A

Abandonment :- The voluntary surrender or relinquishment of possession of real property with the intention of terminating one's possession or interest but without the vesting of this interest in any other person, such as when a person moves and abandons leased property before the lease term has expired.

Abatement :- Elimination or reduction of real estate taxes to attract new business to an area.

Abstract Of Title :- The condensed history of a title to a particular parcel of real estate, consisting of a summary of the original grant and all subsequent conveyances and encumbrances affecting the property and a certification by the abstractor that the history is complete and accurate.

Abstract Of Title With Lawyer's Opinion :- An abstract of title that a lawyer has examined and has certified to be, in his or her opinion, an accurate statement of fact.

Acceleration Clause :- The clause in a mortgage or trust deed or note that can be enforced to make the entire amount of principal and interest due immediately if the mortgagor defaults on an installment payment or other covenant.

Accrued Items :- On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan or taxes on real property.

Acknowledgment :- A formal declaration made before a duly authorized officer, usually a notary public, by a person who has signed a document attesting that the instrument was executed by him and that it was his free and voluntary act.

Acre :- A measure of land equal to 43,560 square feet, 4,840 square yards, 4,047 square meters, 160 square rods, or 0.4047 hectare.

Actual Notice :- Express information or fact', that which is known; direct knowledge.

Adjustable-Rate Mortgage (ARM) :- A mortgage loan in which the interest rate may increase or decrease at specified intervals over the life of the loan.

Adjusted Basis :- See basis.

Adjusted Sales Price :- For income tax purposes, the actual sales price reduced by allowable sales expenses.

Administrator/Administratrix :- A man/woman appointed by a court to settle the estate of a deceased person when there is no will; contrast with executor/executrix.

Ad Valorem Tax :- A tax levied according to value; generally used to refer to real estate tax; also called the general tax.

Adverse Possession :- The actual, visible, hostile, notorious, exclusive, and continuous possession of another's land under a claim of title. Possession for a statutory period may be a means of acquiring title.

Affidavit Of Title :- A written statement, made under oath by a seller or grantor of real property and acknowledged by a notary public, in which the Grantor (1) identifies himself or herself and indicates marital status, (2) certifies that since the examination of the title on the date of the contract no defects have occurred in the title, and (3) certifies that he or she is in possession of the property (if applicable); not used in Texas.

Agency :- The relationship existing between a principal and an agent who acts for the principal within the specified authority granted by the principal. The principal is entitled to rely on the agent, who places the principal's interests above those of his own.

Agency By Ratification :- An agency relationship that is established after the fact.

Agent :- One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed real estate broker to be his or her agent.

Air Lot :- A designated airspace over a piece of land. An air lot, like surface property, may be transferred.

Air Rights :- The right to use the open space above a property, generally "owing the surface to be used for another purpose.

Alienation :- The act of transferring property to another. Alienation may be voluntary, such as by gift or sale, or involuntary, as through eminent domain or adverse possession.

Alienation Clause :- The clause in a mortgage or deed of trust that states that the balance of the secured debt becomes immediately due and payable at the mortgagee's option if the property is sold by the mortgagor. In effect this clause prevents the mortgagor from assigning the debt without the mortgagee's approval; also called a due-on-sale clause.

Allodial System :- A system of land ownership in which land is held free and clear of any rent or service due to the government; commonly contrasted to the feudal system. In the United States, land is held under the allodial system.

Americans With Disabilities Act :- A federal law to eliminate discrimination against individuals with disabilities by mandating equal access to jobs, public accommodations, government services, public transportation, and telecommunications.

Amortization :- A loan in which the principal as well as the interest is payable in monthly or other periodic installments over the term of the loan.

Amount Realized On Sale :- The amount of gain, or profit, subject to the income tax.

Appraisal :- An estimate of the quantity, quality, or value of something. The process through which conclusions of property value are obtained; also refers to the report that sets forth the process of estimation and conclusion of value.

Appraisal Review Board :- A group of people who hear appeals concerning assessed valuations for tax purposes and recommend or deny changes in values shown of record.

Appraised Value :- An estimate of the present worth of a property.

Appreciation :- An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.

Appurtenances :- Those rights, privileges, and improvements that belong to and pass with the transfer of real property but are not necessarily a part of the property, such as rights-of-way, easements, water rights, and property improvements.

Assemblage :- The combining of two or more adjoining lots into one larger tract to increase their total value.

Assessed Value :- The value set upon property for taxation purposes.

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

Assessment Roll :- The public record of the assessed values of 0 lands and buildings within a specific area.

Assignment :- The transfer in writing of interest in a bond, mortgage, lease, or other instrument.

Assumption Of Mortgage :- Acquiring title to property on which there is an existing mortgage and agreeing to be personally liable for the terms and conditions of the mortgage, including payments-, contrast with subject to mortgage.

Attachment :- I. The act of taking a person's property into legal custody by writ or other judicial order to hold it available for application to that person's debt to a creditor. 2. A process of converting personal property to real estate.

Attorney's Opinion Of Title :- A writing based on a lawyer's reading of an abstract of title that specifies any title defects and names the legal titleholder as the lawyer interprets it; states whether a seller may convey good title.

B

Balloon Payment :- A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized.

Bargain And Sale Deed :- A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. The grantor may add warranties to the deed at his or her discretion.

Base Line :- One of a set of imaginary lines running east and west and crossing a principal meridian at a definite point, used by surveyors for reference in locating and describing land under the rectangular survey (or government survey) system of property description.

Basis :- The financial interest that the Internal Revenue Service attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on the sale of the asset. If a property was acquired by purchase, the owner's basis is the cost of the property, plus the value of any capital expenditures for improvements to the property, minus any depreciation allowable or actually taken. This new basis is called the adjusted basis.

Bench Mark :- A permanent reference mark or point established for use by surveyors in measuring differences in elevation.

Beneficiary :- 1. The person for whom a trust operates or in whose behalf the income from a trust estate is drawn. 2. A lender who lends money on real estate and takes back a note and trust deed from the borrower.

Bequest :- The transfer of personal property to a legatee in accordance with a will.

Bilateral Contract:- See contract.

Bill Of Sale :- A written instrument given to pass title to personal property.

Biweekly Payment Plan:- A loan that calls for 26 half-month payments a year, resulting in an earlier loan retirement date and lower total interest costs than with a typical fully amortized loan.

Blanket Mortgage :- A mortgage covering more than one parcel of real estate, providing for each parcel's partial release from the mortgage lien on repayment of a definite portion of the debt.

Boot :- Money or property given to make up any difference in value or equity between two properties in an exchange.

Breach Of Contract :- Violation of any terms or conditions in a contract without legal excuse; for example, failure to make a payment when it is due.

Broker :- One who buys and sells for another for a commission. See also real estate broker.

Brokerage :- For a commission or fee, bringing together parties interested in buying, selling, exchanging, or leasing real property.

Broker-Salesperson :- A person who has passed the broker's licensing examination but works on behalf of another licensed broker.

Buffer Zone :- Zoning districts that gradually change from a higher-intensity use to a lower-intensity use.

Building Code :- An ordinance that specifies minimum standards of construction for buildings to protect public safety and health.

Building Line :- A line fixed at a certain distance from the front and/or sides of a lot beyond which no structure can project. See setback.

Building Permit :- A permission issued by a city for the construction of a building to ensure compliance with building codes.

Bundle Of Legal Rights :- The concept of land ownership that means ownership of all legal rights to the land-for example, possession, control within the law, and enjoyment-rather than ownership of the land it self.

Buydown :- A cash payment, usually measured in points, to a lender to reduce the interest rate a borrower must pay.

Buydown Mortgage :- A mortgage on which a cash payment has been made to the lender to reduce the interest rate a borrower must pay; usually 'bought down" for the first two or three years of the loan.

Buyer Agency :- An agency relationship between the broker and the buyer, with fiduciary duties owed to the buyer.

Buyer Representation Agreement :- A contract that establishes a broker-buyer agency relationship.

Buyer's Broker :- A licensee who has declared to represent only the buyer in a transaction, regardless of whether compensation is paid by the buyer or the listing broker through a commission split.

C

Canons Of Professional Ethics And Conduct :- A code of ethics established by the Texas Real Estate Commission and published in its Rules.

Capital Gain :- Income earned from the sale of an asset.

Capital Investment :- The initial capital and the long term expenditures made to establish and maintain a business or investment property.

Capitalization :- A mathematical process for estimating the value of an income-producing property by dividing the annual net operating income by the capitalization rate. The formula is expressed as ( Value = Income / Rate )

Capitalization Rate :- The rate of return a property will produce on the owner's investment.

Cash Flow :- The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. If expenses exceed income, a negative cash flow is the result.

Casualty Insurance :- A type of policy that protects a property owner or other person from loss or injury sustained as a result of theft, vandalism, or similar occurrences.

Certificate Of Sale :- The document generally given to a purchaser at a tax foreclosure sale. A certificate of sale does not convey title; generally it is an instrument certifying that the holder received title to the property after the redemption period had passed and that the holder paid the property taxes for that interim period.

Certificate Of Title :- A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.

Chain Of Title :- The succession of conveyances from some accepted starting point, whereby the present holder of real property derives his or her title.

Chattel :- Personal property; personalty.

Civil Rights Act Of 1866 :- The first and primary law guaranteeing equal rights to 0 U.S. citizens-, prohibits all discrimination based on race.

Client :- The person who employs an agent to perform a service for a fee.

Closing :- The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price.

Closing Agent :- The person responsible for conducting the settlement of a real estate sale. Usually the Title Company.

Closing Statement :- A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made, and all cash paid out in the transaction. See also HUD 1.

Cloud On The Title :- Any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.

Code Of Ethics :- An agreement to which all REALTORS@ must subscribe and that holds the members to high standards of conduct.

Codicil :- A supplement or an addition to a will, executed with the same functionalities as a will, that normally does not revoke the entire will.

Coinsurance Clause :- A provision in insurance policies covering real property that requires that the policyholder maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.

Collateral :- Something of value deposited with a lender as a pledge to secure repayment of a loan.

Commission :- Payment to a broker for services rendered such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Common Elements :- Parts of a property that are necessary or convenient to the existence, maintenance , and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the general and limited common elements.

Common Law :- The body of law based on custom, usage, and court decisions.

Community Property :- A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. Texas is a community property state.

Community Property Right Of Survivorship :- A declaration made by husband and wife that community property will go to the survivor upon the death of one party; eliminates probate.

Comparables :- Properties listed in an appraisal report that are substantially equivalent to the subject property and are used to compare and establish a value of the subject property.

Competent Parties :- People who are recognized by law as being able to contract with others, usually those of legal age and sound mind.

Competitive Market Analysis (CMA) :- A comparison of the prices of recently sold homes that are similar to the subject home in terms of location, style, and amenities. Based on this analysis, a broker or salesperson can help the seller determine a listing price.

Computerized Loan Origination (CLO) :- A computer network tied into a major lender that allows agents across the country to initiate mortgage loan applications in their own offices.

Condemnation :- A judicial or an administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.

Condition :- A contingency, qualification, or occurrence on which an estate or property right is gained or lost.

Conditional Use Permit :- A grant approved by a zoning ordinance "owing, with conditions, a special use of property that is in the public interest.

Condominium :- The absolute ownership of an apartment or a unit (generally in a multiunit building) based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium unit owners.

Consideration :- Something of value that induces a person to enter into a contract. Consideration may be 'valuable" (money) or "good" (love and affection).

Construction Loan :- See interim financing.

Constructive Notice :- Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they actually have examined them. Possession of property also is considered constructive notice that the person in possession has an interest in the property.

Contract :- An agreement entered into by two or more legally competent parties by the terms of which one or more of the parties, for a consideration, undertake to do or refrain from doing some legal act or acts. A contract may be either unilateral, where only one party is bound to act, or bilateral, where all parties to the instrument are legally bound to act as prescribed.

Contract For Deed :- A contract for the sale of real estate wherein the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until final payment. Also called an installment contract, a land contract, a contract of sale, or articles of agreement for warranty deed.

Conventional Loan :- A loan that is not insured by the FHA or guaranteed by the VA.

Conveyance :- Written instrument, such as a deed or lease, that evidences transfer of some ownership interest in real property from one person to another.

Co-Ownership :- A broad category of ownership by more than one person. Examples are tenants in common and joint tenants.

Corporeal Right :- A tangible interest in real estate.

Cost: - The capital outlay for land, labor, materials, and profits necessary to bring a property into existence.

Cost Approach To Value :- An estimate of value based on current construction costs, less depreciation, plus land value. Contrast with the income approach to value and the sales comparison approach to value.

Counteroffer :- A new offer made as a reply to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror's repeating it.

Covenant :- A written agreement between two or more parties in which a pledge is made to perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases, and contracts for deed.

Credit :- On a closing statement, an amount entered in a person's favor-either an amount the party has paid or an amount for which the party must be reimbursed.

Curtesy :- A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states, including Texas, have abolished curtesy.

Customer :- One who purchases or sells property without being represented by an agent. A customer is usually without representation or advice.

D

Datum :- A horizontal plane from which heights and depths are measured.

Debit :- On a closing statement, an amount charged, that is, an amount that the debited party must pay.

Decedent :- A person who has died.

Deceptive Trade Practices Act (DTPA) :- Part of the federal Consumer Protection Act originally passed in 1973 and made specifically applicable to real estate in 1975 prohibiting a number of false, misleading, or deceptive acts or practices.

Dedication :- The voluntary transfer of private property by its owner to the public for some public use, such as for streets or schools.

Deductible Clause :- A clause in an insurance policy that limits the exposure to loss for an insured homeowner.

Deed :- A written instrument that, when executed and delivered, conveys title to or an interest in real estate.

Deed In Lieu Of Foreclosure :- A deed to a lender given by an owner conveying mortgaged property on which the mortgage is in default.

Deed In Trust :- A form of deed by which real estate is conveyed to a trustee.

Deed Of Reconveyance :- The instrument used to recovery title to a trustor under a trust deed after the debt has been satisfied. Be sure you receive this once you have paid off your mortgage. Also, take it to the county clerks office and have it recorded.

Deed Of Trust :- An instrument used to create a mortgage lien by which the mortgagor (trustor) conveys his or her title to a trustee, who holds it as security for the benefit of the lender (beneficiary); also called a trust deed.

Deed Restrictions :- Clauses in a deed limiting the future uses of the property.

Default :- The nonperformance of a duty, whether arising under a contract or otherwise; failure to meet an obligation when due.

Defeasance Clause :- A provision in leases and mortgages that cancels a specified right on the occurrence of a certain condition, such as cancellation of a mortgage on repayment of the mortgage loan.

Defeasible Fee Estate :- An estate in which the holder has a fee simple title that may be divested on the occurrence or nonoccurrence of a specified event. The two categories of defeasible fee estates are fee simple determinable and fee simple subject to a condition subsequent.

Deficiency Judgment :- A personal judgment levied against the mortgagor when a foreclosure sale does not produce sufficient funds to pay the mortgage debt in full.

Delinquent Taxes :- Unpaid taxes that are past due.

Delivery And Acceptance :- The actual transfer of the deed, or an act of a seller showing intent to make a deed effective, without which there is no transfer of title to the property.

Density Zoning :- Zoning ordinances that restrict the maximum average number of houses per acre that may be built within a particular area, generally a subdivision.

Department Of Housing And Urban Development (HUD) :- Federal agency that administers the Fair Housing Act of 1968.

Depreciated Cost :- The value of a property after deducting an allowance for depreciation.

Depreciation :- 1. In appraisal, a loss of value in property due to any cause, including physical deterioration, functional obsolescence, and external obsolescence. 2. In real estate investment, an expense deduction for tax purposes taken over the period of ownership of income property. See also cost recovery.

Descent :- Acquisition of property through inheritance laws when there is no will.

Determinable Fee Estate :- A fee simple estate in which the property automatically reverts to the grantor upon the occurrence of a specified event or condition.

Developer :- One who converts raw land into a platted subdivision, installs utilities, builds streets, and so forth, and who also may construct buildings on lots and sells them.

Devise :- A gift of real property by will. The donor is the devisor and the recipient is the devisee.

Discount Points :- An added loan fee charged by a lender to make the yield on a lower-than-market-value loan competitive with higher-interest rate loans.

Discount Rate :- 1. The interest rate charged member banks that borrow from the Federal Reserve System. 2. The rate used to convert future income into present value.

Dominant Tenement :- A property that includes in its ownership the appurtenant right to use an easement over another person's property for a specific purpose.

Dower :- The legal right or interest, recognized in some states, that a wife acquires in the property her husband held or acquired during their marriage. During the husband's lifetime the right is only a possibility of an interest; on his death it can become an interest in land. Dower is not recognized in Texas.

Duress :- Unlawful constraint or action exercised on a person whereby the person is forced to perform an act against his or her will. A contract entered into under duress is considered voidable.

E

Earnest Money Deposit :- An amount of money, deposited by a prospective buyer as evidence of good faith under the terms of a contract, that is to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.

Easement :- A right to use the land of another for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land.

Easement Appurtenant :- An easement that passes with the land on conveyance.

Easement By Implication :- An easement that arises when the parties' actions imply that they intend to create an easement.

Easement By Necessity :- An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.

Easement By Prescription :- An easement acquired by continuous, open, uninterrupted, exclusive, and adverse use of the property for the period of time prescribed by state law. If your neighbor makes use of your property they may end up acquiring that property. For example if they install a fence that is one foot deep into your property, and you do not do anything about it they may end up owning that extra foot of land along your property’s edge.

Easement In Gross :- An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example, a utility easement.

Economic Life :- The period of time during which a structure may reasonably be expected to perform the function for which it was designed or intended.

Economic Obsolescence :- See external obsolescence.

Emblements:- Growing crops, such as grapes and corn, that are produced annually through labor and industry; deemed to be personal property.

Eminent Domain :- The right of a government or municipal quasi-public body to acquire property for public use through a court action called condemnation, in which the court decides that the use is a public use and deter-mines the price or compensation to be paid to the owner.

Enabling Acts :- State legislation that confers certain powers, such as municipal zoning ordinances.

Encroachment :- A building or some portion of it-a wall