Real Estate Definitions Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y | Z

A

ABANDONMENT
When a tenant leaves a property before the expiration of the lease agreement.
ABSTRACT OF TITLE
A carefully researched sequential report of transactions that have an effect on ownership, encumbrances and use of a property.
ACCELERATION CLAUSE
A clause in a lien agreement that permits the holder (lender) to call all future payments due in 30 days as the result of a default in the lien agreement. The most common default is the default of payment but other defaults may also trigger the acceleration clause such as permitting waste, failing to insure as agreed, etc.
ACCESSION
The process of gaining title to additional property by installing fixtures or alluvial action such as accretion (the deposit of soil from a river flow) or legal process such as abandonment of easement.
ACKNOWLEDGE
The legal process of having the signature on a contract or other legal document certified by a notary public.
ACRE
43,560 square feet
ACQUISITION
The legal taking of ownership in a property.
ACTIVE LICENSE
A license that has legal force and effect because the holder has met all regulatory requirements.
ACTUAL DELIVERY
Delivery of a legal instrument such as a deed or notice by physical means such as in person or by mail. Forms of delivery that do not qualify as Actual would include posting a public notice.
ADDENDUM
An Addendum adds to the terms of a referenced contract. Generally, a court will hold that since an addendum occurs after the original contract was drafted that any conflict between the original contract and the addendum will be decided in favor of the addendum because the addendum is the last representation of the agreement of the parties.
ADJUSTABLE RATE MORTGAGE (ARM)
A loan where the interest rate is periodically adjusted based on a specific economic indicator (or financial index). ARM loans have 5 primary elements that control the rate of the contract: 1)The initial rate of the contract 2) The Adjustment Cap which limits any one adjustment 3) The Lifetime Cap which limits the maximum adjustment over the initial rate that may occur 4) The Margin which is a percentage rate that is added to the index to determine the contract rate for any period subject to the caps 5) The Index which is an independently produced rate based on actual market conditions
ADJUSTED COST BASIS
A taxpayer’s basis in a property is the allowable costs of acquisition. The adjusted cost basis reflects the additions of improvements, minus depreciation claimed.
ADJUSTMENT PERIOD
Length of time between interest rate adjustments on an adjustable rate loan.
ADMINISTRATOR
A person appointed by the court to settle the estate of a person who died without a will (intestate.)
AD VALOREM TAX
A tax levy based on the value of a property. Common forms of Ad Valorem Tax would be; a tax equal to a percentage of value (2.165%), tax stated in dollars per "100 ("2.165 per "100 of value), or dollars per "1000 ("21.65 per "1000 of value), or a tax applied using mills(21.65 mills)
ADVERSE POSSESSION
Acquiring title to another’s property by open, notorious, hostile and continuous possession for a statutory period (7 years in Utah.) In Utah, paying the property taxes for the statutory period of time is also required.
AFFILIATED BUSINESS ARRANGEMENT (AfBA)
An affiliated business arrangement (AfBA) exists when a person in a position to refer settlement business, such as a real estate broker, or an associate of such person has an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in an entity to which business is referred such as a joint venture title or mortgage entity. The Safe Harbor Test outlined in RESPA Section 8 protects the affiliates if they comply with a three part test: 1)The AfBA owner referring business to the AfBA must provide a written disclosure on a separate sheet of paper to each consumer who is referred to the AfBA no later than the time of the referral. 2) The customer being referred to an AfBA must not be required to use the AfBA. 3) No payments other than a return on ownership interest or payments otherwise permitted under the statute may be received under the AfBA.
AGENCY
A relationship between two parties wherein the principal hires another person to represent him or her.
AGENCY BY ESTOPPEL
A claim of no agency that is denied based on the claim being inconsistent with prior representations made by act, conduct or silence. The court, after hearing the evidence then orders agency based on estoppels. ( the court stops the claim of no agency)
AGENCY BY RATIFICATION
The confirmation of a previous act of agency by the party whom the agent represents. Ratification can be by an act or by informed inaction.
AGENCY BY STATUTE
Agency by act of law, such as a court appointed Administrator acting on behalf of a deceased person.
AGENT
The person appointed by a principal to act for and in behalf of the principal. Agents have always been held by law to a standard of acting in the principal’s best interest unless specifically instructed by the principal to act otherwise.
AGGREGATE ESCROW ANALYSIS
This analysis is required by RESPA. It must be performed by the lender holding reserve funds for the payment of expenses such as property taxes and casualty insurance. It is intended to discover if the lender is holding in reserve more than they are entitled to hold. The formula is that at the reserve account’s lowest level it cannot contain more than 1/6th of the total annual requirement of the account. Any excess must be refunded or an adjustment be made to the contribution amount to bring the account in line with HUD requirements.
ALIENATION CLAUSE
A clause in a lien agreement, such as a trust deed, that requires that prior to any title transfer, any financial obligation to the lien holder will be satisfied.
ALIENATION OF TITLE
Alienation of Title occurs when the principal’s interest in a property is transferred to another. This transfer may be voluntary or involuntary.
ALL-INCLUSIVE TRUST DEED (AITD)
This form approved by Utah to be used by brokers in settling a transaction, creates a lien interest on behalf of the seller.
ALLODIAL
The system used in the United States to create ownership interest in property. This system is in contrast to the system that existed in Europe and England wherein the sovereign (the King) appointed the right to use property (a lease) which could be withdrawn.
ALTA POLICY
A title insurance policy using the policy form of American Land Title Association. These forms were created to provide uniformity of coverage among the title insurance industry. Most lenders being national in the scope of their mortgage business uniformly requested the ALTA form so that they could rely upon the protections being uniform with their loans in other states. So through time the ALTA policy has become associated with lender policies. The ALTA policy forms also include forms that would protect the buyer. These policy forms are becoming widely used.
AMENITY
A benefit beyond the property that may add value to a particular buyer in that property such as direct access to the beach or recreation club membership only available to home owners.
AMERICANS WITH DISABILITIES ACT (ADA)
A 1992 federal law intended to mandate equal access for the handicapped to jobs, public transportation, government services, public accommodations, and telecommunications. Real estate is affected when public access is required to a facility. Electric door openers and special restroom fittings are examples of measures necessary for public facilities to comply. Buildings constructed after 1992 must comply in order to obtain building permits. Older buildings may need to be retrofitted.
AMORTIZATION PERIOD
The term over which an amortized loan payment is computed to pay of the loan balance.
AMORTIZED LOAN
An amortized loan has regular monthly payments that include both principal and interest. Loans could be: 1) fully amortized which would pay off the loan balance by the end of the loan term. 2) partially amortized which would require a balloon payment at the end of the loan term.
ANNUAL PERCENTAGE RATE (APR)
The interest rate plus any other charges for the loan, including such things as discount points and origination fees; computed as a yearly percentage rate. It is used for comparing loans.
ANTICIPATION
The appraisal principle that weighs the value of the future benefits a product or property will bring.
APPRAISAL
A professional process for estimating the value of real property.
APPRECIATION
A percentage of increase in the value of the property over its value when it was originally purchased.
APPURTENANT
Attached to the land (such as a house) or the deed (such as a recorded easement).
ARBITRATION
The two parties in disagreement agree to accept the decision of a third party who acts both as a mediator and a judge. It avoids the excessive time and high costs of a court action.
“AS IS” CLAUSE
The clause in the Real Estate Purchase Contract that stipulates the buyer is buying the property in its current condition and with the faults that have been disclosed.
ASSEMBLAGE
Combining two or more parcels of land into one.
ASSESSED VALUE
A percentage of the appraised value, as determined by law, upon which the tax rate will be levied to determine the property tax.
ASSETS
Property of value; including real estate, personal property, bank and investment balances, business interests, etc.
ASSIGNMENT OF CONTRACT
One party in a contract substitutes another party in his place. The original party retains secondary liability for the performance of the contract. It does not require the agreement of the other original party in the contract.
ASSIGNMENT OF LEASE
A contract that substitutes a new tenant in the lease. The assignee becomes liable for the remaining term of the lease. Unless prohibited by the lease contract, this can be done without the approval of the lessor, but the original lessee retains secondary liability.
ASSOCIATE BROKER
A person with a broker’s license who works under the supervision of an employing principal broker.
ASSUME OR ASSUMABILITY
One party taking another’s place in responsibility. For example, the buyers assumed the seller’s loan. Most loan agreements do not allow assumption of the debt by a third part unless the third party is approved by the lender.
ASSUMPTION OF LOAN
The purchaser assumes the payments and responsibility for the existing loan. This is an assignment of the loan contract to the purchaser which means primary liability for the contract comes with it. The seller has secondary liability unless specifically released by lender.
ATTACHMENT
The legal process when real or personal property is seized by the court and held as security for satisfaction of a judgment.
ATTORNEY IN FACT
A person who has been given power to sign in behalf of another.
ATTORNEY’S OPINION
A lawyer’s examination and evaluation of the history of title. It includes a brief summary of all recorded instruments which affect the title, including records of taxes, special assessments, judgments, mortgages and trust deeds.

B

BALLOON MORTGAGE
A loan with a balloon payment at the end of its term. It could be partially amortized, a straight loan, or a note.
BALLOON PAYMENT
Required payment larger than the regular payment. These payments are often made at the end of the loan, retiring the loan early; but can be made at other times during the term of the loan.
BARGAIN AND SALE DEED
This deed makes no guarantees as to the condition of the title, but unlike the Quit Claim Deed, the grantor implies some actual interest in the property.
BASELINE
An east-west line which intersects the meridian and creates a point from which land can be measured under the Government or rectangular survey method.
BASE LOAN AMOUNT
An FHA term referring to the lesser of the sales price or appraisal value plus allowable closing costs multiplied by the appropriate loan to value ratio.
BASIS POINT
A finance term meaning a yield of 1/100th of 1% annually. 100 basis points = One percent.
BENEFICIARY
The lender under a Trust Deed & Note.
BEQUEST OR LEGACY
A gift of personal property given in a will.
BILATERAL CONTRACT
A contract wherein a promise is exchanged for a promise, thus making the contract binding on both parties.
BILL OF SALE
Evidence of transfer of ownership of personal property.
BI-WEEKLY MORTGAGE
A mortgage repayment plan that has 26 half-monthly payments in a year, which results in an acceleration of the pay off and saving of interest costs of the life of the loan.
BLANKET MORTGAGE
A loan that uses two or more parcels of real property as security.
An advertisement which fails to indicate that the advertiser is a real estate brokerage or that sales agents or brokers are selling their own property.
BLOCKBUSTING
The illegal practice of inducing panic selling in a neighborhood by starting rumors involving minorities moving in.
BOARD OF ADJUSTMENT
The body to which one would appeal in order to obtain a variance to do something contrary to the current zoning law.
BOARD OF EQUALIZATION
The body of appeal if you think your property tax appraisal is too high.
BOOT
Personal property or money needed to make up a difference in value when exchanging real property.
BOX FORM (TIL)
The Truth In Lending disclosure form that is required to be furnished to each borrower disclosing loan terms and costs. It has picked up the nickname of Box form because the first page contains several boxes surrounding key information.
BRANCH OFFICE
Any remote operation of the main real estate office which will be in operation more than 12 months and must be registered with the Real Estate Division.
BRIDGE, SWING OR GAP LOAN
A short term loan to help the buyers have up-front funds to get into their new home, when the sale on the old one is going to close later than the closing to purchase the new one.
BUFFER ZONE
An area established by the zoning and planning commission to separate commercial and industrial areas from residential. Its purpose may be safety or economics.
BUILDING CODES
Rules set by government to establish minimum standards of construction.
BUNDLE OF RIGHTS
All rights and interests that can be legally held in real property. They are separated into Possession, Use & Control, Quiet Enjoyment and Disposition.
BUSINESS PLAN
A written overview that reveals the basic philosophy and strategy for an investment property.
BUYDOWN
A financing technique in which a borrower is able to obtain a lower interest rate by paying discount points at the time the loan is originated. (1 point = 1% of the loan amount)

C

CAP
The maximum amount an interest rate can change during each adjustment period (periodic cap) or over the term of the loan (lifetime cap) on an Adjustable Rate Mortgage (ARM).
CAPACITY
The borrower/co-borrowers’ ability to repay the loan.
CAPITAL
Total value of assets. This term is sometimes used to refer to the amount actually paid as down payment and closing costs, as in “the borrowers capital in the transaction”. Also used to refer to the total value of an investment as in “CAP Rate”. (Rate of return on capital invested or purchase price)
CAPITAL GAIN
The taxable profit derived from the sale of a capital asset, such as real property.
CAPITAL MORTGAGE MARKET
Markets (including informal markets as well as organized markets and exchanges) in which mortgage backed securities are bought and sold.
CAPITALIZATION RATE OR CAP RATE
The ratio created when the net operating income is divided by the value of the property. It is also called the rate of return.
CAVEAT EMPTOR
The philosophy that says “Let the buyer beware.”
CC&R’S
The abbreviation given to restrictions and requirements created in the Uniform Declaration of Restrictions for condominiums. Covenants, Conditions & Restrictions.
CERTIFICATE OF ELIGIBILITY
Endorsement from the Veterans Administration indicating the right of a veteran to obtain a VA loan and the amount of his eligibility.
CERTIFICATE OF REASONABLE VALUE (CRV)
The document required for a VA loan that verifies the value of property being used as security for the VA loan (VA appraisal).
CERTIFICATE OF SALE
The document given to the individual who successfully bids and purchases a property at a Sheriff’s Sale. It does not convey title to the property.
CHAIN OF TITLE OR ABSTRACT OF TITLE
A historical record of land ownership and liens or encumbrances against the property.
CHATTEL
A synonym for personal property. It comes from the word “cattle.”
CHATTEL MORTGAGE
A loan secured by personal property.
CLO
Computerized Loan Origination programs.
CLOSED-END LOAN
A loan with a specific balance set at the beginning, and the balance cannot be increased during the term of the loan.
CLOSING
When any loan funds are received from the lender(s) and the applicable documents are recorded. This comes after the settlement.
CLOSING COSTS
Various fees and charges related to the generating of a loan and finalizing the transaction.
CLOSING DISCLOSURE
A disclosure of all monies involved in a mortgage loan transaction, required by the Consumer Finance Protection Bureau (CFPB) before closing, in most residential mortgage loans.
CLOSING STATEMENT
The required form to be used when closing a real estate transaction. It discloses all monies involved in the transaction.
CLOUD ON THE TITLE
A term that refers to any kind of lien or encumbrance against the title.
CLUE REPORT
An insurance report that results in a score (similar to a credit score) which will influence insurance costs for auto or real property insurance.
CODICIL
An addition or change to an existing will.
COFI
See Eleventh District Cost of Funds Index.
COLLATERAL
A term that refers to security used for a loan. It may be real or personal property.
COLOR OF TITLE
To all outward public appearance, or from a document that seems to be valid, the possessor of the property would seem to have ownership.
COMBINED LOAN TO VALUE RATIO (CLTV)
The ratio of all financing (first and junior mortgages) to the value of the property. For example, with two loans, CLTV = (The Value of Loan1 + The Value of Loan2) / The Total Value of the Property
COMMERCIAL BANK
An institution which accepts deposits, makes business loans, and offers related services.
COMMINGLING
A broker putting personal or company money in excess of "500 into the real estate trust account, where client trust monies are held.
COMMISSION
One entity of the Division of Real Estate composed of five people, one of whom is a chairman.
COMMUNICATION
The process of notifying the offeror that the offer has been accepted.
COMMUNITY HOME BUYERS PROGRAM (CHBP)
A community lending model based on borrower income in which mortgage insurers and Fannie Mae offer flexible underwriting guidelines to increase the buying power for a low or moderate income family and to decrease the total amount of cash needed to purchase a home.
COMMUNITY PROPERTY
A form of ownership between husband and wife where each has an equal interest in property obtained during their marriage. The only way either can hold separate property is to obtain it before marriage, after the marriage is ended, or during the marriage by gift or inheritance.
COMMUNITY REINVESTMENT ACT (CRA)
An Act which focuses on meeting the needs of all persons in the community, with special emphasis on the needs of low-income families.
COMPARISON APPROACH
An appraisal method that uses comparable sales as a basis to estimate market value.
COMPETENCY OR CAPACITY
The ability to understand the terms of a contract and to make a rational decision as to whether or not to enter into it.
COMPETITION
An appraisal principle: When a particular use of property is bringing a high return, others enter into the same business or purchase property for the same purpose.
COMPLAINT
Filing this document with the court initiates foreclosure under a mortgage.
COMPOUND INTEREST
Interest is paid on earned interest as well as on the principal. It is used in savings accounts.
COMPUTERIZED HOME UNDERWRITING MANAGEMENT SYSTEM (CHUMS)
HUD's system used for processing single family mortgage insurance applications from initial receipt through endorsement.
COMPUTERIZED LOAN ORIGINATION (CLO)
An electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers.
COMMUNITY REINVESTMENT ACT (CRV)
A United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.
CONDEMNATION
A legal action initiated by the government to seek the right to purchase land from a private individual by eminent domain.
CONDOMINIUM
One owns the air space of one’s own unit and an undivided interest in the common area.
CONDOMINIUM OWNERSHIP ACT
The act which governs ownership and related issues when one owns airspace and undivided interest in the common area.
CONFORMING LOAN
A mortgage loan that conforms to the guidelines employed by Government Sponsored Enterprises (GSE) such as Freddie Mac and Fannie Mae.
CONFORMITY
An appraisal principle which states that because all homes in a particular area are harmonious in design and value, their value is sustained and tends to increase over time.
CONSIDERATION
The process wherein each party to a contract makes a sacrifice and each party receives a benefit. It is an essential element of any contract.
CONSTRUCTION LOAN
An open ended loan funded in installments as various portions of the work are completed.
CONSTRUCTIVE DELIVERY
The process of transferring a deed from the grantor to the grantee by recording the deed at the county recorder’s office.
CONSTRUCTIVE EVICTION
When the landlord violates the terms of the lease by not keeping the property livable or habitable, the tenant can legally vacate the property and not be held liable for further rent payments.
CONSTRUCTIVE FRAUD
A party misrepresents innocently, with no evil intention, but that misrepresentation could have been avoided with reasonable care.
CONTINGENCY CLAUSE
Sometimes known as a “subject to” clause, it requires completion of certain acts before the contract is fully binding.
CONTRACT
An agreement between two or more parties to do or not to do certain things. It may be oral or in writing.
CONTRIBUTION
The appraisal principle which states that an improvement to a property must add its cost to the value.
CONTROLLED BUSINESS ARRANGEMENT (CBA)
An arrangement where a package of services (such as a real estate firm, title insurance company, mortgage broker and home inspection company), is offered to consumers.
CONVENTIONAL CONFORMING LOAN
A loan that does not exceed the monetary limits set by FNMA (Fannie Mae) and FHLMC (Freddie Mac), and which is not an FHA or VA loan.
CONVEYANCE
Transfer of title to land. Includes most instruments by which an interest on real property is created, mortgaged or assigned.
COOPERATIVE
A form of ownership in multiple unit housing where the owner purchases shares of stock in the entire development, then obtains exclusive use of a unit by means of a proprietary lease.
CORPORATION
A legal person. It cannot die or go to jail.
CORPOREAL
Something that is physical or tangible, such as land or buildings.
CORRELATION
See Reconciliation.
COST APPROACH
An approach to appraisal which considers the price of resources necessary to build the same or a similar property. It is the only approach which places a separate value on the land.
COST OR COST BASIS
What you paid for the product or property when you bought it.
COST OF FUNDS INDEX (COFI)
An index used with adjustable rate mortgages based on the average of interest rates paid by thrifts to depositors (their cost of funds).
COST PLUS
A contract where payment is for material and labor, with a profit factor added.
COST RECOVERY
An income tax deduction allowed on investment property to treat the improvements as though they will waste away in a certain number of years. It cannot be applied to raw land or a personal residence. Also known as depreciation.
COUNTER OFFER
A response to an offer wherein the offeree changes one or more of the terms of the contract, becomes the offeror, and sends the offer back to the original offeror.
COVENANT AGAINST ENCUMBRANCES
This covenant in a deed assures the grantee that the title has no liens or encumbrances except those that have been revealed by the grantor.
COVENANT OF FURTHER ASSURANCE
In the event someone makes a claim against the property, the grantor has the full responsibility to defend the title against the claimant. This includes producing proper documents to substantiate the ownership of the grantee, and going to court if necessary.
COVENANT OF QUIET ENJOYMENT
In a deed, the guaranteed right of an owner or lessee legally in possession of property to uninterrupted use without interference from any third party claiming superior title.
COVENANT OF SEIZIN
This covenant in a deed guarantees the grantor holds title to the property and has the right to convey it to a grantee. Also spelled Seisin or Seizin.
COVENANT OF WARRANTY FOREVER
If the grantor were to lose in defense of the title, this covenant guarantees payment for the defense of the title and for damages caused the grantee, including buying the property back from the grantee if necessary.
COVENANTS, CONDITIONS & RESTRICTIONS
See CC&R’s.
CREDIT
On a settlement statement, an amount of money which will reduce what the buyer has to bring to closing, or increase the amount the seller gets at closing.
CREDIT REPORT
A report outlining a borrower’s debt and installment payments.
CREDIT REPORTING AGENCIES (CRAs) OR CREDIT BUREAUS
Companies that compile reports from information obtained from credit information depositories data bases and provide those reports to their clients.
CREDIT UNION
A non-profit financial institution owned and operated entirely by its members. They provide financial services to their members, including savings and lending.
CUBIC FOOT METHOD
Under the Cost Replacement Approach, this method determines the cost per unit of volume and then multiplies it by the number of units of volume. It is most often used with warehouses.
CYCLE OF CHANGE, OR NEIGHBORHOOD CYCLE
This appraisal principle involves activity which goes from growth or integration to equilibrium to disintegration and perhaps to growth again.

D

DAMAGES
A money adjustment ordered by the court for actual losses suffered.
DEBIT
On a settlement statement, an amount of money which will increase what the buyer brings to close, or will reduce what the seller gets at closing.
DEBT SERVICE
Loan payments of principle and interest.
DEDICATION
A private individual’s gift of property for public use. It may be voluntary (giving land for a public park) or statutory (subdivider giving land for roads).
DEDUCTIONS
Items which the IRS allows to be subtracted from your gross taxable income in order to determine your taxable income.
DEED
The document that serves as evidence of ownership of real property, as well as the document of conveyance.
DEED IN LIEU OF FORECLOSURE
The defaulting borrower conveys title to the property to the lender. In return, the lender forgives the loan on the property.
DEFAULT
A failure to perform by legal dates, including non-payment on a promissory note.
DEFEASANCE CLAUSE
A clause in most loans written in favor of the borrower. It requires the lender to reconvey all interest in the property after the loan has been paid off.
DEFEASIBLE FEE ESTATE or DETERMINABLE FEE ESTATE
A fee simple estate which has conditions attached, the violation of which could cause the grantee to lose title. If written in the deed with the words “so long as,” it automatically reverts back to the grantor or his heirs if the conditions are violated. It may also be referred to as “Fee Simple Qualified.”
DEFERRED MAINTENANCE
When physical deterioration is repairable, but hasn’t yet been taken care of.
DEFICIENCY JUDGMENT
A judgment obtained when a foreclosure sale fails to completely pay off a debt.
DELIVERY
The process of the grantor giving the deed to the grantee.
DEPARTMENT OF COMMERCE
The state agency charged with regulating business activity in Utah. It is the parent agency over the Utah Division of Real Estate.
DEPRECIATION
A loss of value in real property, regardless of the reason for the loss. Also an accounting process used for investment property taxation, referred to by the IRS as cost recovery.
DEPARTMENT OF VETERANS’ AFFAIRS (VA)
A government entity that oversees such issues and loans, health care, and education for those who have been in the military.
DEPT OF HOUSING AND URBAN DEVELOPMENT (HUD)
A government entity which oversees mortgage lending, community planning and development, fair housing, public housing, and lead based paint compliance.
DESCENT
The laws by which the court determines ownership of property of a person who has died intestate, but who has heirs.
DESIGNATED AGENCY
The principal (buyer or seller) who is hiring an agent specifies exactly which person(s) will act as agent or subagent and exercise fiduciary care in representing the principal’s best interest.
DESKTOP UNDERWRITER (DU)
Fannie Mae’s (FNMA) automated underwriting system that reduces the time, cost, and subjectivity associated with mortgage loan underwriting.
DEVISE
A gift of real property given in a will.
DEVISOR/DEVISEE
The individuals who give (devisor) and receive (devisee) gifts of real property in a will.
DIRECT ENDORSEMENT UNDERWRITER (DE)
FHA approved underwriter
DIRECTOR OF REAL ESTATE DIVISION
One of the entities in the Real Estate Division. A full-time position responsible for submitting a budget for the Division’s operation.
DISCIPLINARY ACTION
Action taken by the Utah Division of Real Estate and the Mortgage Commission as a result of licensee misconduct. The commission has authority to 1)impose a fine 2)suspend a license 3)revoke a license 4)block renewal of a license 5)require additional education
DISCIPLINARY SANCTIONS
Penalties imposed by a licensing authority for violation of licensing law.
DISCOUNT POINTS
Money paid when a loan is initially obtained which is considered prepaid interest and permanently lowers the interest rate. Also known as a buy down.
DISCOUNT RATE
The rate charged by the Federal Reserve to member banks for money they borrow. It, along with reserve requirements, is one of the ways the Federal Reserve controls the economy.
DISCOUNTED LOAN OR NOTE
Selling a loan to the secondary money market for less than its face value. This increases the yield (profit) on the loan.
DOCUMENT PREPARATION FEE
A fee charged to offset the cost of preparing the documents to be signed by the borrower to complete the loan agreement. The documents include disclosures, notices, contracts, security agreements and government reports.
DOCUMENT RECEIPT
A confirmation by the buyer and seller that they received a copy with all signatures.
DOMINANT TENEMENT
The name given to a property that encumbers a neighboring property with an easement.
DOUBLE COMMISSION
The seller pays a commission to the listing agent, as per their contract, and also a commission to the selling agent.
DOUBLE CONTRACT
The buyer and seller enter into a second sales contract in order to deceive the lender and enable the buyer to finance the purchase.
DOWN PAYMENT
Cash portion paid by the buyer towards the purchase of real property. It is the difference between the sales price and loan amount.
DUAL AGENT
When the agent is representing both principals in a transaction with their informed consent. Also known as a limited agent.
DURESS
The use of force to obtain agreement. It can be physical or emotional.
DWELLING
Under Utah law, for lending purposes, it could be a condominium, a cooperative unit, a manufactured home, or a single family home.

E

EARNEST MONEY DEPOSIT
The deposit a buyer makes when submitting an offer to purchase real property. It shows he is serious in the offer and will serve as liquidated damages if he defaults on the contract.
EASEMENT
A non-possessory interest which one person has in land owned by another, allowing limited use or enjoyment of the owner’s land. It may be referred to as a physical use or condition.
EASEMENT APPURTENANT
An easement which attaches to the land and/or the deed, and passes from owner to owner with the deed.
EASEMENT BY IMPLICATION
An unexpressed, but legally binding understanding regarding a right of way between the parties, created by their actions.
EASEMENT BY NECESSITY
Created by a court of law in situations where justice and need, not convenience, dictate the appropriateness of the easement; such as the case of land locked property.
EASEMENT BY PRESCRIPTION
An easement created by adverse use. The use must be adverse, hostile, open, notorious and continuous. This type of easement can be prevented by giving permission to the user, or by ordering the user to discontinue the use before the statutory period passes. (It requires 20 years in Utah.)
EASEMENT IN GROSS
An easement which is personal in nature and does not pass with the deed or the land. It runs with the persons who agreed to it for the term of their lives, or with the need for which it was created, such as a utility easement.
ECONOMIC LIFE
The period of time during which improvements give a return on investment. It is generally considered to be shorter than physical life.
ECONOMIC OR EXTERNAL OBSOLESCENCE
A form of depreciation caused by forces outside the property boundaries. They may be political or social factors. It is considered to be incurable.
EFFECTIVE AGE
An age placed on property for appraisal purposes, based on the condition of the property. It may be more or less than the actual chronological age.
EGRESS
Leaving a property by traveling across the servient tenement property.
ELEVENTH DISTRICT COST OF FUNDS INDEX (COFI)
An index produced by the Eleventh District of the Federal Home Loan Bank reflecting the weighted average cost of home mortgage loans made by member banks.
EMBLEMENTS
Crops nurtured in the year of the transfer or sale of the property. They are considered personal property.
EMINENT DOMAIN
The right of the government to take title, at fair market value, to land owned by a private individual.
ENCROACHMENT
The unauthorized intrusion of a building, tree, or other improvements onto a neighbor’s property.
ENCUMBRANCE
Anything which burdens the title to real property so as to restrict, limit, or otherwise affect an owner’s rights.
ENDORSEMENTS
Additional title insurance coverage required by a lender which gives coverage not included in the policy.
ENFORCEABILITY
The issue of whether a contract dispute could be taken into the court to be settled.
ENTITY
Mortgage lending company licensed with the Division of Real Estate. Entities are managed by a Principal Lending Manager (PLM).
ENVIRONMENTAL PROTECTION AGENCY (EPA)
The government entity which deals with the impact of commercial, industrial and residential development on the environment.
EQUAL CREDIT OPPORTUNITY ACT OF 1974 (ECOA)
Federal act which prohibits discrimination in financing, based on race, age, sex, or marital status.
EQUITABLE PERIOD OF REDEMPTION
In foreclosure, the period of time during which the borrower can reinstate the loan before the foreclosure sale takes place. It is sometimes referred to as equity of redemption.
EQUITABLE TITLE
The legal interest held in a property by the buyer between the time the contract is signed and conveying the actual deed.
EQUITY
The market value of a property minus the debts secured by the property.
ESCALATION CLAUSE
A clause written into a loan or lease that allows for payments to be increased at specified times by stated amounts.
ESCHEAT
This occurs when someone dies without a will, having no heirs.
ESCROW
A depository where a neutral third party is used to hold money or documents.
ESTOPPEL CERTIFICATE
A document provided by a lender which reveals all the terms of a loan as requested by the borrower or ordered by the court.
ESTOVERS
The right of a tenant to use natural resources on leased land, such as timber, water, etc. when required as necessities.
EXCEPTIONS AND RESERVATIONS CLAUSE
In a deed, it indicates rights in the real property which will not be conveyed to the grantee and is another name for the habendum clause.
EXCHANGE
See Tax Deferred Exchange.
EXCLUSIVE AGENCY LISTING
One broker is named as the exclusive agent of the seller, but the seller reserves the right to locate a buyer without paying a commission.
EXCLUSIVE RIGHT-TO-SELL LISTING
One principal broker is designated to represent the seller and receive a commission when the buyer is found, regardless of who finds the buyer.
EXECUTE
To put a contract into effect by signing it.
EXECUTED CONTRACT
A contract with all of the terms completed by all parties.
EXECUTIVE DIRECTOR, DEPT. OF COMMERCE
The person who appoints the Director of the Utah Division of Real Estate.
EXECUTOR
The title of a person named in a will to carry out the terms of the will after the death of the testator.
EXECUTORY CONTRACT
A contract that is not fully performed, but which is not in default.
EXPRESS AGENCY
Agency created through words, written or oral, between the principal and the agent, such as a listing agreement.
EXTENDED COVERAGE TITLE INSURANCE
Covers claims both on and off the record. It includes a site visit to give protection against unrecorded liens and encumbrances, such as mechanic’s liens, as well as defects in the land itself, such as unrecorded easements, encroachments, and information based on incorrect surveys. It can be obtained by private individuals.

F

FAIR AND ACCURATE CREDIT TRANSACTION ACT OF 2003 (FACT Act)
An amendment to the Fair Credit Reporting Act that allows consumers to request and obtain a free credit report once every twelve months from each of the three nationwide consumer credit reporting companies. The act also contains provisions to help reduce identity theft and requires secure disposal of consumer information.
FAIR CREDIT REPORTING ACT (FCRA)
An Act which is concerned with protecting consumers’ rights as it applies to credit reporting in terms of accuracy and timeliness.
FAIR MARKET VALUE
What a willing buyer is willing to pay, and a willing seller is willing to accept, with neither of them under duress and the property has been on the market for sufficient time to verify its value.
FAMILIAL STATUS
One of the protected classes under Fair Housing referring to families with children under 18.
FARMERS HOME ADMINISTRATION (FmHA)
An agency of the U.S. Department of Agriculture created to assist farmers and families living in rural areas by financing and insuring loans for housing and other farming-related needs. The agency was created to provide families with financing tools - such as loans and grants - to help them re-establish self-sufficient farming efforts in the aftermath of the Great Depression.
FEDERAL AGRICULTURE MORTGAGE CORPORATION (FAMC)
A stockholder-owned, publicly traded company that was chartered by the United States federal government in 1988 to serve as a secondary market in agricultural loans such as mortgages for agricultural real estate and rural housing.
FEDERAL BOX FORM
The truth in Lending disclosure required by law to be provided to the borrower within 3 business days of application. This disclosure informs the borrower of all loan costs imposed by the lender as well as the APR and some basic loan terms such as rate, number of payments, etc. Replaced by the Loan Estimate.
FEDERAL CONSUMER CREDIT PROTECTION ACT
See Truth In Lending Act.
FEDERAL DEPOSIT INSURANCE CORPORATION
The U.S. corporation insuring deposits in the United States against bank failure. The FDIC insures deposits of up to "250,000 per institution, as of 2016, as long as the bank is a member firm.
FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA)
An agency of the United States Department of Homeland Security whose primary purpose is to coordinate the response to a disaster that has occurred in the United States and that overwhelms the resources of local and state authorities.
FEDERAL FAIR HOUSING ACT OF 1866
This body of law stated no discrimination based on race in the sale or lease of real estate is allowed and all people are to be treated the same.
FEDERAL FAIR HOUSING ACT OF 1968
Extended the Federal Fair Housing Act of 1866 by adding the prohibition of discrimination according to color, religion, and natural or national origin. It specifically stated that no discrimination should take place relative to sale or rental of real estate, or real estate brokerage services. Sex was added as a protected class in 1974.
FEDERAL FAIR HOUSING AMENDMENT ACT OF 1988
Added two new protected classes to Fair Housing: handicapped and familial status.
FEDERAL HOUSING ADMINISTRATION (FHA)
A department under HUD that administers and insures loans designed to help low income borrowers with limited cash resources to get into homes.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FhLMC, Freddie Mac)
A public government sponsored enterprise created in 1970 to expand the secondary market for mortgages in the US. Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases.
FEDERAL NATIONAL MORTGGAGE ASSOCIATION (FNMA)
A government sponsored enterprise whose purpose is to expand the secondary mortgage by securitizing mortgages in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations.
FEDERAL RESERVE BANK
The bankers’ bank; it regulates the money supply by establishing discount rates (cost of money to lending institutions) and setting a reserve requirement (how much cash lenders must keep on hand).
FEDERAL RESERVE BOARD (FRB)
The governing body of the Federal Reserve System. The board sets Fed policy regarding the discount rate and reserve requirements (among other key economic decisions). 
FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION (FSLIC)
A defunct U.S. government institution that provided deposit insurance to savings and loan institutions until its dissolution at the end of the 1980s.
FEDERAL TRADE COMMISSION (FTC)
The federal agency charged with the regulation of interstate commerce. The FTC enforces the Truth in Lending Act which affects the mortgage industry.
FEE SIMPLE, FEE ESTATE, FEE SIMPLE ABSOLUTE
The highest or most complete form of ownership that can be held under the law. The ownership rights go on forever.
FEE SIMPLE DEFEASIBLE
See Defeasible Fee Estate. Also sometimes called “fee simple qualified.”
FHA LOAN
A government loan with a low down payment, insured by the borrower’s payment of the Mortgage Insurance Premium (MIP).
FHA UFMIP
The insurance a borrower is required to pay on an FHA loan at the time the transaction is closed. It is allowed to be added to the loan amount.
FHLMC (FREDDIE MAC)
Federal Home Loan Mortgage Corporation; a privately owned secondary money market player. It is federally regulated.
FICO SCORE
Fair, Isaac and Company score. A credit score ranging from 400 to 900; the lower the score the greater the risk of default.
FIDUCIARY
The word which describes the responsibility of an agent toward the principal, involving trust, loyalty, confidence, care and diligence.
FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT (FIRREA)
A law enacted to ensure that real estate appraisals are performed up to standard. This includes regulation on the competency of the appraisers, supervisory standards and accurate and full documentation.
FINANCIAL MARKETS
Wholesale lenders such as Fannie Mae, Freddie Mac and Ginnie Mae selling investments such as mortgage backed securities through investment bankers or stock brokers.
FINANCIAL STATEMENT
An accounting statement reflecting assets and liabilities of an individual and or company.
FIXED COST
A contract where the price is established up front and there is no allowance for overruns.
FIXED INTEREST RATE
See Fixed-Rate Loan.
FIXED-RATE LOAN
A loan where the interest rate, the number of payments, and the amount of payments is established in advance and will not change over the life of the loan. This type of loan has a Fixed Interest Rate.
FIXED-RATE MORTGAGE
A fixed-rate loan secured by real property.
FIXTURE
That which is attached without losing its identity. It is always real property.
FLAT LEASE
The lessee makes periodic, equal rent payments.
FLIPPING
A loan fraud, or predatory lending, practice where a property is purchased and immediately “resold” at an artificially inflated price.
FLOAT AGREEMENT
A term that refers to the spread of the interest on an adjustable loan. It may or may not have an upper and lower limit.
FLOOD INSURANCE
Insurance required for the life of the loan when the property is determined to be in a flood plain.
FNMA (FANNIE MAE)
Federal National Mortgage Association, a major secondary money market player. It is privately owned, but Federally regulated.
FORECLOSURE
The legal process a lender uses to recover the investment from a defaulting borrower where the loan was secured by the property.
FORFEITURE
In a default situation when the lender may repossess the property, this is the effect to the borrower.
FORMAL WILL
Most valid form of a will, usually prepared by an attorney. It is the least likely form of a will to be challenged.
FRAUD
An act intended to deceive or misrepresent in order to gain some unfair or dishonest advantage over another and induce someone to give up something of value.
FREEHOLD ESTATE
An interest in property in which some form of ownership is held.
FULLY AMORTIZED LOAN
A loan that requires payments of both principal and interest. When the last payment is made, the loan is retired.
FULLY DISCLOSED PRINCIPAL
The “other party” knows there is a principal, knows who it is, and that there is an agent.
FUNCTIONAL OBSOLESCENCE
The item in question is working fine, but is not what people want in their homes any more. Examples are a poor floor plan, four bedrooms and one bath (insufficient bathrooms for the expected occupancy), inadequate insulation, insufficient electrical outlets, etc.
FUNDING FEE
A fee required to obtain a VA loan, the amount of which varies, depending upon the circumstances of the veteran’s service. It can be added to the loan.

G

GENERAL AGENT
An agent hired by contract to use the agent’s expertise to fulfill the objectives of the principal.
GENERAL OR FULL WARRANTY DEED
A deed that contains all five covenants and covers the period of time from the date of transfer back to the date of the patent.
GENERAL PARTNER
A partner who has full authority to make decisions, act for the partnership, and has full liability for the business dealings of the partnership.
GENERAL PARTNERSHIP
A partnership composed only of general partners.
GIFT DEED
A transfer of ownership made for love and affection. Creditors of the donor could still use the property for payment of the grantor’s debts if it can be shown that the donor was insolvent and transferred the property to evade creditors.
GNMA (GINNIE MAE)
Government National Mortgage Association. A secondary money market player which is government owned and purchases loan pools of FHA and VA loans.
GOOD CONSIDERATION
Consideration given in the form of love, friendship, loyalty, etc.
GOOD FAITH ESTIMATE (GFE)
A required disclosure required under RESPA, within 3 days of application for a loan, giving details of the cost to the consumer for obtaining the loan.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (Ginnie Mae)
A U.S. government corporation within the U.S. Department of Housing and Urban Development that aims to ensure liquidity for government-insured mortgages and bring investors' capital into the market for these types of loans, so that the issuers have the means to issue more.
GRADUATED LEASE
A lease where the rent will increase periodically in amounts specified in the lease, as contained in the escalation clause.
GRADUATED PAYMENT MORTGAGE (GPM)
Payments begin below the normal, fully amortized payment and are then increased for a set period of years. Some lead to negative amortization.
GRANT DEED
A type of deed used in some states which contains limited warranties. The grantor usually also provides title insurance.
GRANTEE
One who receives property or property rights from a grantor.
GRANTOR
One who conveys property or property rights to a grantee.
GROSS LEASE
The tenant pays a set amount of rent. From this rent, the lessor is required to pay some or all operating expenses.
GROSS OPERATING INCOME (GOI)
The total income received from an investment property after subtracting vacancies and lost rents.
GROSS RENT MULTIPLIER
A “quick and dirty” estimate of value based only on a relationship between the value of the property and the gross rents. It is referred to as the GRM.
GROSS SCHEDULED INCOME (GSI)
What an investor would receive if there were no vacancies or lost rents.
GROUND LEASE
The landlord leases the land to the tenant, and the tenant builds improvements on the leased land.
GROWING EQUITY MORTGAGE
A loan where payments increase each year, thereby allowing the loan to be paid off many years sooner and a substantial amount of interest dollars to be saved.
GUARANTOR
A person or entity that promises to pay a debt on behalf of another person or entity if that person or entity defaults in their promise to pay.

H

HABENDUM CLAUSE
Known as the “to have and to hold clause,” and sometimes as a “subject to” clause, it defines and limits the estate which the grantee will receive when the property is transferred.
HARD MONEY LOAN
This is a loan which will generate cash to borrowers, with which they may do as they like.
HAZARD OR HOMEOWNERS’ INSURANCE
An insurance policy which indemnifies real property against loss resulting from physical damage to the property such as fire, vandalism, etc.
HIGHEST AND BEST USE
The appraisal principle which states that value should be based on the utilization of the property which will bring the greatest return to the owner. That use must be legal and feasible.
HOLDER OF LIFE ESTATE
The receiver of a life estate who has the property for the duration of the grantee’s own life.
HOLDOVER TENANT
The lessee had an estate for years which has now terminated. The lessor accepted a rent check so now the tenant is on periodic tenancy basis.
HOLOGRAPHIC WILL
A handwritten will, which must be dated, written entirely in the handwriting of the testator, and does not need witnesses in order to be valid. It can pass both real and personal property.
HOME EQUITY COMBINED LOAN TO VALUE RATIO (HCLTV)
For first mortgages that have subordinate financing under a Home Equity Line of Credit (HELOC), the lender must calculate the HCLTV ratio. This is determined by dividing the sum of the original loan amount of the first mortgage, the full amount of any HELOCs (whether or not funds have been drawn), and the Unpaid Principal balance (UPB) of all closed-end subordinate financing, by the lesser of the sales price or appraised value of the property.
HOME EQUITY LINE OF CREDIT (HELOC)
A pre-approved borrowing limit secured by the borrowers personal residence. The loan balance can increase or decrease as the borrower borrows up to the borrowing limit, or repays the loan balance. This loan type is intended to allow for borrowing, repayment, borrowing repayment as often as the borrower desires with in the limits of the loan.
HOME EQUITY LINE OF CREDIT TOTAL LOAN TO VALUE RATIO (HTLTV)
The Total Loan-to-Value ratio on the property including the Home Equity Line of Credit (HELOC) as well as any mortgage or secondary financing, which is the sum of the lien amounts owed divided by the value of the property.
HOME MORTGAGE DISCLOSURE ACT (HMDA)
An act which seeks to eliminate the practice of redlining and requires lenders to disclose information about loans in relation to geographic areas.
HOMEOWNERS PROTECTION ACT 1998 (HPA)
This act ensures borrowers will receive notice of the right to cancel PMI when certain conditions are met. It also requires the lender to drop PMI when the balance of the loan is 78% of the original loan amount.
HOMEOWNERSHIP AND EQUITY PROTECTION ACT OF 1994 (HOEPA)
A law that requires lenders to make disclosures to the borrowers regarding the costs involved in high fee and high rate loans.
HOMEOWNERS ASSOCIATION (HOA)
An association of homeowners who own homes in an area, formed for the purpose of improving or maintaining the quality of an area. An association of condominium owners with the purpose of managing the common are of the condominium project.
HOUSING AND URBAN DEVELOPMENT (HUD)
See Department Of Housing And Urban Development (HUD).
HUD 1 SETTLEMENT STATEMENT
The form that used to be used when closing a real estate transaction. Replaced by the Closing Disclosure in 2015.
HYPOTHECATION
Using property as collateral or security for a debt without giving up possession of the property.

I

IMPLIED AGENCY
See Ostensible Agency.
IMPOUND, RESERVE OR ESCROW ACCOUNT
A trust account established to set aside funds for future needs relating to a parcel of real property. Those needs typically include such things as property tax and hazard insurance.
IMPROVEMENTS
A term that refers to any additions to the land made by man. It includes buildings, roads and utilities and landscaping.
INACTIVE LICENSE
A license that is earned, but not currently in effect. For example, a license to originate mortgage loans that is not currently with an entity and therefore does not authorize the holder to originate loans.
INCOME OR CAPITALIZATION APPROACH
An appraisal approach based on the cash flow the property produces. It addresses the question, “How much will a potential investor pay for the cash flow?”
INCORPOREAL RIGHTS
Intangible or non-possessory rights in real property, such as easements, licenses, mining claims, etc.
INCURABLE DEPRECIATION
Physical deterioration that cannot be repaired in a cost-effective manner.
INDEMNIFY
A covenant to reimburse or repair any damage incurred. The title insurance company indemnifies the insured against loss due to insured perils.
INDEX/ INDICES (plural)
In an ARM loan, a financial indicator which will have the margin added to it to create the adjusted interest rate.
INDEX LEASE
Rent payments are periodically adjusted based on an economic indicator, such as the consumer price index.
INGRESS
Entering by traveling across the servient tenement property.
INJUNCTION
Legal action taken to enforce the restrictive covenants in the Uniform Declaration of Restrictions or to prevent a neighbor from encroaching.
INSTALLMENT LOAN
A loan requiring periodic payments.
INTEREST
A sum paid or accrued in anticipation of payment in exchange for the use of money.
INTEREST IN PROPERTY
A legal share of ownership or partial ownership in property.
INTEREST RATE
Money paid during the term of a loan that is profit to the lender. It represents the return, or yield, on the lender’s investment.
INTEREST ONLY LOAN
A loan that only requires interest payments during the loan term. The balance of the loan is paid in one lump sum at the end of the term. See Balloon Payment. Also see Straight Note.
INTEREST RATE
Money paid during the term of a loan that is profit to the lender. It represents the return, or yield, on the lender’s investment.
INTERMEDIATE THEORY
A combination of Title Theory and Lien Theory that allows the lender to sell the property in case of default, but does not allow it to keep any equity.
INTESTATE
The condition of a person who dies and leaves no will.
INVALID
An agreement or contract that is not binding due to some defect in the structure or content or parties legal standing.
INVERSE CONDEMNATION
The legal process by which a private individual sues to have the property taken by eminent domain.
INVESTMENT PROPERTY
Property which is generating a cash flow, such as a strip mall or a single or multi-family rental property.
INVOLUNTARY LIEN
A lien, such as a property tax lien, merchant’s lien, or judgment which attaches to real property without the owner’s consent.

J

JOINT TENANCY
A form of concurrent ownership where all owners have equal rights of possession, equal interest, took title at the same time, there is one deed, and each owner has full rights of survivorship.
JOINT VENTURE
A “temporary” partnership between individuals and/or companies to accomplish a particular project or business activity.
JUDGMENT
The decision given by a court after a case has been heard.
JUMBO LOAN
A non-conforming conventional loan that exceeds the monetary limits set by FNMA (Fannie Mae) and FHLMC (Freddie Mac).
JUNIOR LIENS
Any loans or encumbrances which come after the one which was recorded first against the property.

K

KICKBACKS
An illegal referral fee, under RESPA, paid by a lender to a real estate agent for referring a borrower.

L

LAND CONTRACT, INSTALLMENT SALES CONTRACT, OR CONTRACT FOR DEED
A document wherein the lender (usually the seller) retains title to the property until the debt is paid. It is known in Utah as a Uniform Real Estate Contract.
LATE CHARGE
A penalty for failure to pay a periodic payment on a loan within the specified period of time.
LATERAL SUPPORT
The duty to give support to a neighbor’s property, such as building a retaining wall.
LEASE
A contract for a less-than-freehold estate or right in real property. Rent is paid for the right of possession in someone else’s property.
LEASE WITH OPTION TO PURCHASE
A lease contract which allows the lessee the right to purchase the property. Sometimes a portion of the rent will apply to the down payment if the right is exercised.
The right of an individual to continue a use of land contrary to current zoning regulations because the use existed prior to the establishment of the current zoning category.
The essential element of a contract that protects the public.
LENDER FEES
Various amounts the lender charges to the consumer for processing the loan. Some of these may be charged by third parties through the lender.
LENDER’S POLICY
Title insurance purchased by the borrower to protect the lender against title defects in the collateral.
LESS THAN FREEHOLD
An estate or legal interest in real property that is not an ownership interest.
LETTER FORM REPORT
An appraisal report that provides a short, written statement giving the bare essentials of the appraisal.
LEVERAGE
Using as much of other people’s money and as little of your own as possible in order to buy property.
LIABILITIES
Obligations that require payment such as car loans, credit cards, mortgages, etc.
LIBOR
See London Interbank Offered Rate.
LICENSE INTEREST
A limited, revocable interest in property. It grants a privilege, not a right, and is often an oral agreement granting a short term use of real property. Examples would include an owner allowing someone to hunt, boat, or fish on his property; or attendance at movie theaters and sporting events.
LICENSE RENEWAL
A license is usually given for a specific time period. When that time period expires, there is often an option to renew the license for another period of time. A real estate license in Utah must be renewed every two years. If a license is not renewed, then it expires, and is no longer valid.
LICENSEE
Someone who holds a license. The Division of Real Estate gives a Mortgage Originator’s license to originate mortgages, and a real estate Sales Agent License to represent others in the sale of real estate, among others.
LIEN
An encumbrance for money against real property, such as a mortgage, a mechanic’s lien, etc.
LIEN THEORY
A legal doctrine or theory of mortgage law, used in most states, which gives lenders an interest in the property and allows them to force the owner to sell the property to pay the debt in the event of default. This is different from Title Theory which has the lender hold the title to the property.
LIEN WAIVER
When the owner of the property pays the general contractor for the work done, this form should be given by the mechanic who did the work.
LIFE ESTATE
A form of freehold estate wherein the holder acts as though he owns the property so long as he lives.
LIFE ESTATE PUR AUTRE VIE
A life estate based on the life of a person other than the holder of the life estate.
LIFETIME CAP / RATE CAP
The highest rate allowed by the note agreement in an adjustable rate loan.
LIMITED AGENT
See Dual Agent.
LIMITED PARTNER
A partner who has no authority to make decisions or act for the partnership. He is financially liable only for the amount of his investment.
LIMITED PARTNERSHIP
A partnership with at least one general partner and one limited partner. Beyond that, there can be as many general or limited partners as desired.
LINE OF CREDIT
A pre-approved borrowing limit. The loan balance can increase or decrease as the borrower borrows up to the borrowing limit. or repays the loan balance. This loan type is intended to allow for borrowing, repayment, borrowing repayment as often as the borrower desires with in the limits of the loan.
LIQUIDATED DAMAGES
In anticipation of a particular default, clauses are sometimes written into a contract to specify the default and its penalty. Liquidated damages means that the penalty is converted to a cash dollar amount.
LIQUIDITY
The state of having cash or cash equivalent assets. “The company has liquid assets.” or, “The company has the ability to meet its obligations because of its liquidity.”
LIS PENDENS
It gives constructive notice that an action affecting a particular parcel of property has been filed in court. The property can be sold, leased, or otherwise disposed of, but all transactions are subject to the outcome of the court action.
LISTING
An agency agreement between a seller and a principal broker. The owner authorizes the broker to place the property on the market and seek a ready, willing, and able buyer and agrees to pay consideration if the broker is successful.
LITTORAL RIGHTS
Rights of an owner of property bordering a lake, river, ocean or body of water subject to tides.
LOAN FRAUD
Predatory practices by unethical and illegal lenders seeking to unjustly increase their profits, often at high risk to the consumer. It often involves falsification of information, changes in the appraisal, and similar practices.
LOAN PRODUCTS
The various types, variations, and loan programs offered by lending institutions to borrowers.
LOAN PROSPECTOR® (LP)
Loan Prospector® is Freddie Mac’s automated underwriting technology and risk assessment tool that gives ready access to credit and pricing terms.
LOAN SERVICING
The process of collecting loan payments, holding funds in escrow, and giving an annual accounting to the borrower. The entity doing so receives a fee.
LONDON INTER-BANK OFFER RATE (LIBOR)
An index for used with Adjustable Rate Mortgage’s which is an average of daily lending rates from several major London banks.
LONG-TERM FINANCING
Sometimes called permanent financing, this loan will often pay off an existing short-term loan, and then extend for several years into the future.
LOAN TO VALUE RATIO OR LTV RATIO
The amount of debt secured by the property compared to the worth of the property, expressed as a percentage.
LOT, BLOCK, AND PLAT
A method of land description used for subdivisions, identifying the location of a particular parcel in the subdivision or tract.

M

MANAGEMENT CONTRACT
An employment contract between a property manager and an owner of investment property.
MARGIN
The percentage, established with the ARM loan, which will be added to the index to create the adjusted interest rate.
MARKET DATA OR COMPARISON APPROACH
An appraisal approach that contrasts the subject property with other properties that have recently sold. Adjustments are made to account for variations between the subject property and the others. Also called a Comparative Market Analysis (CMA)
MARKETABLE RECORD TITLE ACT
The law that allows the simplification and stabilization of title searches by allowing old liens and encumbrances to be removed after 40 years.
MATERIAL FACT
Material fact means information that a person of ordinary intelligence and prudence would consider relevant in deciding whether or not to buy or lease real estate.
MATURITY
Referring to the end of a loan agreement. The time that the loan must be paid in full.
MECHANIC’S LIEN
A lien placed by a person who has integrated labor or materials into a property and has not been paid.
MEDIATION
A non-binding process of meeting with a neutral or disinterested third party to try to resolve a dispute between the two principals in the transaction or contract.
MERGER
The joining of two contiguous properties so as to extinguish a lesser right. For instance, this process can terminate an easement on land locked property.
MERIDIAN
A north-south line which intersects a baseline and creates a point from which land can be measured under the Government or rectangular survey method.
METES AND BOUNDS
A method of land description that uses measurements and monuments and utilizes angles.
MILE
5,280 linear feet
MINERAL RIGHTS
Subsurface rights of an owner of real property which extend downward to the center of the earth. These rights are real property.
MONUMENT
A fixed surveyor’s marker for a metes and bounds description. It can be natural or man made and marks the corners of the property.
MORTGAGE
A document used to secure a loan. It is a judicial agreement, meaning if non-payment takes place, the holder of the promissory note can take it to court and the court will order the sheriff to foreclose.
MORTGAGE BACKED SECURITIES
A large pool of mortgage loans which, if underwritten by Fannie Mae or Freddie Mac, may bypass federal and state regulatory approval.
MORTGAGE BANKNG COMPANY
A mortgage lender that uses it’s own resources to fund mortgage loans that it originates.
MORTGAGE BANKERS ASSOCIATION (MBA)
The national association that represents the real estate finance industry. The MBA works to help their members conduct business of single and multifamily mortgage finance by promoting fair and ethical lending practices, fostering professional excellence through educational programs and publications, providing news and information, and holding conferences.
MORTGAGE BROKER
A loan originator that brings the borrower and lender together in exchange for a fee, but is not employed by the lender.
MORTGAGE INSURANCE (MI)
Insurance required by a lender if the principal of the loan is above a set Loan to Value (LTV). It covers the interests of the lender if there is default on the loan, and the proceeds from foreclosure do not cover the amount owed. It can be added to an FHA loan.
MORTGAGE INSURANCE PREMIUM (MIP)
An insurance policy used in FHA loans if your down payment is less than 20%. The FHA assesses either an upfront MIP (UFMIP) at the time of closing, or an annual MIP that is calculated every year and paid in 12 installments.
MORTGAGE OFFICER
A person licensed by Utah to originate loans, also known as a loan originator or mortgage originator.
MORTGAGE ORIGINATOR
See Mortgage Officer.
MORTGAGE POOL
A collection of mortgages offered as collective collateral in exchange for the purchase of mortgage backed securities. Pooling reduces the risk to investors because the risk of foreclosure is shared by many making an individual investors risk very low. Ginnie Mae further enhances the safety by offering the “full faith and trust of the United States Government” as guaranty that no investor will experience loss.
MORTGAGEE
The lender who receives a mortgage as security for a loan or debt.
MORTGAGOR
A borrower who hypothecates property as security for a loan through the use of a promissory note and a mortgage.
MUTUAL AGREEMENT
The essential element of a contract achieved through the offer and acceptance process.

N

NARRATIVE REPORT
The longest form of appraisal report which uses a variety of supporting documentation.
NATURAL PERSON
An individual. The opposite of a legal person or corporation.
NEGATIVE (PASSIVE) INTENTIONAL FRAUD
When a person covertly hides facts, thus leading the other contracting party to believe certain things which are not true.
NEGATIVE OR REVERSE AMORTIZATION
A loan that requires payments of no principal and only part of the interest. The unpaid interest is added to the principal. This technique is used on some graduated payment mortgages.
NET LEASE
Tenants pay the landlord rent and, in addition, also pay their portion of the operating expenses (such as utilities).
NET LISTING
An illegal listing wherein the seller identifies an acceptable amount for the property and everything above that figure will be commission to the agent.
NET OPERATING INCOME (NOI)
The profit that remains after the operating expenses have been subtracted from the gross effective income.
NICHE LOANS
Loans designed to meet the special needs of certain groups of consumers who need to get loans, such as those having extremely poor credit.
NON-DISTURBANCE CLAUSE
A clause in a mortgage which protects the rights of the lessee if the property should be foreclosed by the lender upon the owner’s default.
NON-HOMOGENEOUS
A term that means no two parcels of land are exactly alike.
NON-INVESTMENT PROPERTY
A property that has no cash flow, such as your home or a vacant lot.
NON-OWNER OCCUPIED (NOO)
A classification used in mortgage origination, risk-based pricing and housing statistics for one to four-unit investment properties. The property is not occupied by the owner. The term non-owner occupied is not typically used for multi-family rental properties, such as apartment buildings.
NON-RECOURSE LOAN
The terms of the loan stipulate that even if the lender receives less than the balance owed as a result of a foreclosure action, the debt is satisfied and the lender may not go after the borrower’s personal assets.
NON-RESIDENT LICENSE
A real estate licensee from another state acquires this kind of a license to enable him/her to practice real estate in Utah.
NOTICE OF DEFAULT
The action filed to initiate foreclosure under a Trust Deed and Note.
NOTICE OF INTEREST
Holders of junior liens against a property would file this. If the senior lien holder foreclosed, they would be notified and could protect their interest.
NOTICE OF TRANSFER orSERVICING TRANSFER NOTICE
The notice provided to a borrower that the servicing agent for their loan will change to another entity. The notice must be provided at least 15 days prior to the transfer.
NOTICE TO QUIT
The first step a lessor must take against a tenant before filing an Unlawful Detainer with the courts.
NOVATION
The substitution of a new party or a new obligation in a contract. This process requires the agreement of all original parties in the contract, but once it has been agreed to, the original obligatee, or liable party, is released from liability.
NUNCUPATIVE WILL
Oral will, written down by someone and witnessed by two non-beneficiaries. It can only convey personal property.

O

OFFICE OF THRIFT SUPERVISION (OTS)
The bureau of the U.S. Treasury Department that is responsible for issuing and enforcing regulations governing the nation's savings and loan industry.
OPEN END LOAN (MORTGAGE)
A loan which can be increased up to an agreed upon maximum, similar to the way a credit card works. It is often used for construction loans and home equity loans.
OPEN LISTING
A listing agreement that can be given to as many principal brokers, on the same property, as the seller desires. It is a non-exclusive listing.
OPERATING BUDGET
A projection of the financial operation of an investment property.
OPTION
A contract wherein a seller agrees to sell property for a set amount at specified terms, if the buyer chooses to exercise that right to purchase during the contracted period of time. In return for the seller taking his property off the market, the buyer pays valuable, non-refundable consideration.
OPTION ARM
An adjustable rate mortgage with optional payment terms. For example: 1)fully amortized payment 2)accelerated payment 3)minimum payment 4)interest only payment
OPTIONEE
One who receives an option; a potential buyer who may or may not buy by the end of the term of the option.
OPTIONOR
One who gives an option; the potential seller.
ORIGINATION FEE
A fee (profit) charged by the lender to initiate a loan.
OSTENSIBLE AGENCY
Also called Implied Agency. Agency which is created through the actions of the parties, rather than through an express agreement.
OWNER FINANCING
A loan agreement between the seller and the buyer for all or a portion of the purchase price of real property.
OWNER’S POLICY
The title insurance policy purchased by the seller to protect the buyer against title defects.

P

PACKAGE MORTGAGE
A loan that uses both real and personal property as security.
Fees paid by the borrower prior to settlement that will be disclosed on the HUD1 statement but will not be included in the totals to be paid at settlement.
PAR
The interest rate charged on a loan that requires no discount points be paid nor pays a yield spread premium. Rates above Par pay a yield spread premium. Rates below Par require the payment of discount points.
PAROL EVIDENCE RULE
Prevents the admission into court of oral agreements reached prior or subsequent to the written contract and which contradict the terms in the written contract.
PARTIALLY AMORTIZED LOAN
A loan requiring payments of both principal and interest, but when the final payment is made, a balloon payment is required to retire the loan.
PARTIALLY DISCLOSED PRINCIPAL
The “other party” knows who the agent is, knows there is a principal, but is not told who the principal is.
PARTICIPATION LOAN
A loan where the lender becomes an investor or owner in the project for which the money is being loaned.
PARTITION SUIT
A court process where property owned concurrently can be divided into distinct portions so each co-owner may hold his or her portion in severalty. The court may order the property sold.
PARTY WALL
A common wall between two properties, usually involving a zero lot line.
PATENT OR PUBLIC GRANT
The instrument issued when the property is first conveyed from public or government ownership to a private individual.
PAYMENT CAPS (PERIODIC CAP)
Adjustable rate mortgage adjustment limits. Shorthand notation frequently follows this pattern – 2/1/6. These caps are set by contract and never change. The caps limit the initial adjustment (x/-/-), each individual adjustment (-/x/-) and the maximum adjustment from the initial rate (-/-/x).
PER DIEM
Per day.
PERCENTAGE LEASE
A lease used in commercial leasing. The tenant pays a percent of the net or gross income derived from the use of the property, or the tenant may be paying a flat rate plus a stated percent of the gross or net income.
PERIODIC TENANCY (MONTH-TO-MONTH)
A lease which automatically renews itself. The period for legal notice is established by statute in each state, or can be agreed upon as one of the terms of the lease (15 days in Utah).
PERIL
Danger, referring to the risk that some event, circumstance, or condition may cause harm. Insurance policies insure against perils.
PERMANENT FINANCING
A long term loan that pays off the construction loan (takeout loan).
PERSONAL PROPERTY
The opposite of real property, it is moveable and destructible. Synonyms are chattel and personalty.
PERSONAL REPRESENTATIVE
A term used in Utah for the Administrator or Executor of a will.
PERSONALTY
A synonym for personal property. The opposite of “realty.”
PHYSICAL DETERIORATION
A type of depreciation that occurs when something wears out and will no longer perform the function or give the service that was originally intended.
PHYSICAL LIFE
The time span during which an improvement is still standing though it no longer has economic life.
PLAIN LANGUAGE TITLE POLICY
Title insurance covering the borrower, which will cover mechanic’s liens.
PLANNED UNIT DEVELOPMENT (PUD)
A type of building development that is a designed grouping of both varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, all within one contained development or subdivision.
PLEA IN ABEYANCE
An agreement with the court to hold a guilty plea for a specified period to allow the defendant to prove they will not violate the law again. After the period of time has passed and if the defendant complied with the terms of the agreement the guilty plea set aside and the case is dismissed with no negative record recorded.
PLEDGE
The borrower gives up possession of the property being used as collateral for the loan (the way a pawn shop works).
PLOTTAGE
Combining two or more parcels of land with a resulting increase in total value.
POC
On the HUD 1, see Paid Outside of Closing.
POINT
A fee charged by a lender that is based upon the loan amount. One point is equal to 1% of the loan amount.
POINT OF BEGINNING
In the Metes and Bounds method, this is the corner at which the boundary description starts.
POLICE POWER
The right of government, such as in zoning, to exercise control over private property without their consent and without compensation.
POSITIVE INTENTIONAL FRAUD
When a person deliberately and overtly deceives or misrepresents facts pertinent to a contract.
POWER OF ATTORNEY
What an attorney-in-fact holds which authorizes actions in behalf of another person, including signature authority.
The authority (conveyed from the trustor to the trustee at the time the Trust Deed and Note are signed) to sell the property in the event of default.
PRELIMINARY (TITLE) REPORT(PR)
A report from the title company prepared as one of the disclosures from the seller to the buyer, which would include liens, easements, and other defects on the title.
PREPAIDS
Charges to the borrower not related to the closing process, but are ongoing costs, such as insurance, taxes, and interest, that are collected up front, at closing.
PREPAYMENT PENALTY
This clause in a loan penalizes the borrower for paying off the loan earlier than agreed.
PREPAYMENT PRIVILEGE
This clause in a loan allows the borrower to pay the loan off early. The amount of the monthly payments can be increased, with all of the extra payment applying to the principal. This also allows them to refinance without penalty, or make balloon payments from time to time.
PRINCIPAL, INTEREST, TAXES, AND INSURANCE (PITI)
A mortgage payment which includes principal (funds that were borrowed), interest (the cost of financing for the amount borrowed), taxes (an amount to go into an escrow account for future payment of property taxes), and insurance (an amount to go into an escrow account for the future payment of hazard insurance).
PRICE
The amount of money being asked for a product or property, or the amount it sells for.
PRIMARY MONEY OR MORTGAGE MARKET
Those who originate loans of any type, regardless of the priority of the loan, are in this financial market. The secondary market would be those who buy existing loans from other lenders.
PRIME RATE
The interest rate that is charged to a lender’s most favored clients and is established by the major banks or lenders of America.
PRINCIPAL
The person who hires the agent. This person is also sometimes referred to as a client.
PRINCIPAL BROKER
The broker who manages the offices and is responsible for supervising the activities of the licensed and unlicensed staff.
PRINCIPAL LENDING MANAGER (PLM)
  A licensed Lending Manager that is registered with the state as the lending supervisor for an office.  They are responsible for overseeing the lending activities through the office.
PRIOR APPROPRIATION OR STATUTORY APPROPRIATION
The legal doctrine used in Utah for distribution of water based on the “first come, first served” idea.
PRIORITY OF LOANS
Is established by the date of recording. Priority is sometimes characterized as first in time first in line. The lien that has the first or earliest recording date is the first in line to get paid upon foreclosure.
, PRIVATE MORTGAGE INSURANCE (PMI)
A risk-management product that protects lenders against loss if a borrower defaults. Most lenders require private mortgage insurance (PMI) for loans with loan-to-value (LTV) percentages in excess of 80%.
PROCESSING FEE
A fee charged to offset the cost of doing the paperwork of a loan application and communicating with the loan underwriter. Typically a lender will hire a person specifically for the task of loan processing. This fee would be to cover the cost of the loan processor.
PROCURING CAUSE DOCTRINE
A doctrine governing who gets the selling portion of the commission. It says the agent who set up an uninterrupted chain of events that led to the closing earned the commission.
PROFIT AND LOSS STATEMENT (P&L)
A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time, usually a fiscal quarter or year.
PROMISSORY NOTE
The document given as evidence of the loan. It contains all information relative to the money: payment, term, interest rate, etc.
PROPERTY IMPROVEMENT LOAN
A loan for the specific purpose of repairing or expanding the subject real estate.
PROPERTY MANAGEMENT
This activity occurs when a licensee manages investment property for the owner.
PROPERTY MANAGER
One who represents the interests of the owner of investment property. The property could be for residential or commercial purposes. This person must have a real estate license.
PROPERTY MANAGEMENT TRUST ACCOUNT
A separate trust account for property management. A real estate brokerage must open a separate trust account for property management if they are handling more than six property management accounts.
PROPERTY TAX
The tax levied by government against real estate. These taxes are due in Utah on November 30 and cover the full calendar year. They are also referred to as real property tax.
PROPRIETARY LEASE
Sometimes called an “owner’s” lease. It is held by a person who owns shares in a stock cooperative. They own personal property which entitles them to this type of lease.
PRORATION
The process of computing the buyer’s and seller’s portion of an obligation owed by both, such as property tax.
PUFFING
Sales talk, or exaggerated statements that reflect an obvious overstatement by the agent and are not considered misrepresentation or fraud.
PURCHASE MONEY MORTGAGE
The seller is the lender and may be lending all or only part of the purchase price.

Q

QUANTITY SURVEY METHOD
The appraiser determines the cost of the materials, labor, management fees, and profit. These are used to determine the value of improvements when using the cost approach in appraisal.
QUASI-GOVERNMENTAL
An organization that looks and acts like government but is owned by private citizens. Examples include Freddie Mac or Fannie Mae.
QUITCLAIM DEED
A deed that conveys all interest in a property which the grantor may or may not have, and gives no warranties as to the condition of title. Its primary use is to remove clouds from the title.
QUIET ENJOYMENT
One of the rights in the “Bundle of Rights.” The right of an owner or lessee to uninterrupted legal use of the property without interference or disturbance caused by defective title.
QUIET TITLE ACTION
A court action to determine the actual ownership of real property. This type of proceeding would be conducted to transfer title to an adverse possessor.

R

RANGE
A vertical column of townships, counted east and west from the meridian in the Government or Rectangular Survey Method.
RATE CAP/ LIFETIME CAP
The highest rate allowed by the note agreement in an adjustable rate mortgage.
RATE OF RETURN
Same as Capitalization Rate or Cap Rate.
REAL ESTATE PURCHASE CONTRACT
A State approved form which must be filled out by all licensees which is used when writing an offer to buy real property. When accepted, it becomes the sales agreement.
REAL ESTATE PURCHASE CONTRACT FOR NEW CONSTRUCTION
Similar to the Real Estate Purchase Contract, but this one is to be used solely when the property being purchased is a new home to be constructed or for which no Certificate of Occupancy has been issued.
REAL ESTATE RECOVERY FUND ACT
The purpose of this Utah act is to protect the public from dishonest licensees. It creates the Real Estate Recovery Fund which reserves funds to pay reparations to members of the public that were harmed by a licensee’s actions.
REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)
An act that is designed to protect the borrowers in real estate transactions through thorough disclosure of the costs of obtaining the loan. It is also known as Regulation X, and is different than Truth In Lending.
REAL ESTATE TRUST ACCOUNT
A special bank account where money is deposited when it is being held for other people involved in a real estate transaction.
REAL PROPERTY
Land and appurtenances, air space to infinity, and the subsurface to the center of the earth.
REAPPRAISAL LEASE
A lease wherein the rent is determined by a periodic re-evaluation of the property’s value.
RECIPROCITY
When states agree to recognize each others’ education requirements for real estate licensing.
RECONCILIATION
An appraiser should use as many of the approaches to appraising as possible. This technique synthesizes the results into a single estimate of value. It is sometimes called correlation.
RECONVEYANCE OF DEED
The document a lender uses to return all interest in the property after the debt has been satisfied under a Trust Deed and Note. This is in accordance with the defeasance clause.
RECORDING
A form of delivery of a deed, also known as constructive delivery or notice.
RECTANGULAR SURVEY METHOD
A method of land description that uses base and meridian lines, townships and sections. It is also referred to as the Government Survey Method.
REDLINING
The discriminatory practice of refusing to make loans in certain neighborhoods.
REFERRAL FEE
A fee paid for sending a customer to another for services.
REFINANCE
Obtaining a new loan, often at a lower interest rate, out of which the old loan is paid off.
REGULATION Z
See Truth in Lending Act.
REIT (REAL ESTATE INVESTMENT TRUST)
Its purpose is to avoid double taxation. It must have at least 100 members, and return at least 90% of the profits to the investors.
RELEASE CLAUSE
When a blanket loan has been given, this clause will allow part of the property to be removed as security for the loan when certain requirements have been met, sometimes called a partial release clause.
RELEASE OF LIEN
If a mechanic had previously placed a claim against the property where the work was done, when payment is made, this form must be filed within ten days to release the mechanic’s lien against the property.
REMAINDERMAN
The person who will receive the life estate when the current holder of the life estate dies. There can be more than one of these.
REO (REAL ESTATE OWNED)
An acronym to designate property owned by an institutional lender most often obtained as a result of foreclosure.
RESCISSION
As a remedy for fraud, or by agreement of the parties, all parties return to their original positions prior to the executing of the contract. It is also known as a “contract to end a contract.”
RESERVES
See Impound, Reserve or Escrow Account.
RESIDENTIAL CONSTRUCTION EARNEST MONEY SALES AGREEMENT
Similar to the Real Estate Purchase Contract, but this one is to be used solely when the property being purchased is a new home to be constructed or for which no Certificate of Occupancy has been issued.
RESIDENTIAL MORTGAGE CREDIT REPORT (RMCR)
A residential mortgage credit report details your credit, employment and legal history, as well as your residency. Unlike a normal credit report, A RMCR pulls information from al 3 credit reporting agencies.
RESIDENTIAL MORTGAGE REGULATORY COMMISSION
The body of non-governmental employees who guide the mortgage industry and establish rules and regulations.
RESIDENTIAL MORTGAGE LOAN EDUCATION, RESEARCH, AND RECOVERY FUND
A fund held by the State of Utah and funded from license fees with the purposed of compensating consumers who have been harmed by mortgage licensees. Payment from the fund must be ordered by the court.
RESIDUAL INCOME
An amount determined as the income available to make mortgage payments after other obligations have been considered. It is used instead of debt to income ratios in determining eligibility for VA loans.
RETAIL MORTGAGE RATE
The interest rate on a loan which is charged to the consumer (borrower).
REVERSE ANNUITY MORTGAGE (RAM)
When the mortgagee makes regular monthly payments to the mortgagor. The payments create the loan. It is used for elderly people whose homes are paid off or nearly so. The debt is not repaid until they either sell the house or die.
RIDER
Comparable to an addendum to a purchase contract, this document contains issues added to the security instrument (trust deed).
RIGHT OF FIRST REFUSAL
A right given to a prospective purchaser to be able to meet the price and terms at which the owner is willing to sell the property to another party. Unlike an option, the seller is under no obligation to withdraw his property from the market.
RIGHT OF RESCISSION
Under Truth in Lending, the borrower has 3 days to decide whether or not to proceed with the loan.
RIPARIAN RIGHTS
An approach to the distribution and use of water that states the owner of real property has a reasonable right to use any water that is on, under, or adjacent to the property. The guideline for boundaries when water borders land.
ROOFTOP LEASE
This lease is used when the tenant only wants to rent the top of the building.
RULE OF DISCLOSURE
An agent’s responsibility to reveal all material facts to a principal, including mistakes and misrepresentations. Indeed it might be said concerning the fiduciary relationship, what the agent knows, the principal knows.
RULE OF OBEDIENCE
An agent’s responsibility to follow all instructions of the principal.

S

SAFETY CLAUSE
A clause in a listing contract that protects the listing broker from the seller's attempt to sell the property after the expiration of the listing to avoid paying a commission.
SALABILITY
Marketable, having the ability to be sold.
SALES AGENT
A real estate licensee who does not have a broker’s license and must work under the supervision of the employing principal broker.
SALE AND LEASEBACK
An owner sells a property, then leases it back from the new owner. This could be a long or short term lease.
SATISFACTION OF MORTGAGE
The document used by the lender to reconvey all of his interest in a property, as required by the defeasance clause under a mortgage.
SEASONED LOAN
A loan with a payment history. This feature of a loan is preferred by the secondary money market.
SECONDARY MONEY OR MORTGAGE MARKET
Individuals or financial institutions who purchase existing loans.
SECOND MORTGAGE
A mortgage whose priority follows a first mortgage (the mortgage in first position).
SECTION
An area of land one mile square in the Government or Rectangular Survey Method. It contains 640 acres.
SECURITIZATION
Creating a security that can be sold to investors backed by a mortgage pool. Stocks and bonds are examples of securities.
SELLER DISCLOSURES
The property’s title and physical condition information required by the REPC to be given to the buyer by the seller.
SENIOR LIEN
Refers to first mortgages or trust deeds or the debt first recorded against the real property.
SERVICE PROPERTY
Property such as government buildings or churches which are used for public purposes and are non-profit.
SERVICE RELEASE PREMIUM (SRP)
A payment to the originating lender for the transfer of servicing obligations to a new loan servicer.
SERVICING DISCLOSURE STATEMENT
A notice given the borrower within 3 business days of the application detailing the possibility of transfer of servicing to another entity after the loan closes. The notice must include the percentage of loans transferred by the lender and the borrower’s rights during the transfer.
SERVICING TRANSFER
Conveying to a new entity the right to collect the payments and maintain the escrow account on a loan. RESPA has requirements for this process.
SERVIENT TENEMENT
The name given to a property encumbered by an easement appurtenant, such a landlocked situation.
SETTLEMENT
The date specified in the purchase contract when buyer and seller deliver any monies required, as cleared funds, to the settlement agent and sign the documents applicable to the transaction.
SETTLEMENT COSTS & YOU
A booklet RESPA requires to be given to borrowers within 3 days of application for a loan.
SETTLEMENT STATEMENT (HUD-1)
The required form to be used when closing a real estate transaction prior to 2015. It disclosed all monies involved in the transaction. Replaced by the Closing Disclosure.
SEVERALTY
A form of ownership wherein an individual owns the property in sole ownership.
SEVERANCE
A process by which real property becomes personal property.
SHARED EQUITY MORTGAGE
The lender not only collects interest on the loan, but when the property is sold, the lender will receive a portion of the profits from the increase in the property’s value since the time it was purchased.
SHERIFF’S DEED
The document given to the person who bid and bought property at a Sheriff’s Sale. This document is not given until the statutory six-month period of redemption has passed.
SHERIFF’S SALE
The name of the event wherein a property is sold in foreclosure under a mortgage.
SHERMAN ANTITRUST ACT
A law designed to encourage competition and free enterprise by outlawing price fixing.
SHORT FORM OR CHECKLIST REPORT
An appraisal report that uses a standardized form wherein the appraiser checks boxes and fills in blanks. It is often required by a lending institutions.
SIMPLE INTEREST
The type of interest that is computed on the unpaid principal balance.
SINGLE FAMILY DWELLING (SFD)
A free-standing residential building, also called a single-detached dwelling.
SITUS
Personal preference for one location over another which affects the value of the property.
SPECIAL ASSESSMENT
A tax customarily imposed against only those parcels of property that will benefit from a proposed public improvement such as sidewalks, sewer, street lights, parks, etc.
SPECIAL PURPOSE PROPERTY
Property that doesn’t fit one of the standard zoning classifications (residential, commercial, agricultural, etc.) is put in this general category.
SPECIAL WARRANTY DEED
This type of deed contains only two covenants: the covenant of seizin and the covenant against encumbrances. Furthermore, it only warrants the period of time that the grantor actually owned the property.
SPECIFIC PERFORMANCE
A legal remedy requiring a party to perform as agreed in the contract.
SPECIFIC, SPECIAL AGENT
An agent hired by contract to carry out specifically stated activities.
SPOT ZONING
The process involved when the zoning and planning commission changes the zoning of a single lot to be different from others surrounding it.
SQUARE FOOT METHOD
In this Cost Approach Method, the appraiser multiplies the value per unit of area times the number of units of area.
STANDARD COVERAGE TITLE INSURANCE
Title insurance which protects against losses arising from both recorded title claims, omissions and errors in public records, and from inadequate title search procedures. It does not protect from undisclosed and unrecorded claims against the title such as unrecorded mechanic’s liens.
STATE APPROVED FORMS
The Division of Real Estate and the State Attorney General’s office allow licensees to fill out these forms. They include the Real Estate Purchase Contract, its Addenda, the All Inclusive Trust Deed and its Note, and the Uniform Real Estate Contract.
STATE ENGINEER
In Utah, the entity to which one applies for water rights. It encompasses the Division of Water Rights.
STATUTE OF FRAUDS
The requirement that certain contracts must be in writing in order to be enforceable in court.
STATUTORY DEDICATION
When the developer is allowed by the city, county, or state to convey the streets, sidewalks, gutters, etc. for maintenance by the government.
STATUTORY PERIOD OF REDEMPTION
The period of time, following a foreclosure sale, wherein the mortgagor has the right of paying off all debts against the property, thus regaining ownership.
STEERING
The act of directing buyers to or away from certain geographical areas for the purpose of discriminating.
STIGMATIZED
A Stigmatized property is defined as: (a) the site or suspected site of a homicide, other felony, or suicide; (b) the dwelling place of a person infected, or suspected of being infected, with the Human Immunodeficiency Virus (HIV, AIDS), or any other infectious disease that the Utah Department of Health determines cannot be transferred by occupancy of a dwelling place; or (c) property that has been found to be contaminated, and that the local health department has subsequently found to have been decontaminated in accordance with Title 19, Chapter 6, Part 9, Illegal Drug Operations Site Reporting and Decontamination Act.
STOCK COOPERATIVE
Persons buy a stock interest in a building. This entitles them to a lease in one of the units, called a proprietary or “owner’s” lease. Note that the stock purchased is personal property.
STRAIGHT NOTE
A loan that requires payments of interest only, sometimes called a term loan, or term mortgage. Usually the entire principal is paid off in one balloon payment at the end of the loan.
SUBAGENT
Anyone who is assisting the agent (principal broker) in the agent’s responsibilities. For instance, a sales agent or associate broker in the office, or principal broker with a co-broker agreement.
SUBDIVISION
Land divided into lots which may or may not include improvements such as water, utilities, curbs, gutters, and streets, but does not include buildings.
‘SUBJECT TO’ CLAUSE
This clause may be found in either a contract or a deed. In a contract, it is another name for the contingency clause. In a deed, it is another way of referring to the habendum or “to have and to hold” clause.
SUBLEASE
A lease given by the original lessee. The lessee remains fully liable to the lessor. The lessee pays rent to the lessor or landlord, and collects rent from the sublessee.
SUB-PRIME LOAN
Borrowers who do not qualify for conforming or A paper, but do qualify for B, C or D paper would get this kind of loan.
SUBORDINATION CLAUSE
The clause in a loan that can alter the priority of a loan.
SUBROGATION
The substitution of liability or rights, as in a title insurance policy.
SUBSTITUTION, PRINCIPLE OF
The appraisal principle which states that no prudent buyer will pay more than he has to get what he wants. This is the basic principle of the Market Data or Comparison approach to appraisal.
SUPPLY AND DEMAND
The principle of economics, as well as appraisal, which states that when there is an overabundance of a particular product, the price will go down; conversely, when there is a limited amount of that product, the price will go up.
SURVIVORSHIP
The surviving owner(s) automatically receives ownership of the deceased person’s share. It takes precedence over a will.
SYNDICATE
A group of investors, who combine funds and managerial resources to develop, manage or purchase real estate for profit or as a tax shelter. Actual ownership can be as tenants in common, S Corporation, Partnership, Limited partnership, Joint Venture, or Real Estate Investment Trust.

T

TACKING
In adverse possession, this process allows consecutive periods of adverse possession by multiple adverse possessors to be added together to make up the required number of years.
TAKE-OUT LOAN
Once construction is completed and an appraisal obtained, this is a term referring to the permanent, long-term financing for the property.
TAX CREDIT
Items which the IRS allows you to subtract from the dollar amount of taxes due. There are very few of these allowed.
TAX DEFERRED EXCHANGE
An exchange of like for like properties. Tax on any capital gains is paid at a later date. Boot or debt reduction is taxable.
TAX SERVICE FEE
A fee to a third party vender who confirms whether taxes are current and provides amount of taxes for credit at closing.
TEASER RATE
An introductory rate lower than the rate would have been if computed by adding the margin to the index on an adjustable rate loan.
TENANCY AT SUFFERANCE or ESTATE AT SUFFERANCE
The lease has expired and the lessee is now possessing the property illegally, having been given proper notice to vacate. It is similar to trespassing except that the lessee, at one time, held a legal lease.
TENANCY AT WILL or ESTATE AT WILL
A lease which requires little or no notice of termination. It is used in special circumstances wherein both the lessor and lessee agree that the lease can be terminated by either party. It is of uncertain duration.
TENANCY BY THE ENTIRETY
A form of ownership that can only be held by husband and wife, similar to joint tenancy, except that one party cannot sell or encumber the property without the approval of the spouse.
TENANCY FOR YEARS or ESTATE FOR YEARS
A lease which contains a termination date. Its term can be for any agreed-upon period of time. (It can be more or less than one year.)
TENANCY IN COMMON
A form of ownership where owners have full rights of possession, but each owner can have a different percent of ownership. Upon the death of one, that interest goes to the heirs.
TENANT IN SEVERALTY
One who owns real property without co-owners.
TENDER
Another term for the process of making or presenting an offer.
TERM
The period of time a loan will last from the date it was initiated.
TERM MORTGAGE
See Straight Note.
TESTATOR
The title of a person who makes a will.
THIRD PARTY
A person or entity that provides services to the parties of a contract but is not a signatory or agent of a signatory of the contract.
THIRD PARTY DELIVERY
Delivery of the deed is accomplished by a disinterested party who has written, acknowledged instructions from the grantor. It is also called a deed in escrow.
TIER
The horizontal row of townships, counted north and south from the baseline in the Governmental or Rectangular Survey method.
TIME IS OF THE ESSENCE
The clause in a contract that means all dates are firm and non-performance by the date specified may create a voidable contract.
TIMESHARE AND CAMP RESORT ACT
The act that governs developers who offer property for use with mobile types of housing or where you will use the property for a limited amount of time periodically.
TITLE
An abstract term denoting ownership, not a document.
TITLE FEE
A fee paid to a title insurance company for insurance or services.
TITLE INSURANCE
Since an attorney’s opinion does not offer the buyer financial protection if the title proves unsound, this can be purchased, giving varying degrees of financial protection relative to the condition of title of real property.
A review of all recorded documents affecting a specific parcel of real property.
TITLE THEORY
A legal doctrine or theory of mortgage law used in a few states that allows the lender to take property as collateral for the debt by holding ownership of the property until the debt is paid. This is different from Lien Theory.
TO AND THROUGH DOCTRINE
An approach which says the agent who first showed the property to the buyer earns the selling portion of the commission.
TOTAL LOAN TO VALUE RATIO (TLTV)
The total loan-to-value (TLTV) ratio is obtained by dividing the sum of the First Lien Mortgage amount and the disbursed amount of the Home Equity Line of Credit and any other secondary financing by the lesser of property's purchase price or appraised value.
TOWNSHIP
The largest land area used in the rectangular or government survey system. It is six miles square.
TRADE FIXTURE
That which is considered legally attached to a business. It is always personal property.
TRIGGER TERMS
Under Truth in Lending, if any number other than the APR or purchase price is used in advertising, all these other numbers (trigger terms) must be disclosed.
TRUST DEED (OR DEED OF TRUST)
The document that provides for a non-judicial foreclosure process. It is used to secure a promissory note, by which a borrower hypothecates property as collateral for a debt or loan.
TRUSTEE
Since the courts are not being used in the case of a Trust Deed and Note, this person acts as an escrow agent to insure that the terms of the loan are carried out, and to initiate foreclosure if they are not.
TRUSTEE’S DEED
The document that is given to the individual who successfully bids at a foreclosure sale and purchases the foreclosed property. It conveys fee simple title immediately after the sale.
TRUSTEE’S SALE
The event where property is sold in foreclosure under a Trust Deed and Note.
TRUSTOR
The legal term given to one who hypothecates property as collateral for a loan, using a promissory note and trust deed.
TRUTH IN LENDING ACT
An act created in Congress to protect consumers from being deceived about the costs of borrowing money. It requires full disclosure of the cost of borrowing money and regulates advertising of credit. Also known as the Federal Consumer Credit Protection Act, or Regulation Z.
TRUTH IN LENDING DISCLOSURE FORM (TIL)
A Truth-in-Lending Disclosure Statement provides information about the costs of your credit.

U

UNDERWRITTING
Accepting a loan risk on behalf of a lender. The underwriter will consider the borrower’s information, income documentation, appraisal report, credit report and other information and compare the borrower to the loan acceptance criteria.
UNDISCLOSED PRINCIPAL
The “other party” thinks that the agent is the principal and sees no evidence of an agency relationship. It is usually illegal.
UNDUE INFLUENCE
Taking advantage of another person because you hold a unique position of trust, such as a doctor/patient, attorney/client, real estate agent/client relationship.
UNIFORM COMMERCIAL CODE
The body of law that regulates the transfer, or sale, of personal property, such as when one is selling a business (UCC).
UNIFORM DECLARATION OF RESTRICTIONS
The document that is used when a subdivider or developer records a group of restrictive covenants on all of the lots in a subdivision.
UNIFORM RESIDENTIAL APPRAISAL REPORT (URAR)
A form used in real estate appraisal which was created to allow for standard reporting and analysis of single-family dwellings or single-family dwellings with an accessory unit“.
UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT UNINFORCABLE
Federal legislation aimed at creating proper legal relationships between landlords or owners and tenants. A contract that due to its lack of written form may not be taken to court and used as evidence. The Statute of Frauds requires certain types of contracts to be in writing to be enforceable in a court of law.
UNIFORM RESIDENTIAL LOAN APPLICATION (1003)
The industry standard form used by nearly all mortgage lenders in the United States.
UNILATERAL CONTRACT
A contract wherein a promise is exchanged for a performance. Only one of the parties is initially bound, as when a reward is offered, for example, finding a lost animal.
UNIT-IN-PLACE METHOD
An appraisal method for determining the cost of improvements which takes a general approach. It is sometimes referred to as a sub-contractor approach and considers the cost of components, such as the concrete work, the framing, etc. or such items as extra light fixtures, kitchen or bathroom fixtures, etc.
UNIVERSAL AGENT
An agent hired to do all things for and in behalf of the principal.
UNLAWFUL DETAINER
The legal action a landlord brings against the tenant to evict when there is legal cause.
UPFRONT MORTGAGE INSURANCE PREMIUM (UPMIP)
An insurance premium that is collected, typically on Federal Housing Administration (FHA) loans, at the time the loan is initially made.
URBAN RENEWAL
The procedure of condemning private property as a blighted area and having it torn down and rebuilt.
USURY
Interest rates above the legal rate, or statutory limit.
UTAH CODE ANNOTATED (UCA)
The Utah laws the govern our municipalities, and regulate industries within the state.  Real Estate laws are under Title 61.
UTAH EXEMPTION ACT
The law that provides protection for a portion of equity when a homeowner experiences foreclosure or bankruptcy.
UTAH RESIDENTIAL MORTGAGE PRACTICES ACT
The Utah law that regulates non exempt mortgage lenders. The act appoints the Division of Real Estate and the Utah Mortgage Regulatory Commission as regulators over the mortgage industry and sets out licensing requirements, education requirements and standards of practice for loan originators of 1-4 unit single family residential properties.
UTAH UNIFORM LAND SALES PRACTICES ACT
The body of law that governs subdivisions which fall under the regulation of the State of Utah.

V

VA FUNDING FEE
A fee charged by the VA. It can be added to the loan amount and is computed as a percentage of the loan.
VA LOAN
A government loan that is guaranteed and does not require a down payment.
VALID CONTRACT
A contract that contains all the essential elements of a contract and therefore is binding on all parties.
VALUABLE CONSIDERATION
Consideration in the form of money, services, promises, real property, or personal property.
VALUE
The power of a product, service, or property to command other goods or money in exchange. It is the present worth of future benefits arising out of ownership.
VARIANCE
The right of an individual to do something that violates current zoning regulations because the zoning and planning commission or Board of Adjustment granted that right.
VENDEE
One who buys or offers to buy.
VENDOR
One who sells or offers to sell.
VERIFICATION OF DEPOSIT (VOD)
Requests sent to a bank by state and federal agencies, including the Veteran's Administration and the Social Security Administration, to verify whether a customer qualifies for:•  Subsidized housing•  Food stamps•  Medicare•  Medicaid•  other types of assistance based on deposits held at the bank.
VERIFICATION OF EMPLOYMENT (VOE)
A process used by banks and mortgage lenders in the United States to review the employment history of a borrower, to determine the borrower's job stability and cross-reference income history with that stated on the Uniform Residential Loan Application.
VERTICAL LEASE
A lease for either air rights or subterranean rights (such as oil).
VETERANS AFFAIRS (VA)
Formerly known as Veterans Administration. A branch of government that administers veterans benefits including VA loans.
VOID CONTRACT
A contract that lacks one or more of the essential elements of a contract and therefore is not binding on any of the parties.
VOIDABLE CONTRACT
A contract wherein one of the parties can challenge one or more of the essential elements of the contract and therefore has the right to affirm or disaffirm the contract.
VOLUNTARY DEDICATION
When a private individual gives land as a gift for public use, such as land for a park, church, hospital, etc.

W

WALK-THROUGH INSPECTION
An optional visit by the buyer to check and approve the condition of the property and any repairs that have been made.
WAREHOUSING FEES
The fee for storing money between the loan rate lock date and the loan date.
WASTE
When the owner of the property commits destructive acts on the property or fails to keep up with maintenance requirements.
WATER RIGHTS
The ability under the law to have the use of water. They are considered to be real property.
WATER SHARES
A right to use water on real property, granted to the owner by a canal company with water certificates. They are considered personal property.
WRAPAROUND LOAN
A loan that encompasses one or more existing loans.
WRIT OF EXECUTION
A court order directing an officer of the court to sell property of the defendant in order to satisfy a judgment.
WRIT OF RESTITUTION
In an Unlawful Detainer Action, the judge’s order for the sheriff to evict a tenant and restore the premises to the lessor.

Y

YIELD SPREAD PREMIUM (YSP)
The money or rebate paid to a mortgage broker for giving a borrower a higher interest rate on a loan in exchange for lower up front costs, generally paid in origination fees, broker fees or discount points.

Z

ZONING
A right of state governments to regulate the height, bulk and use of private property in order to protect the health, morals, welfare, and safety of the public. Zoning laws are usually delegated to the local level.