating a value that is accurate, supportable, and defensible. Appraisers must adhere to professional regulations and standards mandated by the Appraisal Standards Board, presented in the provisions of the Uniform Standards and Professional Appraisal Practice (USPAP) and state appraisal boards.

The appraisal process consists of the following six steps:

  1. Identify the problem to be solved
  2. Plan the appraisal (scope of work)
  3. Collect and analyze relevant data
  4. Apply the relevant approaches to value
  5. Final reconciliation
  6. Prepare the report

appraisal purpose

the appraiser must identify and define the specific value sought, the purpose of the appraisal, in the appraisal assignment. The value sought will influence the selection of the relevant data.

Market value is the typical purpose of an appraisal but an appraiser must determine in the first step of the appraisal process if client might need any other purpose. Value could be needed for insurance purposes, liquidation or some other need.

appraiser

a real estate professional who competently and objectively performs valuation services that are supportable and defensible.

appraiser classification

refers to the licensing levels mandated by state appraisal boards to satisfy the requirements by FIREEA.

In Georgia there are four appraiser classification levels: registered, licensed, certified residential, and certified general.

appurtenance

anything that attaches to the land and transfers with the land even if not specified in the deed – appurtenances are said to “run with the land.” Examples of appurtenances include property improvements, easements, water rights, condominium parking, etc. These rights transfer to future owners of the land.

appurtenant easement

is the right attached to one parcel of real estate to use a portion of another parcel of real estate.

Example: the owner of Lot A has the right to use a 50’ strip across the rear of Lot B, in other words, Lot A owns an easement across Lot B. The right attached to the property and not the owner of the property. Whoever owns Lot A will have the right to cross Lot B. Also, whoever owns Lot B will have to tolerate the use of the easement by the owner of Lot A. Lot A is referred to as the “benefitted” property or dominant estate (or tenement) and Lot B is referred to as the “burdened” property or servient estate.

arms-length transaction

refers to a transaction where the parties to the agreement have opposing interests. The purchaser wants to purchase for as little money as possible and the seller wants to sell for as much money as possible.

asbestos

A mineral fiber found in rocks that are known to be used in a variety of household products such as appliances, ceilings, wall and pipe coverings, floor tiles, roofing and siding materials. The fiber has been found to cause lung and stomach cancer, therefore real estate salespeople must reveal to the buyer the known presence of asbestos on the property.


assemblage

is the process of combining two or more parcels of adjacent land into one larger tract.

assessed value

The value for purposes of imposing ad valorem tax. Assessed value may be equal to the total market value of the property as it is in the state of Florida; or it may be equal to a portion of the total market value of the property such as 40% as is the practice in Georgia. 

assessment

The imposition of a tax, charge, or levy, usually according to established rates.

assessment ratio

The ratio of assessed value to market value. For example, if the property tax applies to $40,000 when a property has a market value of $100,000 - the assessment ratio is .40 or 40% as follows:

$40,000 ÷ $100,000 = .40 or 40%

The assessment ratio will be a function of the state in which the property is located.


assignment

the transfer of the rights and obligations under a contract to another party.

assume

to take on a responsibility or duty


Attorney-in-fact

A person who is allowed by another person to act in his or her place with a power of attorney.


auctioneer

in GA an auctioneer selling real estate, they must also hold a salesperson's or a broker's license.

avulsion

The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden change in the course of a stream.

B

balance

The principle of balance requires the appropriate blend of the four factors of production. For maximum value to be achieved land, labor, capital, and management must be in the proper proportion to each other.

Balloon payment

Loans set each monthly payment to cover interest requires and some principal payback. The final payment at the end of the term would handle any remaining principal and be larger than any prior payment. Also called a partially amortized loan.


base line

The main imaginary line running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular (government) survey system.

benchmarks

A permanent reference mark or point established for use by surveyors in measuring differences in elevation,

beneficiary

(1) The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. (2) A lender in a deed of trust loan transaction.


bilateral contract

A contract where all parties are legally bound to act as the contract states.


blanket loan

covers financing for multiple land lots.

Example: a builder or developer may be creating a subdivision so will use this financing and will also request a partial release clause. So as each lot is sold the entire debt is not required to be paid.


blockbusting

An illegal practice where one person gets another to enter a real estate transaction where the first person could benefit financially by showing that a change may occur in the neighborhood including race, sex, religion, color, handicap, familiar status or ancestry of the occupants, a change possibly resulting in the lowering of the property values a decline in the quality of schools, or an increase in the crime rate.


breach of contract

Violation of terms in a contract without a legal excuse. For example: not paying on time. The person who did not breach has three options:


break-even ratio

identifies the percentage of EGI necessary to pay for all operating expenses and debt service. It is the point where cash flow begins. It is also the occupancy necessary to pay all expenses and debt service.

Since the BER describes the occupancy necessary to break-even, it can also be used as an indicator of the risk posed by such an investment. A lower break-even ratio means that a lower occupancy will satisfy the operating expenses and debt service and that would mean lower risk. The break-even ratio is calculated by dividing the total of the operating expenses and annual debt service by the effective gross income

BRETTA

The Georgia Brokerage Relationships in Real Estate Transactions Act, Title 10, Chapter 6A of the Georgia Code. Provides laws for agency relationships.

broker

a professional who brings buyers and sellers together within a market for the purpose of exchanging goods and or services for a fee. A real estate broker who represents buyers or sellers (or landlords and tenants) usually earns a commission which is a percentage of the financial transaction.

brokerage

the bringing together of parties interested in making a real estate transaction.

brokerage engagement

a written contract in which the seller or buyer becomes the client of the broker and promises to pay the broker a valuable consideration or agrees that the broker may receive a valuable consideration from another for producing a ready, able, and willing prospective buyer or seller, or performing other brokerage services.


brownfields

Industrial properties that suffer from the presence of ecologically contaminated elements.


BRRETA

is an acronym that stands for Brokers Relationship in Real Estate Transactions Act. The purpose is to define and regulate relationships between licensed real estate agents (brokers) and the general public through state statute rather than through the common law of agency which results from judicial decisions. In Georgia it is Title 10 Chapter 6A of the O.C.G.A. §.  

building line

is the zoning ordinance which establishes the front setback line. That distance is measured from the right of way (where the site begins) and not from the portion of the right of way which is paved. Governments will often impose other limitations on the building line such a minimum width at the building line.

bundle of legal rights

The concept of land ownership that includes ownership of all legal rights to the land - for example, possession, control within the law, and enjoyment.

bundle of rights

the variety of rights associated with the ownership of real estate. The concept of a “bundle” suggests that the rights are individual rights grouped in a bundle permitting some rights to be separated from the others.

buydown

cash up front to temporarily (or permanently) lower the interest rate or initial payments.


buyer agency agreement

is an employment contract. The broker is employed as the buyer's agent- the buyer. rather than the seller, is the principal.The purpose of this agreement is to find a suitable property.


buyer's agent

A residential real estate broker or salesperson who represents the prospective purchaser in a transaction. The buyer's agent owes the buyer-principal the common-law or statutory agency duties.

C

CAN-SPAM act of 2003

act pertaining to licensees who send commercial emails. Requirements of the CAN-SPAM Act of 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act) prohibits deceptive subject lines and misleading or false header information, in addition the act requires that e-mail recipients have an opt-out method.


capitalization rate

is a one of the components, the Rate, within the Income Approach formula (V = I ÷ R) used to determine the value of an incoming producing property.

The Capitalization Rate is comprised of two rates: the interest rate and the capital recovery rate (often referred to as the recapture rate). The interest rate is the return "on" the investment. It is interest in its traditional sense and use. The capital recovery rate is actually the return "of" the investment. That is, the capital recovery rate reimburses the investor for the deterioration in value of the improvements which were paid for at the time of purchase, but deteriorate as time passes.

cash equivalency

refers to adjustments necessary to determine a subject's value when pricing has been affected by favorable (below market) financing terms provided by the seller in a transaction, or the assumption by the buyer of a below market mortgage.

The cash equivalency technique will reveal the maximum impact that the favorable financing may have had on the price paid; it will not necessarily reveal the actual impact on the sales price. It attempts to determine what the actual sale price would have been if the favorable financing or concessions had not been offered.

CERCLA - Comprehensive Environmental Response Compensation and Liability Act

A federal law, in 1980 and reauthorized by the Superfund Amendments and Reauthorization Act of 1986, which imposes on owners, lenders, occupants, and operators liability got correcting environmental problems discovered on a property.


Certificate of reasonable value (CRV)

This states the property's current market value based on a VA-approved appraisal. The CRV places a ceiling on the amount of a VA loan allowed on the property.


certificate of title

document from and attorney/agent expressing an opinion as to the lawful holder of title to the real estate. The title insurance company will use the certificate of title to issue the title insurance.

chain of title

shows each property’s history of ownership. Because the current owner’s title is only as good as the title received from the previous owner, the chain of title can establish that the ownership was properly vested in each of the proceeding owners.

chattel

or personal property, includes all tangible items that are not considered real estate.

Civil Rights Act of 1866

This banned all racial discrimination and was mainly intended to protect the civil rights of African Americans in the wake of the civil war. This law provided that "All citizens of the United States shall have the same right in every state and territory as is enjoyed by White citizens thereof, to inherit, purchase, lease, sell, hold, and convey real and personal property."


Civil Rights Act of 1968

This emulated the objectives of the Civil Rights Act of 1964 and extended protections against discrimination in residential real estate transactions based on the protected classes of race, color, religion, or national origin.


client

is the individual or entity that creates a contractual relationship with the real estate professional.

The appraisal client is generally the party engaging the services of the appraiser. The client may or may not be the party who pays the appraiser for his or her services. A financial institution may request an appraisal for a mortgage loan. The borrower/owner may pay the appraiser at the time of the inspection but the actual client for the appraisal service would be the financial institution who engaged the appraiser to perform the valuation service.

Closing

This involves two major events: the promises made in the sales contract are fulfilled and the mortgage funds are distributed to the buyer.


Closing disclosure

A five page document that shows the accounting of the settlement of payments and expenses for both the borrowers and sellers in the transaction.


closing statement

Detailed cash accounting of a real estate transaction made by a broker, escrow officer, attorney or other person designated to process the mechanics of the sale, showing all cash received, all charges and credits made, and all cash paid out in the transaction. May also be called a settlement statement.


coinsurance clause

a clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to 80% of the property's actual replacement cost.

commission

payment to a broker for services rendered, such as in a sale or purchase of real property.

community association manager

a person who provides only community association manager servies acting on behalf of a broker. A community assocation manager is responsible for the operation of the affairs of a community association, which includes overseeing the daily operations of an association.


community property

is a form of ownership where both spouses have an equal interest in property acquired during the marriage. Spousal interest can be created per state law for all property not considered separate property even if the deed is silent or if the real estate was purchased and title only named one spouse.

Community Reinvestment Act of 1977 (CRA)

under the act, financial institutions are expected to meet the deposit and credit needs of their communities, participate and invest in local community developement and rehabilitation projects; and participate in loan programs for housing, small businesses, and small farms.

comparable

refers to a suitable substitute that has similar attributes and characteristics of the subject that can be used to help determine the market value of the subject.  

competent parties

a person who can legally enter a contract. This means that the person must be of legal age and of sound mind. If it is a business entity they must have authority to bind the business.


competitive market analysis (CMA)

A comparison of the prices of recently sold homes that are similar to listing seller's home in terms of location, style, and amenities.

complainant

A person who makes a complaint or instigates legal action against another.


complaint process

Someone who believes that illegal discrimination has happened can file a complaint with HUD within a year of the act. After a complaint has been filed and received HUD will decide if there is reasonable cause to charge illegal discrimination. Most cases are attempted to be resolved through conciliation. But they do have the right to an administrative hearing or even civil action in federal court within two years of the act.


Computerized Loan Origination (CLO)

computer network connected into a major lender that lets agents everywhere to initiate loan application in their own offices.


condemnation

is the process or legal action required by the government to exercise its power of eminent domain.

condition adjustment

are adjustments made by the appraiser to estimate a subject's value accounting for the homeowner maintenance, or the lack thereof. The appraiser must obtain detailed information about the subject’s condition and the condition of the comparables in order to accurately adjust for this factor.

Condition adjustments can be based on the cost to cure the deficiency. Generally, when the typical purchaser is evaluating a potential purchase they will take into account the cost to cure known maintenance issues. If a roof needs to be replaced, the typical purchaser will discount the price to be paid by the cost to replace the roof covering.

The appraiser can use the cost to cure to adjust for condition differences when estimating value.

condominium

is property ownership whereby each owner of a single unit also owns some common area jointly (as tenants in common) with the other unit owners.

Condominium Declaration

Document filed to create a condominium which establishes the owner’s intent to create this special category of real estate ownership. Declaration includes the full legal description and the administrative structure of the condominium and the Condominium Association; including identifying and creating board positions, election procedures as well as powers and duties.

Condominium’s Rules and Regulations

document filed with the condominium declaration which will contain rules passed by the condominium’s administrative officers who may limit certain activities such as the ability to rent units, the ability to park certain vehicles, the assignment of parking spaces, and rules that may affect a variety of other activities.

consideration

in a deed means that something of value is being given in exchange for the rights being aquired.

constructive notice

is one of the three ways the law presumes an individual has notice of an event. Constructive notice is making information available for public discovery. The deed recording system provides a means of legally providing notice (albeit constructive) to the world.

contract

is an agreement made between two or more parties where each promises to do something; or promises to refrain from doing something. If a breach occurs, the  law provides a remedy.


contribution

The principle of contribution states that items or components of real estate are worth what value they contribute to the entire property value. Contribution applies to the cost approach since, in effect, the improvements will be worth whatever value they contribute to the land.

controlled business arrangement (CBA)

Stated by the Real Estate Settlement Procedures Act (RESPA), it is an arrangement in which an individual or firm has more than one percent interest in a company to which the firm regularly refers business.


cooperative

often refers to a group of individuals who unite in some common business endeavor. The business is owned and managed by its members for the benefit of its members. Coops provide purchasing power and economies of scale that would not be available to the members acting alone. Coops can be created for numerous products or retail enterprises, utilities, credit unions, and real estate cooperatives.

corporation

a legal entity separate and distinct from its creators. They are considered "persons" under the law and may have perpetual existence - that is, the corporation will continue even after the stockholders who created it are deceased.


cost

the word "cost" has many connotations. In accounting cost means the price paid at acquisition. In general conversation, cost may be used to describe the wholesale price. Appraisers, however, use cost to describe the cost to the consumer to construct the improvements being appraised as of the effective date of the appraisal. What “cost” means to appraisers is the current retail price to the consumer including all construction costs, builder profits, and marketing expenses.

cost approach

is one of the three classic approaches to estimating the value of real property. In the cost approach, the site and the improvements are valued separately. The focus in applying the cost approach is on the current value or current cost of the improvements. The improvements are valued at the current cost new minus any loss in value due to depreciation. The depreciated cost of the improvements is then added to the site value to provide an indication of the value of the property.

It is considered most reliable when appraising properties with new improvements or when appraising properties that have unusual improvements for which there are no market comparables.

counteroffer

is a new offer made in response to an offer received.

covered housing

The Fair Housing Act applies to:

  • single family housing owned by private individuals when a broker is used or discriminatory advertising is used
  • single family housing not owned by private individuals
  • single family housing owned by private individuals who own more than three such dwellings or who, in any two-year period, sell more than one dwelling in which he or she was not the most recent resident
  • multifamily dwellings of five or more units
  • multifamily dwellings of four or fewer units, if the owner does not reside in one of the units

Credit

an amount entered in a person's favor; an amount that has already been paid, an amount being reimbursed, or an amount the buyer promises to pay in the form of a loan.


curable depreciation

the economic feasibility of “fixing” the item which is causing the value loss. An item of depreciation is curable if the cost to cure does not exceed the value increase derived from implementing the cure. Alternatively, if the value increase is equal to, or greater than the cost the cure, the deficiency will be categorized as curable.

Curable items would include most common items of physical depreciation such as repair of a broken window, or broken handrail. It would also include re-painting the exterior of the house if the paint finish was worn and no longer protecting the siding or trim.

customer

a non-represented person (third party) who still gets some kind of service.


D

datum

A horizontal plane from which heights and depths are measured.

Debit

is a charge; an amount that a party owes and must pay at closing.


debt service

is the annual amount of mortgage payments.

dedication

is the process to transfer ownership of land from a private owner to the government – the main purpose of which is to permit the funding of maintenance through tax dollars.

Example: When a subdivision is complete the developer will dedicate roads and public areas to the governing authority for ongoing upkeep and maintenance.

deed

A written instrument that conveys title to or an interest in property from one party to another. Deeds must be executed and delivered in order to be valid.

deed in lieu of foreclosure

Sometimes known as a friendly foreclosure because it is carried out by mutual agreement rather than by lawsuit. This is still considered an adverse element in the borrower's credit history.


Deed of trust

A legal document where title to property is given to a third-party trustee as security for obligation owed by the borrower to the beneficiary.


deed restrictions

Clauses in a deed limiting the future uses of the property. They may impose a vast variety of limitations and conditions - for example, they may limit the density of buildings, dictate the types of structures that can be erected, or prevent buildings from being used for specific purposes or even from being used as all.

defeasance clause

A clause used in leases and mortgages that cancels a specified right upon the occurence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.

deficiency judgment

A personal judgment levied against the borrower when a forclosure sale does not produce suficient funds to pay the mortgage debt in full.

demand

is one of the four essential characteristics that must be present for any product to have value. Demand refers to the desire to have something. People must desire or need an item for it to have value. However, for this analysis, the desire alone is insufficient. The desire must be coupled with the financial ability to purchase. Value isn’t created just because people “want” something. They have to want and be able to buy – then value will be created.

The four essential characteristics or elements of value are: Demand, Utility, Scarcity, and Transferability – a useful tool to remember them is the acronym DUST.

designated agency

the broker may appoint sales people employed by the broker to represent the interests of buyer and seller.


developer

Real estate developers invest in land, add improvements and subdivide the land into the residential building sites.

devise

A gift of real property in a will. The recipient is the devisee.

direct costs

are the costs for materials, the labor to install the materials and for subcontractor fees. Direct costs are often referred to as “hard costs” or the costs that result in visible improvements to the land.

disclaimers

indications made on real estate websites that the material on the site is solely for informational purposes and that no warranties or representations have been made.

disclosure

the giving out of information, either voluntarily or to be in compliance with legal regulations.

discount point

used to increase the lender's rate of return on its investment.

For example, the interest rate that a lender charges for a loan might be less than the yield an investor demands. To make up the difference the lender charges the borrower discount points. The number of points charged depends on two factors:

  • difference between the loan's stated interest rate and the yield required by the lender.
  • how long the lender expects it will take the borrower to pay off the loan.

districts and land lots

A legal description system used in Georgia. Grid lines divide areas into rectangles or squares and large square areas are divded into districts. Land lots further divide each district.

Do Not Call Registry

The Do-Not-Call Implementation Act of 2003 authorized the Federal Trade Commission (FTC) to create and maintain a national list of telephone numbers whose owners no longer wanted to receive telephone solicitations. It is necessary to verify that numbers being called are not listed on the Do Not Call Registry.


doctrine of merger

provides that an easement will automatically be extinguished when the servient and dominant estates are brought under the same ownership.

dollar adjustment

Appraisers adjust for property differences using lump-sum dollar amounts, percentage, or unit adjustments. Ultimately, all adjustments will be converted to a dollar amount for the purpose of adjusting the comparable’s sales price. Which type adjustment the appraiser will use depends in large part on how the differences are perceived by the market participants.

A lump-sum dollar adjustment allows the appraiser to quantify the contributory value of a specific feature or item and make the specific dollar adjustment directly for that feature or item. Appraisers will typically make lump-sum dollar adjustments for the following items or features: site/view, condition, basements, energy efficient items, heating and cooling systems, garages or carports, pools, porches, patios, fireplaces, and detached buildings.

dominant estate

is a piece of property that benefits from a right attached to another piece of property due to an appurtenant easement.

dual agency

is the representation of opposing interests in a real estate transaction such as representing both buyer and seller in the same transaction. Georgia real estate license law prohibits this unless it is disclosed.


E

earnest money

money deposited by a buyer under the terms of a contract, will be forfeited if the buyer defaults, but will be applied to the purchase price if the sale is closed.

easement

is the right that a party or parcel of real estate has to cross or use the land of another.

Easements may affect value and are not always visible. Appraiser should require access to a survey, plat, and complete legal description to minimize the likelihood that an easement or encroachment will be overlooked when attempting to determine value. Common easements include power line, drainage, and underground utility easements.

easement in gross

is the right to use real estate that vests in a person or entity such as a power company or railroad. There is a servient estate but no dominant estate.

For example, an electric company may own an easement across several properties to install power poles and transmission wires. Other common easements in gross are found in utility easements, oil pipeline easement, sewer easements, and drainage easements. Unlike commercial easements in gross, personal easements in gross generally expire with death of the easement holder.

economic factors

one of the four broad categories of factors affecting the value of real estate, which are - physical, social, economic and governmental. 

Economic factors that affect real estate markets originate at the national level and at the state and local level. From a national perspective the federal government’s monetary and fiscal policies may cause changes in interest rates, inflation, and the cost of housing. On a local level, the availability of high wage employment, financially sound employers, a good economic base, and a community that encourages business development are all favorable factors for real estate markets.

economic life

is the period of time a component or structure will contribute value to the property. Every improvement has a physical life and an economic life. Appraisers are concerned with economic life because economic life is tied to value.

An air-conditioning unit may only have an economic life of 5 years before it loses all book value. If it is well maintained, it may be useful for 15 years.

economic obsolescence

A value loss that occurs because of factors external to the property. Economic obsolescence (sometimes referred to locational, external, or environmental obsolescence) is a value loss associated with detrimental or inharmonious nearby land uses which detract from the subject property’s appeal, utility, marketability, and consequently, its value.

Some common examples:

  • Properties adversely affected by take-offs and landings at a nearby airport.
  • Properties adversely affected by odors from an adjacent or nearby land fill.
  • Properties adversely affected by proximity to noise from highway traffic.

Note that in each instance, the source of the loss in value is outside the boundaries of the property being appraised. Although technically, there may be some instances where economic obsolescence may be curable, it is generally considered to be incurable.


effective age

is the apparent or relative age of a component or structure. Effective age may the same as actual or chronological age, but it may also be different.

A house that has an actual age of five years may only have an effective age of two years if the house were well-maintained, updated, and redecorated to stay current. In other words, the five year-old house may compete with houses that are only two years old because the improvements have been kept current.

effective date

is the single date (point in time) for which the value estimate is effective and it is valid for that one day (point in time) only. Real estate markets are constantly changing and factors affecting value are dynamic. The effective date establishes the economic framework in place on the valuation date and is necessary to make the value estimate valid. The effective date of an appraisal can be for sometime in the past (retrospective), a current date, or some date in the future (prospective) – relative to the date of the report. The effective date is determined by the client. A common retrospective appraisal would be for an estate appraisal and the effective date is usually the date of death. If the property was repaired after the death or the area went through some changes the appraiser must factor in those elements to determine the accurate value on the effective date.

effective gross income

is a realistic estimate of the actual gross income for an income producing property because it provides an allowance for vacancy and collection losses.

The EGI is equal to the potential gross income (PGI) minus the appropriate vacancy and collection losses for the type of property.

efficient market

Efficient markets adjust prices quickly to changes in supply and demand. Efficient markets tend to have the characteristics of a theoretical “perfect market.”

electronic contracting

a process of integrating information in a real estate transaction between clients, lender and title and closing agents electronically.

Electronic Signatures in Global and National Commerce Act (E-Sign)

an act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created.

emblements

Growing crops, such as grapes and corn, that are produces annually through labor and industry; also called fructus industriales.

eminent domain

is the power of the government to take private property for public use for just compensation under the Fifth Amendment to the U.S. Constitution. This is one of the four powers of government which institutes public limitations on real property. The four powers are: Police power, Eminent domain, Taxation, and Escheat, remembered by the acronym PETE.  

A recent decision in Kelo v. City of New London, 545 U.S. 469 (2005) has challenged the historical understanding. In Kelo, the Supreme Court of the United States permitted the city of New London, Connecticut to use eminent domain to transfer land from one private owner to another private owner to further economic development. The Court held in a 5-4 decision that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use" under the Takings Clause of the Fifth Amendment.

employee

someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and social security taxes from the compensation of employess. See also independent contractor.

encapsulation

is another way of asbestos control; sealing off of disintegrating asbestos.


encroachment

is the unauthorized extension of one property onto another property’s land or into its air space.

encumbrance

is a right or interest in real estate held by someone other than the owner (or title holder). It is an impediment to free and clear title – although not all encumbrances will adversely affect the transfer of real estate.

Encumbrances are divided into two categories, monetary and non-monetary. Monetary encumbrances (liens) affect the title and may affect the transfer of ownership; whereas non-monetary encumbrances affect the condition of the property and are not likely to interfere with a transfer of title – although some could.

entrepreneurial profit

is the reward or incentive for taking the risk associated with the construction of the improvements.

environmental impact statement (EIS)

A report that includes a description of a development project with emphasis on the environmental setting and a description of the impact the project could have on the environment during the whole process of the project.


environmental site assessments (ESA)

investigation by an environmental specialists to decide if there are any environmental hazards that could affect the use of a property or impose future financial liability. ESA assists the seller in making disclosures and the buyer in making an informed offer.


Equal Credit Opportunity Act (ECOA)

federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status.

equalization factor

used to achieve uniformity when it is necessary to correct inequalities in statewide tax assessments.

equitable right of redemption

The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.

equitable title

an ownership interest pending payment of the debt.

equity

the interest or value that an owner has in property over and above any loan or indebtedness.

erosion

The gradual wearing away of land by water, wind, and general weather conditions; the diminishing of property by the elements

escheat

is the power of government to take property when the owner of the property abandons it or dies with no heirs and no will.

This is one of the four powers of government which institutes public limitations on real property. The four powers are: Police power, Eminent domain, Taxation, and Escheat, remembered by the acronym PETE.

escrow contract

a fund reserved to meet future real estate taxes and property insurance premiums.


estate

in reference to rights in real estate, the word estate refers to the nature, quality and degree of interest that a person has in real estate.

estate at sufferance

occurs when a tenant retains possession of the property after the termination of a lease and fails to pay rent. Because the estate is recognized as a real property right, the tenant must be evicted and cannot be removed as would be case for a trespasser.

estate for years

is a lease for a specific period of time. It does not have to be for a full year, but the lease must specify a beginning and end.

For example, a lease from March 1st to April 30th would be an estate for years. The estate for years terminates automatically at the end of the lease – no notice is required unless called for in the lease.

estate in land

The degree, quantity, nature, and extent of interest a person has in real property.

estate taxes

Federal taxes on a decedent's real and personal property.

excess land

pertains to large tracts of residential land properties that financial institutions will not make long-term mortgage loans on – even if there is a residence on the property.

There is a two-part test for identifying excess land:

  1. land area greater than typical and necessary to support the improvement in that market; and
  2. it is capable of separate and independent use.

exclusive-agency buyer agency

One broker becomes the buyer's agent but the buyer reserves the right to search for properties as well.


exclusive-agency listing

one broker is authorized to act as the exclusive agent of the principal. However, the seller retains the right to sell the property without the obligation to pay the broker.


exclusive-right-to-sell listing

one broker is appointed to the seller's sole agent. The broker is given the exclusive right, or authorization, to market the seller's property. Whether the sellers finds a buyer with or without the broker's assistance, the seller still must pay the broker a commission.


execute

This is making a document legally valid, such as formalizing a contract by signing, or acknowledging and delivering a deed. Execution of a document can refer to just the act of signing; it may refer to complete doing of the document's terms.


executed contract

This is a contract that has been finished fully. All parties have fulfilled their promises.


executor

or executrix if a female, is the person named in a will to handle the affairs of the estate.

executory

refers to the status of a contract which says that something remains to be done by one or more of the parties.


express agency

It is created when the principal and agent enter into an agreement which expresses their intent to create the agency. The agreement may be in writing or oral.


express agreement

an oral contract where the parties state the terms and share their intentions in words.


expressed agreement

is a contract that is declared in words either orally or in writing.

externalities

The principle of externalities states that factors external to a specific parcel of real estate may have favorable or unfavorable consequences on the value of that real estate. Proximity to a lake or river will often contribute to the value of real property, however, other externalities such as proximity to a land fill or other inharmonious land use may detract from a property’s value.

extraordinary assumption

refers to when an appraiser must presume as fact information that is otherwise uncertain in order to complete the appraisal. Every appraisal requires assumptions to be made.

An appraiser may not be able to make an interior inspection of the subject when the property is a foreclosure. It may be necessary for the appraiser to assume the quality and condition of the interior in order to proceed with the assignment. These assumptions about the interior would be classified as an extraordinary assumption. The use of extraordinary assumptions is covered in USPAP Standards Rule 1-2(f).

F

Fair Business Practices Act

This act prohibits business transactions that would result in substantial damage to citizens of Georgia. It also regulates advertising and restricts activities that encourage consumer transactions.


Fair Housing Act

title VIII of the Civil Rights Act of 1968, which declares a national policy of providing fair housing throughout the United States. Makes discrimination based on race, color, sex, familial status, handicap religion or national origin illegal in connection with the sale or rental of most dwellings.


Familial

defined as having one or more individuals under the age of 18 living with a parent or guardian. It also includes a woman who is pregnant and anyone in the process of receiving custody of a child under the age of 18.


Fannie Mae

a government sponsered enterprise established to purchase mortgage loans in the secondary mortgage market from the primary lenders.

Farm Credit System

a federal agency of the Department of Agriculture that offers programs to help families purchase or operate family farms.

Farm Service Agency (FSA)

a federal governement agency that provides credit assistance to farmers and other individuals who live in rural areas.

Farmer Mac

a government sponsered enterprise that operates similary to Fannie Mae and Freddie Mac but for agricultural loans.

Federal Deposit Insurance Corporation (FDIC)

an independent federal agency that insures the deposits in commercial banks.

federal funds rate

is the rate recommended by the Federal Reserve for the member banks to charge each other on short term loans.

Federal Reserve System

the country's central banking system, which exercises responsibility for the nation's monetary policy by regulating the supply of money and interest rates.

fee simple

refers to the maximum ownership that can be enjoyed in real estate. It permits the owner the greatest control over the land. This estate is freely transferable and inheritable.

fee simple defeasible

An estate in which the holder has a fee simple title that may be divested upon the occurence or nonoccurence of a specified event. There are two categories of defeasible fee estates: fee simple on condition precendent (fee simple determinable) and fee simple on the condition subsequent.

fee simple determinable

A fee simple estate qualified by a special limitation. Language used to describe limitation includes works "so long as" or "while" or "during."

feudal

refers to the concept of land ownership associated with medieval Europe. Under the feudal system, no one other than the King and his chosen nobility were land owners. Kings and nobility allowed others to live and work on the land, but the privilege required compensation to the “crown” in the form of military service or the fruits of their labor.

FHA loan

part of the Federal Housing Administration, which was to stimulate home ownership, the lender has to agree to make loans that can be amortized over at least 20 years with loan to value ratios of 80%.


fidelity bond

This insurance would be required for the brokers providing community association management services. The handling of funds from a community association totaling in excess of $60,000 requires the property manager to carry a fidelity bond or insurance to protect against the loss of such funds.


Fiduciary

A legal and ethical relationship based on trust and confidence.


FIRREA

Financial Institutions Reform, and Recovery, and Enforcement Act (FIRREA) enacted in 1989 by Congress in response to the taxpayer funded bailout of the failed savings and loan associations during the 1980s. FIRREA required appraisers involved in federally related transactions to be state licensed or certified.

fixity

refers to the permanence and durability of land (real estate).

fixture

An item of personal property that has been converted to real property by being permanently affixed to the realty.

foreclosure

a legal procedure in which property pledged as a security is sold to satisfy the debt. This procedure brings the rights of the parties and all junior lien holders to a conclusion.


four unities

refers to the necessary elements of Possession, Interest, Time, Title to be satisfied for the ownership form of joint tenancy to be created. The four unities are often remembered by the acronym of PITT.

fraud

deception to cause a person to give up property or a lawful right. Fraud can be active or passive.


Freddie Mac

(Federal Home Loan Mortgage Corporation) a government sponsored enterprise established to purchase primarily conventional mortgage loans in the secondary mortgage market.


freehold estate

An estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate.

frontage

is most commonly used to describe the length of a property’s boundary on a public right of way, e.g. highway frontage. It can also be used to describe a property’s boundary that is adjacent to a lake, river, golf course, or other beneficial or non-beneficial land use.

functional obsolescence

is a loss in value that generally occurs as a result of the changes in the tastes and desires of the typical purchaser. Outmoded or outdated systems or fixtures are likely to be a source of functional obsolescence. Functional obsolescence can also result from inadequacies in a structure (poor floor plan) or component (tub with no shower) as well as over-improvements in a structure or component (often referred to as a super-adequacy).

further assurance

is the grantor’s promise to perform acts in the future that may be necessary for the grantee to maintain his rightful claim.

future interest

A person's present right to an interest in real property that will not result in possession or enjoyment until some time in the future, such as a reversion or right or re-entry.

G

GA Fair Housing Law

This provides its citizens with the same protection as the federal fair housing law. If a person has been discriminated against in Georgia that person may file a complaint under either the federal or the state fair housing laws.


general agent

is authorized to act only in a specific trade or business for the principal.

Examples of general agencies:

  1. Real estate broker hired by property owner to manage all aspects of the real estate.
  2. Real estate salesperson hired by a broker to list and sell real estate, and perform other real estate business services.
  3. You hire a friend and provide them $10,000 to use to shop and buy a good used car for you.

general lien

The right of a creditor to have all of a debtor's property-both real and personal-sold to satisfy a debt.

General partnership

A partnership that involves two or more individuals who share ownership and management of the business.

  • Control - general partnership will cease to exist upon death of one of the general partners. Partners mus approve the sale of a partnership interest.
  • Liability - each partner personally liable for the partnership and for the actions of the general partners.
  • Taxes - the income from the partnership flows to each partner based on his or her share of ownership
  • Administrative obligations - no formalities necessary to create general partnership.

Georgia Miltia District

Used to define a property description in some areas of Georgia.

Georgia Real Estate Commission

the Georgia Real Estate Commission's role is to regulate the real estate brokerage industry through licensing of practitioners with a goal of protecting the public interest.

Ginnie Mae

(Government National Mortgage Association) a government agency that guarantees mortgage backed securites using FHA and VA loans as collateral in the secondary mortgage market.


GLA adjustment

reflect the market’s behavior of paying less per unit with increases in size. GLA adjustments may be obtained by paired sales analysis or by graphing the cost per square foot against the size of the house.

When using paired sales analysis it is necessary to perform analysis for each variation in GLA between the subject and comparables. Graphing permits a broader application of calculating any variation in GLA in that price and quality range of housing.

Good-Faith Estimate (GFE)

An initial accounting of expected closing costs.


governmental factors

one of the four broad categories of factors affecting the value of real estate, which are - physical, social, economic and governmental.

Governmental factors have a substantial impact on property values and can be subdivided into three main categories. The first is governmental services which includes the availability and quality of services such as police, fire, and schools. For example, school system popularity may result in measurable increases in property values. The second category is government regulation of real estate, and the third category is taxation.

grant

is the transfer of government owned land to private ownership. This is the functional opposite of land dedication.

grantee

is the party receiving an interest conveyed in a deed.

granting clause

Words of conveyance in a deed is the specific language that expresses the intention of the grantor to transfer their interest in the property ownership to the grantee.


grantor

is the property owner who is transferring their interest conveyed in a deed.

gross lease

lease of property which a landlord pays all property charges incurred through ownership, such as repairs, taxes, insurance, and operating expenses. Most residential leases are gross leases.


gross living area

is the total heated area of the house in square feet (SF) as measured from the exterior. Gross Living Area (GLA) does not include attic space, garage, or basement area. Also excluded from GLA is the second floor area of two story rooms such as living rooms, family rooms, great rooms, and morning rooms. However, it is common in some areas to include the second floor of a two-story foyer in the GLA.

groundwater

Water under the surface of the earth, which is standing or moving. This does not include water in underground streams.


Group boycotting

An illegal boycott where competitors agree not to do business with targeted individuals or businesses.

Example: the exclusion of a real estate firm from a multiple listing service.


H

habendum clause

is not an essential requirement of a deed but if used will follow the granting clause and define or limit the interest being transferred. The habendum clause begins with the words “to have and to hold.”

Handicap

  1. Having a physical or mental disability (including hearing, mobility and visual improvements, chronic alcoholism, chronic mental illness, AIDS, AIDS Related complex and mental retardation)
  2. having a record of such a disability
  3. being regarded as having a disability.

headrights

The earliest property descriptions in Georgia in the eastern area used the headrights approach, which depends on natural boundaries and markers.

heterogeneity

The uniqueness of land. No two parcels of land are ever exactly the same.

highest and best use

is generally the value sought by the independent appraiser for a subject property. The appraiser is employed to form a value opinion as to the site’s highest and best use “as if vacant” and “as improved.”

home inspector

professionals who provide a deliberate and methodical visual inspection of the interior and exterior of the structure. The home inspector does what most buyers fail to do, make a thorough and objective inspection of the house.

homeowner association

are entities created by a planned unit development to own the common areas and enforce subdivision restrictions including maintaining and managing the amenities. Financial participation is mandatory to insure funds are available for maintenance.

homeowner's insurance policy

a standard insurance policy that protects and covers a real estate owner against financial loss from fire, theft, public liability, and other common risks.

homestead

Land that is owned and occupied as the family home. In many states a portion of the area or value of this land is protected or exempt from judgements for debts.

hypothecation

To pledge property as security for an obligation or loan without giving up possession of it.

hypothetical condition

assumes conditions that are contrary to what is known to exist, but is assumed for the purposes of appraisal analysis. The use of hypothetical conditions is covered in USPAP Standards Rule 1-2(g).

An appraiser may need to determine the commercial value of a property that is currently zoned residential. The appraiser knows it is not zoned commercial but proceeds assuming the zoning can change, the assumption is contrary to what exists and is a hypothetical condition.

I

implied agency

one that is created by circumstances, appearances, and/or conduct of the parties.

Example:

  • A seller allows a broker to show his property without any agreement to representation. To third parties viewing the house, the believe the broker was acting on the seller's behalf and so the third party may rightfully infer an agency relationship.

implied agreement

is an unwritten contract/agreement created by the actions of the parties.


Impound Account

Also called the escrow account, is the trust account made to set aside money for future needs.


improvement

(1)Any structure, usually privately owned, erected on a site to enhance the value of the property - for example, building a fence or driveway. (2)A publicly owned structure added to or benefiting land, such as a curb, sidewalk, street or sewer.

income ratio

is one of the three ratios (operating expense ratio; the income ratio; and the break-even ratio) that can be useful in analyzing property income. Ratios provide a quick financial “health” check of an investment. The income ratio is the portion of the effective gross that is income.

incurable depreciation

the economic feasibility of “fixing” the item which is causing the value loss. An item of depreciation is incurable if the cost to cure exceeds the value increase derived from implementing the cure. Alternatively, if the value increase is less than the cost the cure, the deficiency will be categorized as incurable.

The term incurable does not reflect on whether the item “can” or “cannot” be replaced or repaired. Rather it reflects on whether it makes economic sense to cure the item.

independent contractor

someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays all expenses, social security and income taxes and receives no employee benefits.

index

an undeterminable economic indicator that is used to adjust the interest rate in the loan. Most indexes are tied to US Treasury securities.


index method

The least accurate method of calculating cost new and the least used method is the index method (used mainly to corroborate cost estimates from other methods). The index method attempts to calculate the cost new of a structure by multiplying its original cost by the change in some known index associated with price increases. While the cost approach is normally not concerned with the original or historic cost of a structure, the index method requires the original cost, year built, and cost index from the year of construction to be known. It is also necessary to know the current year index. The index would be associated with price increases in construction and could be consumer price index or construction cost index. To calculate the cost new using the index method, multiply the original cost of the structure times the new index over the old index (the new index over the old index reflects the price changes during the period of time).

indirect costs

are the “soft costs” or hidden costs associated with construction that are other than labor and materials.

Examples of indirect costs include finance charges, appraisal fees, engineering fees, building permits, taxes during construction, etc.

innocent misrepresentation

is basically a negligent misrepresentation made by someone who did not have a duty to verify the accuracy of the statement and had no intentions to deceive. A homeowner rents their home unaware that the Department of Transportation will be widening a nearby road. A rentor asks if there is much traffic on the road and the homeowner says no. The tenant can not cancel the lease after they move in based upon the landlords’ innocent misrepresentation.


inquiry notice

is one of the three ways the law presumes an individual has notice of an event. Inquiry notice presumes that under certain circumstances a reasonable person will make additional inquiries to determine if an event has occurred and its status.

installment contract

under an installment contract the seller retains legal title, the buyer takes possession and gets equitable title to the property. Although the buyer obtains possession under the contract, the seller is not obligated to execute and deliver a deed to the buyer until the terms of the contract have been satisfied.

intangibles tax

The intangibiles tax is a state tax on notes secured by real estate and must be paid before recording is allowed. Tax is on amount of new mortgage (if for more than 3 years). Lender must record the mortgage/security deed in order to foreclose later.

  • Calculation is: $1.50 for each $500 of mortgage amount (or part of $500) to be recorded. Proper rounding is important.
  • Where Recorded: At the court house in the county where property is located.
  • When Recorded: As soon as possible after signing.
  • Requirements: Must be signed, witnessed, and notarized.

Note: The tax must always end in either $.50 or an even $1.00. If tax is not paid lender cannot foreclose. It is the responsibility of the borrower, but may be paid by anyone on his behalf. If an existing loan is being assumed, that intangibles tax on that loan has already been paid and there is NO new intangible tax.

Examples:
Mortgage is $300,000
IT = $300,000 x $1.50/500 = $900.00

Mortgage is $275,400 convert the 400 to one 500 increment
IT = $275,500 x $1.50/500 = $826.50


intended use

must be determined within the first step of the appraisal process. The intended use or intended function of an appraisal describes what the intended users are actually going to do with the appraiser’s analyses and conclusions.


intended user

includes any individuals in addition to the client who are expected to use the appraisal report. Normally, intended users will be identified during the first step of the appraisal process when the appraiser communicates with the client at the time the parties agree on the assignment. Often, however, it will be incumbent on the appraiser to expect or inquire as to the existence of other users in addition to the client based on the nature of the appraisal.

intermediate theory

Adopted by a number of states, a theory based on the principles of title theory but requires the mortgagee foreclose to obtain legal title.

internet advertising

state laws vary, in Georgia, Rule 520-1-.09 of the Commission's Rules and Regulations defines Internet advertising as subject to the regulations governing all other advertising media.

internet listing display policy

a policy from the National Association of REALTORS that allows all MLS members to have equal right to display MLS data, and respects the rights of property owners and their listing brokers to market a property as they wish.

intestate

refers to the status of a deceased and their estate when a will does NOT exist. When a person dies without a will, they are said to die intestate.

involuntary alienation

The act of transferring property to another. Examples of involuntary alienation would be eminent domain or adverse possession.

involuntary lien

A lien place on property without the consent of the propery owner.

J

joint tenancy

special form of ownership in real estate by two or more people created by satisfying four unities. The law requires four requirements to be met in order to create a joint tenancy or prevent it from being created inadvertently or by accident.

The four unities of joint tenancy are: Possession, Interest, Time, Title, often remembered by the acronym of PITT.

judgment

The formal decision of a court upon the respective rights and claims of the parties to an action or suit. After a judgment has been entered and recorded with the county recorder, it usually becomes a general lien on the property of the defendant.

junk fax prevention act

states that it is illegal to send an unsolicited commercial fax message without express consent or without an established business relationship with the recipient.

L

land

the earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.

law of agency

defines the rights and duties of the principal and the agent. It applies to a variety of business transactions. Contract law and real estate licensing law combine with the law of agency to interpret the relationship between licensees and their clients.

lease

is a contract between the owner and the party who will occupy the real estate.

leased fee

is the owner’s interest in rented or leased property. The owner gives up his right of possession in exchange for the income from rent and the return of the property at the end of the lease. The tenant acquires a leasehold interest.

Fee Simple = Leased Fee + Leasehold

leasehold

is the is the tenant’s interest in real property. The tenant acquires the right of possession from the property owner in exchange for rent. Normally, the leasehold interest in rented property is worth nothing and the leased fee and fee simple are equal Fee Simple = Leased Fee + Leasehold

leasing agent

Agent is employed either by the owner directly or through the owner's property manager. Typical leasing agent services include:

  • market research to estimate a rental price for the property based on analysis of supply and demand in the market area and a comparative analysis between the property to be leased and the properties competing for the same tenants.
  • advertising the property
  • showing the property to prospective tenants
  • negotiating the lease terms under the owner's direction or the direction of the property manager
  • getting the lease signed

 


legal description

A description of a specific parcel of real estate complete enough for an independent surveyor to locate and identify it.

legal will

is the device used to direct the distribution of an estate upon the death of the owner.

lessee

the tenant

lessor

the landlord

liability

  1. In an accounting system, it's all amounts on the credit side, including the amounts owed.
  2. It is legal responsibility for an act.

liability coverage

insurance provided to protect policyholder against financial losses resulting from claims of bodily injury or property damage.

license

(1)A privilege or right granted to a person by a state to operate as a real estate broker or salesperson.. (2)The revocable permission for a temporary use of land - a personal right that cannot be sold.

lien theory

Some states interpret a mortgage as being purely a lien on real property. The mortgagee has no right of possession but must forclose the lien and sell the property if the mortgagor defaults.


liens

are financial interests in real estate held by someone other than the owner of the property. Financial interests can be created voluntarily when borrowing money to finance real estate or involuntarily by creditors. Liens affect the real estate title and may affect the transfer of ownership.

The party holding the lien is called the lienor. The owner of the property subject to the lien is called the lienee.

life estate

is an interest in real estate with a duration that lasts the lifetime of the holder.

For estate planning - through a life estate, an owner can provide shelter for a loved one while retaining control of the ultimate disposition of the property. Life estates are generally not considered estates of inheritance because the life estate ends with the death of the estate holder.

Limited liability company

Is a hybrid comprised of the better features of a corporation and the better features of a partnership. They may have perpetual existence and offers limited liability to the owners (called “members”) along with pass-through of the business’s income to the member’s personal tax return as in a partnership.

  • Control - can manage business directly or may appoint non-member managers to operate.
  • Liability - limited liability in the same way shareholders do in the corporation.
  • Taxes - two or more members as a partnership for tax purposes.
  • Administrative obligations - resembles the creation of corporations.

Limited partnership

A partnership where there are general partners who operate and manage the business and limited partners who do not operate but are, in effect, investors in the business with an ownership interest.

  • Control - only the general partners may operate and manage the business
  • Liability - limited partners are typically liable only for the amount invested
  • Taxes- income from the partnership flows to each partner based on his or her share of ownership
  • Administrative obligations - requires registration with the secretary of state

limited warranty deed

A limited warranty deed (also known as a limited warranty deed) limits the grantor's warranty forever to title claims arising during the period of time that the grantor owned property.

linkage

is the factor(s) that cause neighbors to feel connected.

Linkages can be anything from a transportation system that permits easy movement within the neighborhood to the social bonds that encourage people to feel a part of the community. Examples include ties resulting from participation in religious exercises, local employment, schools, or other social interaction.

liquidated damages

are those damages specified in the contract as the remedy in the event of a default or breach of contract. Often for new construction a liquidated damages clause is included indicating a fee associated with each day the construction is not completed.


lis pendens

A recorded legal document giving constructive notice that an action affecting a particular property has been filed in either a state or a federal court.

listing agreement

A contract between an owner and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission.

littoral

rights granted to owners of land bordering on non-flowing waters such as large lakes and oceans to have access to the water for reasonable uses.

Loan Estimate (LE)

three page document that has the accounting for borrowers of the loan.


Loan origination fee

The processing of a mortgage application is known as loan origination. When a mortgage loan is originated, a loan origination fee, or transfer fee, is charged by most lenders to cover the expenses involved in generating the loan.


loan-to-value ratio

the ratio which expresses the relationship betweeen the amount of money borrowed and the value of the subject property.

Local Improvement District (LID)

An assessment (i.e., tax) on a local improvement district for a public improvement project the district has approved.

locational factors

is one of the four basic categories of adjustments; which are: terms and conditions of sale; date of sale; locational factors; and physical factors.

Locational factors permit adjustments for differences associated with advantages or disadvantages in location between the subject and comparables. Locational factors include physical, social, economic, and political differences that influence the prices paid for real estate.

Example: A subject is located at the entrance to the subdivision off a busy street. Comparables are all located within the same subdivision. The appraiser analyzes any affect from the subject property location against the comparable locations and makes appropriate adjustments for any difference in value.

lot-and-block (recorded plat) system

A method of describing real property that identifies a parcel of land by reference to lot and block numbers within a subdivision, as specified on a recorded subdivision plat.

M

management agreement

An agreement between the owner and a management firm or individual that shows what the owner expects of the property manager and how the property manager will satisfy those expectations.


management plan

This plan includes the owner's goals of the property. This document is detailed and states what the manager wants to accomplish, how and when. They analyze three different factors while putting this plant together: owner goals, regional and neighborhood market, and the specific property. It also has a section on revenue and anticipated expenses.


market

is where buyers and sellers discover information about products and services offered, and voluntarily engage in transactions to buy and sell those products and services. Just about everything that is bought and sold has a market and most markets are defined by the product or service being exchanged such as the petroleum market, automobile market, housing market, etc.

market abstraction

An appraisal technique that allows appraisers to 'break down' real estate transactions into their component parts to identify the values associated with the individual components. Note that market abstraction can be used as a tool in a variety of ways in addition to finding depreciation. For example, it can also be used to find site values from analysis of improved property sales.

market rent

or economic rent, is described as the rent paid by the typical tenant to an owner where:

  • the parties are dealing at arms-length, and
  • the parties are well-informed or well-advised as to the usefulness of the property, and
  • the parties are typically motivated, and
  • where the rent paid is unaffected by special concessions.

market value

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  1. buyer and seller are typically motivated; 
  2. both parties are well informed or well advised, and each acting in what he or she considers his or her own best interest;
  3. a reasonable time is allowed for exposure in the open market;
  4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
  5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

marketable title

is subject to judicial interpretation but generally means that the property title is free from reasonable doubt as to who the true owner is; free from the probable claims of others; and that it is capable of being insured at standard title insurance rates.

mechanic's lien

A statutory lien created in favor of contractor's, laborer, and materialmen who have performed work or furnished materials in the erection or repair of a building.

meridian

One of a set of imaginary lines running north and south and crossing a base line at a definite point, used in the rectangular (government) survey system.

metes and bounds

means distances and directions. This is a way of describing a parcel of land by describing its boundaries. A metes and bounds description always has a starting point, called the point of beginning, and always ends at the same point of beginning.

metes-and-bounds description

A legal description of a parcel of land that begins at a well-marked point and follows the boundaries, using directions and distances around the tract, back to the place of beginning.

minimum level of service

some states are requiring licensees perform some minimum level of service to clients.

mistake

is a narrowly defined tool in contact law that recognizes parties have not reached mutual agreement or meeting of the minds if they are mistaken about a material aspect of the transaction. The mistake must be unintentional and not due to negligence or ignorance. A contract based on mistake would be void. A party cannot claim "mistake" to get out of a contract he or she signed.

Example: A seller has a piece of land for sale. A potential buyer visits the area but views the wrong lot. After entering into the contract the mistake is discovered and the contract is considered void. Neither party could be forced to perform as there was no ‘meeting of the minds’.


modified straight line

is used to estimate accrued depreciation for a single component or an entire structure and provides some improvement in accuracy over the straight line method as it allows a separate calculation for curable physical items and curable functional obsolescence.

In this method, the curable physical depreciation and the curable functional obsolescence is calculated first and then deducted from the cost new of the improvements before the applying the percentage of depreciation to the cost of the remaining incurable improvements. This method assumes that there is generally a uniform decline in value with time.

monuments

A fixed natural or artificial object used to establish real estate boundaries for a metes-and-bounds description.

mortgage

A conditional transfer or pledge of real estate as security for the payment of a debt. Also the document creating a mortgage lien.

mortgage disclosure improvement act (MDIA)

Effective date of July 31, 2009 changed how buyers and sellers, lenders, mortgage brokers, title agents, and real estate licensees prepare for closing. Lenders and licensees should consider the following:

  • three business days from loan application to provide the Loan Estimate (LE).
  • seven business days are required after receipt of the original LE, or a revised LE, before the loan can be consummated.
  • three business days must be allotted before the signing of loan documents, after the borrower receives the final closing disclosure
  • three business days will be added to the closing date if there has been a change to the CD resulting an increase to the APR.
  • in the event that the closing required corrections to the CD, the creditor must provide a corrected CD no later than 30 calendar days after receiving the corrected information.

Mortgage insurance premium (MIP)

FHA program is funded by borrowers through a mortgage insurance premium which amounts to an annual fee of .5 percent to 1.5 percent of the loan balance.


mortgagee

The lender in a morgage loan transaction.

mortgagor

The borrower in a mortgage loan transaction.

multiperil policies

insurance policies that cover multiple possible perils.

For example: fire, hazard, public liability, and casualty


multiple listing service (MLS)

a marketing organization whose broker members make their own exclusive listings available through other brokers and gain access to other brokers' listed properties as well.


N

national do not call registry

a registry, managed by the Federal Trade Commmission, that lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.

negligent misrepresentation

is basically fraud without the intent to misrepresent. It occurs when a false statement is made about a material fact by someone who was obliged to verify the accuracy of the statement.

negotiable instrument

A written promise or order to pay a specific sum of money that may be transferred by endorsement or delivery. The transferee then has the original payee's right to payment.

net lease

a tenant has to pay rent as well as cost incurred in maintaining the property, including taxes, insurance, utilities, and repairs.


net listing

the seller will receive a net amount of money from the sale and any excess money goes to the broker as commission. Net listings are illegal in Georgia.


net operating income

is the annual "income" in the income approach formula.

The calculation of the net operating income (NOI) begins with the calculation of the potential gross income (PGI) – which is the maximum income the property is capable of generating. Next, effective gross income (EGI) is calculated which is equal to the PGI minus the appropriate vacancy and collection losses for the type of property. The NOI is the result of reducing the EGI by the operating expenses as shown in the following:

PGI – Vacancy and Collection Losses = EGI
EGI – Operating Expenses = NOI


net-net lease

is a contract between landlord and tenant that shifts part of the cost of ownership to the tenant. In a net-net lease, the tenant will pay rent plus the tenant’s share of property taxes and insurance on the building.

non-conforming use

land presently used in such a manner that is inconsistent with a newly enacted zoning ordinance. Depending on the zoning ordinance, the right to a non-conforming use may terminate if the improvements are partially or totally destroyed.

nonhomogeneity

a lack uniformity. Real estate is considered to be nonhomogeneous because no two parcels of land are exactly alike.  

note

A financing instrument that states the terms of the underlying obligation, is signed by its maker, and is negotiable (transferable to a third party).

novation

is a change in a contract that involves a replacement agreement or a replacement of a party.

Example: A homeowner refinances a mortgage with the same mortgage company. The parties remain the same, but the old agreement (mortgage) is substituted with a new agreement. That is called a novation of the contract.

O

observed condition method

is the most detailed method of quantifying accrued depreciation. This method separately accounts for physical depreciation (curable, incurable short-lived, and incurable long-lived), functional obsolescence (both curable and incurable), and economic obsolescence.

offer and acceptance

is an essential element to create a contract valid. Requires that one party (the offeror) makes an offer to a second party (the offeree) who accepts unconditionally and communicates that acceptance to the offeror. A "meeting of the minds"


Office of Thrift Supervision (OTS)

The Office of Thrift Supervision (OTS) is the primary federal regulator of federally-chartered and state-chartered savings associations, their subsidiaries, and their registered savings and loan holding companies. OTS was established as a bureau of the U.S. Department of the Treasury on August 9, 1989, and has five regional offices located in Jersey City, Atlanta, Chicago, Dallas, and San Francisco. OTS is funded by assessments and fees levied on the industry it regulates.

Open buyer agency

A non-exclusive agreement where the buyer agrees to pay a commission to any broker who finds a suitable property. But, should the buyer find the property without any assistance from a broker, and then the buyer has no obligation to pay a commission.


open listing

also known as a nonexclusive listing, the seller retains the right to employ any number of brokers as agents. The seller is only obligated to pay a commission to the broker who successfully produces a ready, willing, and able buyer. If the seller personally sells the property without to aid of any brokers, the seller is not obligated to pay a commission.


operating budget

This is a projection of the income to be derived from the operation of the property and the expenses necessary to operate the property over a one year period. If the property is new, income is based on anticipated revenues and expenses.


operating expenses

include all costs necessary to generate the effective gross income (EGI) of an income producing property. Operating expenses include fixed expenses, variable expenses and reserves for replacement of short-lived components.

option

an agreement to keep open, for a set period, an offer to sell or lease real property.

option listing

A listing with a provision that gives the listing broker the right, but not the obligation, to purchase the listed property within a certain time.

optionee

the individual who receives the option in an option contract.

Example: A builder wants to assemble several pieces of land and receives options from all the homeowners involved before he actually purchases the properties. The builder is the optionee.

optionor

the individual who gives an option in an option contract. The optionor is the only one who must perform in this unilateral contract

Example: A builder wants to assemble several pieces of land and receives options from all the homeowners involved before he actually purchases the properties. The property owners are the optionors and must sell if the builder decides to exercise his option.

Ostensible agency

a relationship that is formed by actions rather than expressed agreement. Also called implied agency.

Example:

  • A situation where broker Allison shares office space with broker Barry. Both of there businesses are independent of one another. If Allison should assist a client of Barry's while Barry is out of the office, the client may believe that Allison is the agent of Barry.

owner financing

this means that the owner is carrying out the mortgage


P

package loan

loans that include both real and personal property.

Example: a model home is sold and mortgaged with all furnishing included.


paired sales analysis

is the process of identifying two properties which differ only in a specific feature being measured.

To illustrate, the value of a basement can be estimated by finding two identical properties except that one has a basement and the other does not. The difference in their sales prices will be the value of the basement. It is not necessary that the sales used for paired sales analysis also appear as comparables in the appraisal.

partition

is the division of cotenant's interests in real party that takes place through court proceedings when the parties cannot voluntarily agree.

party wall

A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.

percentage adjustment

Appraisers adjust for property differences using lump-sum dollar amounts, percentage, or unit adjustments. Percentage adjustments are based on a percentage of the sales price of the comparable property. They are helpful in residential appraising when attempting to apply uniform adjustments for broad market preferences, market changes (date of sale adjustments), and for differences in the actual ages of improvements. Typically, percentage adjustments are more common in non-residential appraising.

For example: a neighborhood has a superior amenity package and similar houses in a nearby subdivision sell for 10% less. Since the market values one location over another by 10%, then the appraiser should use the percentage adjustment and adjust any comparables accordingly.

It should be noted that there is an order for making percentage adjustments. Since the percentages are applied to the sales price of the comparable, it is necessary to first adjust the comparable’s sales price for the term and conditions of the sale, then the date of sale, and finally the locational and physical factors.

perfect market

all products or services being bought or sold are homogeneous or identical within a perfect market.

periodic estate

is a recurring estate for some period – usually month to month. However, the period could be from quarter to quarter, year to year, etc. This estate automatically renews for a new period. Notice is required to terminate a periodic estate.

personal property

items, called chattels, that do not fit into the definition of real property; movable objects.

physical depreciation

is the loss in value associated with the gradual wearing and tearing away of a structure or its components as a result of the affects of time, weather, use, lack of maintenance, etc. It is the most common type of depreciation and the kind normally envisioned when depreciation is considered.

physical factors

one of the four broad categories of factors affecting the value of real estate, which are - physical, social, economic and governmental.

Physical factors may contribute to, or detract from, the value of real estate and include topography, views, proximity to neighborhood shopping and neighborhood services, access to transportation, ingress and egress, climate, seasonal factors, etc. Physical factors may be naturally occurring such as rivers, mountain ranges, lakes, oceans, or the eye-catching red rock formations in Sedona, Arizona. Constructed or man-made factors include the interstate highway system, sports stadiums, and attractions such as the Statue of Liberty, Disney World, etc.

physical life

is the period of time that the improvement will likely continue to perform its basic function. Every improvement has a physical life and an economic life. Physical life is almost always longer than economic life. A car may only have an economic life of 5 years before it loses all book value. The physical life of the car may enable you to drive it for 15 years.

Planned Unit Development

is a zoning concept where an owner of a large tract of land can propose a blend of land uses which might include residential, retail, office, and/or industrial uses. Each use would be required to conform to the general zoning provisions for that type of use, and overall densities would be limited by PUD regulations.

plat map

A map of a town, section, or subdivision indicating the location and boundaries of individual properties.

plottage

is the incremental increase in value of assembled properties over the sum of the values of the individual sites.

police power

the power or right of the government to control and regulate numerous activities to protect the health, safety, morals and general welfare of the community. This power is exercised by governments at all levels – federal, state, county, and city.

Examples of federal and state regulation would encompass areas such as environmental protection, protected species acts, and protection of wetlands. Local governments concentrate on land use regulations, property use restrictions, and prohibition of certain activities by landowners.

This is one of the four powers of government which institutes public limitations on real property. The four powers are: Police power, Eminent domain, Taxation, and Escheat, remembered by the acronym PETE.

polychlorinated biphenyls (PCBs)

these were used in insulation materials and may be in electrical equipment. They stay in the air for a long period of time and can be the cause of health problems.


potential gross income

is the maximum income the property is capable of generating. It is the income resulting from 100% occupancy of the property at market rent.

Power of attorney

this allows someone (attorney-in-fact) to act as an agent on behalf of another person.


Prepaid Items

expenses to be prorated (such as fuel oil in tank) that have been prepaid by the seller but not fully used up. They are credits to the seller.


prepayment penalty

Some mortgage notes contain a prepayment clause that requires that the borrower pay a prepayment penalty against the unearned portion of the interest for any payments made ahead of schedule.


price

is determined by the principle of competition, which states that price or profit is set by buyers in the market competing for the same or similar products or services; or by sellers in a market competing for the same buyers.

Price fixing

An agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms.


primary mortgage market

where consumers can shop for and ultimately receive a home loan.


principal

1. One of the main parties to a transaction. For example the buyer and seller are principals in the purchase of real property.

2. In a fiduciary relationship, the person who hires a real estate broker to represent him or her in the sale of property. The phrase "principals only", often found in real estate ads, is meant to exclude real estate agents from contacting the owners of the property.

3. The capital sum. Interest is paid on the principal. An amortized payment includes interest and principal.


prior appropriation

A concept of water ownership in which the landowners right to use available water is based on a government-administered permit system.

Private mortgage insurance (PMI)

where the buyer purchases an insurance policy that provides the lender with funds in the event that the borrower defaults on the loan.


probate

legal process in which the court determines who will inherit a decedent's property and what the estate's assets are.

procuring cause

the things and actions of someone that leads to the desired outcome (a sale).

Example: activities like holding an open house, placing advertisement online/in newspapers, and showing the house to buyers.


profit and loss statement

Also known as the income statement, this statement shows all income minus all expenses which equals the net operating income.


Prohibited Acts

The Civil Rights Act of 1968 prohibited the following activities and conduct in residential real estate transactions:

  •  giving different terms for loans to buy or repair a dwelling, or deny a loan altogether
  • denying membership in MLS
  • refusing to sell, rent, or negotiate with any person
  • changing terms, conditions, or services for different individuals
  • stating or advertising that the property is restricted
  • telling a person that a property is not for sale or rent when it is.
  • making a profit by inducing owners to sell by telling them that persons of protected class are moving into their neighborhood (blockbusting or panic selling)

Promissory Notes

is the borrower's promise to pay a debt. Usually shows the amount of debt, rate of interest, and time and method of payment.


property manager

They have a longer agreement with the property owner and their job is more involved with the operation of the property after the tenants have occupied the property. Typical property management services include:

  • collecting rent
  • property maintenance and repair
  • managing the tenant mix and relationships
  • create a property management plan
  • create an operating budget
  • prepare monthly accounting including operating income statements
  • prepare year-end tax reports

Prorations

the division of financial responsibility between the buyer and the seller for such items as loan interest, taxes, rents, fuel and utility bills. They are necessary to ensure that expenses are divided fairly between the seller and the buyer.

Example: the seller may owe current taxes that have not been billed; the buyer would want this item settled at closing. When taxes must be paid in advance, the seller is entitle to a rebate at the closing. If the buyer assumes the seller's existing mortgage or deed of trust, the seller usually owe the buyer an allowance for accrued interest through the date of closing.


prospective appraisal

is a value estimate with an effective date sometime in the future. A prospective appraisal assignment would be one needed to determine value for construction build out purposes.

puffing

Exaggerated or superlative comments or opinions not made as representations of fact.

punitive damages

Exemplary court-awared damages to an injured party. The purpose of punitive damages is to punish the perpetrator, not to reward the injured party.


Purchase-money mortgage (PMM)

This always indicates seller financing. A seller may have the desire to take back a note rather than a lump sum payment for their property


Q

quantity survey method

is the most detailed of the cost estimating methods and from an academic perspective, it is therefore the most accurate. The quantity survey method is a detailed and itemized list of each component of the structure. Every piece of wood framing, every pound of nails, every door hinge, and every board of sheetrock is itemized.

quiet enjoyment

is a deed covenant that expresses the grantor’s promise that the grantee will be able to possess the property free of interference from the grantor or any other third parties. The promise means that no one will claim a superior right or title to the property.

quiet title

court action or process to remove any clouds or defects on title. It is a chance for anyone with claims on a property to bring it forward before the court declares or settles the legal owner.

quit claim deed

is a deed which provides no warranties. A quit claim deed is used to release any interest, if any, the grantor may have in the property and not have to make any warranties in doing so.

R

radon

A colorless and odorless gas produced from the decay of radioactive minerals in the ground. It is responsible for thousands of lung cancer deaths each year. In most states, brokers have to disclose any radon problems.


ready, willing, and able buyers

one who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

real estate

is the land and the improvements - all that is permanently attached to it - either naturally (such as a tree) or by people (such as a building).

Although the land is commonly thought of as being the surface of the earth, it also includes the space above as well as everything below the surface. Theoretically, land extends from the center of the earth, through the surface of the earth and upward to infinity above the earth’s surface. As a practical matter though, the law imposes limitations and recognizes that land consists of the surface of the earth and everything below the surface to a reasonable depth; and everything above the surface to a reasonable height.


real estate cooperative

is a form of ownership where individuals or members form a business entity to acquire the ownership of the land and building. Although the physical appearance of the real estate is the same, the ownership interests are distinguished from other forms of ownership by the following:

  • Members of the coop own stock in the corporation – they do not own the real estate directly.
  • Taxes are assessed on the entire piece of real estate not on the individual units.
  • Mortgage or financing of the property is on the entire property not on the individual units.
  • Shareholders may experience difficulty obtaining a 'share' loan to finance equity using their stock and proprietary lease as security.
  • Members are obligated under Fair housing laws but can maintain control of new members by 'first right of refusal' on the sale of shares.

real estate education, research, and recovery fund

A state fund, supported either by part of the real estate licensing fees or by a special fee, used to promote real estate education and provide a source of financial relief for people injured by the fraudulent practices of a judgement-proof licensee.


Real Estate Settlement Procedures Act (RESPA)

a federal law, originally enacted in 1974, designed to fully advise buyers and sellers involved a real estate purchase of the full settlement costs. These disclosures prevented any participants in the transaction from charging kickbacks, fee-splitting, or referral fees that would elevate the costs for home buyers without their prior knowledge.


real property

refers to the “rights of ownership” in real estate. Often used interchangeably with real estate – and normally the distinction is not significant - but real estate refers to the land and improvements.

recording

is the process designed to provide a public system by which the ownership of real estate is reasonably ascertainable and thereby discourages or prevents fraudulent transfers.

For example, without a public record of real estate ownership, an unscrupulous tenant pretending to be the owner might be able to convince an unsuspecting purchaser to buy the property from him. Because of public records, the purchaser has the opportunity to examine ownership of the property and determine that the title is not held by the person claiming ownership. By examining the public records the purchaser can acquire the information and will be barred from claiming later that he did not know the seller was not the owner.

rectangular survey

method used to describe and identify large tracts of land. The need for the rectangular system arose out of the nations need to survey large public land areas that had been acquired after the nation was formed.

The rectangular survey system begins with an initial point – a fixed point with a known longitude and latitude from which all legal descriptions in that geographic area will be referenced. There are 32 such points across America – larger states may have more than one; while smaller states may not have any initial points – instead relying on one in an adjacent state. Florida, for example, has an initial point in Tallahassee – just one for the entire state.

A map of principal meridians and base lines created by the Public Land Survey System for the states which use this system can be found on the U.S. Department of the Interior - Bureau of Land Management website.

redlining

when lenders make loan decisions based on neighborhoods or locations where the residents are of a protected class. If the applicant resided in a location assessed by the lender to have high risk they were denied the loan.


Regulation Z

is issued by the Board of Governors of the Federal Reserve System to implement the federal Truth in Lending Act, which is contained in title I of the Consumer Credit Protection Act. This helps consumers uncover the true cost of obtaining credit.

The purpose of Regulation Z is to:
Promote the informed use of consumer credit by requiring disclosures about its terms and cost. The regulation also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. The regulation does not govern charges for consumer credit. The regulation requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of § 226.5b and mortgages that are subject to the requirements of § 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.

Release deed

used to give legal title from a trustee back to the trustor after a debt has been paid.


reliction

is the process which increases the size of land as a result of water receding.

For example, if a lake’s size is reduced by evaporation, the receding water leaves behind more land which becomes an extension of the original land area.

remainder

is a future interest held by anyone other than the grantor. For example, if “A transfers to B for life and then to C,” C would have a remainder interest. In that situation C would be called a remainderman.

rent analysis

close analysis of a property to see how much would be the appropriate price to rent it for.


replacement cost

is the cost to create or recreate a structure with similar utility as the original structure. The original building materials would be replaced with current construction materials which provide the same functionality.

reproduction cost

is the cost to create a replica of the structure being appraised. That is – an exact duplicate.

If the subject structure were built in 1960 with a foundation wall thickness of three feet (perhaps planning to use the basement as bomb shelter) the reproduction cost would include the current cost of a foundation wall three feet in width.

rescission

means to void, cancel, or withdraw approval of the agreement. There are two types of rescission mutual meaning both parties agree to rescind the agreement and unilateral when only one party withdrawls from a contract.

reserves for replacement

are allowances for losses occurring to short-lived components or equipment which have not yet required expenditure.

For example, in an apartment complex, each year a portion of the roof covering wears out and the annual depreciation in value from use is taken in account each year rather than the year in which the actual expenditure or replacement occurs.

retrospective appraisal

is a value estimate from a historic perspective; that signifies the effective date is in the past.

A common retrospective appraisal would be one completed for estate purposes where the value must be estimated back to the date of death.

Reverse mortgage

Mortgage that allows people 62 or older to borrow money against the equity they have built up in their real property.

Ex: " house rich - money poor" - often older individuals who may be on fixed income need or want additional supplemental income.


reversion

is future interest held by the transferor or grantor of an estate. For example, if “A transfers to B for life,” A would have a reversion in the property.

Right of redemption

borrowers have a period in which to redeem their real estate after the sale.


right of survivorship

characteristic of the form of ownership of joint tenancy where co-owners inherit property from each owner upon the death of a joint tenant.

riparian

rights afforded owners of land bordering on flowing water such as rivers or streams (and in some instances lakes) to have access to the water for reasonable uses.

risk management

Being able to look at the risk and evaluate them. Four options regarding risk are:

1.) Risk avoidance - Eliminate the risk if it does not interfere with the goals of an endeavor. For example: it would be fun to have a dog at a day care center, however, the dog may pose a risk to the children so getting rid of the dog eliminates the risk.

2.) If it can not be eliminated, it can be controlled. For example: no way to completely avoid a building from catching on fire but you can control a fire that may start by installing a sprinkler system, providing wall mounted extinguishers, practicing safe operating methods to minimize the likelihood of a fire starting.

3.) depending on potential amount of financial harm and risk takers ability to absorb the risk, it can be transferred to another party. This is where insurance comes into play.

4.) if a risk is necessary, unlikely to occur, and cost to use another method fails to justify the expense, the risk taker can simply accept the risk.


routine maintenance

day to day activities to keep up with the building and prevent future maintenance.

For example day to day activities: cleaning common areas, plumbing adjustments, also providing regular upkeep of air conditioning, heating, and landscaping.


S

Sale-and-leaseback

This is often used to finance large commercial or industrial properties. Arrangements would set up the original owner as a tenant to operate their business with preferable rates and freeing up capital.


sales comparison approach

is one of the three classic approaches to estimating the value of real property. In the sales comparison approach, comparable sales are identified, analyzed, and compared to the subject property (the property being appraised). The sales prices of the comparable properties are adjusted downward to reflect features superior to the subject and upward to reflect the subject’s superior features.

The result is that each comparable sale’s adjusted sales price offers an indication of the subject’s value. The separate value indications from each of the sales can then be reconciled into a single value estimate. The concepts and techniques used in the application of the sales comparison approach are the same for residential and non-residential improvements.

sales concessions

financial incentives or creative financing, or, on occasion, personal property that can be offered to induce a sale. Any sales concessions that influence the price should be adjusted accordingly by the appraiser when determining value.

salesperson

A person who, for a compensation or valuable consideration, is employed either directly or indirectly by a licensed real estate broker to perform certain acts: to sell, offer to sell, buy, offer to buy


scarcity

is one of the four essential characteristics that must be present for any product to have value. Products that are in abundance have little or no value. There must be an element of scarcity which means that there is a perception that there is a limitation on the supply of the item.

The four essential characteristics or elements of value are: Demand, Utility, Scarcity, and Transferability – a useful tool to remember them is the acronym DUST.

scope of work

is the type and extent of research and analyses that will be sufficient and necessary to produce a credible or believable value estimate.

secondary mortgage market

creates liquidity for the primary motgage market by purchasing and selling packages of mortages.

For example, Fannie Mae or an investment group would purchase loans originated in the primary market by a local bank so that the local bank could turn around and continue lending money to consumers. An individual could not go to Fannie Mae and apply for a single loan.  

section

A portion of township under the rectangular (governement) survey system. A township is divided into 36 sections, numbered 1 through 36. A section is a square with mile-long sides and an area of one square mile, or 640 acres.

security agreement

recognized by the UCC as an instrument documenting interests in a debtor's chattel.

security deed

The Georgia form of a morgage instrument in which a borrower conveys legal title to the property to the lender for the purpose of securing a mortgage lien.

seisin

is a deed covenant that makes the assertion and promise that the grantor is in possession of the property and its rightful owner.

separate property

refers to property excluded from community property ownership interests if it was acquired in the following manner:

  • Individual property owned at the time of marriage and capital gains thereon (income received from individual property will likely be considered community property)
  • Individual property inherited or received by gift during the marriage
  • Individual amounts received for personal injury (except recovery for lost income)

servient estate

is a piece of property that is burdened or suffers from a right attached to another piece of property due to an appurtenant easement.

set back

is a zoning regulation that requires owners of real estate to build any improvements a designated distance from the property line.

setbacks

are determined by zoning ordinances and are the open areas necessary between the lot line and the nearest point a building can be constructed.

For example, common setbacks will require at least 35 to 50 feet of open space in the front yard, 10 to 15 feet of open space on the side yards, and 35 to 50 feet of rear yard space.

Settlement Statement (HUD-1)

cash accounting by the person designated to process the sale. This shows all the cash received, all charges and credits made and all cash paid. Also called the closing statement or adjustment sheet.


severalty

is ownership of real estate by one party; or severed from all others.

severance

is the process of converting an item that is real estate to personal property by detaching it or severing it from the land.

Sherman Antitrust Act

Antitrust legislation is designed to prohibit monopolies and encourage competition. The Sherman Antitrust Act prohibits price-fixing, group boycotting, allocation of customers or markets, and tie-in-agreements.


Single agency

the business limits representations to buyers and tenants; or to sellers and landlords.


situs

refers to the preference the market may have for one location over another. This preference is usually measured by the dollars paid for each location or the value difference between locations. Location preferences are driven by factors such as availability of transportation, quality of schools, perceptions of safety, climate, scenery, availability of jobs, taxes, government policies, etc.

social factors

one of the four broad categories of factors affecting the value of real estate, which are - physical, social, economic and governmental.

Social factors are changes in social norms, cultural beliefs, population, and family make-up can cause long-term changes in real estate markets. An example is the continual increase in the average age of the population. Markets have identified a demand for a type of housing that might not otherwise have been created. In the last 20 years there has been a proliferation of one-story detached condominiums or zero lot line homes. These accommodate the demand from senior citizens who prefer to have low maintenance one-story homes – that permit some privacy without the cost and trouble of maintaining a large yard.

Sole proprietor

A business where one person owns the entire business and reports all profits and losses on his or her personal income tax return.

  • Control - complete control of the business
  • Liability - owner is personally responsible for the debts and liabilities of the business
  • Taxes - all income and expenses of operation will be reported using supplemental forms on the owners tax return.
  • Administrative obligations - three categories: support income and expenses show on tax return, ensure business is running efficiently, and establish that the business follows licensing rules.

special agent

is an agent who is authorized to represent the principal in one specific act or business transaction only and under very detailed instructions.

An example would be a broker hired by a seller to list their property. The broker is a special agent of the property owner for the purpose of finding a ready, willing, and able buyer for that particular property.


special assessments

A tax or levy customarily imposed against only those specific parcels of real estate that will benefit form a proposed public improvement like a street or sewer.

specific lien

A lien affecting or attaching only to a certain, specific parcel of land or piece of property.

specific performance

is a legal remedy that allows the court to order the breaching party to perform as they agreed to in the contract. This remedy is reserved for contracts involving unique or irreplaceable items. Real estate is considered unique. A seller could be forced to sell their property if they tried to withdraw from or breach the contract.

square foot method

is the least detailed of the cost estimating methods and is the one used by appraisers. In this method costs are established on a per unit basis such as the square foot or cubic foot. Appraisers will identify the “cost per square foot” associated with size and style of improvement being appraised and simply multiply the cost per unit times the number of units (square feet) in the structure. When using this method it is important to identify the cost of the main structure (GLA) and identify separately the cost associated with parts of the structure that vary from house to house.

For example, not all houses have basements, garages, fireplaces, or screened porches. The cost of those items must be calculated separately so that the square foot method may be applied to variety of structures within a grouping of houses.

Statute of Frauds

requires certain agreements to be in writing and signed to be enforceable by court action.

For example: deeds, real estate sales contracts, and certain leases.


statutory lien

A lien imposed on property by statute - tax lien, for example - in contrast to an equitable lien, which arises out of common law.

steering

the practice of directing buyers towards or away from certain neighborhoods based on their race or certain properties based on their status as a protected class. This involved two broad classes of conduct:

  • directing or encouraging people to select properties and locations based on the person's protected class (most commonly "racial" sterring); and/or
  • failing, on the basis of the person's protected class, to show, or to inform buyers of houses that meet their specifications. 

step lease

is any gross, net, net-net, or triple lease that contains a “step up” (or step down) in the amount of rent paid based on some time table or event.

A common “escalator clause” might call for rent to increase by $2.00 square foot annually on each anniversary of the lease. The step up will be an attempt to provide rent increases as the market rent rises. Naturally, if the step up rate is higher than the increase in market rents, the owner will benefit. If the market rates rise faster than the step up rates, the advantage would go to the tenant.

Straight loan

Loans that are interest only and have to be paid back in three to five years. The short payback period meant that borrowers had to either pay the loan back in full or refinance the loan at the end of the three or five year term.


straight-line method

can be used to estimate accrued depreciation for a single component or an entire structure. This method assumes that there is generally a uniform decline in value with time. To calculate accrued depreciation using this method, it is necessary to know the economic life, effective age, and cost new of the component or structure.

sub-market

a sub-set or a specific segment of a larger market which share common characteristics unique to that sub-market. 

Example: Real Estate Market is a very broad market. Lake properties are a sub-market in real estate. Fundamental issues about the size of the lake and recreation available at the lake, factors peculiar to this market include view of lake whether restricted or panoramic; access to the lake; availability of a dock permit; and depth of water at the dock. These factors have a considerable affect on the prices paid for lake properties and distinguish them from other non-lake properties.

subagent

is someone who is employed by someone else who is already acting as an agent. In real estate salespersons work for a broker who is employed by the client through a listing or buyer contract. The salesperson is an agent for the broker and the subagent for the client.

subordination

refers to a lesser position of claim held, usually in respect to a right or security.

subrogation

is the substitution of one legal party for another with the new party acquiring the legal rights and claims of the original party.

substitution

The main or underlying principle attributed to the successful use of the cost approach is the principle of substitution. The principle of substitution applies to the cost approach in the following manner.
The value of real property is set by the cost to construct an equally desirable substitute.”

subsurface rights

ownership rights in a parcel of real estate for elements below the surface, including: water, minerals, gas, oil or anything that is below the surface.

Superfund Amendments and Reauthorization Act (SARA)

This focuses on the cleanup of releases or hazardous substances on property. This also creates legal exposure based on liability for owners, landlords, and, sometimes, lenders.


supply and demand

The principle of supply and demand merely expresses the affect on price of changes in supply and demand. All things being equal, as the supply of real estate increases, prices will fall. Conversely, as demand increases, prices will rise.

surety bonds

cover a business for losses as a result of criminal activity of its employees when conducting tasks for the business.


surface right

ownership rights in real estate that is limited to the surface of the property and does not include the air above (air rights) or the minerals below (mineral rights) the surface.

survivability

parts of a contract that survive past the transaction

Examples:

  1. When one section of a contract is invalid, the rest of the contract "survives" and is still valid
  2. If you were to buy someone's house today and the property taxes have not been paid yet, the owner would hand you 300 dollars for the future payment. When time comes for the payment, it is really 400 that the owner owes you, they still have to pay this 400; that part of the contract "survives"

T

tacking

Adding or combining successive periods of continuous occupation of real property by adverse possessors. This concept enables someone who has not been in possession for the entire statutory period to establish a claim of adverse possession.

taxation

The process by which a government or municipal quasi-public body raises monies to fund its operation.

tenancy by the entireties

is a special ownership created for husband and wife. In a tenancy by the entireties, both the husband and wife own 100% of the property. The marital partners must take title at the same time and through the same deed. Some states require specific verbiage to be included in the deed. This form of ownership is not recognized by all states and is not available in Georgia.

tenancy in common

ownership in real estate by two or more people. Each person owns a separate and divisible interest in the property that will be inherited by their heirs upon death unless directed otherwise by a will. Ownership as tenants in common is the default estate should the deed conveying title not specifically provide for another type.

tenant compatibility

A manager must make sure that a certain place is suitable for a tenant in location, size, and amenities. The manager should also make sure the tenant is able to pay for the space. Tenant compatibility is simply making sure the tenant is a good choice for the space you are managing.


tenant improvements

Also called construction allowance, it is money to a lessee from the lessor to cover the cost, partially or in all, of preparing a structure for the lessee's occupancy. This could include costs for partitions, wiring, lighting, and standard carpeting.


testate

refers to the status of a deceased and their estate when a will exists. When a person dies with a will, they are said to die testate.

testator

is the man who makes a will, testatrix if a female.

Tie-in arrangement

Offering products together as part of a package. For competitive purposes, a monopolist may use forced buying, or "tie-in" sales, to gain sales in other markets where it is not dominant and to make it more difficult for rivals in those markets to obtain sales.

   


time-share

is a form of ownership that allows access or occupancy for only a designated or specific time period.

title

rights of an owner to an estate or real property. A record that establishes the rights of ownership.

title insurance

is purchased by mortgage companies or lenders when securing a loan to insure that the title is free from reasonable doubt as to who the true owner is; free from the probable claims of others.

Real estate professionals should advise their clients that the insurance issued at closing is for the benefit of the lender not the homeowner. A separate policy would be required to be purchased for the homeowner.

title search

the process of verifying the ownership of real estate.

Title theory

The mortgagor actually gives legal title to the mortgagee and retains equitable title.


Title VIII of the Civil Rights Act of 1968

Protections against discrimination against classes of race, color, religion, or nation origin. Federal prosecution was also added when threats, force, or violence was used against a protected class or persons seeking to help those individuals. Title VIII is commonly known as the Fair Housing Act.


Torrens system

system for the registration of real estate which requires the issuance of "certificate of title" by the government that conclusively establishes the property’s ownership. It is available in only a handful of states – Georgia being one of them – however, it is rarely used.

townhouse

is a manufacturing style of real estate housing usually having a shared common wall between two units. It is not a form of ownership.

trade fixture

any item added or installed by a tenant of a lease to the real property that is removed by the tenant prior to the end of the lease.

transfer tax

A fee paid for the privilege of transferring ownership of the property. The tax rate in GA is $.10 for each $100 (or fraction thereof) of price paid minus any assumed mortgages.

transferability

is one of the four essential characteristics that must be present for any product to have value. Transferability refers to the ability to transfer the unrestricted use or ownership of the product to another individual. Without this quality, there would be limited or no “exchange value” potential for the product.

The four essential characteristics or elements of value are: Demand, Utility, Scarcity, and Transferability – a useful tool to remember them is the acronym DUST.

trigger terms

are items that if included in any advertising which entices a borrower must disclose additional information to protect the consumer per Regulation Z.

Such terms include: credit terms, down payment, monthly payment, dollar amount of the finance charge, or term of the loan.

triple net lease

is a contract between landlord and tenant that shifts part of the cost of ownership to the tenant. In a triple net lease, the tenant will pay rent plus the tenant’s share of property taxes, insurance, and common area maintenance (CAM) on the building.

trust

is a fiduciary arrangement used to transfer ownership of real or personal property to a trustee to be held and/or administered on behalf of the beneficiary. The person who creates the trust is called the trustor.

trust fund account

An account set up by a broker, attorney, or other agent at a bank or other recognized depository, into which the broker deposits all funds entrusted to the agent by the principal or others; also call and earnest money or escrow account.


trustee's deed

A deed executed by a trustee conveying land held in a trust.

Truth-in-Lending Act

the federal government regulation designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all true costs.


U

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

Federal department that is active in national housing programs. Some programs they have are urban renewal, public housing, model cities, rehabilitation loans, FHA subsidy programs and water and sewer grants.


unfair practices

Sales practices that do not involve deception but are still illegal under the regulations of the Federal Trade Commission. It is unfair if it offends public policy; is immoral, unethical, oppressive or unscrupulous; or causes injury to consumers.


Uniform Commercial Code

The Uniform Commercial Code Section (UCC) is a central depository for certain financing statements and other documents provided for under the Uniform Commercial Code since 1966.

Excerpt from the Uniform Commercial Code:
The Uniform Commercial Code adopts the "notice filing" approach, under which an abbreviated notice is filed with the appropriate filing officer evidencing that a debtor and secured party intend to engage in a secured transaction using specified collateral as security. The actual security agreement may even be executed later. The Code became effective at midnight on June 30, 1966 , and applies to transactions entered into and events occurring after that date.

Simply the UCC permits an outlet for a creditor to present public notice by filing a financing statement with the appropriate filing office about a debtor’s assets used as collateral for a secured transaction.

Uniform Electronic Transactions Act (UETA)

sets forth rules for entering into an enforceable contract using electronic means.

unilateral contract

is a contract that requires only one party of the contract to perform. An option contract is a common unilateral contract.

For example: a lost pet poster that offers an reward, no one is obligated to look for the pet but if the pet was to be found and returned, someone would owe them the reward that was listed.


unit-in-place method

estimates costs more generally than the quantity survey method. It is more of a “systems” or “component” approach to cost estimating.

In the unit-in-place method, costs are provided for installed items – that is the cost includes both the material and the labor to install the material. Costs are commonly given “per unit” for parts of a system or component with lump sum costs for fixtures and equipment.

For example, the electrical cost for a structure might be quoted per electrical receptacle. To calculate the cost for the electrical system, the number of receptacles is multiplied by the cost per receptacle. That calculation will provide the cost of the electrical job including materials and labor. This would be in contrast to the detail required in the quantity survey method which would require an itemization of the cost for receptacle boxes, receptacle plates, receptacles, switches, box covers, wire, etc. with a separate labor charge to install them.

universal agent

when the principal allows the agent to act on behalf of the principal in every fact of their life. This type is not very common due to the broad scope of authority given to the agent.

Examples:

  1. A professional athlete may hire a universal agent to negotiate compensation packages, select and choose investments, and negotiate endorsement contracts.
  2. An elderly person may hire to handle bank accounts, income, investments, sale of real or personal property, or any other matters.

Urea-formaldehyde foam insulation (UFFI)

this is an insulating foam that can give off harmful formaldehyde gases.


usury

Charging interest at a higher rate than the maximum rate established by state law.

utility

is one of the four essential characteristics that must be present for any product to have value. Utility means that the product is useful and satisfies some need or desire.

The four essential characteristics or elements of value are: Demand, Utility, Scarcity, and Transferability – a useful tool to remember them is the acronym DUST.

V

VA loan

These assist veterans and their spouses (including un-remarried spouses of veterans whose deaths were service-related) in financing the purchase of homes with little or no down payments at interest rates.


valid

refers to an agreement which contains all of the essential elements of a contract: competent parties, offer and acceptance, consideration, and legal subject matter.It is binding and enforceable on all parties to it.


value

with regard to appraising, value refers to the specific purpose sought in the appraisal assignment. Examples of values include: market value, insurable value, quick sale value, liquidation value, book value, etc.

While the purpose (specific value sought) of most appraisals is to estimate a property’s market value, the appraiser should not assume that is the purpose of every appraisal.  

variance

is the permission by the government to allow a minor deviation or violation of the current zoning requirements. Violations of zoning setback requirements are a substantial source of requests for variances.

vendee

is the buyer. Vendee is the individual who is buying land or an option on the real estate.  

vendor

is the seller. Generally it is individual who is selling their land or real property. Vendor could also sell their option on real property.    

vested interest

is an interrest that certain to occur

void

refers to a contract with no force or affect under the law – and therefore is not capable of being enforced under any circumstances. A contract that has an illegal purpose was invalid from the beginning and can not be enforced by either party.

voidable

refers to a contract that allows one of the parties to rescind the agreement because they entered into the agreement under a disability.

Example: If an individual bought a piece of land but the seller used fraud to induce the sale the contract is considered voidable and can be voided by the injured party. The purchaser has the right to void the contract but not the seller who used fraud. If the purchaser finds oil under the land the seller does not have the same right to void the contract claiming it was voidable.

voluntary alienation

means that the owner of the property agreed to the transfer. Examples of voluntary alienation would be gift or sale.

voluntary lien

A lien placed on property with the knowledge and consent of the property owner.

W

warranty deed

also known as a general warranty deed, contains the maximum protection for grantees. The following covenants and warranties; seisin, quiet enjoyment, further assurance, against encumbrances, and warranty forever, are contained in the warranty deed either expressly in some states or by implication.

A warranty deed is used in the standard real estate transaction.

water rights

common law rights held by owners of land adjacent to rivers, lakes, or oceans, and includes restrictions on those rights and land ownerships.

water table

upper surface of the aquifer or underground water system. The existence of a high water table on the site may create long term foundation and dampness problems that could have an impact on the site’s value.

web site management tools

tools that licensees can purchase to help with their marketing efforts.

wetland

is land area(s) covered with water or saturated with water at least part of the year and identified as such by state governments or the federal government.

These marsh or swamp-like areas are believed to provide refuge for wildlife (feeding migratory birds and other animals); help prevent flooding; and help to filter pollutants out of our ground water system. Governments have acted to protect these areas (and the life forms they sustain) from development.

workers' compensation act

A state law requiring all employers to provide insurance coverage for their employees. Therefore, if a salesperson is injured on the job, he or she will be covered for specified medical expenses and lost wages.


wraparound loan

borrower might have an existing loan but needs additional financing. A second loan is made which is larger than the first and the new payments will be made to cover both loans. The first loan might contain a prepayment penalty forcing the borrower to pay a large penalty if paid off early.


Y

year's support

Has replaced dower and curtesy in Georgia. A surviving spouse and/or minor can petition the probate court to have real and/or personal property set aside from the estate to provide for 12 months' support from the date of the decedent's death.

Z

zero lot line

is a zoning concept that allows owners to build one or more sides of a structure on the property line.

zoning

is a common use of police power for the government to limit and control the uses of land.

All major American counties and cities have now adopted zoning ordinances (except Houston, the largest city in Texas and the fourth largest in America). Zoning ordinances specify the precise types of uses and activities permitted by the jurisdiction on each piece of land. Zoning categories commonly include residential, apartment, commercial, office and institutional, agricultural, and industrial.


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