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A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.

Condition in a mortgage that may require the balance of the loan to become due immediately, if regular mortgage payments are not made or for breach of other conditions of the mortgage.

Americans with Disabilities Act, passed by the Federal government of the USA on July 26, 1990 to establish a clear and comprehensive prohibition of discrimination on the basis of disability. See http://www.ada.gov/)

An authorized person who manages or transacts business for another called the principal.

Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.

To pay a debt in periodic amounts until the total amount, including any interest, is paid. To "amortize" is also to write off against a taxable income something over time such as mortgage points.

A qualified party's opinion of the value of a property; an expert judgment or estimate of the quality or value of real estate as of a given date.

Expressed as a percentage, the return generated from either inflation or real price change. Investors prefer real price increases, those beyond the rate of inflation, since these are generated by demand growing relative to supply and real estate tends to move with inflation in the long run anyway simply as a durable asset.

A financing technique in which the lender can raise or lower the mortgage interest rate according to a set index, such as Treasury bills.

An official valuation of property for tax purposes. Also payments made by condominium or cooperative owners for their share of building maintenance expenses.

Acquire and dispose of property, decide when to increase investment n a property to generate additional income may select and supervise property manager.

The dominant standard for building measurements provided by BOMA, "Building Owners and Managers Association". See www.boma.org

An independent business person who sets real estate office policies, hires employees, determines their compensation, and supervises their activities in the role of a real estate intermediary or agent.

A site perceived to be or actually contaminated by pollutants from prior uses or nearby site underground, surface runoff and airborne contamination. Requires phase 1 inspection to assess actual condition, phase 2 study to determine remediation steps required for clean up and phase 3 implementation of actual cleanup. The EPA provides a certification after clean up has reached acceptable standards. There are hundreds of Brownfield sites in most cities. See http://www.epa.gov/brownfields/

A set of standards enforced by the local government that require certain materials, design, building process, safety features and inspections as a building is constructed. Intended to protect both those who build the structure as well as those who may live or visit the structure.

An agent who represents the buyer in a real estate transaction. A buyer agent may be paid by the buyer, seller or listing agent at closing, provided all parties consent.

Additional physical improvements, e.g., land, buildings, building additions, site improvements, machinery, equipment; lighting, roofing, HVAC systems, cables, as distinguished from cash outflows for items that are normally considered part of the current property operations.

Central Business District or downtown, except in Charlotte, NC where downtown is "uptown".

CERCLA (Comprehensive Environmental Response, Compensation, & Liability Act)

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Comprehensive Environmental Response, Compensation, and Liability Act, also known as the "Superfund" act, gives EPA the authority to respond directly to releases or threatened releases of hazardous substances that may endanger human health or the environment. See http://es.epa.gov/osre/superfund.html

A certificate issued by a title company or a written opinion rendered by an attorney that the seller has good marketable and insurable title to the property which he is offering for sale. A certificate of title offers no protection against any hidden defects in the title that an examination of the records could not reveal. The issue of a certificate of title is liable only for damages due to negligence. The protection offered a homeowner under a certificate of title is not as great as the offered in a title insurance policy.

The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to the price of the property and are items prepaid at the closing day.

A method of determining the value of a property by comparing the prices paid for similar properties.

Collateralized Mortgage Backed Securities, large pools of commercial mortgages that have been rated by credit agencies and sold in tranches (slices of varying risk and terms).

A written standard of ethical conduct embraced by the affected trade association to describe appropriate business conduct under a variety of circumstances. The emphasis is most codes of ethics is on truthful representation, avoidance of conflicts of interest, respect for colleagues, and open disclosure of areas of competency and experience.

Compensation paid to a real estate agent (usually by the seller) for services rendered in connection with the sale, exchange, or lease of property.

The taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be based on a determination by a governmental agency that a particular building is unsafe or unfit for use.

Individual ownership of a portion of a building, with common areas shared by all owners. Maintenance fees called "assessments" are paid to the condominium association to maintain, repair, or improve the property.

In the construction industry, a contractor is one who contracts to erect buildings or portions of the them. There are also contractor for each phase of construction: heating, electrical, plumbing, air conditioning, and others.

Legal agreement between a buyer and seller or tenant and landlord that is in writing and includes all the elements necessary for a legally binding contract; consideration, signed authority, descriptions, closing date, contingencies, and the process to remove contingencies at a minimum.

Responsible for site selection, acquisition, construction, lease negotiation, furniture, operations, accounting, and labor management for industrial and service corporations.

The current cost to construct a reproduction of, or replacement for, the existing structure less an estimate for accrued depreciation, plus the prepaid site cost.

A formal written instrument by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the purchaser at closing day. There are two parties to a deed: the grantor and the grantee.

Failure to make mortgage payments as agreed to in a commitment based on the terms and at the designated time set forth in the mortgage or deed of trust. It is the mortgagor's responsibility to remember the due date and send the payment prior to the due date, not after. In the event of default, the mortgage may give the lender the right to accelerate payments, take possession and receive rents, and start foreclosure. Defaults may also come about by the failure to observe other conditions in the mortgage or deed of trust.

Decline in value of a property due to wear and tear, adverse changes in the neighborhood, or any other reason. Also, for commercial property depreciation refers to the economic life over which the asset, excluding land, might be written off for the calculation of taxable income. Current economic lives for residential investment property are 27.5 years and 39.0 years for commercial property.

Responsible for initiating and coordinating all the activities necessary for project development including design, financing, site acquisition, preparation, permitting and lease-up. The developer's ownership role might be anywhere from 0% to 100%.

A yield rate used to convert future payments or receipts into present value.

A percentage of the purchase price the buyer pays in cash typically at the closing; the amount of money to be paid by the purchaser to the seller upon the transfer of title. The down payment is the difference between the sales price and mortgage loan also known as initial equity.

An agent representing both parties in a transaction. In almost every state, dual agency is illegal and unethical without the written consent of both the buyer and the seller.

The same thing as a consideration or a deposit. The money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the property and to form a binding contact.

A right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example.

funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual.

An examination of the public records to determine whether the current title is clear or defective.

A written agreement in which the seller appoints only one agent to market the property for a specific period of time. If the owner sells or leases the property himself, e is not required to pay a commission.

A written agreement between an agent and a property owner stating that the owner will pay a commission to the agent if the property is sold during a specific time period whether or not the agent is responsible for the sale.

The price a property will command on the open market, neither buyer or seller acting under duress and with full information. Statistically, fair market value is the most probable selling price with a typical marketing period.

Fannie Mae purchases home mortgages, thus serving as a source of funds for mortgage lenders. It is a privately owned corporation whose shares are traded on the New York Stock Exchange, but it is subject to the strict supervision of the secretary of the U.S. Department of Housing and Urban Development (HUD).

Refers to Title VIII of the Civil Rights Act, and stipulates that discrimination based on race, color, sex, familial status, handicap, religion, or national origin is illegal in connection with the sale or rental of most dwellings.

A federal agency established to improve housing standards and conditions. The FHA provides mortgage insurance to approved lending dwellings.

A legal term applied to any of the various methods of enforcing payment of the debt secured by a mortgage, or deed of trust, by taking and selling the mortgaged property.

Once a federally chartered corporation established to purchase mortgages in the secondary, or resale market it is now a private corporation. It is subject to some oversight by the U.S. Department of Housing and Urban Development (HUD).

A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.

That party in the deed who is the buyer or recipient.

That party in the deed who is the seller or giver.

A term tat describes attempts to consider the impact of development including parking lots, building design, operation and building recycling on the environment. Lighting and energy uses more efficient options and people sensitive systems that turn off when no one is around. Windows are reflective and all possible materials are made in such a way as to be recycled.

Entity that manages approximately 40% of the federal government's office space.

A pledge made by one person (the guarantor) to ensure that another person (the obligator) will fulfill an obligation to a third party (the obligee).

Protects against damages caused to property by fire, windstorms, and other common hazards.

The reasonably probable and legal use of vacant land or an improved property which is physically possible, appropriately supported, financially feasible, and that results in the highest value.

A federal department active in a variety of national housing programs including urban renewal and public housing.

Heating, Ventilating and Air Conditioning

Buildings and additions intended to increase the value of a property.

The indication of value derived for an income-producing property by converting its anticipated net operating income into property value by direct capitalization of expected income, where value equals the NOI divided by the capitalization rate.

A charge or claim by one party on the property of another as security for the payment of a debt. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor.

A written agreement between a property owner and a real estate broker authorizing the broker to find a buyer or tenant.

The agent who represents the seller.

A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.

Any attribution affecting property value that is not readily observable but which might be known by the seller of such property must be disclosed to residential buyers under most state laws using state mandated disclosure forms.

A means by which agents list properties offered for sale by other agents, often available through the internet to the public.

A legal document pledging property as security for the payment of a loan and lien or claim against real property given by the buyer to the lender as security for money borrowed.

A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a property.

A written agreement to repay a loan. The agreement is secured by a mortgage, serving as proof of indebtedness, and states the manner in which it shall be paid.

The lender in a mortgage agreement.

The borrower in a mortgage agreement.

National Association of Industrial and Office Properties. See www.naiop.org

Proceeds from the sale of asset or part of an asset less brokerage commissions, closing costs, legal and marketing expenses.

A proposal to purchase property at a specified price and terms.

A lender's charge for establishing and processing a new mortgage loan. It is generally computed as a percentage of the loan and may be tax deductible.

The person or entity named in the public record as the owner of a property or mortgage.

An association of two or more persons or entities for the purpose of carrying out an investment or business for profit and for sharing of both profits and losses.

Phase 1 is a historical review and inspection of a site to determine if there are likely any environmental concerns. A phase 2 study involves soil borings, tests for toxic presences and estimates the extent of cleanup necessary. Phase 3 is the actual clean up of a site.

A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.

A one-time charge paid to the lender for issuing a loan. Each point equals one percent of the loan amount and is used to obtain revenue in addition to the interest rate. Sometimes called "discount points". For example, if a loan is for $250,000, one point is $2,500. Points are charged by a lender to raise the yield on the loan at closing.

Payment of mortgage loan, or part of it before the due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment. Some loans are "locked out" preventing early prepayment.

Property managers are responsible for the care and upkeep of the premises and often coordinate leasing activities either directly or through the designated leasing agent.

As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds to support public services such as schools.

Items yet to be completed during new construction based on an inspection by the buyer or tenant.

The total cost of an investment including all amounts paid to the seller excluding any adjustments at closing.

A buyer who has demonstrated the financial ability to afford the asking price of a property.

A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has. (See deed)

A registered trade name that may only be used by members of the NATIONAL ASSOCIATION OF REALTORS�.

Obtaining a new loan to pay off an existing loan. Refinancing is a popular practice when interest rates drop.

A conduit entity that invests in real estate and avoids corporate taxation on distributed income. Requires emphasis on long term real estate investing and the payout of nearly all taxable income. See www.NAREIT.org for current rules and a history of REITs starting from their initial authorization in January of 1961.

Private restrictions limiting the use of real property. Restrictive covenants are created by deed and may "run with the land," binding all subsequent purchasers of the land, or may be "personal" and binding only between the original seller or buyer. Restrictive covenants may limit the density of builders per acre, regulate size, style or price range of buildings to be erected.

The overall capitalization rate used to determine the Reversion Value based on the end of year NOI or next year NOI divided by a capitalization rate.

A value indication derived by comparing the property being appraised to similar properties that have been sold recently, applying appropriate units of comparison, and making adjustments to the sales prices of the comparable based on the differences from the subject property. Comparables are adjusted to reflect what they would sell for if they were identical to the subject property being appraised.

The agent who obtains a buyer. A selling agent may represent the buyer, or may be a subagent of the seller.

Smart growth recognizes connections between development and quality of life. In general, smart growth invests, time, attention, and resources in restoring community and vitality to center cities and older suburbs. New smart growth is more town-centered, is transit and pedestrian oriented, and has a greater mix of housing, commercial and retail uses. It also preserves open space and many other environmental amenities.

A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.

A lien that binds a specified piece of property, unlike a general lien, which is levied against all one's assets. It creates a right to retain something of value belonging to another person as compensation for labor, material, or money expended in that person's behalf. In some localities it is called "particular" lien or "specific" lien. (See lien)

A deed in which the grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims asserted by the grantor and those persons whose right to assert a claim against the title arose during the period the grantor held title to the property. In a special warranty deed the grantor guarantees to the grantee that he has done nothing during the time he held title to the property which has impaired the grantee's title.

Speculative properties are not yet leased or presold. Developers are "speculating" on future real estate demand prior to or just after the completion of the building.

Projected income less expenses that are both subject to change, but that have been adjusted to reflect equivalent, stable property operations. Unusually low occupancy or low occupancy might be viewed as temporary and atypical given rise to the use of Stabilized NOI for appraisal purposes.

A salesperson who works for an agent.

A map or plat made by a licensed surveyor sowing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.

There are several definitions to sustainable development. Here are two: "Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs" from the United Nations World Commission on Environment and Development.

Refers to a permanent mortgage loan used to "take out" a construction loan.

Landlord provided improvements included in the space such as wall finish, carpeting, and lighting.

Specializes in negotiating for tenants. The tenant representatives' company should, preferably, not also be leasing agents, i.e. landlord representatives.

Lawful ownership of property. As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.

An insurance policy that protects against losses arising from title defects such as forged or miss-filed documents. Protects lenders against loss of their interest in property due to legal defects in title.

An examination of the public records to determine whether the current title is clear or defective.

A federal agency designed to help veterans enter the housing market. A loan guaranteed by the U.S. Department of Veterans Affairs (VA). VA loans are made to honorably discharged veterans.

A final inspection of a property before it changes ownership.

The acts of an authorized local government establishing regulations for property land usage, type of use, density, and set-backs.


Homer Hoyt Institute & Hoyt Fellows, LLC	Maury Seldin Advanced Studies Institute	Hoyt Advisory Services	Hoyt Institute for Real Estate

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