Real Estate

  1. Common Laws
    Part of English law that is derived from custom and judicial precedent rather than statutes.
  2. Statute Laws
    “Written laws adopted by a legislative body.”
  3. A.R.S.
    Arizona Revised Statues
  4. AZ Constitution – Article XXVI (26)
    “Gives real estate licensees the power to draft or write contracts related to the sale of real estate in AZ.”
  5. The Real Estate Commissioner
    “Appointed by the Governor”
  6. Arizona Real Estate Advisory Board
    • “Established by the Legislature to provide the Real Estate Commissioner
    • with such recommendations as it deems necessary and beneficial to the
    • best interests of the public.”
  7. Grace Period
    • “A period of 1 year after expiration of a real estate license that if
    • renewed within this time frame, there is no need to retake all
    • education”
  8. Consent Order (Consent Agreement)
    “A disciplinary action resulting from negotiation between the Department and the Respondent.”
  9. Recovery Fund
    • “A last resort for recovery of losses, in an attempt to make a claimant
    • whole, caused by the conduct of a licensed salesperson / broker in a
    • real estate transaction”
  10. Land
    “The top of the earth, it’s tress, bushes, waters, extending down and upwards”
  11. Improvements
    “Improved assets that fall on, in or on top of the property”
  12. Appurtenances
    “Occurs when the attachment becomes part of the property”
  13. Underground Right
    “Known as subsurface rights, anything that is under the ground you own is yours and it is considered real property”
  14. Air Rights
    “The ownership of rights that extend above the property”
  15. Bundle of Rights
    “Set of legal rights assigned to the title holder of real property”
  16. Disposition
    “The right of the owner to dispose of the property”
  17. Enjoyment
    One of the bundle of rights that allows the owner of the property to "enjoy" the property freely and openly
  18. Exclusion
    “The right to exclude others from using the land”
  19. Possession
    “The right to possess the land with legal title”
  20. Control
    “The right to control the property under legal conditions”
  21. Chattle
    “An individual’s personal property (another term used in real estate)”
  22. Tangible Property
    “A person’s personal property that can be seen, touched, held”
  23. Affixture
    “The conversion of personal property to real property”
  24. Severance
    “The conversion of real property to personal property”
  25. Conversion
    “The act of changing from one type of property to another”
  26. Real Property
    “Land, anything under it or over it, rights, improvements and fixtures”
  27. Personal Property
    All property that is not real property”
  28. Accession
    “The acquisition of tenants property by landlord due to failure of removing the property at end of lease”
  29. Fructus Naturales
    The plants or crops that yield or produce the harvested crop
  30. Fructus Industriales
    “The actual fruit or material that came from the plant”
  31. Emblements
    Items that came from the crop and are now personal property”
  32. Corporeal
    Often referred to as real property that is inheritable”
  33. Incorporeal
    “Often referred to as personal property that is inheritable”
  34. Estate
    “The degree, quantity and nature of one’s interest in land”
  35. Leasehold Estate
    Ownership of a temporary right to hold land or property”
  36. Lessor
    “Landlord or the ‘Giv-or of the lease’ but retains bundle or rights”
  37. Lessee
    “Tenant or the ‘Receiv-ee of the lease’ but has some rights under the lease”
  38. Freehold Estate
    Any estate which is free from hold of any entity
  39. Grantor:
    “The person who is giving the estate (Giv-or)”
  40. Grantee
    The person who is receiving the estate (Receiv-ee)
  41. Fee Simple Absolute
    “Highest and most desirable form of property ownership”
  42. Indefeasible Fee
    Unable to annul, forfeit or end the estate as long as the owner abides by all legal rights”
  43. Fee Simple Qualified
    A type of fee estate which has limitations placed upon it”
  44. Defeasible
    “Can be terminated if certain criteria is met or not met”
  45. Annul
    “To declare invalid (void)”
  46. Fee Simple Determinable
    “As long as something is done (or not done) in deed”
  47. Reverter Clause
    Automatically transfers full ownership back to grantor”
  48. Fee Simple on Condition Subsequent
    “Subject to a prohibited declaration in deed”
  49. Fee Simple Conditional
    Inheritance of property is limited to direct descendants only”
  50. Devise
    “To will or transfer real property upon one’s death”
  51. Waste
    “Lowering the value of property by neglect”
  52. Estate in Reversion
    A life estate that ends upon the death of the life tenant and reverts back to grantor or the grantors heirs”
  53. Estate in Remainder
    “Upon the death of life tenant, property will revert to a 3rd party”
  54. Remainderman
    “A third party who has a remainder interest in real property”
  55. Estate por autre vie
    “A life estate that is based upon the life of someone else”
  56. Homestead
    “An owner’s primary residence is protected from general creditors”
  57. Dower
    “Life estate the wife has when her husband dies”
  58. Curtsey
    “Life estate the husband has when his wife dies”
  59. Inchoate
    “Just begun and so not fully formed or developed”
  60. Alienation
    “The act of transferring real property from one person to another”
  61. A Deed
    • “A written legal document that is signed and delivered and is used to
    • convey the ownership of real property and legal rights to another.”
  62. Conveyance
    “The legal process of transferring “real property from one owner to another – not title.”
  63. Dedication
    • “A form of voluntary alienation where by the owner of property deeds
    • ‘dedicates’ the lands that are needed for roads, sewers, waterlines, and
    • other utilities.
  64. Title
    “The right of ownership of property and evidence of such rights.”
  65. Constructive Notice
    “Notice that is given to the general public at large.”
  66. Actual Notice
    • Delivered in such a way as to give legally sufficient assurance that
    • actual knowledge of the matter has been conveyed to the recipient.”
  67. Abstract of Title
    “The written history of the title”
  68. Patent
    “The instrument used to transfer land form a government body to individuals”
  69. Derivative Title
    “Title that belongs to either a corporation, individual or other entity that was derived from the government’s original title
  70. A Clear Title or a Marketable Title
    “One that is complete and has no errors found
  71. Adverse Possession
    • “A
    • type of involuntary alienation or giving up of a property whereby an
    • unauthorized person who does not hold legal title to a property can in
    • fact obtain legal title and rights.”
  72. Tack On
    • A term used when one squatter uses someone else’s previous adverse
    • possession time to include their time for the adverse possession.”
  73. Color of Title
    Title that may have the appearance of good and valid title to property.”
  74. Habendum Clause
    “To have and to Hold”
  75. CC&R’s
    “Covenants, Conditions and Restrictions.”
  76. Encumbrance
    “Burden or other impediment on title”
  77. Conventional Will
    “Signed by the maker plus two witnesses”
  78. Codicil
    “An amendment to a will”
  79. Holographic Will
    Handwritten will signed and dated only by its creator
  80. Nuncupative Will
    Oral will, usually spoken while on one’s death bed”
  81. Lien
    A ‘monetary or financial’ claim placed against real property
  82. Easements
    • (a type of encumbrance) “A right to use or to cross over someone else's
    • property for a specified purpose, like ingress or egress.”
  83. Deed Restrictions
    Restrictions on the use of the real estate in some way.”
  84. CC&R
    “Covenants, Conditions and Restrictions”
  85. Latches
    “The failure to assert your legal rights in an appropriate time.”
  86. Encroachment
    A type of nuisance, an intrusion on a person’s territory, property or individual rights”
  87. Cloud on a Title
    “An apparent encumbrance, discovered in the title search and history.”
  88. Monetary Encumbrances
    “Money that will affect title to the property involved.”
  89. General Lien
    “A lien on all property, both real and personal of a debtor”
  90. Specific Liens
    “Debts that are directly tied to the real property only”
  91. Voluntary Liens
    “Liens that one would allow and acknowledge.” They elect to have that lien.
  92. Involuntary Lien
    “Occurs by law, such as a tax or special assessment lien.
  93. Lis Pendens
    “A written notice that a lawsuit has been filed.”
  94. Statutory Lien
    “Any lien that is placed on the property by an act of law”
  95. Voluntary Lien
    “Two parties have contracted to create a lien”
  96. Lienor
    “The creditor placing the lien”
  97. Lienee
    “Debtor who owns the property”
    “Judgement liens arise from court order or from a lawsuit”
    “Created by an act of law and are attached to personal and real property”
    A Creditor placed lien against the estate of a deceased to recover debts owed by deceased”
  101. Mechanics Lien
    • “A lien filed for the non-payment of labor already performed on a
    • property or for job site materials that were used during the
    • construction of the property.”
  102. Escrow
    A third party that has a neutral non-interested position in the sale”
  103. Fiduciary
    “Involving trust, especially with regard to the relationship between a trustee and a beneficiary.”
  104. Impound Account
    “An account set up and maintained by the mortgage company to collect insurance and tax payments on behalf of the owner”
  105. Budget Loan (PITI)
    “Payments include Principal, Interest, Taxes and Insurance”
  106. Cloud On Title
    “Any type of hindrance or encumbrance that might invalidate or impair the title to real property or make the title doubtful.”
  107. Quiet Title Action
    To establish free-and-clear ownership of the property, and to resolve any defects or clouds found in a property title search
  108. Bona Fide Purchaser
    “Rights to retain ownership of property against someone else’s future claims”
  109. Innocent Purchaser
    “No reasonable reason to suspect any problems with property”
  110. Subrogation
    • “Title
    • companies clause giving them the right to take legal action against any
    • third party responsible for their losses for which a claim has been
    • paid. (the title insurance company can recoup looses they paid to
    • protect the new buyer/owner)”
  111. Title Endorsement
    “An addition or limitation of coverage that is attached to a title insurance policy.”
  112. CLUE
    “Comprehensive Loss Underwriting Exchange”
  113. Sellers
    “Grantor (Giv-or)”
  114. Buyers
    “Grantee (Receiv-ee)”
  115. Deed
    Legal document signed by the seller or grantor of real property used to convey ownership rights”
  116. Debit
    “Any Charge or Cost” (Use a Debit Card at a store when you pay for something)
  117. Credit
    “Any money you get back” (Stores ‘credit’ you when you return something)
  118. Prorated
    “Divide or distribute money evenly depending on usage of items or service”
  119. Calendar Year
    365 days, each month has actual number of days
  120. Statutory Year
    “360 days, each month has 30 days”
  121. Laws of Decent
    • “Who, according to the state gets the property when the legal owner(s)
    • die, or a manner of distributing the assets to the heirs.”
  122. Severalty
    “When a single unmarried individual buys property”
  123. Tenancy in Common
    “Used for ownership of real property with two or more owners who are not married”
  124. Rights of Survivorship
    “When one owner dies, their portion of the property will pass ‘automatically’ to the other owners and split equally”
  125. Devise
    “A clause in a will leaving real estate to someone else (inherit)”
  126. Partition Action
    • “If co-owners are not getting along or can not agree to sell the
    • property court action will be required to manage or dispose of the
    • property.”
  127. Commingling
    “When one spouse's separate property is mixed with the other spouse's marital property”
    “Obtain a loan against or to otherwise hinder the transferability of title”
  129. Disclaimer Deed
    “One spouse waiving their rights to that property”
  130. Entity
    “Formed organization used to conduct business for profit or non-profit”
  131. Certificate of Affixture
    “Conversion to real property from personal property and is filed with the county.”
  132. Dealer’s License
    “Right to sell non-affixed (movable) units”
  133. Air rights
    “Ownership of the space between all common walls”
  134. Horizontal Regime
    “Developer action to create multiple deeds from a singular deed in order to sell condos”
  135. Proprietary Lease
    “Lease given by co-op to an owner to use unit for an indefinite period of time”
  136. Subdivided Land:
    “Divided into 6 or more parcels (less than 36 acres each)”
  137. Unsubdivided Land
    “Divided into 6 or more parcels (36 acres or more, but less than 160 acres)”
  138. Subdivider
    “A Person who divides the land”
  139. Developer
    “Person who builds improvements on the land”
  140. Public Report
    “A comprehensive public report (to protect the public)”
  141. Lot Split
    “A split of 5 or fewer”
  142. Master Deed
    • “Once the community has been established, the master deed is used to
    • grant the ownership of the common areas to homeowners via the HOA using
    • CC&R’s.”
  143. Blue Sky Law
    “Protect the public from unscrupulous land sellers”
  144. Puffing
    “When statements are made to exaggerate the properties qualities”
  145. Misrepresentation
    “An unintentional false statement”
  146. Fraud
    “An intentional false statement”
  147. Rescission
    “The remedy of cancelling a contract that restores all parties to original positions, making all parties whole again”
  148. Demise
    “To convey or grant a leasehold estate”
  149. Lessor
    “Landlord or the Giv-or of the lease (Landlord)”
  150. Lessee
    “Tenant or the Receiv-ee of the lease (Tenant)”
  151. Reversionary Interest
    “Whereby the property will revert back to the lessor at the termination of the lease”
  152. Sub-Leasing
    “The action taken when the current “lessee” becomes a “lessor” to a 3rd party”
  153. Sandwich Lease
    • “Where the lessee becomes lessor and sub-lessee will make payments to
    • their lessor who will in turn make the payments to the original lessor”
  154. Assigning a Lease
    “Where the original “lessee” assigns their rights to a new “lessee”
  155. Novation
    “The ‘substitution’ of either parties or contracts”
  156. Breach
    “Any party of is in default of a contract or agreement”
  157. Constructive Eviction
    “Landlord Breaches contract, tenant can sue for damages”
  158. Actual Eviction
    “Tenant Breaches contract, landlord can sue for damages”
  159. Distraint
    “Seizing a tenants property until full payment has been made”
  160. Expense Stop
    • “A fixed amount (typically per square foot) in a lease where the tenant
    • is responsible for all building operating expenses and taxes in excess
    • of said amount.”
  161. Turnkey Project
    “The space being rented or purchased is ready to move into”
  162. Anchor Tenant
    • “A large tenant who would usually be an asset to the rest of the junior
    • tenants – a Grocery store would attract new clients to a small nail
    • salon next door.”
  163. Contracts
    “Agreements between parties to either do something or not do something”
  164. Reasonable Standard
    “All parties acting fairly with the intent to complete the agreement”
  165. Valid
    “Contract has the required components”
  166. Void
    “Contract is missing one of the required components”
  167. Voidable
    “Contract that could be voided by one party”
  168. Rescind
    “Revoked, cancelled or taken back”
  169. Enforceable
    “Contract has all components and is binding on all parties in a court of law”
  170. Statute of Limitations
    “Defines time limits on bringing suit or action”
  171. Unenforceable
    “Contract appears to be valid but may be invalid”
  172. Implied Contract
    “Both parties assume a contract based upon their actions”
  173. Express Contract
    “An exchange of promises either orally or in writing”
  174. Unilateral Contract
    “One sided contract where only one party must perform”
  175. Bilateral Contract
    “Both parties promise to do something in exchange for something”
  176. Competent Parties
    “All parties are legally deemed able to enter into agreements”
  177. Offer and Acceptance
    “An offer to contract by one party to another party and an indication by the agreed upon acceptance of those terms”
  178. Offeror
    “The person making the offer, the “Give-or”
  179. Offeree
    “The person receiving the offer, the “Receiv-ee”
  180. Time is of the essence
    “There is a deadline looming or expiration”
  181. Counteroffer
    “A new and changed offer based on the original”
  182. Legal Purpose
    “Only a contract that is for legal purposes is considered a valid contract”
  183. Description
    “Real Estate contracts must have the legal description of the property”
  184. Signed
    “Signatures from each party must be on the contract to affirm it’s acceptance”
  185. In Writing
    “Due to Statute of Frauds, all real estate contracts must be in writing”
  186. Parol of Evidence
    “Contract must rely on written words”
  187. Consideration
    Something of value must be given up to induce another to perform”
  188. Executory Contracts
    “Contracts that are in process, not yet completed
  189. Executed Contracts
    “Contracts that are completed and all promises have been kept”
  190. Discharge Of A Contract
    “When the main obligations of a contract end”
  191. Assignment:
    One party in a contract gives up their position to another party”
  192. Assignor
    “The original party to the original contract who is the give-or
  193. Assignee
    “The new party to the old contract or the receiv-ee“
  194. Novation
    “The substitution of parties or parts of an existing contract”
  195. Accord and Satisfaction
    • “Agreement to discharge a claim in which the parties agree to give and
    • accept different performance which is usually less than what is required
    • or owed”
  196. Breach
    “Breaking or failing to observe a law, agreement, or contract”
  197. Suit for Performance
    “The injured party can force the other party to fulfill the contract”
  198. Damages
    “An award issued to one party as compensation for breach of contract”
  199. Compensatory Damages
    “Provide a plaintiff with the monetary amount necessary to replace what was lost, and nothing more (compensation)”
  200. Liquidated Damages
    “Monetary damages agreed upon upfront if either party were to breach the terms of the contract”
  201. Punitive Damages
    “Damages exceeding simple compensation and awarded to punish the defendant (rarely used in cases of contract disputes)”
  202. Boilerplate Contracts
    “Pre drafted contracts that are industry standards and commonly used”
  203. Contingency
    “A provision in a contract for an unforeseen event or circumstance”
  204. Earnest Monies
    “Money used to confirm acceptance of a contract”
  205. Interpleader
    “Neutral third party who listens to each side of the story”
  206. Option
    “Contract on property that allows the buyer right to purchase”
  207. Optionor
    “The person giving the option (Giv-or)”
  208. Optionee
    “The person who is receiving the option (Receiv-ee)”
  209. Promissory Note
    “The loan document”
  210. Hypothecation
    The pledging of property as security for an obligation or a loan without losing possession of it
  211. Mortgagor
    “Borrower (Giv-or of the Monthly Payments)”
  212. Mortgagee
    “Lender (Receiv-ee of the Monthly payments)”
  213. Beneficiary
    “The person or entity that “benefits” from payments (Banks/Lenders)”
  214. Redemption Period
    “A timeframe where the Mortgagor who lost the property in the judicial sale can redeem the property by paying back all fees”
  215. Acceleration Clause
    “If upon defaulting on a mortgage, the lender can call the whole loan payable upon default and thus accelerates the forced sale”
  216. Sheriffs Deed
    “A deed that offers little protection to the buyer and is used to convey ownership as an act of law”
  217. Excess money Bid
    • “The lienholders will be paid back from the sale proceeds in the manner
    • in which they were recorded in time. First in time, is first in line to
    • get paid back. If, after all money has been paid back to the lenders,
    • the excess money from the foreclosure sale will go back to the previous
    • owner.”
  218. Lender’s Credit Bid
    • The lender bids the debt that the borrower owes. Basically, the lender
    • gets a credit in this amount. The lender can bid the full amount of the
    • debt, including foreclosure fees and costs, or it might bid less
  219. Deficient Bid
    • “A deficiency bid occurs when the foreclosing lender submits a written
    • bid less than the amount owed. The foreclosing lender may elect to sue
    • the homeowner who signed the original promissory note, for the amount of
    • the deficiency.”
  220. Subordination
    • “An act of yielding a position. Lenders usually want to be in first
    • place, but if a lender were to agree to ‘subordinate’ their position, it
    • would mean taking a back seat to the new lender”
  221. Non-disturbance
    “A non-disturbance clause ensures that a tenant will not be evicted in the event that the landlord goes bankrupt.”
  222. Deed in Lieu
    “Owner of the home has the option to ‘give up’ rights and possession to the bank in lieu of a foreclosure”
  223. Anti-Deficiency Laws
    • “A Lender cannot take further action against a debtor if the foreclosure
    • sale did not cover the full balance owed to the lienholder”
  224. Treasurers Deed
    “A deed that the certificate of purchase holder is granted by the treasurer after the statutory redemption period has passed”
  225. Mortgage Banker
    Works in the loan department of larger financial institutions like banks, savings and loan association or credit unions
  226. Mortgage Broker
    Has no direct ties to any one institution and can shop loan programs”
  227. Conforming Loans
    Any mortgage loan that conforms to federal guidelines
  228. Nonconforming Loans
    A loan that fails to meet bank criteria for funding”
  229. Jumbo loans
    “Loans in the amount over the conforming rate”
  230. MIP
    Mortgage Insurance Premium carried on FHA insured loans”
  231. Certificate of Eligibility
    “Proof that the Veteran has served and is eligible”
  232. Certificate of Reasonable Value
    VETERAN is given a certificate good for a period of 6 months that the property meets the value at asking price
  233. Loan Servicing
    • The collection of funds due monthly to the loan owner and the
    • distributions of those funds to the appropriate party, for a collection
    • fee”
  234. Fully Amortized Loans
    “Loans where both the principal and interest are being paid per month”
  235. Budget Loans
    Full Amortized loans that include the payments that will be made to insurance and taxes”
  236. Draw Payments
    “Detailed payment plans for a construction project”
  237. Assumption
    Buyer assumes the debt and terms of the sellers existing loan
  238. Novation
    Substitution of a new contract in place of an old one
  239. Subject To
    Subject to the existing mortgage on the property
  240. Due On Sale Clause
    A way to prevent a new buyer from assuming the loan (lender can call the note due and payable, also found in foreclosures)
  241. DTI Ratio
    • Debt to Income Ratio and is calculated by dividing total recurring
    • monthly debt by gross monthly income, and it is expressed as a
    • percentage”
  242. Loan to Value
    Ratio is a number that describes the size of a loan compared to the value of the property securing the loan”
  243. Income Ratio
    “Monthly housing expenses / Monthly Gross Income”
  244. Debt Ratio
    All Housing expenses + All Other Monthly expenses/ Monthly Gross Income”
  245. Usury
    “Illegal practice of lending money at unusually high interest rates”
  246. Subprime Loan
    • “Loans where the borrower is not prime or A grade. These borrowers will usually have a higher interest rate due to lower credit, capacity,
    • collateral or character.”
  247. Amortized Fixed-Rate Mortgages
    “Have same interest rate for entire repayment”
  248. Adjustable Rate Mortgage (ARMs)
    “Will change, typically every year"
  249. Federal Funds Rate
    “Interest rate conventional banks use to lend money”
  250. Arrears
    “Mortgages are paid in arrears, you are paying interest on money you used”
  251. Principal
    “The amount of the loan being financed”
  252. Interest
    “The money paid to a lender for the use of their money”
  253. Interest Rate
    “A percentage rate applied to the principal which determines the amount of interest owed to the lender over time”
  254. Floating Rate
    • "The rate that is offered to a borrower before actually making a loan
    • decision can fluctuate depending on external forces, and is where rates are for any given day, before a borrower has ‘locked in’ their rate."
  255. Rate Lock
    "When the borrower gets closer to the close of escrow date, the lender will ask the borrower to ‘lock in’ their rate which we try and get the most favorable terms based on the market."
  256. APR
    • “Annual Percentage Rate, the annual interest rate charged and represents
    • the actual amount it costs the borrower over the life of the loan”
  257. Prepayment Penalties
    “Lenders clause in the borrowing documents that states there will be a financial penalty if the loan is paid off early”
  258. Release (Partial Release)
    When financing multiple properties and the borrower pays off one of the properties under a blanket loan, the lender will ‘release’ that propertyfrom being encumbered
  259. Nonrecourse
    • “A non-recourse loan is defined as a loan where the borrower or
    • guarantors are not personally liable for repaying any outstanding
    • balance on the loan.”
  260. Satisfaction of Mortgage
    • “When the borrower has successfully paid off their mortgage, the lien
    • holder will send a satisfaction of mortgage letter indicating fully
    • repaid. This is also recorded as a release of liability.”
  261. Deed of Reconveyance
    • “The same concept of the satisfaction of mortgage, but used in States
    • where the Deed of Trust is used and indicates full satisfaction and
    • repayment of the Deed of Trust.”
  262. Discount Points
    “Prepaid interest that lowers the APR over the life of the loan”
  263. Origination Points
    “An upfront fee that borrowers will pay to the lender as compensation for issuing a loan, processing, underwriting etc”
  264. Temporary Buydown Points
    “By paying upfront fees to a lender a borrower can receive a reduced interest rate for a set amount of time”
  265. Long Term Gains
    “Investors look for rental income and long term appreciation”
  266. Short Term Gains
    “Investors are looking for gains in a short time frame”
  267. Speculation
    “A form of gambling where appreciation is the outcome’s goal”“A form of gambling where appreciation is the outcome’s goal”
  268. Asset
    “Tangible or Intangible items that have value”
  269. Appreciation
    “Rise in an assets value based on outside economic factors”
  270. Depreciation
    “Fall in an assets value based on outside economic factors”
  271. Leverage
    “Borrowing money instead of using your own to acquire property”
  272. Liquidity
    “How quickly an asset can be converted to cash”
  273. Cash Flow
    “Gross Income – expenses and loan costs”
  274. Earned Income
    “The income derived from your daily working activities”
  275. Passive Income
    “Income derived from assets, not actively working”
  276. Pass Through Income
    “Income that is earned by an LLC and is taxed at the personal income bracket, it passes through the company to you directly.”
  277. Capital Gains
    “Difference between net proceeds and the adjusted basis”
  278. Cost Basis
    “Purchase price of an asset plus costs associated with the purchase”
  279. Capital Improvements
    “Money Spent on asset including repairs or improvements”
  280. Adjusted Basis
    “Cost Basis + Capital Improvements – Depreciation”
  281. Sales Price
    “Amount the property sold for”
  282. Selling Costs
    “Total of all costs relating to the sale of the property”
  283. R.O.I.
    “Return on Investment = profit from investment / cost of investment”
  284. Tax Shelter
    “Real estate allowing investors tax benefits”
  285. Facilitator
    “Someone who handles a transaction but has no fiduciary duty”
  286. Boot
    “Money taxed at time of exchange that investor took from sale”
  287. Installment Agreements
    “Sellers carry note over time with down payment”
  288. Secured Debt
    “Debt where collateral was used to secure the financing”
  289. Unsecured Debt
    “Loan where no collateral was used for the security”
  290. Junior Lien Holders
    “Lenders behind the primary lender in loan position”
  291. Chapter 7
    “Liquidation of unsecured debts such as credit cards or medical bills”
  292. Chapter 11
    “Allows the restructuring of debts and pay them back over time”
  293. Chapter 13
    “Ability to repay debts over a 5 year time period”
  294. Material Fact
    “Something that most competent people would find a need to know before making an offer to purchase or listing a home for sale”
  295. Material Defect
    “Something that has a direct effect on the value of a property”
  296. Misrepresentation
    “The unintentional concealment of a material fact”
  297. Fraud
    “The intentional concealment of a material fact in order to deceive”
  298. SPDS
    Seller Property Disclosure Statements
  299. Lead Based Paint Form
    Used in residential properties built before 1978
  300. Disclosures
    Usually Written documents provided by the sellers to buyers explaining all there is to know about the property.
  301. Due Diligence
    Buyers duty to investigate any and all resources available to them before finalizing their decisions.
  302. Potable Water
    “Water that is approved for drinking and human consumption”
  303. Non Potable Water:
    “Water that is not treated and not approved for drinking, DO NOT DRINK”
  304. Groundwater
    “Water UNDER the surface”
  305. Surface Water
    “Water ON the surface”
  306. Effluent
    “Reclaimed (treated) waste water”
  307. Riparian Rights:
    “Water rights that apply to Flowing Waters (Rivers and Streams)”
  308. Navigable Waterway
    “A waterway than can be used for commerce (used by a commercial vessel)”
  309. Non-Navigable Waterway
    “A waterway that is not large enough to accommodate commercial vessels (commerce)”
  310. Littoral Rights
    “Water rights that apply to Non-Flowing water (oceans and seas, navigable lakes)”
  311. Reliction
    “Recession of water that exposes increased land”
  312. Accretion
    “An Increase in land by sediment in the water (new land becomes property of land owner)”
  313. Alluvion
    “The actual particles (sand, mud, etc) that create the new shore line”
  314. Avulsion
    “A loss of land as a result of erosion”
  315. Erosion
    “The process of earth being worn away by fluid or wind”
  316. Doctrine of Prior Appropriation
    “Doctrine that governs the use of surface water”
  317. Active Management Areas (AMAs)
    “Five Regions determined to be highly dependent on groundwater”
  318. Assured Water Supply Program
    “Within the 5 AMAs any new developer must provide a certificate of assured water supply”
  319. Certificate of Assured Water Supply
    “Provided by the ADWR indicating a source of water for a guaranteed period of 100 Years”
  320. Overdraft
    When more groundwater is being used than is being replaced in the underground aquifer”
  321. Irrigation Non-Expansion Area (INA)
    “An area designated as having insufficient groundwater for safe irrigation”
  322. Open Areas
    “Areas outside of AMAs”
  323. Perfected
    “Rights to use the water”
  324. Appurtenant
    “Runs with, belongs to”
  325. Appropriate
    “To give away”
  326. Metes
    “Distance and direction term”
  327. Bounds
    “Boundary description term”
  328. Monuments
    “Reference points term”
  329. Principal Meridians
    “Longitude (North-South)”
  330. Baselines
    “Latitude (East-West)”
  331. Range Lines
    “North-South lines”
  332. Ranges
    “Range 6 mile strips”
  333. Township Lines
    “East-West lines”
  334. Tiers
    “Township 6 mile strips”
  335. Township Square
    “The point where each 6 mile wide range and tier intersect”
  336. Section
    “Consists of 640 acres”
  337. Acre
    “43,560 sq feet”
  338. Contiguous
    “Sections that touch at any point”
  339. Abutting
    “Sections that butt up against each other”
  340. Government Check
    “The area bound by the two sides of the guide meridians and correction lines”
  341. Fractional Sections
    “Section of a township where corrections are confined to”
  342. Assessor’s Identification Number
    “Indexing system for tax purposes”
  343. Tract
    “Large piece of land identified in a survey”
  344. Lot
    “Individual subdivided pieces of land within a tract”
  345. Blocks
    “Groups of lots commonly found within a subdivision”
  346. Fictitious Name
    “The name of a corporation llc or entity”
  347. Salesperson
    “Agent of the broker and also a fiduciary to their client"
  348. Sub-Agent
    “Agent is an ‘agent of the agent’ (agent for the broker)”
  349. Independent Contractor
    “Acting as self employed, the broker can not dictate hours”
  350. Employee
    You perform services that can be controlled by an employee
  351. MLS
    Multiple Listing Service
  352. E&O
    “Insurance Policy Brokers carry in case of lawsuits caused by their agents”
  353. Principal (AKA Client)
    “Seller or entity who owns the property being listed”
  354. Agent
    Broker Hired represent the Principal in this transaction
  355. Unilateral Contract
    One sided, only one party has to perform”
  356. Bilateral Contract
    “Two sided, both parties have to perform”
  357. Earnest Money
    Money used to confirm acceptance of a contract”
  358. Commingling
    Mixing a client’s funds with your own personal funds, which makes it difficult to determine which funds belong to who”
  359. Conversion
    Taking the client’s money and depositing those funds directly into one’s own accounts and using that money for their own purposes
  360. Agency
    “Legal relationship where one party allows someone else the powers to act for them or on their behalf in some manner or capacity”
  361. Principal
    Person who uses or hires an agent to work on their behalf with a third party”
  362. Agent
    • “Acts on behalf of the principal and should not have a conflict of
    • interest in carrying out the wishes or the act on behalf of the
    • principal”
  363. Customer
    “Third party who is part of the transaction but is not the actual client/principal”
  364. Universal Agent
    “Agent acts on behalf of principal in all matters”
  365. General Agent
    “Agent acts on behalf of principal for predetermined actions”
  366. Specific Agent/Special Agent
    Agent in charge of only one action for principal”
  367. Express Agency
    “Relationship is created through an agreement in which the agent and the principal agree to enter into an agency relationship”
  368. Implied Agency
    Establishes an agency relationship through the actions of the two parties”
  369. Ratified Agency
    “A type of agency formation that take place after the fact”
  370. Salesperson
    “Agent of the broker and also a fiduciary to their client”
  371. Sub Agent
    “Acting as an agent on behalf of someone else”
  372. E & O Insurance
    • “A type of insurance that brokers and brokerage firms carry to protect
    • them against losses incurred from agents actions or inactions”
  373. Misrepresentation
    “False statements made without the desire to harm or deceive”
  374. Fraud
    “False statements that are made with the intention of harm or to deceive”
  375. Puffing
    “A form of exaggeration which is legal although not suggested as it make an appearance of higher value”
  376. Fiduciary
    “Highest standard of care available”
  377. Beneficiary:
    “The person or entity to whom the fiduciary is responsible to”
  378. Imputed Notice
    “A buyer or seller is thought to have the same knowledge of the agent since the agent is working closely with the principal.”
  379. Breach
    “Act of breaking or failing to observe a law, agreement, or code of conduct”
  380. Rescission
    “The revocation or cancellation of agreements previously made”
  381. Full Disclosure
    • “Obligated to disclose to his principal all relevant and material
    • information that the agent knows and that pertains to the transaction”
  382. Buyer’s Broker
    “Agent who represents prospective purchasers rather than sellers”
  383. Seller’s Broker
    “Agent who is representing the seller or owner of the property”
  384. Dual Agency
    “One agent is representing both parties in a transaction
  385. Limited Dual Agency
    “Two different agents from the same brokerage firm”
  386. Appraisal
    “Act or process of developing an opinion of value”
  387. CMA
    “Comparative Market Analysis”
  388. BPO
    “Broker price opinion”
  389. Inherent Value
    “It will always hold some value to someone”
  390. Highest and Best Use
    “Optimal use of a property determines its highest value”
  391. Orientation
    • “The positioning of a home on a lot. The orientation of a home can
    • affect the market value of that home – North/South facing homes are more desirable in Arizona due to the suns heat.”
  392. Excess Land
    “Land that is not needed to serve or support the existing improvement. Can be sold separately.”
  393. Anticipation
    “Income expected in future value”
  394. Conformity
    “A property conforms to the other houses in a neighborhood”
  395. Progression
    “Property value will increase if more valuable property enters an area”
  396. Regression
    “Property value will decrease if less valuable property enters an area”
  397. Plottage (Assemblage)
    “Increasing the value of smaller parcels by combining them into one larger group”
  398. Directional Growth
    “The direction of growth as realized over a period of time”
  399. Fair Market Value (FMV)
    “Price that property would sell for on the open market”
  400. Appreciation
    “Anticipated increase in value over time”
  401. Insurable Value
    • “Insurable value is less than the property's appraised or market value
    • because it excludes the value of land on which the building stands.”
  402. Salvage/Residual Value
    “The estimated value that an asset will have at the end of its useful life.”
  403. Loan (Mortgage) Value
    “This is simply the amount of the loan or the amount being financed.”
  404. Earned Increment
    • “A property can appreciate due to an owner improving the property,
    • updating it, repairing it or otherwise making it more desirable, thus
    • increasing the value.”
  405. Unearned Increment
    • “An increase in value due to the results of economic factors, like
    • directional growth, or finding natural resources in the ground.”
  406. Depreciation
    “Reduction in the value of an asset over time due to wear and tear”
  407. Livable Square Footage
    “This is the amount of property that is usually heated/cooled by HVAC”
  408. Under Roof Square Footage
    “The full property, including garages, sheds, cabanas etc”
  409. Subject
    “The identified property being appraised”
  410. Comparables
    “Selected properties of similar value and type used to determine valuation”
  411. Nonhomogeneity
    “No two properties are the same”
  412. Reproduction Costs
    “The cost of an exact reproduction”
  413. Replacement Costs
    “The cost of rebuilding using current materials”
  414. Square Footage Method
    “Costs per sqft derived from building”
  415. Quantitative Method
    “Computerized itemization of materials & labor”
  416. Unit In Place Method
    “Estimating costs of all property components”
  417. Capitalization Rate
    “Net Operating Income / Current Market Value”
  418. GRM
    “Gross Rent Multiplier”
  419. GRM Formula
    “Market Value (/) Annual Gross Income”
  420. Market Value
    “GRM (X) Annual Income”
  421. Drive by Appraisal
    • “Instead of doing a full interior/exterior appraisal, drive by’s of
    • homes by licensed real estate appraisers are sometimes used to determine a comparable homes value.”
  422. Desk Top Appraisal
    • “A less accurate but quick type of appraisal done from a computer where the appraiser uses tax records and MLS to accumulate data for
    • valuations.”
  423. Automated Valuation Models
    “Companies like Zillow® or Redfin® provide a service that can provide real estate property valuations using mathematical modelling combined with a database.”
  424. HUD
    “Federal Department of Housing and Urban Development (HUD)”
  425. Conciliation
    “Assuring that the licensee in violation will correct the violation”
  426. Actual Damages
    “Compensation for any losses proven to had occurred”
  427. Monetary Penalty
    “Penalties that are assessed to agents, brokers or firms who are found guilty of discrimination”
  428. Punitive Damages
    “Within 2 years civil action may be sought in federal court for punitive damages, which are designed to punish the party”
  429. FHA
    “Federal Housing Authority”
  430. Title VIII (8) of the Civil Rights Act of 1968
    “Act that prohibited the discrimination against certain protected classes”
  431. Steering
    “Also known as Channeling, is steering prospective home buyers to or away from buying in a certain area”
  432. Block Busting
    “Influencing the decisions of home owners to buy or sell based on fear of an ethnic or social change”
  433. Redlining
    “Refusing to issue insurance polices or make loans in a particular area”
  434. Sherman Antitrust Act
    “1890 law passed to prevent the artificial raising of prices by restriction of trade or supply and to break up monopolies”
  435. Boycotting
    "A violation of the Sherman Anti Trust Act whereby hurting another business by refusing to use them"
  436. Tie In Agreement
    "By making or forcing a client to use another business, these businesses are tied in together; also illegal"
  437. Clayton Act
    “Prohibits mergers and acquisitions where the effect is to lessen competition or to create a monopoly”
  438. Police Powers
    “Laws that allow government to limit private land use through various efforts”
  439. Enabling Acts
    “Power given to the states to pass legislations”
  440. Land Use Controls
    “Using land for development is subject to the local government’s review and approval”
  441. Zoning
    “The details of a municipalities’ Master Plan”
  442. Buffer Zones
    “Areas that may be used to separate zoning classifications”
  443. Variances
    “Allow permanent exceptions for 1 specific property”
  444. Special Use Permits
    “Are not violations of the zoning ordinance and allow something different than what was originally determined”
  445. Building Codes
    “Regulate building and construction standards including quality, design and occupancy”
  446. Certificate of Occupancy
    “Government issued certificate that confirms that there are no building code violations and that it is ready for occupancy”
  447. Eminent Domain
    “Right of the government to take privately owned land for the good of the people with compensation owed to the owner”
  448. Taxation
    • “The government has the right to impose (levy) taxes on real and
    • personal property to provide services for the benefit of the people.”
  449. AD Valorem
    “Taxed according to value”
  450. Special Assessments
    “Taxes that are specific and unique and are assessed against real property for certain public projects”
  451. Escheat
    “Property reverting back to the state when an individual dies without a will or heirs”
  452. Intestate
    “Dying without a will”
  453. State Laws of Descent
    “Applies to intestate situation when a person HAS heirs”
  454. Decedent
    “The deceased person”“The deceased person”
  455. Probate
    • “Formal court proceedings that confirm:
    • Will validity
    • Asset collection
    • Decedents debts (including taxes) are paid
    • The decedent’s remaining assets are disposed of”
Card Set
Real Estate