Glossary - 360training.com

1 Texas Principles of real estate I Page 1 of 46 Glossary Abstract of Title: A brief history of the title to a particular parcel of real estate . It is a summary of the public records that exist regarding that parcel and presents a compressed listing of the various events and changes that have affected the title to that parcel over time. It chronicles any transfers in ownership as well as any divisions of ownership interest. It also records liens and other encumbrances that may be associated with the property. Most abstracts are accompanied by a certificate that identifies the period of time covered by the abstract, but there are no standard forms or methods for presenting or creating an abstract. Acceleration Clause: (also called an alienation clause ) A clause in the mortgage document that, if enforced, makes the entire balance of the mortgage due to the lender immediately upon default.

2 Accrued Item: Accrued items are prorated costs that are owed by a seller (such as real estate taxes in states where these are not prepaid), but which will ultimately be paid by a buyer after he or she receives title to a property. That is to say, these expenses have been (or are being) incurred, but need not be paid at the time the sale closes. In an effort to ensure that these expenses are handled fairly, the seller generally pays the buyer for these items through credits at closing. For example, a seller might credit a buyer for the proportion of annual real estate taxes that were charged during the part of the year that the seller occupied the property. Action to Quiet Title: (also called suit to quiet title and quiet-title action ) A legal proceeding that attempts to establish ownership when there is a real or potential defect in a title created by a lien or other encumbrance.

3 Generally, the action aims to resolve difficulties created by the tension between the apparent or legally-recognized owner s claim to a property and the rights or interests in that property that may have been acquired by creditors or other parties who are not (presently) the recognized, legal owners of the property. Texas Principles of real estate I Page 2 of 46 Actual Authority: The express or implied authority that a principal gives an agent in an agency relationship. Actual Damages: Compensation given to an injured party for proven injuries or losses that resulted from another party s actions or omissions. Actual Notice: Some form of communication given directly to the individual being alerted to the existence of the fact; it is notice he or she has received personally. One can also gain actual notice on one s own, without receiving any explicit communication from another person.

4 For example, one would have direct knowledge that is, actual notice about a property after researching that property through public records or by performing a property inspection. Ad Valorem Taxes: General real estate taxes, calculated according to the assessed value of individual properties. The term ad valorem is Latin for "according to value." Adjusted Basis: The purchase price of real estate plus the cost of improvements, less depreciation. Affidavit of Title: A legal guarantee regarding the condition of a property s title. In this affidavit, the seller swears to his or her legal identity and marital status; the seller also testifies that he or she has had no bankruptcies, divorces or legal judgments made against him or her since the date of the title examination; , that the title is in the same condition as it was at the time of the examination.

5 The affidavit also generally entails that that there are no unrecorded deeds or contracts for the property and that the owner has paid for all repairs and improvements that have been made recently or that were stipulated as part of the sale. Agency Relationship: A relationship created when one party designates another to represent his or her interests in dealings with a third party. Texas Principles of real estate I Page 3 of 46 Agent: An individual authorized by a principal to make decisions on behalf of that principal and represent his or her interests. Air Rights: The right to use, control, and occupy the space above a particular parcel of real estate , which is sometimes called an air lot. Americans with Disabilities Act (ADA): This act prohibits discrimination against individuals with disabilities.

6 Specifically, it guarantees them access to employment, public services, telecommunications, public accommodations, and commercial facilities. Amortization: The repayment of a financial obligation over a period of time in a series of periodic installments. Specifically, it is the payback of the principal owed to the lender. Each payment should cover the interest accrued over the period for which payment is made and a portion of the principal. The interest portion is tax deductible, whereas the amortization is not. Amortization Rate: The percentage of a periodic payment that is applied to the reduction of the principal; in a level-payment mortgage this corresponds to the sinking fund factor. Amortization Term: The period over which the principal amount would be retired on the basis of the periodic installments paid.

7 Amortized Loan: A financial obligation repaid over a period in a series of periodic payments. Apparent Authority: The authority created when the principal falsely represents an agent to a third party, suggesting that the agent has significant authority when he or she has no actual authority. Texas Principles of real estate I Page 4 of 46 Appraisal: The process by which the value of a piece of real estate is determined; any value so determined is called the appraisal value. Appraisal Report: An appraiser s written or oral estimate of value submitted to a client based on a specified definition of value for the subject property as of a specific date, giving all details of the data utilized in the appraisal process. Appraised Value: An estimate by an appraiser of the amount of a particular value, such as market value, assessed value, or insurable value, based on the given assignment.

8 Appraiser: A person who engages in the procedure of estimating the value of real property or personal property. Appreciation: An increase in the value or worth of something due to economic or related causes such as supply and demand, which may prove to be either permanent or temporary. It is the opposite of depreciation. Appropriation: The actual method by which a district imposes a real estate tax. Area: The surface size of a two-dimensional figure such as a triangle or rectangle, expressed in terms of square units, , square feet or square yards. It is formulated by the equation: length x width = area for rectangles; one-half base x height = area for triangles; pi x radius squared = area for circles, etc. Asbestos: Naturally occurring mineral fibers that are mined and processed into materials used in building and other kinds of manufacturing.

9 Asbestos is used to strengthen materials, provide thermal and acoustical insulation on exposed surfaces, and to fireproof a product or material. Asbestos fibers have been linked to cancer of the lungs, stomach and intestines, as well as to a disease called asbestosis. Texas Principles of real estate I Page 5 of 46 Assessment Roll: A public record that provides information on properties in a specific area or district, including legal descriptions, owners, and assessment values. Assignment: A method of transferring the rights and obligations of a contract to a third party without canceling the contract. Assignments vary as to what rights and obligations are transferred and to what degree. Association of real estate License Law Officials (ARELLO): An international organization that promotes uniform standards for license law administration and enforcement.

10 Assumption: Taking over the obligation or commitment of another, as in a loan, insurance policy, etc. Balance: The appraisal principle that states that the highest property values are realized when improvements are proportional to one another and the land in size and type. Banker s Year: An evenly based system used for calculations that assumes 12 calendar months, each containing 30 days, for a total of a 360 day year. Banking Year: A 360-day year (or 12 months of 30 days each) that is often used in banking and other financial practices. Bargain and sale deed: A deed without warranties with which a grantor may transfer all of his or her ownership interest to a grantee. A bargain and sale carries no guarantees as to the condition of the title; however, the grantor does acknowledge that he or she has the title to and possession of the interest to be conveyed.