Glossary

A mortgage arrangement whereby the principal amount loaned is increased to include personalty such as appliances, as well as realty; both realty and personalty serve as collateral.

The division of real property between those who own it in undivided shares. For example, A and B own land as tenants in common until they partition it. Thereafter, each owns a particular tract of land.

A wall built along the line separating two properties, partly on each. Either owner has the right to use the wall and has an easement over that part of the adjoining owner’s land covered by the wall.

Conveyance of title to government land, also called a land patent.

An official paper included with a pay check that indicates the amount of salary or wages earned and itemizes deductions from income, such as federal income tax withholding and retirement contributions. When applying for a loan, the borrower may use recent pay stubs to verify current income.

Full or partial money given to decrease a debt.

A portion of the whole. One percent equals one hundredth (1/100) of the whole. One percent of $100 is $1, 2 percent is $2.

A lease of property in which the rental is based on a percentage of the volume of sales made upon the leased premises. It usually provides for minimum rental and is regularly used for retailers who are tenants. The retailer pays additional rent only if sales are high; the shopping center owner has incentive to make the shopping area attractive.

A procedure to estimate the drainage characteristics of soil, especially to determine suitability for a septic system.

A mortgage for more than ten years. A permanent mortgage usually replaces construction or interim financing and provides steady income with amortization payments to the lender.

Personal property; all property that is not realty. Many laws and terms that apply to real property are not the same as those for personalty. When dealing with both types, one should be certain to apply appropriate law and terminology.

The loss of value from all causes of age and action of the elements. For example, a broken window, hole in plaster, collapsed porch railing or sagging frame. Also called physical deterioration.

Acronym for principal, interest, taxes and insurance. The monthly mortgage payment, by most homeowners, consisting of calculated principal and interest plus one twelfth of the estimated annual taxes and insurance.

The person who brings a lawsuit. See defendant.

A plan or map of a certain piece or certain pieces of land. Examples include a subdivision plat or a plat of one lot.

A public record containing maps of land showing the division of the land into streets, blocks and lots and indicating the measurements of the individual parcels. The tax assessor’s office, usually in a city or county, maintains a plat book open for public inspection.

Increment in the value of a plot of land that has been enlarged by assembling smaller plots into one ownership. Combining several small tracts into one ownership can provide a large enough land area for a more profitable use than otherwise. However, it is often difficult to get several owners to sell because some hold out for a high price.

The system of pipes, fittings and fixtures that provide fresh water and dispose of sewage and wastewater from a home. When inspecting a home before purchase, the plumbing should be checked for proper operation, leaks and good ventilation. It also is important to have enough bathrooms to support the occupants.

Document that is required for salespersons and brokers in most states. Issued by the state licensing agency, a pocket card identifies its holder as a licensee and must be carried at all times.

The right of any political body to enact laws and enforce them for the order, safety, health, morals and general welfare of the public. For example, zoning ordinances are an exercise of police power. Government authorities are granted the power of eminent domain through the police power.

Occupying a property as owner; part of the bundle of rights that define property ownership. Mere possession can infer ownership if unchallenged, such as laws that recognize squatter’s rights or those that grant easements for long-standing use of someone else’s property.

An instrument authorizing a person to act as the agent of the person granting it. By using a power of attorney, one can grant a specific person a wide or limited scope of power.

Methods used by unscrupulous lenders to take advantage of borrowers. Predatory practices saddle the borrower with unnecessary expenses or high interest charges. In some cases, predatory practices force foreclosure of the property.

Land and tenements; an estate; the subject matter of a conveyance.

At closing, the purchaser may reimburse the seller for some expenses that the seller paid in advance; the purchaser, as a borrower, may be required to pay certain expenses in advance.

A clause in a mortgage that gives a mortgagor (borrower) the privilege of paying the mortgage indebtedness before it becomes due. Sometimes a penalty must be paid if prepayment is made, but payment of the interest that is not yet due is waived.

A charge, usually a percentage of the outstanding balance of the loan, made by the lender for paying off the loan before the end of its term. The right of a lender to charge a penalty is included in the prepayment clause of the mortgage contract. However, some states preclude prepayment penalties when the contract interest rate is more than a stated amount. Some penalties expire after the first several years of the term.

An analysis to estimate the largest mortgage loan a borrower could qualify for based on income and current debts. Prequalifying provides a homebuyer with an idea of the price range affordable with current financing. Lenders will prequalify homebuyers without charge, often over the telephone. However, prequalifying does not imply any type of commitment to make a loan.

A span of prices describing homes that a particular homebuyer can afford and finds acceptable. Establishing a buyer’s price range requires prequalifying to estimate affordability and a preliminary market search to find out the homes available at various prices.

A lease between the owner and a tenant who, in turn, has sublet all or part of his or her interest. The tenant in the primary lease is still responsible to the landlord, even though the subtenant(s) are occupying the space.

The amount of money remaining to be paid on a loan. Also, the client of a brokerage agent; the person who engages an agent by contract. The principal of a loan determines how much interest must be paid. During the term of a mortgage loan, the principal declines and less of each payment is interest. The principal of an agent is the person the agent serves, who is most often the seller unless the buyer has made specific arrangements with an agent.

The amount of money remaining to be paid on a loan. Also, the client of a brokerage agent; the person who engages an agent by contract. The principal of a loan determines how much interest must be paid. During the term of a mortgage loan, the principal declines and less of each payment is interest. The principal of an agent is the person the agent serves, who is most often the seller unless the buyer has made specific arrangements with an agent.

The address persons establish as their official dwelling place. A person’s principal residence has special status under state law, the federal income tax code and some financing programs. For example, in Texas, principal residences are subject to the homestead exemption.

Mortgage insurance provided by a private firm. The federal government provides mortgage insurance through the Federal Housing Administration (FHA). However, the size of loan that can be insured is limited, and other restrictions may make private insurance a better choice in some cases.

To establish the validity of the will of a deceased person. Also called prove. Probate relates not only to the validity of a will but also to matters and proceedings of estate administration.

Court with authority over proving wills and administering estates.

The cash remaining after all expenses are deducted, usually from a sale of property. When a property is sold, various expenses are connected with the sale, a mortgage loan usually has to be repaid and some taxes may be accrued. The money remaining after paying expenses can be used by the seller, perhaps as a down payment on a replacement property.

To make known to the public; to put into print. In Texas, certain printed forms for real estate transactions and their regulations have been released by the Texas Real Estate Commission.

The rights that one individual has in lands or goods to the exclusion of all others; rights gained from the ownership of wealth. See real property and personalty.

The recorded boundary of a plot of land. A survey is performed in order to establish property lines and describe them on a plat.

The operation of property as a business, including rental, rent collection, maintenance and so on. Property managers remove the daily burden from investors, thus allowing real estate owners to be free of daily operations.

One who holds title to real estate.

Same as ad valorem taxes.

To allocate between seller and buyer their proportionate share of an obligation paid or due; for example, to prorate real property taxes or insurance. Many items of expense are prorated between buyer and seller, to the date of closing.

To buy or obtain title to a property in exchange for something, usually money.

A mortgage given by a grantee (buyer) to a grantor (seller) in partial payment of the purchase price of real estate. Institutional lenders often are unable or unwilling to finance certain types of property, so the seller must accept a purchase money mortgage to facilitate a sale.

The contract price paid for a property but not including transaction costs.

The buyer.