Home Buyers Glossary C

This mortgage was developed by Fannie Mae to offer low income buyers the option of a loan down payment with a fixed rate mortgage.  Typically this loan package is offered to borrowers who would not normally qualify for conventional 30-year fixed rate home loans.  This mortgage compares your earnings with the earnings in your local area.  To qualify your income must be at or below the average median income level of your local area.

a clause in an adjustable rate loan that allows the borrower to convert the ARM to a fixed rate loan at some future date.

a non standard mortgage that allows the borrower to refinance the loan during the loan period if interest rate falls below the current loan rate.

 Making telephone calls or visiting from door to door to seek prospective buyers or sellers; in the real estate business, generally associated with acquiring listings in a given area.

maximum rate of change of the interest rate on an adjustable rate mortgage. The mortgage may have an annual or lifetime ceiling.

 gain on the sale of a capital asset. If long-term (generally over six months), capital gains are some­times favorably taxed. A personal residence is a capital asset.

 The initial capital and the long-term expenditures made to establish and maintain a business or investment property.

 A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net income expected to be produced by the property. The formula is expressed: Income Rate — = Value.

 The net spendable income from an investment, determined by deducting all operating and

fixed expenses from the gross income. If expenses exceed income, a negative cash flow is the result.

 A type of insurance policy that protects a property owner or other person from loss or injury sustained as a result of theft, vandalism, or similar occurrences.

 A Latin phrase meaning “Let the buyer beware.”

 The document generally given to a purchaser at a tax foreclosure sale. A certificate of sale does not convey title; generally it is an instrument certifying that the holder received title to the property after the redemption period had passed and that the holder paid the prop­erty taxes for that interim period.

 A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.

 The succession of conveyances from some accepted starting point whereby the present holder of real property derives his or her title.

personal property See PERSONAL PROPERTY.

 date when buyer and seller exchange money for property.  The meeting in which you sign the legal documents and pay the fees completing the purchase.

 various fees and expenses payable by the seller and buyer at the time of a real estate closing (also called Transaction costs). Included are brokerage com­missions, discount points, title insurance and examina­tion, deed recording fees, and appraisal fees.  What a bank charges you to cover its costs in providing a mortgage, including everything from the bank attorney’s fee to copying costs for the required paper work. Closing costs typically run 2% to 3% of the cost of the house.

 accounting of funds from a real estate sale, made to both the seller and the buyer separately. Most states require the broker to furnish accurate closing statements to all parties to the transaction.   A summation by the seller’s attorney identity various payments and credits that will affect the closing. It is typically sent to your attorney for review.

 outstanding claim or encumbrance that, if valid, would affect or impair the owner’s title.

 The grouping of homesites within a subdivision on less-than normal-sized lots, with the remaining land used as common areas.

 A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property’s actual replacement cost.

 The illegal act of a real estate broker who mixes the money of other people with that of his or her own—by law, brokers are required to maintain a separate trust account for the funds of other parties held temporarily by the broker.

 Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property. A percentage of the sale price paid to the real estate agent. Sellers typically pay 4% to 6%.

 written pledge or promise; a firm agreement, often used to describe the terms of a mortgage loan that is being offered.

 Parts of a property that are necessary or convenient to the existence, maintenance, and safety of a condominium, or are normally in common use by all of the condominium residents. All condominium owners have an undivided ownership interest in the common elements.

 The body of law based on custom, usage, and court decisions.

 1.A system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. This system stemmed from Germanic tribes and, through Spain, came to the Spanish colonies of North and South America. The system was unknown under English common law.

2. property accumulated through joint efforts of husband and wife and owned by them in equal shares. This doctrine of ownership now exists in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington State.

 Properties listed in an appraisal report that are substantially equivalent to the subject property.

 Persons who are recognized by law as being able to contract with others; usually those of legal age and sound mind.

 an estimate of what a property might bring based on the sale or offering of similar properties, usually by a real estate salesperson. Contrast with Appraisal.

 A theory of urban development which states that expansion tends to occur in concentric circles outward from the central business district.

 A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner.

 one that requires certain condition(s) to be fulfilled, such as rezoning of the property or the buyer’s need to sell another property, before the con­tract is binding.

 written agreement for the sale of property stating that the seller retains title until the conditions of the contract have been fulfilled. See Contract for deed.

 The absolute ownership of an apartment or a unit, generally in a multi-unit building, based on a legal description of the airspace which the unit actually occupies, plus an undivided interest in the ownership of the common elements which are owned jointly with the other condominium unit owners. The entire tract of real estate included in a condominium develop­ment is called a parcel, or development parcel. One apartment or space in a condominium building or a part of a property intended for independent use and having lawful access to a pub­lic way is called a unit. Ownership of one unit also includes a definite undivided interest in the common elements.

 1. That which is received by the grantor in exchange for his or her deed. 2. Something of value that induces one to enter into a contract. Consideration may be “valuable” (money) or “good” (love and affection).

 1. Acts done by the landlord which so materially disturb or impair the tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent. 2. A purchaser’s inability to obtain clear title.

 Notice given to the world by recorded documents. All persons are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.

  A wife’s dower right to her spouse’s real estate which, after the death of her husband, is complete or may be completed to become an interest in such real estate.

 An agreement entered into by two or more legally competent parties by the terms of which one or more of the parties, for a consideration, undertakes to do or to refrain from doing some legal act or acts. A contract may be either unilateral, where only one party is bound to act, or bilateral, where all parties to the instrument are legally bound to act as prescribed.

 A contract for the sale of real estate wherein the purchase price is paid in periodic installments by the purchaser who is in possession although title is retained by the seller until final payment. Also called an installment contract.

 A loan that is not insured or guaranteed by a government or private source.

 A residential multi-unit building whose title is held by a trust or corporation, which is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease.

 An entity or organization created by operation of law whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until dissolved according to legal procedures.

Provisions in the rectangular survey system (government survey method) made to compensate for the curvature of the earth’s surface. Every fourth township line (at 24-mile intervals) is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a full six miles.

The process of estimating the value of a property by adding to the estimated land value the appraiser’s estimate of the reproduction or replacement cost of the building, less

depreciation.

 The business of providing people with expert advice on a subject, based on the counselor’s extensive, expert knowledge of the subject.

 A new offer made as a reply to an offer received, having the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror’s repeating it.

 A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.

 A reoccurring sequence of events that regularly follow one another, generally within a fixed interval of time.

Usually called Restrictive Covenants because they restrict the use of real property. Often required as part of the subdivision process by the approving authority, these are charges registered against the title, and binding upon all subsequent owners. These covenants govern how a property may be used. The most common are Covenants for in favor of the Ministries of Health, Environment or Highways. See also "Statutory Building Schemes"  which have the same effect but are declared by the developer as away of maintaining controls on the appearance of the homes in the subdivision and the uses of the properties.