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Real Estate Training Article
  By Real Estate Trainer
    Randy Roussie

Glossary Of Real Estate Terms For Agents / Realtors!

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Glossary Of Real Estate Terms  
 

Real Estate Glossary - P to Z!

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PACKAGE MORTGAGE — A type of mortgage used in home financing covering real property, improvements, and movable equipment/appliances.

PAR VALUE — Market value, nominal value.

PATENT — Conveyance of title to government land.

PARAMOUNT TITLE — Title which is superior or foremost to all others.

PARTICIPATION — Sharing of an interest in a property by a lender. In addition to base interest on mortgage loans on income properties, a percentage of gross income is required, sometimes predicated on certain conditions being fulfilled, such as a minimum occupancy or percentage of net income after expenses, debt service and taxes. Also called equity participation or revenue sharing.

PARTIES (PARTY) — Those entities taking part in a transaction as a principal, e.g., seller, buyer, or lender in a real estate transaction.

PARTITION — A division of real or personal property or the proceeds there from among co-owners.

PARTITION ACTION — Court proceedings by which co-owners seek to sever their joint ownership.

PARTNERSHIP — A decision of the California Supreme Court has defined a partnership in the following terms — “A partnership as between partners themselves may be defined to be a contract of two or more persons to unite their property, labor or skill, or some of them, in prosecution of some joint or lawful business, and to share the profits in certain proportions.” A voluntary association of two or more persons to carry on a business or venture on terms of mutual participation in profits and losses.

PARTY WALL — A wall erected on the line between two adjoining properties, which are under different ownership, for the use of both properties.

PAYMENT ADJUSTMENT DATE — With regard to an adjustable rate mortgage, the date the borrower’s monthly principal and interest payment may change.

PAYMENT CAP — With regard to an adjustable rate mortgage, this limits the amount of increase in the borrower’s monthly principal and interest at the payment adjustment date, if the principal and interest increase called for by the interest rate increase exceeds the payment cap percentage. This limitation is often at the borrower’s option and may result in negative amortization.

PAYMENT RATE — With respect to an adjustable rate mortgage, the rate at which the borrower repays the loan—reflects buydowns or payment caps.

PENALTY — An extra payment or charge required of the borrower for deviating from the terms of the original loan agreement. Usually levied for being late in making regular payment or for paying off the loan before it is due, known as “late charges” and “prepayment penalties.”

PERCENTAGE LEASE — Lease on the property, the rental for which is determined by amount of business done by the lessee; usually a percentage of gross receipts from the business with provision for a minimum rental.

PERIMETER HEATING — Baseboard heating, or any system in which the heat registers are located along the outside walls of a room, especially under the windows.

PERIODIC INTEREST RATE CAP — With respect to an adjustable rate mortgage, limits the increase or decrease in the note rate at each rate adjustment, thereby limiting the borrower’s payment increase or decrease at the time of adjustment.

PERSONAL PROPERTY — Any property which is not real property.

PHYSICAL DETERIORATION — Impairment of condition. Loss in value brought about by wear and tear, disintegration, use and actions of the elements; termed curable and incurable.

PLAINTIFF — In a court action, the one who sues; the complainant.

PLANNED DEVELOPMENT — A subdivision consisting of separately owned parcels of land together with membership in an association which owns common area. Sometimes the owners of separate interests also have an undivided interest in the common area.

PLANNED UNIT DEVELOPMENT — (PUD) A term sometimes used to describe a planned development. A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning.

PLANNING COMMISSION — An agency of local government charged with planning the development, redevelopment or preservation of an area.

PLAT (of survey) — A map of land made by a surveyor showing the boundaries, buildings, and other improvements.

PLEDGE — The depositing of personal property by a debtor with a creditor as security for a debt or engagement.

PLEDGEE — One who is given a pledge or a security. (See definition of Secured Party.)

PLEDGOR — One who offers a pledge or gives security. (See definition of debtor.)

PLOTTAGE — A term used in appraising to designate the increased value of two or more contiguous lots when they are joined under single ownership and available for use as a larger single lot. Also called assemblage.

PLOTTAGE INCREMENT — The appreciation in unit value created by joining smaller ownerships into one large single ownership.

POINTS — See Discount Points.

POLICE POWER — The right of the State to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.

POWER OF ATTORNEY — A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an attorney in fact.

POWER OF SALE — The power of a mortgagee or trustee when the instrument so provides to sell the secured property without judicial proceedings if a borrower defaults in payment of the promissory note or otherwise breaches the terms of the mortgage or deed of trust.

PREFABRICATED HOUSE — A house manufactured and sometimes partly assembled before delivery to building site.

PREFERRED STOCK — A class of corporate stock entitled to preferential treatment such as priority in distribution of dividends.

PREPAID ITEMS OF EXPENSE — Prorations of prepaid items of expense which are credited to the seller in the closing escrow statement.

PREPAYMENT — Provision made for loan payments to be larger than those specified in the note.

PREPAYMENT PENALTY — The charge payable to a lender by a borrower under the terms of the loan agreement if the borrower pays off the outstanding principal balance of the loan prior to its maturity.

PRESCRIPTION — The means of acquiring incorporeal interests in land, usually an easement, by immemorial or long continued use. The time is ordinarily the term of the statute of limitations.

PRESUMPTION — An assumption of fact that the law requires to be made from another fact or group of facts found or otherwise established in the section.

PRIMA FACIE — Latin meaning first sight, a fact presumed to be true until disproved.

PRINCIPAL — This term is used to mean the employer of an agent; or the amount of money borrowed, or the amount of the loan. Also, one of the main parties in a real estate transaction, such as a buyer, borrower, seller, lessor.

PRINCIPAL NOTE — The promissory note which is secured by the mortgage or trust deed.

PRIOR LIEN — A lien which is senior or superior to others.

PRIORITY OF LIEN — The order in which liens are given legal precedence or preference.

PRIVATE MORTGAGE INSURANCE — Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan (PMI).

PRIVITY — Mutual relationship to the same rights of property, contractual relationship.

PRIVITY OF CONTRACT — The relationship which exists between the persons who are parties to a contract.

PRO RATA — In proportion; according to a certain percentage or proportion of a whole.

PROCURING CAUSE — That cause originating from a series of events that, without break in continuity, results in the prime object of an agent’s employment producing a final buyer; the real estate agent who first procures a ready, willing, and able buyer for the agreed upon price and terms and is entitled to the commission.

PROGRESS PAYMENTS — Scheduled, periodic, and partial payment of construction loan funds to a builder as each construction stage is completed.

PROGRESSION, PRINCIPLE OF — The worth of a lesser valued residence tends to be enhanced by association with higher valued residences in the same area.

PROMISSORY NOTE — Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.

PROPERTY — Everything capable of being owned and acquired lawfully. The rights of ownership. The right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights. Property is classified into two groups, personal property and real property.

PROPERTY MANAGEMENT — A branch of the real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties.

PRORATION — Adjustments of interest, taxes, and insurance, etc., on a pro rata basis as of the closing or agreed upon date. Fire insurance is normally paid for three years in advance. If a property is sold during this time, the seller wants a refund on that portion of the advance payment that has not been used at the time the title to the property is transferred. For example, if the property is sold two years later, seller will want to receive 1/3 of the advance premium that was paid. Usually done in escrow by escrow holder at time of closing the transaction.

PRORATION OF TAXES — To divide or prorate the taxes equally or proportionately to time of use, usually between seller and buyer.

PROXIMATE CAUSE — That cause of an event which, in a natural and continuous sequence unbroken by any new cause, produced that event, and without which the event would not have happened. Also, the procuring cause.

PUBLIC RECORDS — Records which by law impart constructive notice of matters relating to land.

PUBLIC TRUSTEE — The county public official whose office has been created by statute to whom title to real property in certain states, e.g., Colorado, is conveyed by Trust Deed for the use and benefit of the beneficiary, who usually is the lender.

PURCHASE AND INSTALLMENT SALEBACK — Involves purchase of the property upon completion of construction and immediate saleback on a long­term installment contract.

PURCHASE AND LEASEBACK — Involves the purchase of property by buyer and immediate leaseback to seller.

PURCHASE MONEY MORTGAGE OR TRUST DEED — A trust deed or mortgage given as part or all of the purchase consideration for real property. In some states the purchase money mortgage or trust deed loan can be made by a seller who extends credit to the buyer of property or by a third party lender (typically a financial institution) that makes a loan to the buyer of real property for a portion of the purchase price to be paid for the property. In many states there are legal limitations upon mortgagees and trust deed beneficiaries collecting deficiency judgments against the purchase money borrower after the collateral hypothecated under such security instruments has been sold through the foreclosure process. Generally no deficiency judgment is allowed if the collateral property under the mortgage or trust deed is residential property of four units or less with the debtor occupying the property as a place of residence.

PURCHASE OF LAND, LEASEBACK AND LEASEHOLD MORTGAGES — An arrangement whereby land is purchased by the lender and leased back to the developer with a mortgage negotiated on the resulting leasehold of the income property constructed. The lender receives an annual ground rent, plus a percentage of income from the property.

QUANTITY SURVEY — A highly technical process in arriving at cost estimate of new construction and sometimes referred to in the building trade as the “price take-off” method. It involves a detailed estimate of the quantities of raw material (lumber, plaster, brick, cement, etc.,) used as well as the current price of the material and installation costs. These factors are all added together to arrive at the cost of a structure. It is usually used by contractors and experienced estimators.

QUARTER ROUND — A molding that presents a profile of a quarter circle.

QUIET ENJOYMENT — Right of an owner or tenant to the use of the property without interference of possession.

QUIET TITLE — A court action brought to establish title; to remove a cloud on the title.

QUITCLAIM DEED — A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

RADIANT HEATING — A method of heating, usually consisting of coils, or pipes placed in the floor, wall, or ceiling.

RANGE — A strip or column of land six miles wide, determined by a government survey, running in a north-south direction, lying east or west of a principal meridian.

RANGE LINES — A series of government survey lines running north and south at six-mile intervals starting with the principal meridian and forming the east and west boundaries of townships.

RATE ADJUSTMENT DATE — With respect to an adjustable rate mortgage, the date the borrower’s note rate may change.

RATIFICATION — The adoption or approval of an act performed on behalf of a person without previous authorization, such as the approval by a principal of previously unauthorized acts of an agent, after the acts have been performed.

READY, WILLING AND ABLE BUYER — One who is fully prepared to enter into the contract, really wants to buy, and unquestionably meets the financing requirements of purchase.

REAL ESTATE — (See Real Property.)

REAL ESTATE BOARD — An organization whose members consist primarily of real estate brokers and salespersons.

REAL ESTATE INVESTMENT TRUST — (See REIT).

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) — A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development.

REAL ESTATE SYNDICATE — An organization of investors usually in the form of a limited partnership who have joined together for the purpose of pooling capital for the acquisition of real property interests.

REAL ESTATE TRUST — A special arrangement under Federal and State law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation taxes, profits being passed to individual investors who are taxed.

REAL PROPERTY — Land and anything growing on, attached to, or erected on it, excluding anything that may be severed without injury to the land.

REAL PROPERTY LOAN LAW — Article 7 of Chapter 3 of the Real Estate Law under which a real estate licensee negotiating loans secured by real property within a specified range is required to give the borrower a statement disclosing the costs and terms of the loan and which also limits the amount of expenses and charges that a borrower may pay with respect to the loan.

REAL PROPERTY SALES CONTRACT — An agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract.

RECAPTURE — The process of recovery by an owner of money invested by employing the use of a rate of interest necessary to provide for the return of an investment; not to be confused with interest rate, which is a rate of return on an investment.

RECONVEYANCE — The transfer of the title of land from one person to the immediate preceding owner. This instrument of transfer is commonly used to transfer the legal title from the trustee to the trustor (borrower) after a trust deed debt has been paid in full.

RECORDING — The process of placing a document on file with a designated public official for public notice. This public official is usually a county officer known as the County Recorder who designates the fact that a document has been presented for recording by placing a recording stamp upon it indicating the time of day and the date when it was officially placed on file. Documents filed with the Recorder are considered to be placed on open notice to the general public of that county. Claims against property usually are given a priority on the basis of the time and the date they are recorded with the most preferred claim going to the earliest one recorded and the next claim going to the next earliest one recorded, and so on. This type of notice is called “constructive notice” or “legal notice”.

REDEEM — To buy back; repurchase; recover.

REDEMPTION — Buying back one’s property after a judicial sale.

REDLINING — A lending policy, illegal in California, of denying real estate loans on properties in older, changing urban areas, usually with large minority populations, because of alleged higher lending risks without due consideration being given by the lending institution to the credit worthiness of the individual loan applicant.

REFINANCING — The paying-off of an existing obligation and assuming a new obligation in its place. To finance anew, or extend or renew existing financing.

REFORMATION — An action to correct a mistake in a deed or other document.

REHABILITATION — The restoration of a property to satisfactory condition without drastically changing the plan, form or style of architecture.

REIT — A Real Estate Investment Trust is a business trust which deals principally with interest in land—generally organized to conform to the Internal Revenue Code.

RELEASE CLAUSE — A stipulation that upon the payment of a specific sum of money to the holder of a trust deed or mortgage, the lien of the instrument as to a specifically described lot or area shall be removed from the blanket lien on the whole area involved.

RELEASE DEED — An instrument executed by the mortgagee or the trustee reconvening to the mortgagor or trustor the real estate which secured the loan after the debt has been paid in full.

REMAINDER — An estate which takes effect after the termination of the prior estate, such as a life estate. A future possessory interest in real estate.

REMAINDER DEPRECIATION — The possible future loss in value of an improvement to real property.

RENEGOTIABLE RATE MORTGAGE — A loan secured by a long term mortgage which provides for renegotiation, at per-determined intervals, of the interest rate (for a maximum variation of five percent over the life of the mortgage.)

REPLACEMENT COST — The cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design and layout.

REPRODUCTION COST — The cost of replacing the subject improvement with one that is the exact replica, having the same quality of workmanship, design and layout, or cost to duplicate an asset.

RESCISSION — The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.

RESCISSION OF CONTRACT — The abrogation or annulling of contract; the revocation or repealing of contract by mutual consent by parties to the contract, or for cause by either party to the contract.

RESERVATION — A right retained by a grantor in conveying property.

RESERVES — 1) In a common interest subdivisions, an accumulation of funds collected from owners for future replacement and major maintenance of the common area and facilities. 2) With regard to mortgage loans, an accumulation of funds, collected by the lender from the borrower as part of each monthly mortgage payment, an amount allocated to pay property taxes and insurance when they are due.

RESPA — (See Real Estate Settlement Procedures Act.)

RESTRICTION — A limitation on the use of real property. Property restrictions fall into two general classifications—public and private. Zoning ordinances are examples of the former type. Restrictions may be created by private owners, typically by appropriate clauses in deeds, or in agreements, or in general plans of entire subdivisions. Usually they assume the form of a covenant, or promise to do or not to do a certain thing.

RETROSPECTIVE VALUE — The value of the property as of a previous date.

RETURN — Profit from an investment; the yield.

REVERSION — The right to future possession or enjoyment by a person, or the person’s heirs, creating the preceding estate. (For example, at the end of a lease.)

REVERSIONARY INTEREST — The interest which a person has in lands or other property, upon the termination of the preceding estate. A future interest.

RIGHT OF SURVIVORSHIP — The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant; the distinguishing feature of a joint tenancy.

RIGHT OF WAY — A privilege operating as an easement upon land, whereby the owner does by grant, or by agreement, give to another the right to pass over owner’s land, to construct a roadway, or use as a roadway, a specific part of the land; or the right to construct through and over the land, telephone, telegraph, or electric power lines; or the right to place underground water mains, gas mains, or sewer mains.

RIGHT, TITLE AND INTEREST — A term used in deeds to denote that the grantor is conveying all of that to which grantor held claim.

RIPARIAN RIGHTS — The right of a landowner whose land borders on a stream or watercourse to use and enjoy the water which is adjacent to or flows over the owners land provided such use does not injure other riparian owners.

RISK ANALYSIS — A study made, usually by a lender, of the various factors that might affect the repayment of a loan.

RISK RATING — A process used by the lender to decide on the soundness of making a loan and to reduce all the various factors affecting the repayment of the loan to a qualified rating of some kind.

PACKAGE MORTGAGE — A type of mortgage used in home financing covering real property, improvements, and movable equipment/appliances.

PAR VALUE — Market value, nominal value.

PATENT — Conveyance of title to government land.

PARAMOUNT TITLE — Title which is superior or foremost to all others.

PARTICIPATION — Sharing of an interest in a property by a lender. In addition to base interest on mortgage loans on income properties, a percentage of gross income is required, sometimes predicated on certain conditions being fulfilled, such as a minimum occupancy or percentage of net income after expenses, debt service and taxes. Also called equity participation or revenue sharing.

PARTIES (PARTY) — Those entities taking part in a transaction as a principal, e.g., seller, buyer, or lender in a real estate transaction.

PARTITION — A division of real or personal property or the proceeds there from among co-owners.

PARTITION ACTION — Court proceedings by which co-owners seek to sever their joint ownership.

PARTNERSHIP — A decision of the California Supreme Court has defined a partnership in the following terms — “A partnership as between partners themselves may be defined to be a contract of two or more persons to unite their property, labor or skill, or some of them, in prosecution of some joint or lawful business, and to share the profits in certain proportions.” A voluntary association of two or more persons to carry on a business or venture on terms of mutual participation in profits and losses.

PARTY WALL — A wall erected on the line between two adjoining properties, which are under different ownership, for the use of both properties.

PAYMENT ADJUSTMENT DATE — With regard to an adjustable rate mortgage, the date the borrower’s monthly principal and interest payment may change.

PAYMENT CAP — With regard to an adjustable rate mortgage, this limits the amount of increase in the borrower’s monthly principal and interest at the payment adjustment date, if the principal and interest increase called for by the interest rate increase exceeds the payment cap percentage. This limitation is often at the borrower’s option and may result in negative amortization.

PAYMENT RATE — With respect to an adjustable rate mortgage, the rate at which the borrower repays the loan—reflects buydowns or payment caps.

PENALTY — An extra payment or charge required of the borrower for deviating from the terms of the original loan agreement. Usually levied for being late in making regular payment or for paying off the loan before it is due, known as “late charges” and “prepayment penalties.”

PERCENTAGE LEASE — Lease on the property, the rental for which is determined by amount of business done by the lessee; usually a percentage of gross receipts from the business with provision for a minimum rental.

PERIMETER HEATING — Baseboard heating, or any system in which the heat registers are located along the outside walls of a room, especially under the windows.

PERIODIC INTEREST RATE CAP — With respect to an adjustable rate mortgage, limits the increase or decrease in the note rate at each rate adjustment, thereby limiting the borrower’s payment increase or decrease at the time of adjustment.

PERSONAL PROPERTY — Any property which is not real property.

PHYSICAL DETERIORATION — Impairment of condition. Loss in value brought about by wear and tear, disintegration, use and actions of the elements; termed curable and incurable.

PLAINTIFF — In a court action, the one who sues; the complainant.

PLANNED DEVELOPMENT — A subdivision consisting of separately owned parcels of land together with membership in an association which owns common area. Sometimes the owners of separate interests also have an undivided interest in the common area.

PLANNED UNIT DEVELOPMENT — (PUD) A term sometimes used to describe a planned development. A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning.

PLANNING COMMISSION — An agency of local government charged with planning the development, redevelopment or preservation of an area.

PLAT (of survey) — A map of land made by a surveyor showing the boundaries, buildings, and other improvements.

PLEDGE — The depositing of personal property by a debtor with a creditor as security for a debt or engagement.

PLEDGEE — One who is given a pledge or a security. (See definition of Secured Party.)

PLEDGOR — One who offers a pledge or gives security. (See definition of debtor.)

PLOTTAGE — A term used in appraising to designate the increased value of two or more contiguous lots when they are joined under single ownership and available for use as a larger single lot. Also called assemblage.

PLOTTAGE INCREMENT — The appreciation in unit value created by joining smaller ownerships into one large single ownership.

POINTS — See Discount Points.

POLICE POWER — The right of the State to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.

POWER OF ATTORNEY — A written instrument whereby a principal gives authority to an agent. The agent acting under such a grant is sometimes called an attorney in fact.

POWER OF SALE — The power of a mortgagee or trustee when the instrument so provides to sell the secured property without judicial proceedings if a borrower defaults in payment of the promissory note or otherwise breaches the terms of the mortgage or deed of trust.

PREFABRICATED HOUSE — A house manufactured and sometimes partly assembled before delivery to building site.

PREFERRED STOCK — A class of corporate stock entitled to preferential treatment such as priority in distribution of dividends.

PREPAID ITEMS OF EXPENSE — Prorations of prepaid items of expense which are credited to the seller in the closing escrow statement.

PREPAYMENT — Provision made for loan payments to be larger than those specified in the note.

PREPAYMENT PENALTY — The charge payable to a lender by a borrower under the terms of the loan agreement if the borrower pays off the outstanding principal balance of the loan prior to its maturity.

PRESCRIPTION — The means of acquiring incorporeal interests in land, usually an easement, by immemorial or long continued use. The time is ordinarily the term of the statute of limitations.

PRESUMPTION — An assumption of fact that the law requires to be made from another fact or group of facts found or otherwise established in the section.

PRIMA FACIE — Latin meaning first sight, a fact presumed to be true until disproved.

PRINCIPAL — This term is used to mean the employer of an agent; or the amount of money borrowed, or the amount of the loan. Also, one of the main parties in a real estate transaction, such as a buyer, borrower, seller, lessor.

PRINCIPAL NOTE — The promissory note which is secured by the mortgage or trust deed.

PRIOR LIEN — A lien which is senior or superior to others.

PRIORITY OF LIEN — The order in which liens are given legal precedence or preference.

PRIVATE MORTGAGE INSURANCE — Mortgage guaranty insurance available to conventional lenders on the first, high risk portion of a loan (PMI).

PRIVITY — Mutual relationship to the same rights of property, contractual relationship.

PRIVITY OF CONTRACT — The relationship which exists between the persons who are parties to a contract.

PRO RATA — In proportion; according to a certain percentage or proportion of a whole.

PROCURING CAUSE — That cause originating from a series of events that, without break in continuity, results in the prime object of an agent’s employment producing a final buyer; the real estate agent who first procures a ready, willing, and able buyer for the agreed upon price and terms and is entitled to the commission.

PROGRESS PAYMENTS — Scheduled, periodic, and partial payment of construction loan funds to a builder as each construction stage is completed.

PROGRESSION, PRINCIPLE OF — The worth of a lesser valued residence tends to be enhanced by association with higher valued residences in the same area.

PROMISSORY NOTE — Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its payment. The evidence of the debt.

PROPERTY — Everything capable of being owned and acquired lawfully. The rights of ownership. The right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights. Property is classified into two groups, personal property and real property.

PROPERTY MANAGEMENT — A branch of the real estate business involving the marketing, operation, maintenance and day-to-day financing of rental properties.

PRORATION — Adjustments of interest, taxes, and insurance, etc., on a pro rata basis as of the closing or agreed upon date. Fire insurance is normally paid for three years in advance. If a property is sold during this time, the seller wants a refund on that portion of the advance payment that has not been used at the time the title to the property is transferred. For example, if the property is sold two years later, seller will want to receive 1/3 of the advance premium that was paid. Usually done in escrow by escrow holder at time of closing the transaction.

PRORATION OF TAXES — To divide or prorate the taxes equally or proportionately to time of use, usually between seller and buyer.

PROXIMATE CAUSE — That cause of an event which, in a natural and continuous sequence unbroken by any new cause, produced that event, and without which the event would not have happened. Also, the procuring cause.

PUBLIC RECORDS — Records which by law impart constructive notice of matters relating to land.

PUBLIC TRUSTEE — The county public official whose office has been created by statute to whom title to real property in certain states, e.g., Colorado, is conveyed by Trust Deed for the use and benefit of the beneficiary, who usually is the lender.

PURCHASE AND INSTALLMENT SALEBACK — Involves purchase of the property upon completion of construction and immediate saleback on a long­term installment contract.

PURCHASE AND LEASEBACK — Involves the purchase of property by buyer and immediate leaseback to seller.

PURCHASE MONEY MORTGAGE OR TRUST DEED — A trust deed or mortgage given as part or all of the purchase consideration for real property. In some states the purchase money mortgage or trust deed loan can be made by a seller who extends credit to the buyer of property or by a third party lender (typically a financial institution) that makes a loan to the buyer of real property for a portion of the purchase price to be paid for the property. In many states there are legal limitations upon mortgagees and trust deed beneficiaries collecting deficiency judgments against the purchase money borrower after the collateral hypothecated under such security instruments has been sold through the foreclosure process. Generally no deficiency judgment is allowed if the collateral property under the mortgage or trust deed is residential property of four units or less with the debtor occupying the property as a place of residence.

PURCHASE OF LAND, LEASEBACK AND LEASEHOLD MORTGAGES — An arrangement whereby land is purchased by the lender and leased back to the developer with a mortgage negotiated on the resulting leasehold of the income property constructed. The lender receives an annual ground rent, plus a percentage of income from the property.

QUANTITY SURVEY — A highly technical process in arriving at cost estimate of new construction and sometimes referred to in the building trade as the “price take-off” method. It involves a detailed estimate of the quantities of raw material (lumber, plaster, brick, cement, etc.,) used as well as the current price of the material and installation costs. These factors are all added together to arrive at the cost of a structure. It is usually used by contractors and experienced estimators.

QUARTER ROUND — A molding that presents a profile of a quarter circle.

QUIET ENJOYMENT — Right of an owner or tenant to the use of the property without interference of possession.

QUIET TITLE — A court action brought to establish title; to remove a cloud on the title.

QUITCLAIM DEED — A deed to relinquish any interest in property which the grantor may have, without any warranty of title or interest.

RADIANT HEATING — A method of heating, usually consisting of coils, or pipes placed in the floor, wall, or ceiling.

RANGE — A strip or column of land six miles wide, determined by a government survey, running in a north-south direction, lying east or west of a principal meridian.

RANGE LINES — A series of government survey lines running north and south at six-mile intervals starting with the principal meridian and forming the east and west boundaries of townships.

RATE ADJUSTMENT DATE — With respect to an adjustable rate mortgage, the date the borrower’s note rate may change.

RATIFICATION — The adoption or approval of an act performed on behalf of a person without previous authorization, such as the approval by a principal of previously unauthorized acts of an agent, after the acts have been performed.

READY, WILLING AND ABLE BUYER — One who is fully prepared to enter into the contract, really wants to buy, and unquestionably meets the financing requirements of purchase.

REAL ESTATE BOARD — An organization whose members consist primarily of real estate brokers and salespersons.

REAL ESTATE INVESTMENT TRUST — (See REIT).

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA) — A federal law requiring the disclosure to borrowers of settlement (closing) procedures and costs by means of a pamphlet and forms prescribed by the United States Department of Housing and Urban Development.

REAL ESTATE SYNDICATE — An organization of investors usually in the form of a limited partnership who have joined together for the purpose of pooling capital for the acquisition of real property interests.

REAL ESTATE TRUST — A special arrangement under Federal and State law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation taxes, profits being passed to individual investors who are taxed.

REAL PROPERTY — Land and anything growing on, attached to, or erected on it, excluding anything that may be severed without injury to the land.

REAL PROPERTY LOAN LAW — Article 7 of Chapter 3 of the Real Estate Law under which a real estate licensee negotiating loans secured by real property within a specified range is required to give the borrower a statement disclosing the costs and terms of the loan and which also limits the amount of expenses and charges that a borrower may pay with respect to the loan.

REAL PROPERTY SALES CONTRACT — An agreement to convey title to real property upon satisfaction of specified conditions which does not require conveyance within one year of formation of the contract.

RECAPTURE — The process of recovery by an owner of money invested by employing the use of a rate of interest necessary to provide for the return of an investment; not to be confused with interest rate, which is a rate of return on an investment.

RECONVEYANCE — The transfer of the title of land from one person to the immediate preceding owner. This instrument of transfer is commonly used to transfer the legal title from the trustee to the trustor (borrower) after a trust deed debt has been paid in full.

RECORDING — The process of placing a document on file with a designated public official for public notice. This public official is usually a county officer known as the County Recorder who designates the fact that a document has been presented for recording by placing a recording stamp upon it indicating the time of day and the date when it was officially placed on file. Documents filed with the Recorder are considered to be placed on open notice to the general public of that county. Claims against property usually are given a priority on the basis of the time and the date they are recorded with the most preferred claim going to the earliest one recorded and the next claim going to the next earliest one recorded, and so on. This type of notice is called “constructive notice” or “legal notice”.

REDEEM — To buy back; repurchase; recover.

REDEMPTION — Buying back one’s property after a judicial sale.

REDLINING — A lending policy, illegal in California, of denying real estate loans on properties in older, changing urban areas, usually with large minority populations, because of alleged higher lending risks without due consideration being given by the lending institution to the credit worthiness of the individual loan applicant.

REFINANCING — The paying-off of an existing obligation and assuming a new obligation in its place. To finance anew, or extend or renew existing financing.

REFORMATION — An action to correct a mistake in a deed or other document.

REHABILITATION — The restoration of a property to satisfactory condition without drastically changing the plan, form or style of architecture.

REIT — A Real Estate Investment Trust is a business trust which deals principally with interest in land—generally organized to conform to the Internal Revenue Code.

RELEASE CLAUSE — A stipulation that upon the payment of a specific sum of money to the holder of a trust deed or mortgage, the lien of the instrument as to a specifically described lot or area shall be removed from the blanket lien on the whole area involved.

RELEASE DEED — An instrument executed by the mortgagee or the trustee reconvening to the mortgagor or trustor the real estate which secured the loan after the debt has been paid in full.

REMAINDER — An estate which takes effect after the termination of the prior estate, such as a life estate. A future possessory interest in real estate.

REMAINDER DEPRECIATION — The possible future loss in value of an improvement to real property.

RENEGOTIABLE RATE MORTGAGE — A loan secured by a long term mortgage which provides for renegotiation, at per-determined intervals, of the interest rate (for a maximum variation of five percent over the life of the mortgage.)

REPLACEMENT COST — The cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design and layout.

REPRODUCTION COST — The cost of replacing the subject improvement with one that is the exact replica, having the same quality of workmanship, design and layout, or cost to duplicate an asset.

RESCISSION — The cancellation of a contract and restoration of the parties to the same position they held before the contract was entered into.

RESCISSION OF CONTRACT — The abrogation or annulling of contract; the revocation or repealing of contract by mutual consent by parties to the contract, or for cause by either party to the contract.

RESERVATION — A right retained by a grantor in conveying property.

RESERVES — 1) In a common interest subdivisions, an accumulation of funds collected from owners for future replacement and major maintenance of the common area and facilities. 2) With regard to mortgage loans, an accumulation of funds, collected by the lender from the borrower as part of each monthly mortgage payment, an amount allocated to pay property taxes and insurance when they are due.

RESPA — (See Real Estate Settlement Procedures Act.)

RESTRICTION — A limitation on the use of real property. Property restrictions fall into two general classifications—public and private. Zoning ordinances are examples of the former type. Restrictions may be created by private owners, typically by appropriate clauses in deeds, or in agreements, or in general plans of entire subdivisions. Usually they assume the form of a covenant, or promise to do or not to do a certain thing.

RETROSPECTIVE VALUE — The value of the property as of a previous date.

RETURN — Profit from an investment; the yield.

REVERSION — The right to future possession or enjoyment by a person, or the person’s heirs, creating the preceding estate. (For example, at the end of a lease.)

REVERSIONARY INTEREST — The interest which a person has in lands or other property, upon the termination of the preceding estate. A future interest.

RIGHT OF SURVIVORSHIP — The right of a surviving tenant or tenants to succeed to the entire interest of the deceased tenant; the distinguishing feature of a joint tenancy.

RIGHT OF WAY — A privilege operating as an easement upon land, whereby the owner does by grant, or by agreement, give to another the right to pass over owner’s land, to construct a roadway, or use as a roadway, a specific part of the land; or the right to construct through and over the land, telephone, telegraph, or electric power lines; or the right to place underground water mains, gas mains, or sewer mains.

RIGHT, TITLE AND INTEREST — A term used in deeds to denote that the grantor is conveying all of that to which grantor held claim.

RIPARIAN RIGHTS — The right of a landowner whose land borders on a stream or watercourse to use and enjoy the water which is adjacent to or flows over the owners land provided such use does not injure other riparian owners.

RISK ANALYSIS — A study made, usually by a lender, of the various factors that might affect the repayment of a loan.

RISK RATING — A process used by the lender to decide on the soundness of making a loan and to reduce all the various factors affecting the repayment of the loan to a qualified rating of some kind.


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