The Real Estate Glossary - Jay Morrison Academy · for financing property by cashing out or taking...

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Copyright © 2014 by Jermaine Morrison. All rights reserved. Digitally compiled and distributed in the United States of America. Except as permitted under the United States Copyright Act of 1976, and subject to the Terms of Service and Use in effect and applicable to its distribution, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

The Real Estate Glossary

401K – Retirement account that can be used for financing property by cashing out or taking a loan on the account.

Acquisition Cost – The price you pay to a seller for a property.

After Repair Value (ARV) – The value of a property after all needed repairs and renovations have been completed.

Appraisal - An estimate or opinion of a property's value; also refers to the report that includes supporting evidence of the opinion. Appraiser - A qualified professional who conducts an appraisal. Appreciation - An increase in the market value of a property due to market conditions or property improvements. Apprentice - A beginner; One who is learning a trade or occupation. Appurtenance - Annexations which go with land. Tangible appurtenances including buildings, intangible appurtenances include easements. APR - See Annual Percentage Rate. Arrears - Not paid in advance but paid after the obligation was created. Asbestos - A toxic material that was used in various building materials and fireproof products. Due to adverse health effects believed to be connected with asbestos, it is no longer used in new construction. Asking Price – The price a seller seeks for a property.

Assessed Value - The value assigned to a property for the purposes of taxation. Assessment - A tax levied against a property to cover a share of an improvement. Assessor - A public official that establishes the assessed value of property for the purpose of taxation. Asset - Anything owned of monetary value. Assignee - The person to whom something is assigned. Assignment - The transfer of a contract or right from one person to another. Assignment Agreement – Agreement between the buyer and seller where the buyer agrees to buy a property for a set fee

Assignor - The party who makes an assignment. Assignor - The party who makes an assignment. Associate Broker - See Broker-Salesperson. Assumption of A Mortgage - Accepting personal liability for the repayment of an existing mortgage loan on property being purchased. The seller may also remain liable unless specifically released. If the mortgage contains on a due-on-sale clause it is not assumable without the lender's consent. Attachment - The taking of one's property into the legal custody of the court for possible later application to the person's debts. Attorney General's Memorandum - A letter from the New Jersey state attorney

Copyright © 2014 by Jermaine Morrison. All rights reserved. Reproduction or distribution by any means contrary to law is strictly prohibited.

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general regarding discrimination in real estate transaction. The rules of the New Jersey Real Estate Commission require every licensed broker or salesperson who takes a listing for residential property give the seller or landlord a copy of the Attorney General's Memorandum so they will be aware that it is illegal to discriminate. Attorney in fact - One who has been granted the power of attorney and is empowered to act in the place of another. An attorney-in-fact need not be an attorney at law. An attorney-at-fact may be granted specific power for perform a specific act for their principal or general power to represent their principal on a much broader basis. Attorney Review Clause - A clause in a sale or rental contract that allows the parties a specified period of time to obtain professional legal advice and review of the contract. In New Jersey any real estate licensee prepared residential contract for the sale of a one to four family dwelling, or one residential building lot, or a lease for a term of one year or more, in which the licensee has a commission or fee interest, must include an attorney review period of at least three days. Attornment - A tenant agrees to recognize a new landlord and formally agrees to become the tenant of a new landlord. Avulsion - The sudden loss of land caused by flood, earthquake or the sudden change of a stream's course. Back-up Offer - An offer submitted to a seller who has already accepted a prior offer. Sellers who are presented backup offers need to be careful that they do not find

themselves obligated under two different contracts. Legal advice should be sought. Balloon Mortgage - A mortgage in which the periodic payments are not enough to fully pay off the loan by maturity and the final payment is larger than the previous payments. Balloon Payment - The final and considerably larger payment in a balloon mortgage. Bankruptcy - When an individual or business entity is legally declared unable to meet debt obligations. Bankruptcy can have a negative impact on future ability to borrow money. Bargain and Sale Deed - A deed which conveys title but includes no warranties other than that the grantor has the right to convey the title. Base Line - A latitude reference line used in the rectangular survey. Basis - Used for income tax purposes, it is the price paid for the property including any recourse loan obligation and certain other fees involved in acquisition. Bench Mark - A permanent reference mark used by surveyors in elevation measurements. Beneficiary - One who benefits from the operation of a trust. One who receives the proceeds of a will or insurance policy. Bequest - Personal property given or received under the terms of a will. Something that has been bequeathed.


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Bilateral Contract - Imposes obligations on both parties to a contract, i.e. a promise for a promise. Bill of Sale - The written instrument which transfers title to personal property. Binder - An interim contract that may accompany an earnest money deposit and outlines the buyers Brand – A certain array of products or services that are made by one company that all have certain features or names.

Buyer – The potential prospect for purchasing a property. Examples of a buyer include traditional home buyers and investors.

Carrying Costs – The costs and fees associated with a property before the property is sold.

Cash-Out – At the right time, selling all properties and cashing out and receiving the equity from the properties.

Certificate Of Reasonable Value (CRV) - Issued by the Veterans Administration after an appraisal has been done on a property being purchased with a V.A. guaranteed loan. Certificate Of Reduction - A document executed by a mortgage which sets forth the outstanding balance due on a loan. Certificate Of Title - An opinion as to the status of condition of title to a particular parcel of land after careful research. Certified Property Manager CPM - A professional designation conferred by the

National Association of Realtors to property managers who have met the NAR's stringent requirements for certification including education, testing, and ethical standards. Chain of Title - The history of all the documents on record having transferred title to a particular property starting with the earliest document and ending with the most recent. Chattel - Items considered to be personal property. Chattel Mortgage - A mortgage secured with personal property. Check - Used in the rectangular survey system, an area of land measuring 24 miles by 24 miles square. CIS - See Consumer Information Statement. Clear Title - One that is free of any clouds of defects. Client - The party that retains the services of a real estate broker; the principal. CLOs - Computerized Loan Origination system. Computerized systems available in some real estate offices designed to assist buyers in the process of sorting through the many loans and loan options offered by various lenders. Closed Mortgage - One in which the principal balance may not be paid off before maturity. Not permitted in New Jersey. Closing - The process of finalizing a real estate and/or financing transaction which involves applying the various costs, credits and prorations to the appropriate parties and


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signing all required documents. Also referred to as a settlement. Closing Agent - The person or business entity that coordinates a closing. The closing agent will prepare the closing documents and disburse funds. A closing agent could be a title company or an attorney. Closing Costs - Fees such as loan origination, title search, survey, attorney and prepaid items such as escrow deposits for taxes and insurance in connection with a real estate/financing transaction. Closing Date - The date on which a real estate and/or financing transaction is finalized. The date on which a closing occurs. Closing Statement - A detailed account used in the final settlement of a real estate transaction that shows all amounts paid by or due to each party. Also called a settlement statement. See HUD-1 Settlement Statement. Cloud on title - An outstanding claim or encumbrance which may not be valid, but would affect or impair the condition of a title. CMA - See Competitive Market Analysis. Codicil - An addition to a will that in some way adds to, or changes the original provisions. Collateral - Something pledged as security for a loan. The borrower runs the risk of losing the asset if the loan is not repaid as promised.

Commercial Frustration - A principle which states that if the purpose of the leasehold cannot be effectuated or continued due to some unforeseen occurrence such as the passage of a new law, the lease may be legally terminated. Commingling - The illegal practice of combining the broker's or agent's funds with the funds of others. Commission - 1) A fee, which is usually based on a percentage of the sale price, for a service performed. A real estate agent's fee (commission) is usually based on a percentage of what the property I sold for. 2) Short for the New Jersey Real Estate Commission. Commitment Letter - Issued by a lender to a borrower, binding the lender to loan mortgage money to the borrower under specified terms. Common Elements - In a condominium development, the parts that are owned and used by all unit owners. All unit owners share in the cost of maintaining common elements or common areas. Comparables - Refers to the "comparable properties" used when determining the market value of a property. Also called "comps", these properties are used as comparison properties. Competent Parties - Those who are legally capable of entering into a contract. Competitive Market Analysis (CMA) - A method of estimating a property's worth by comparing it with properties that are currently on the market or have sold recently; an informal appraisal.


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Complainant - A party that makes a complaint or files a formal charge, as in a court of law; a plaintiff. Concession - Something given up by one party in favor of the other during the process of a negotiation. For example, the sellers may agree to pay for some of the buyer's closing costs. Condemnation - The process of taking private property, with just compensation to the owner, for some public use by some branch of government under their power of eminent domain. Condition - A contingency or qualification to retain an interest or right. Conditional Fee - Fee ownership that will terminate upon the happening or non-happening of a specified event. Conditional Sales Contract - See Installment Land Contract. Condo - An abbreviation of the word condominium (see condominium). Condominium - A form of ownership in which the party has absolute ownership of a single unit in a multi-unit structure as well as an undivided interest in the common elements of the property with all other unit owners. Conformity - An appraisal principle stating substantially that maximum property value is realized when the subject properties level of improvement is in harmony with surrounding properties.

Consideration - An essential element of an enforceable contract. Valuable consideration is something of value that induces the person to enter into the contract such as money; good consideration would include love and affection. Construction Mortgage - A financing arrangement for the construction of an improvement to real estate usually with money advanced at certain stages of the project. Constructive Eviction - The forcing of tenant to move due to the landlord's failure to maintain the leases premises fit for habitation. Constructive Notice - The presumption that legal notice is given to the world when a document is recorded in the public records. Consumer Information Statement - The Consumer Information Statement (CIS) defines the four business relationships that a firm may engage in in New Jersey. Contingency - When one event is dependent upon the happening of another event. For example: a buyer would not have to go through with a purchase contract if the contract was contingent upon the buyer obtaining a mortgage loan that he or she was unable to obtain. Contract - A voluntary agreement between two or more parties to do or not to do certain acts. Contract for Deed - See Installment Land Contract.


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Contractors – Individuals and companies hired to conduct renovations; may or may not be licensed

Contractual Ability - Qualified to enter into a legally binding contract; legal age and sound mind. Contractual Authority - Permission granted through the terms of a contract. Conventional mortgage; conventional loan - Any mortgage not guaranteed or insured by an agency of the federal government such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA or DVA). Convertible ARM - An Adjustable Rate Mortgage loan that includes an option to convert the loan into a fixed-rate mortgage during a certain time period. Convey - To transfer ownership of something or title to something. Conveyance - The transfer of title to real estate through a deed or some other instrument. Cooperative - A form of ownership in which stockholders own shares of stock in a corporation that owns the building and leases the unites to the stockholders through a proprietary lease. Corporate Resolution - A declaration to do or not to do something as voted on by the officers of a corporation. Corporation - A legal entity formed by the operation of law through which business is transacted.

Corporeal - Tangible; property with physical quality. Correction deed - The recording of a deed for the sole purpose of correcting an inaccuracy in an earlier recording such as a misspelled name or an inaccurate property description. Cost Approach - An appraisal method which adds to the value of the land, the present construction cost of reproducing or replacing the building; summation approach. Cost of Funds Index (COFI) - In index that some adjustable rate mortgages are tied to determine periodic rate adjustments. Counteroffer - A rejection of an offer accompanied by a new offer which better suits the original offeree's needs. An offer made in response to an offer received. Covenant - A written agreement or promise between two or more parties. Conversion - The wrongful and illegal act of intentionally taking, using or converting another person's property, such as money, to one's own use. Credit – The ability to make payments over time and one time

Credit Bureau - A company that maintains a database of information on consumers use of credit. The information is sold to lenders and other issuers of credit in the form of a credit report and used to analyze credit worthiness of the borrower. Credit History - A record of how an individual has used credit in the in the past


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and whether or not these debts were paid back on time or "as agreed". Credit Report - A document used by lenders and other issuers of credit to examine a person's use of credit. A credit report is compiled from a person's credit history. Credit Score - A number that ranks a borrower's credit profile used to predict the likelihood that the borrower will repay future debts. Creditor - One who extends credit. One who is owed money. CRV - See Certificate of Reasonable Value. Cul-de-sac - A street which is open at only one end. The other end has no outlet but has a circular shape to it allowing easy turnaround by vehicles and more attractive development of the surrounding lots. Curable Depreciation - Depreciation that is capable of being corrected. Curtesy Rights - The right that a husband has in his deceased wife's real property. Datum - Used in surveying, mapping or geology, a reference point from which other levels are measured such as sea level. Debenture - A document that acknowledges an unsecured debt. Debt - Money that is owed to another. Debtor - One who owes money to another. Debt-to-Income Ration - The percentage of gross monthly income that is needed to pay

monthly debt payments, Gross monthly income divided by monthly debt payments. Decedent - A person who has died. Declining Balance Method - A method of calculating depreciation for tax purposes. Decree - A court order; a judicial decision. Dedication - The voluntary appropriation of land by its owner to some public use, and the acceptance for such use by the government authority. Deductible - The portion of an insured loss to be borne by the insured before the insured is entitled to recovery from the insurer. Deed - The instrument used to convey title to real property from one party (the grantor) to another party (the grantee); the instrument which is evidence of ownership. Deed in Lieu of Foreclosure - An alternative to foreclosure in which the property owner conveys the mortgaged property to the lender when the mortgage is in default. In this event, junior liens are not cancelled as they would be in actual foreclosure action. Deed of Trust - See Trust Deed. Default - The failure to perform an obligation or duty. Defeasance Clause - A mortgage clause that defeats or voids the conditional conveyance in the mortgage when the obligation is paid. Defeasible - Capable of being defeated.


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Defeasible Fee - Ownership in real estate that is dependent on the occurrence or non-occurrence of a particular event. A fee estate that is capable of being defeated under certain conditions. Deficiency Judgment - A judgment against the mortgagor if a foreclosure sale does not result in enough money to pay the mortgage. Delinquency - Failure to make a required payment when due. Demise - 1. A transfer of interest by lease. 2. Death. Deposit - Money given as evidence of good faith; earnest money. Depreciation - Loss of value brought about by physical deterioration of obsolescence; a deduction for tax purposes. Designated Loan - A loan secured by a building or manufactured (mobile) home located or to be located in a Special Flood Hazard Area, where flood insurance is available under the National Flood Insurance Act of 1968. Deterioration - Ordinary wear and tear. Devise - To give real estate through a will. Devisee - One who inherits real estate through a will. Devisor - The person who gives real estate through a will. Direct Reduction Loan - See Amortized Loan.

Discharge - The release of a lien or obligation. Disclose - To reveal or expose. Disclosure - The act of disclosing; to expose. Discount Points - A fee charged by a lender for the purpose of increasing the yield on the loan. Each point is equal to one percent of the loan amount. Discrimination - The act of discriminating; to make a distinction. Dispossess - To put one out of possession or occupancy of real estate. Distraint - To seize by distress. Docketed - Formally entered into the records of a court. Doing Business As (DBA) – This is a fictitious name, trade name, or assumed name that is used as a legal structure for a business. Dominant Estate Or Tenement - The parcel of land that benefits from an easement. Dower Rights - The right that a wife has in her deceased husband's real property that he owned anytime during their marriage. While the husband is alive the right is considered an inchoate interest (not complete). When the husband dies, the wife will automatically receive a life estate in one half of the property he owned (consummate dower). As of May 28, 1980, dower rights have been abolished in New Jersey. While that does not affect existing dower interests, no new


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dower interests can be created as of that date. Down Payment - Partial payment of the total purchase price as evidence of good faith. Dual Agency - An agency where the agent has two principals with adverse interests in the same transaction. Attempting to arrange the best possible deal for both parties becomes an impossibility. Due Diligence - 1. A thorough investigation of a potential investment considering and confirming all material facts involved. 2. The reasonable amount of care a person should take prior to entering into a contractual relationship with another party. Due On Sale Clause - See Alienation Clause. Duress - Pressure placed upon a person to act out of fear. DVA - Department of Veterans' Affairs. E&O - See Errors and Omissions Insurance. Earnest Money - Money offered as good faith usually paid with an offer to purchase; a deposit. Easement - A privilege or right to use the land of another. Easement Appurtenant - An easement created to benefit a tract of land rather than a person; an easement that "runs with the land" i.e. passes with title.

Easement By Prescription - Acquisition of an easement by continued uninterrupted use for a period of time prescribed by statute. Easement In Gross - A personal privilege to use the land of another; an easement that is not transferred with the conveyance of title. Economic Life - The period of time during which a property or improvement can be profitably used. Economic Obsolescence- Obsolescence brought about by economic forces or external events outside the property itself. Economic Rent - The rental amount a property could command in an open real estate market considering current rates comparable space is receiving. Effective Demand - The demand for a property considering the desire to own the property together with the financial ability to purchase it. Effective Gross Income - Cross income less a deduction for vacancies and collection losses but before operating expenses are deducted. Egress - Means o exiting a property. Emblements - Crops from annual cultivation which belong to the tenant. Eminent Domain - The right the government has to take privately own property, with just compensation paid to the owner, for some worthwhile public use. Employee Identification Number (EIN) – This is a nine digit number that is formed for a business that defines its tax ID status.


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Encroachment - A building, fence or other improvement which extends beyond the boundary line of the property it is erected upon and intrudes onto the neighboring property. Encumbrance - Anything that affects clear title to property and may diminish its value such as lien, mortgage, judgment, etc... Enterprise Zone - Usually a depressed area where businesses are given tax incentives such as reduced property taxes to stimulate growth and jobs in the area. Equifax – Credit reporting agency that provides information on an individual’s past credit history and provides a credit score

Equitable Rights Of Redemption - The right that a mortgagor has to redeem a property before it is sold through foreclosure proceedings. Also called Equity of Redemption. Equitable Title - The right to obtain legal title at some future time when title is presently held in another's name. An example would be a buyer under a purchase contract before title passes. Equity - The value of a property over and above the total amount of any mortgages or other liens against it. Equity Mortgage - A mortgage or credit line backed by the equity in a property. Erosion - The gradual wearing away of land caused by natural elements such as water, wind and general weather conditions. Errors and Omissions Insurance - Liability insurance providing a real estate

agent or other professional with coverage for errors, mistakes or negligence that might occur in the normal conduct of business. E&O insurance does not cover acts of fraud. Escalation Clause - The clause in a lease permitting upward or downward adjustments in rent. The clause in a mortgage permitting upward or downward adjustments in the interest rate. Escalator Clause - The clause in a lease permitting upward or downward adjustments in rent. The clause in a mortgage permitting upward or downward adjustments in the interest rate. Escheat - The reversion of property to the state when a person dies intestate and without heirs capable of inheriting the property. May occur also when property is abandoned. Escrow - The deposit of money, instruments or documents with a third party to be held until the closing of a transaction. Estate (In Land) - The interest, degree, nature, quantity and extent of one's legal interest and rights in real property. Estate At Sufferance - Arises when a person comes into possession of property lawfully and retains possession after his estate has terminated without consent. Estate At Will - The right to occupy or use property as long as the owner permits him to. Estate For Years - An estate for a definite limited period of time such as that created by a lease.


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Estate In Remainder - The right person, other than the grantor, has in land at the end of another person's estate in the same property. Estate In Reversion - An estate that will revert back to the grantor upon the termination of a life estate. Experian - Credit reporting agency that provides information on an individual’s past credit history and provides a credit score

FHA Loan – A government insured mortgage loan that is guaranteed by the Federal Housing Administration.

FICO Score – The middle credit score

Flipping – Purchasing a property with the intention to sell for a profit. Property may or may not require a renovation before reselling

Filter Sources – Individuals who can find deals and provide them to the individuals they know

For Sale by Owner – Property owners who attempt to sell the properties without the assistance of a realtor.

Home Equity Line of Credit (HELOC) – A 2nd mortgage on a property that is provided in the form of a line of credit. Borrower pays only on the amount advanced at any one time. HELOCs leverage the equity built up in the property.

Home Equity Loan (HEL) – A 2nd mortgage on a property that is provided in the form of a lump sum loan. Borrower pays

principal and interest payments on the entire balance of the loan.

Home Inspectors – Professional and licensed individuals who evaluate the condition of a home before the home is sold; usually hired by the buyer

Homeowner’s Insurance – Insurance policy on the property that protects against damage and liability to the property

Incorporated – To form a corporation as a legal structure of a business

Lead Ads – Advertising, promotions, and sponsored activities that promote the company and the overall brand

Lease Option & Assignment – Purchasing a property on a lease where the monthly payments go towards the option to buy the property

Leg work – The idea of old school marketing that includes door-to-door calls and physically visiting potential clients.

Letters – Marketing tool that is emailed or mailed to potential buyers and sellers.

Leverage - The effect that using borrowed money to finance an investment has on the portion contributed by the investor himself; positive or negative. Levy - To assess; to impose a tax. LIBOR - An acronym for London Interbank Offered Rate. A rate at which the most preferred borrowers are able to borrow money. Less preferred borrowers rates may be based on this index. A borrower may


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borrow money at a rate of LIBOR plus four points for example. License - A privilege to enter the land of another for a specific purpose; permission or authority to engage in a particular business or other activity. Licensee - On who holds a license. Lien - A right given by law to a creditor to have a debt or charge paid out of the property or proceeds from the sale of property belonging to the debtor; a hold or claim on property as security which becomes an encumbrance on that property. Lien Theory - The legal presumption that a mortgage creates only a lien on the property and does not convey title to the mortgagee. Lienee - The party burdened by a lien. Lienor - The party holding a lien. Life Estate - An estate in land that continues only for the duration of someone's life and terminates upon the death of that person. Life estate per autre vie - A life estate, the duration of which is based on the life of a person other than the life tenant. "A" grants a life estate to "B" for as long as "C" lives. Life Tenant - A person possessing a life estate. Limited Agency - See Special Agency. Limited Liability Company (LLC) – A flexible legal structure of a business that combines features of a partnership and a corporation.

Liquidate - To convert an asset into cash. Liquidated Damages - A pre-determined sum of money specified in a contract to be forfeited in the event a breach occurs. Lis Pendens - A recorded document which gives constructive notice that there is litigation involving the subject property pending. Lists – A database of potential clients that include foreclosures, distressed houses, bankruptcy, and filter sources.

Listing Agreement - A contract for the employment of a real estate broker by an owner of real estate to sell or lease the property. Listing Broker - The broker or real estate office that initiated or secured the listing agreement. Littoral Rights - Ownership rights of land owners along the course of navigable waters such as lakes, rivers or oceans. Loan Modification - An agreement between a lender and a borrower that changes one or more of the original terms of a loan in an attempt to make the payments more affordable for the borrower and avoid foreclosure. Loan Origination - The process of bringing a new from application to closing. Loan Origination Fee - A fee, which may be in the form of points, paid to a mortgage loan lender for originating a loan. Loan Portfolio - A collection of loans held for servicing or investment.


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Loan-To-Value Ratio - The proportion or percentage that the loan bears to the appraised/market value of the property. Lock-in - When a lender commits to lend at a particular rate provided the loan closes within a specified time period. The rate commitment or lock-in agreement specifies the terms of the lock-in. Long Flip – An investor who waits on a flip for the hope of getting every dollar possible out of the deal

Lot and Block Distribution - A method of property description which uses as a reference, block numbers or letters assigned to each group of adjoining lots in a subdivision, and a lot number or letter for each building lot in the block. Mailers – Postcards, letters, etc. that are used to market to potential clients

Manufactured Home - Homes that are built in multiple sections in a factory and then transported to the site where it is to be installed. Once attached to the permanent foundation constructed on the site, the manufactured home becomes part of the real property. Margin - That part of the interest rate on an adjustable rate mortgage that is added to the base index rate to arrive at the current adjustable rate. Market Data Approach - An approach to determining the value of property by comparing the subject property to recent sales of comparable properties. Market Price - The price that a property actually sells for.

Market Value - The highest price a ready, willing and able buyer would pay to a ready, willing and able seller, neither being under any abnormal pressure to act. Marketable Title - Salable title; clear; free of defects. Master Deed - The title and conveyance document used in a condominium project. Master Plan - A comprehensive guide to the development of the land within a municipality. Mechanics Lien - A specific lien in favor of an unpaid contractor or material supplier who has erected or repaired a building or other improvement to real estate. Meeting Of The Minds - When all parties to a contract have agreed to its terms and conditions; mutual agreement; offer and acceptance. Merger - 1. Occurs when an estate in land is automatically absorbed when a greater estate is acquired by the same person. 2. The combining of two or more organizations. Metes and Bounds - A method of property description that describes the property by starting at a well marked point of beginning and follows the boundaries of the property until it returns to the point of beginning. Mill - Used to compute property taxes it is the equivalent to one-tenth of 1 cent. MLS - See Multiple Listing Service Money Damages - In a breached contract, it is an amount of money awarded to the


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injured party in lieu of contract performance. Monument - Natural or artificial objects used to outline a properties boundaries. Mortgage - A conditional transfer a real property as security for the payment of a debt which becomes a lien on the property. Mortgage Banker - A firm that makes mortgage loans and services the loan. Mortgage Broker - A person or firm in the business of procuring mortgage money for a client. One who brings borrowers and lenders together. Mortgage Companies – The originators of mortgages; usually mortgages are the only service offered.

Mortgage Insurance - Insurance designed to protect lenders against losses caused by a borrower's default on a mortgage loan. Mortgage insurance is usually required if the borrower's down payment is less than 20% of the purchase price. Mortgage Life Insurance - Term life insurance purchased by a borrower. If the borrower dies, the mortgage debt is satisfied by the insurance proceeds. The amount of coverage decreases as the mortgage balance declines. Mortgagee - The lender in a mortgage transaction; the one who receives the mortgage. Mortgagor - The borrower in a mortgage transaction; the one who gives the mortgage.

Multiple Listing Service (MLS) - The medium by which brokers pool or share their listing to gain the greatest exposure for their clients. Municipal Land Use Law - Legislation that transfers the state's power to regulate how land is used to individual municipalities and sets guidelines for the municipality. Mutual Agreement - Agreement to the terms and conditions of a contract between all parties concerned; a meeting of the minds. Naked Title - Title that does not include the rights normally associated with ownership. NAR - National Association of Realtors. National Flood Insurance Program - The program of flood insurance coverage and floodplain management administered under the National Flood Insurance Act of 1968. Negative Amortization - When the principal balance of a loan increases rather than decreases due to periodic payments that are insufficient to pay the interest due. Net Income - The amount of money left over after expenses and allowances have been deducted from the gross income. Net Lease - One that provides that in addition to paying rent the tenant is also responsible for paying various property expenses such as taxes, utilities, etc. Net Listing - A listing agreement which states a minimum amount the seller will accept to sell the property and anything over and above that amount may be retained by


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the broker as the selling commission. This type of listing is illegal in New Jersey. Networking – Building relationships with other people in the real estate industry in order to gain contacts and potential deals

NFIP - See National Flood Insurance Program. Nonconforming Use - The use of property at variance with zoning laws which is permitted to continue because the use was permitted prior to the adoption or revision of the law. Non-Freehold Estate - See Leasehold. Non-Judicial Foreclosure - Foreclosure proceedings conducted by the lender and not requiring a court order. Non-Participating Community - A community in which the sale of flood insurance under the NFIP is not authorized because the community chooses not to participate in the program. Non-Resident - One who resides in another state. Notary Public - A public officer authorized by the state to take acknowledgements, attest or certify documents as being authentic. Note - Written evidence and a personal promise to repay a debt. Notice to Cease - A notice given by the landlord to a tenant that serves as a warning notice. The notice tells the tenant to cease certain wrongful conduct within the premises.

Notice to Quit - A notice given by the landlord to a tenant ending the tenancy and telling the tenant to leave the premises. Novation - 1. The substituting of a new contract for an old one. 2. The substituting of a new obligor in a contract and the releasing of the original obligor of all liability. Obligee - The person to whom an obligation is owed. Obligor - The person who is obligated to pay a debt or perform some other act. Obsolescence - Depreciation of property; loss in value. See Functional Obsolescence and Economic Obsolescence. Occupancy Agreement - An agreement between a buyer and seller which permits the buyer to occupy the property prior to closing. Offer - To present something for acceptance or rejection; an offer to purchase. Offeree - The party that receives an offer. Offeror - The party who makes an offer. Open house - A way to present a home for sale. Under the supervision of the owner or a licensed agent, the house is held open to the public to view and inspect without an appointment. Open Listing - A listing agreement that gives the broker a nonexclusive right to secure a buyer. It may be given to any number of brokers at the same time with the seller obligated to pay a commission only to one who actually finds a buyer.


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Open Mortgage - One that permits the mortgagor to pay the principal in full any time before maturity. Open-End Mortgage; open-ended mortgage - A type of mortgage that allows the mortgagor to borrow additional funds during the term of the loan up to the original amount of the loan. Option - The right to purchase or lease property under specified terms for a specified limited period of time. Option Agreement – Non-exclusive agreement between buyer and seller for the sale of a property

Optionee - The one in possession of an option; the would be buyer. Optionor - The one who gives an option; the property owner. Oral Contract - One that is not reduced to writing; agreement by spoken words. Ordinance - Laws passed by the governing body of a municipality. Origination Fee - A fee, which may be in the form of points, paid to a mortgage loan lender for originating a loan. Ostensible Agency - An agency or authority which on the surface appears to exist because of a person's conduct but in reality does not formally exist. Package Mortgage - A mortgage that provides financing for the real property and some personal property and packages them into one loan.

Par Rate - 1) The lowest interest rate at which a lender is willing to lend money and not require the borrower to pay any points. 2) The interest rate at which a lender is willing to purchase a loan for 100% of the principal balance. If a loan has an interest rate above a lender's par rate, they will pay a premium for the loan (more than 100% of the principal balance). If a loan has an interest rate that is less than the lender's par rate, they will purchase the loan at a discount (less than 100% of the principal balance). Parcel - A tract or plot of land. Parol - Oral; not in writing. Parol Evidence Rule - Parol evidence is oral evidence such as an oral agreement. The Parol evidence rule is a legal rule of evidence that dictates what parol evidence may and may not be admissible in a court of law. For example: a buyer and seller rally agree that the seller will include the washer, dryer and refrigerator in the sale. They then enter into a written contract that mentions the washer and the dryer only. According to the parol evidence rule, the written agreement will be viewed by the court as an expression of the final agreement of the parties and the prior or contemporaneous oral agreement regarding the refrigerator would not be admissible. When the parties to an agreement take the time to draw up a written agreement, generally the agreement takes the place of all prior oral agreements regarding the same matter. It is therefore imperative, for enforceability, that all oral agreements are made part of the final written agreement.


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Participating Community - A community for which FEMA has authorized the sale of flood insurance under the NFIP. Partition - The process of dividing the interests of co-owners such as joint tenants or tenants in common. Party Wall - A wall erected on the boundary line that separates two parcels of land and intended to be used by both parties. Patent - 1. Obvious; clearly visible. 2. An instrument that transfers title to public land from the state to a private individual or entity. Patent Defect - A defect in the property that is clearly visible and will be uncovered through a normal inspection of the property. Percentage Lease - A lease in which all or part of the rent paid is based on a percentage of gross sales done on the premises. Percolation Test - A test of the earth's ability to absorb and drain water. Performance Bond - A bond, usually supplied by a contractor, used to guarantee the completion of the project he was hired to perform. Periodic Estate - An estate in land that continues for successive periods as in a month to month lease; an estate from period to period; a periodic tenancy. Personal Property - Generally, movable objects that have not been affixed permanently to become part of the real property; chattels; personally. Personalty - See Personal Property.

Physical Deterioration - Wear and tear brought about by usage, age, and nature. Piggy-Backing – Using someone else’s good credit to build your own credit.

PITI - Stands for principal, interest, taxes and insurance which are primary components of a mortgage payment. Planned Unit Development (PUD) - A type of development that maximized the use of land by allowing certain areas for housing, recreation, shopping, etc. Plat; Plat Map - A map that shows the location and boundaries of the lots in a selected area. Plot - A small piece of land. Plot Plan - A plan showing the layout of improvements on a property. PMI - Private Mortgage Insurance. Points - See Discount Points. Police Power - The government's right to enact and enforce laws that may restrict the use of property without compensation to the owner, for the health, morals, safety and general welfare of other citizens. Zoning laws and building codes would be examples. Portfolio – The total amount of properties owned

Portfolio loan - A loan retained by a lending institution and not sold in the secondary mortgage market.


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Power of Attorney - A written instrument that empowers one party to act on the behalf of another. Pre-Approval - A determination by a lender, after a review of the borrower's income, debt, and credit history, indicating how much money they will be eligible to borrow. Predatory Lending - Abusive lending practices such as excessive fees, high interest rates, costly and unnecessary insurance policies, large balloon payments, broker fees tied to interest rates, and repeated refinancing that steadily increases a borrower's debt. Prepaid Interest - Interest paid before it is due. Prepayment - An amount paid to a lender to reduce or extinguish the principal balance before it is actually due. Prepayment Penalty - A penalty imposed if a financial obligation is paid before maturity. Pre-Qualified - A preliminary determination from a lender indicating that a borrower has been qualified to purchase a property but does not commit to a loan amount. Prescription - See Easement By Prescription. Price Fixing - The illegal practice of firms conspiring to set fixed prices or compensation rates in an effort to limit competition.

Prima Facie - Evidence that is insufficient upon its face to establish a fact. Primary Mortgage - A priority mortgage that is subsequent to no others. Primary Mortgage Market - Made up of lenders who loan money directly to borrowers; lenders who originate the mortgage and advance the funds. Principal - 1. The party who is represented by an agent. 2. The amount of debt upon which interest is calculated. Principal Meridians - Imaginary longitudinal lines used as reference points in the rectangular survey system. Principle of Conformity - An appraisal principle stating substantially that maximum property value is realized when the subject properties level of improvement is in harmony with surrounding properties. Private Money (Hard Money) – Financing from private lenders who charge more aggressive fees and rates. Examples include hedge funds, affluent people, and anyone with excess cash to invest.

Private Mortgage Insurance (PMI) - Insurance on the upper 20%-25% of a conventional loan designed so that lenders may reduce the loan to value ratio to level where buyers with smaller down payments can qualify for financing. Probate - The legal process of verifying the authenticity and legality of a last will and testament. Promissory Note - A written promise to pay a financial obligation at some future time.


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Promulgate - To put into effect. Property Management - A specialized are of the real estate business which focuses on the marketing, leasing, management and maintenance of real estate on behalf of the owner. The property manager acts as an agent of the owner and the manager's responsibilities include keeping the rentable units leased to quality tenants, keeping the property in good repair, maintenance of financial records. Property Manager - One who specializes in property management (see property management). Prorate or Proration - The division of income or an expense proportionately between parties. Prospectus - A detailed description of an investment opportunity. Puffing - Statements made not as a representation of fact but more as a personal opinion and usually recognizable as such. Punitive Damages - Damages awarded by a court to serve as a punishment in addition to actual damages actually suffered. pur autre vie - For another's life. Purchase and Sale Agreement - A contract between a buyer and seller that details all of terms of a sale such as purchase price, earnest money deposit, down payment, financing terms, closing date contingencies, etc. Purchase Money Mortgage; PMM - 1) A mortgage given to purchase the same property that is pledge as security in the

mortgage. 2) A mortgage given by a buyer to the seller in payment of part or all of the purchase price. Quantity Survey - Valuing the replacement cost of a building by estimating the value of all the raw materials that went into it. Quiet Enjoyment - The right to possess and enjoy property without interference by others. Quiet Title Suit - Action to clear a defect, cloud or questionable claim against a title. Quitclaim Deed - An instrument used to clear or convey, without warranties, a questionable claim a person may have to a title. Radon - A toxic gas found in some areas in the soil of the earth. This gas can seep in buildings and homes and in higher concentrations may contribute to cancer and other illnesses. Range - A string of townships running north and south in the rectangular survey system. Ratable - Property subject to a municipality's general taxation. Rate Cap - See Cap. Ratify - To approve; to sanction. Real Estate Agents – Licensed agents who are authorized to list homes for sale and assist buyers in finding the right home

Real Estate Commission - A state governmental agency charged with the responsibility of protecting the general public through the enforcement of laws and


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promulgation of regulations dealing with the activities or real estate licensees. The Real Estate Commission also issues licenses and if necessary takes disciplinary action against licensees or revokes licenses. Real Estate Sales Full Disclosure Act - The laws governing the promotion and sale of property located outside the state of New Jersey. Real Estate Settlement Procedures Act (RESPA) - A federal law to provide home buyers with a better understanding of a settlement process. Real Property - Ownership rights in land; real estate. Realtor - A registered trade mark of the National Association of Realtors. Only members of state and local boards affiliated with the national association may refer to themselves as Realtors. Members must subscribe to a strict code of ethics and pay membership dues. Realty - Land and its improvements; real estate. Reappraisal Lease - A lease containing a provision that the property be periodically reappraised and the rent be adjusted to reflect the current market value of the property. REC - See Real Estate Commission. Recasting - Redesigning an existing loan by changing the interest rates or extending the loan, the mortgagor and mortgagee remain the same.

Receiver - A person appointed by the court to preserve and control property pending final determination of the court. Reciprocity - The mutual exchange of privileges; one institution recognizing the privileges of the other. Recording - The process of entering a document into the public records to provide constructive notice to the world; legal notice. Rectangular Survey System - The government survey system used to describe vast areas of land and uses latitude and longitude lines as references; Government Survey System. Redeem - To get back; to recover. Redlining - The illegal practice of lending institutions refusing to lend money in certain geographical areas or neighborhoods. Referee's Deed - Used in some areas to transfer title to real estate after a foreclosure sale. Referral Fee - A fee paid for recommending or referring a potential client or customer. Refinance - Securing a new loan to replace an existing one. Regulation Z - See Truth in Lending Law. Release - The discharge of an obligation or responsibility; to relinquish a right claim or interest. Reliction - Permanently exposing dry land by receding water.


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Remainderman - The party who receives the remnant of a terminated estate. Remise - To relinquish a claim to; surrender by deed. A term frequently used in a quitclaim deed. Renounce - To give up, resign, or refuse to follow. Rent Control - Government regulation of the amount of rent that can be charged. Rental Properties – Properties that are purchased with the intent of renting them out for residential or commercial use; income sources

Replacement Cost - The estimated current cost of construction and improvement using the most up to date construction materials and techniques. Reprisal Action - A retaliatory act. Reproduction Cost - The estimated cost of exactly duplicating an improvement using the same materials and techniques as originally used. Rescind - To cancel, annul or void. Rescission - The abrogation of a contract restoring the parties to the same position they were in before the contract existed. A remedy that one may seek in court resulting in the termination of a contract returning the parties to a point in time when it didn't exist. Reservation - A right or interest retained by the grantor when transferring title. For example, "A" conveys a parcel to "B" reserving an easement across the parcel for himself.

RESPA - See Real Estate Settlement Procedures Act. Restrictive Covenant - A clause in a deed which limits the use of the land to some particular use or to something other than a particular use. Reverse Mortgage - An arrangement whereby the mortgagee makes monthly payments to the mortgagor and it is repaid in one lump sum at some future time. Reversionary Interest - The right to future possession of real estate upon the termination of the current estate. Revocation - The withdrawal, nullification or recalling of an offer or a privilege such as a license. Right Of First Refusal - The right to match any offer to buy or lease property before it is sold or leased to another party. Secured Credit Card – A credit card that is secured by a savings account or a CD.

Secured Loans – A loan that is guaranteed by some type of collateral.

Seller – The potential prospect for selling a property. Examples of a seller include a home owner and a bank owner of a property.

Seller Financing – The seller provides financing to the buyer in a form of a promissory note.

Seminars or Informational Engagements – Educational meetings for interested buyers and sellers to learn more about a certain area


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Short Flip – A quick turnaround of a property with a potential for a 30 percent return on investment

Social Media – Facebook, Twitter, LinkedIn, Instagram and YouTube are examples of social media. Social media is a free marketing tool

Tagline – A short catch phrase or slogan used as a marketing tool and part of the brand strategy for a business.

Title Agents – Professional individuals how evaluate and determine the state of the title of a property; who currently has rights to the property

Title Insurance – An insurance policy that covers the title of the home from any discrepancies or individuals claiming to have a stake in the property

Traditional Financing – Financing that comes from mortgage companies and traditional banks.

TransUnion - Credit reporting agency that provides information on an individual’s past credit history and provides a credit score.

VA Loan – A government backed mortgage loan that is available for Veterans of the U.S. Military.

Vendor - Seller. Verbal - Spoken words; oral; parol. Void Contract - A valid contract that is capable of being declared null and void by one or more of the parties.

Voidable Contract - A valid contract that is capable of being declared null and void by one or more of the parties. Voluntary Alienation - Voluntarily transferring ownership such as a sale of the property by the owner. VRM - See Variable Rate Mortgage. Waive - To give up; to refrain from enforcing. Warranty - A guarantee as to conditions in the past, present or future. Warranty Deed - Full covenant and warranty deed - A deed in which the grantor makes the warranties of seisen, against encumbrances, quiet enjoyment, further assurances, and warranty forever. Before title insurance was widely used grantees needed to rely on the warranties made by the grantor if the title proved to be defective. Waste - Abuse of property. Water Rights - The rights to a body of water bordering a parcel of land. Wear and Tear - A form of deterioration that arises out of normal use of the property. A gradual wearing out of the property over time. Wetlands - Land areas where water covers the soil, or is present either at or near the surface of the soil. Frequently called swamps, marshes, or bogs. Wholesaler – The legal and contractual way to gain a stake in a property and gain a fee by finding the buyer.


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Work Out - A way to resolve or restructure a loan or prevent someone from going into foreclosure through a loan modification, forbearance or short sale. Wraparound Mortgage - A form of second mortgage that actually envelops the first mortgage. The wrap around lender pays the first mortgage off with payments made to him by the borrower. Writ - An order by a court directing an authorized officer of the court, to carry out its terms which usually compel a person to do something. Yield - The return on an amount expended or invested; rate of return; profit; interest. YSP - Acronym for Yield Spread Premium. See Yield Spread Premium. Yield Spread Premium - A premium is a lender willing to pay to purchase loan that has an interest rate that exceeds the lender's present par rate. Zoning - A municipality's use of its police power in controlling the use of real property within its jurisdiction. Zoning Map - A map that details the division of a municipality into different zones, each with a list of permitted uses of the property in each zone.


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The Real Estate Glossary - Jay Morrison Academy · for financing property by cashing out or taking...

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