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Ad Valorem Tax
A tax “according to value,” based on property’s assessed value.
Agency
Legal relationship where broker represents a client (principal).
Alienation Clause
Loan clause requiring full payoff when property is sold/transferred (due-on-sale).
Amortization
Gradual repayment of loan principal + interest through regular payments.
Appraisal
Formal opinion of value by a licensed/certified appraiser, following USPAP.
Appurtenance
A right or privilege that goes with the land (e.g., easement, water rights).
Assessed Value
Value assigned by tax assessor for property tax purposes.
Beneficiary
Lender under a deed of trust.
Broker Price Opinion (BPO)
Estimate of price by a broker/agent, often for lenders.
Bundle of Rights
Ownership rights: Possession, Control, Enjoyment, Exclusion, Disposition.
Cap Rate
Rate of return used in income approach (NOI Ă· Value).
CMA (Comparative Market Analysis)
Agent’s estimate of probable price using comps; not an appraisal.
Closing Disclosure (CD)
TRID-required form given 3 days before closing; shows final loan terms.
Cloud on Title
Defect or claim affecting clear title (e.g., lien, judgment).
Consideration
Something of value exchanged in a contract (money, services, promises).
Constructive Eviction
Tenant leaves because landlord fails to maintain habitable conditions.
Contingency
Condition in a contract (e.g., financing, inspection) that must be met.
Conveyance
The act of transferring real property (via deed).
Deed
Legal document transferring title from grantor to grantee.
Defeasance Clause
Clause requiring lender to release lien once loan is repaid.
Easement
Legal right to use another’s land for a specific purpose.
Eminent Domain
Government power to take private land for public use, with just compensation.
Encumbrance
Claim or liability affecting title (e.g., lien, easement, restriction).
Equitable Title
Buyer’s right to obtain ownership when under contract.
Escheat
Government’s right to take property if owner dies without heirs/will.
Estate for Years
Lease with definite start and end dates (no notice required).
Exclusive Right-to-Sell
Listing where broker earns commission no matter who sells.
FHA Loan
Government-insured loan with low down payment, requires MIP.
Fiduciary Duties (OLD CAR)
Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care.
Foreclosure
Legal process to recover property when borrower defaults.
General Warranty Deed
Strongest deed; grantor promises clear title and defends it.
Gross Lease
Tenant pays fixed rent; landlord covers expenses.
Ground Lease
Long-term land lease where tenant builds improvements.
Habendum Clause
“To have and to hold” clause in deed describing ownership rights.
Joint Tenancy
Co-ownership with right of survivorship (interest passes to other owners).
Lien
Legal claim against property as security for debt.
Littoral Rights
Water rights along large lakes/oceans (navigable waters).
Loan Estimate (LE)
TRID form disclosing loan terms within 3 days of application.
Market Value
Most probable price a property would sell for in open market.
Metes and Bounds
Legal description using distance, direction, and landmarks.
Net Lease (NNN)
Tenant pays rent plus property expenses (taxes, insurance, maintenance).
Nonconforming Use
Legal use established before zoning change; “grandfathered.”
Novation
Substitution of a new contract for an old one.
PMI (Private Mortgage Insurance)
Protects lender if borrower defaults on conventional loan <20% down.
Periodic Tenancy
Lease that renews automatically until proper notice is given.
Points (Discount)
Upfront fees (1% of loan) to reduce interest rate.
Police Power
Government authority to regulate land use (zoning, codes).
Proration
Dividing costs (taxes, rent, insurance) between buyer and seller at closing.
Quiet Title Action
Court order to settle title disputes and remove clouds.
Real Property
Land, improvements, and rights permanently attached.
RESPA
Real Estate Settlement Procedures Act; requires disclosure of closing costs.
Riparian Rights
Water rights along rivers or streams.
Special Assessment
Tax levied for improvements benefiting specific properties.
Steering
Directing buyers toward/away from neighborhoods based on protected traits (illegal).
Sublease
Tenant transfers part of interest but remains liable.
Tenancy by the Entirety
Ownership by married couple; includes survivorship.
Title Insurance
Protects buyer/lender from defects in title.
TRID
TILA-RESPA Integrated Disclosures (Loan Estimate & Closing Disclosure).
Zoning
Local land-use regulations under police power.
Ad Valorem Tax
A tax “according to value,” based on property’s assessed value.
Agency
Legal relationship where broker represents a client (principal).
Alienation Clause
Loan clause requiring full payoff when property is sold/transferred (due-on-sale).
Amortization
Gradual repayment of loan principal + interest through regular payments.
Appraisal
Formal opinion of value by a licensed/certified appraiser, following USPAP.
Appurtenance
A right or privilege that goes with the land (e.g., easement, water rights).
Assessed Value
Value assigned by tax assessor for property tax purposes.
Beneficiary
Lender under a deed of trust.
Broker Price Opinion (BPO)
Estimate of price by a broker/agent, often for lenders.
Bundle of Rights
Ownership rights: Possession, Control, Enjoyment, Exclusion, Disposition.
Cap Rate
Rate of return used in income approach (NOI Ă· Value).
CMA (Comparative Market Analysis)
Agent’s estimate of probable price using comps; not an appraisal.
Closing Disclosure (CD)
TRID-required form given 3 days before closing; shows final loan terms.
Cloud on Title
Defect or claim affecting clear title (e.g., lien, judgment).
Consideration
Something of value exchanged in a contract (money, services, promises).
Constructive Eviction
Tenant leaves because landlord fails to maintain habitable conditions.
Contingency
Condition in a contract (e.g., financing, inspection) that must be met.
Conveyance
The act of transferring real property (via deed).
Deed
Legal document transferring title from grantor to grantee.
Defeasance Clause
Clause requiring lender to release lien once loan is repaid.
Easement
Legal right to use another’s land for a specific purpose.
Eminent Domain
Government power to take private land for public use, with just compensation.
Encumbrance
Claim or liability affecting title (e.g., lien, easement, restriction).
Equitable Title
Buyer’s right to obtain ownership when under contract.
Escheat
Government’s right to take property if owner dies without heirs/will.
Estate for Years
Lease with definite start and end dates (no notice required).
Exclusive Right-to-Sell
Listing where broker earns commission no matter who sells.
FHA Loan
Government-insured loan with low down payment, requires MIP.
Fiduciary Duties (OLD CAR)
Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care.
Foreclosure
Legal process to recover property when borrower defaults.
General Warranty Deed
Strongest deed; grantor promises clear title and defends it.
Gross Lease
Tenant pays fixed rent; landlord covers expenses.
Ground Lease
Long-term land lease where tenant builds improvements.
Habendum Clause
“To have and to hold” clause in deed describing ownership rights.
Joint Tenancy
Co-ownership with right of survivorship (interest passes to other owners).
Lien
Legal claim against property as security for debt.
Littoral Rights
Water rights along large lakes/oceans (navigable waters).
Loan Estimate (LE)
TRID form disclosing loan terms within 3 days of application.
Market Value
Most probable price a property would sell for in open market.
Metes and Bounds
Legal description using distance, direction, and landmarks.
Net Lease (NNN)
Tenant pays rent plus property expenses (taxes, insurance, maintenance).
Nonconforming Use
Legal use established before zoning change; “grandfathered.”
Novation
Substitution of a new contract for an old one.
PMI (Private Mortgage Insurance)
Protects lender if borrower defaults on conventional loan <20% down.
Periodic Tenancy
Lease that renews automatically until proper notice is given.
Points (Discount)
Upfront fees (1% of loan) to reduce interest rate.
Police Power
Government authority to regulate land use (zoning, codes).
Proration
Dividing costs (taxes, rent, insurance) between buyer and seller at closing.
Quiet Title Action
Court order to settle title disputes and remove clouds.
Real Property
Land, improvements, and rights permanently attached.
RESPA
Real Estate Settlement Procedures Act; requires disclosure of closing costs.
Riparian Rights
Water rights along rivers or streams.
Special Assessment
Tax levied for improvements benefiting specific properties.
Steering
Directing buyers toward/away from neighborhoods based on protected traits (illegal).
Sublease
Tenant transfers part of interest but remains liable.
Tenancy by the Entirety
Ownership by married couple; includes survivorship.
Title Insurance
Protects buyer/lender from defects in title.
TRID
TILA-RESPA Integrated Disclosures (Loan Estimate & Closing Disclosure).
Zoning
Local land-use regulations under police power.
Amortization Schedule
Table showing how each loan payment is split between principal and interest over time.
Annual Percentage Rate (APR)
True yearly cost of borrowing, includes interest + fees, required by TILA.
Basis (Cost Basis)
Original purchase price + improvements – depreciation; used to calculate capital gains.
Capitalization Rate (Cap Rate)
Rate of return used in income approach: Value = NOI Ă· Cap Rate.
Cash Flow
Income after expenses and debt service are paid (NOI – debt).
Compound Interest
Interest calculated on both principal and accumulated interest.
Debt Service
Loan payments of principal + interest.
Depreciation (Accounting)
Expense deduction for wear, tear, and obsolescence; allowed on investment property (not land).
Discount Points
Prepaid interest; 1 point = 1% of loan amount, typically lowers rate by ~0.25%.
Equity
Market value – outstanding debt.
Gross Income Multiplier (GIM)
Property value Ă· gross annual income.
Gross Rent Multiplier (GRM)
Property value Ă· monthly rent; quick income approach formula.
Loan-to-Value Ratio (LTV)
Loan Ă· Value; shows how much of value is financed.
Mill Rate
Property tax rate expressed in mills (1 mill = $0.001).
Net Operating Income (NOI)
Gross income – operating expenses (before debt service).
PITI
Principal, Interest, Taxes, Insurance; components of monthly mortgage payment.
Prepayment Penalty
Fee charged if borrower repays loan early (restricted in many states).
Proration
Division of costs (taxes, rent, insurance) between buyer and seller at closing.
Return on Investment (ROI)
Profit Ă· Investment; measure of profitability.
Rule of 72
Shortcut for estimating years to double investment: 72 Ă· interest rate.
Simple Interest
Interest calculated only on principal balance.
Statutory Year
360-day year (30-day months) used for prorations in many states.
Tax Shelter
Legal reduction of taxable income through deductions (e.g., depreciation).
Yield
Effective return on investment, often affected by points, fees, or prepayments.
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