GlossaryFor Real Estate Terms


A measure of land equaling 4,840 Square yards, or 43, 560 square feet. If square, it is 208.71 feet square (208.71 ft x 208.71 ft.).


A court-enforced order to remove a lessee from the property. It results in physical ouster of the lessee.


A statement or declaration reduced to writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.


The legal relationship created when a person acts on behalf of another in business and legal dealings with others.


One who acts for the with authority from another, called the principal or client.


Liquidation of a financial obligation on an installment basis, also recovery over a period of cost or value.


A loan in which loan principal is repaid entirely during the loan term, instead of entirely at the end of the term.


A written instrument given to pass title or personal property from the vendor to the vendee.


A single mortgage which covers more than one piece of real property.


Used in urban planning to provide separation of two incompatible zones, e.g. on land between a residential area and an area zoned for industrial use.


A payment to the lender from the buyer, the seller, and/or a third party, causing the lender to reduce the interest rate during the first 1-5 years of the loan.


An agent who represents only the buyer in a real estate transaction, regardless of whether the commission is paid by the buyer or by the seller or through a commission split with the listing agent.


The buyer’s closing costs and credits detailed so that the buyer will know what has charged and credited to him at closing.


The condition which exists when a buyer is in a more commanding position as to price and terms because real property offered for sale is in plentiful supply in relation to demand.


At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (Book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Usually taxed a lower rates than ordinary income


Estimating value of property based on its net income and a reasonable return on the investment, by dividing annual net income by the capitalization rate.


The rate which is considered a reasonable return on investment, and used in the process of estimating value based upon net income. The rate necessary to attract the average investor to a particular kind of investment.


The net income generated by a property, after debt service, but before depreciation and other noncash expenses.


The basic rules establishing the rights and obligations of owners of real property within a subdivision in relation to others owners within the same subdivision and in relation to the homeowners association.


A history of conveyances and encumbrances affection the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.


A movable article of property; any tangible property other than land, buildings, and things annexed to land.


A clam on personal property (instead of real property) used to secure or guarantee a promissory note.


The miscellaneous expenses buyers and sellers incur in the transfer of ownership of real property over and above the cost of the property.


An accounting of funds made to a buyer or seller.


A claim, encumbrance or condition which impairs the title to real property until disproved or eliminated, often through a quitclaim deed or quiet title legal action.


Interest paid on original principal and also on the accrued and unpaid interest, which has accumulated as the debt matures.

CONTINGENCY  A contact provision that requires the completion a certain act before the contract is binding. 

DEBT-TO-INCOME RATION A percentage of a borrower's current debt load and income that lenders use to determine the amount to lend to a borrower.

DEBTOR A person who is in debt; the one owing money to another.

DEED A written instrument that conveys title to real property from one person (grantor) to another (grantee).

DEFERRED MAINTENANCE Existing but unfulfilled requirements for repairs and rehabilitation. Postponed or delayed maintenance causing decline in a building's physical condition. 

DEPRECIATION loss of value of property brought about by age, physical deteriration or functional or economic obsolescence. Also, the decrease in value of an asset that is allowed as an expense for income tax purposes. 

DOWN PAYMENT The part of the purchase price not financed. 

EARNEST MONEY A deposit by a purchaser of real estate as evidence of good faith. Not the buyer's consideration for the contract. 

EASMENT An irrevocable right, privilege or interest limited to a specific purpose which one party has in the land of another.

EMINENT DOMAIN The right of the government or an authorized private entity to acquire for necessary public or quasi-public use by condemnation, upon payment of fair compensation to the owner. 

ENCROACHMENT An unlawful intrusion onto another adjacent property by improvements to real property, e.g., a swimming pool built across a property line.

EQUITY the interest or value which an owner has in real estate over and above the liens against it. A branch of remedial justice by and through which relief is afforded to suitors in courts of equity. 

ESCROW The deposit of instruments and/or funds with instructions with a third neutral party to carry out the provisions of an agreement or contract. 

EXCHANGE a means of trading equities in two or more real properties, so that the transactions are treated as a single transaction through a single escrow.

EXPIRED LISTING a property that has been listed, but had not sold during the listing period. It can be discovered through the Multiple Listing Service (MLS)

FAIR CREDIT REPORTING ACT (FCRA) A federal lay requiring persons who take adverse actions, based upon a credit report received from a credit reporting agency, to reveal to the potential borrower the name of the credit reporting agency that provided with the credit report, and gives consumers the right to have errors in their credit files corrected. 

 FAIR MARKET VALUE The amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under undue pressure to buy or sell. 

FANNIE MAE (FNMA) Created as the Federal National Mortgage Association in 1938 to buy mortgages on residential property. 

FEDERAL DEPARTMENT OF VETERANS AFFAIRS (VA) a government organization that guarantees loans from private lenders to enable veterans, reservists, or National Guard members to finance homes they intend to occupy. 

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) Agency of the federal government that insures lenders against loss in the event of default on mortgage loans financing new and existing homes and home repairs. 

FEE ESTATE (FEE SIMPLE ESTATE) An estate of inheritance in real property. The greatest interest that one can have in real property.  An estate that is unqualified, or indefinite duration, freely transferable and inheritable. 

FICO SCORE A rating of how the applicant has handled his credit.  Scores close to 800 indicate excellent credit, and result in favorable terms.  Those close to 600 or below indicate poor credit, and result in higher interest rates, higher down payments, or rejection of the application. 

FIDUCIARY DUTIES Duties owed by an agent to act in the highest good faith and not obtain any advantage over the principal by the slightest misrepresentation, confidence, or responsibility. 

FINANCE CHARGE The dollar amount credit will cost the borrower over the term of a loan. 

FIXTURE Appurtenances attached to the land or improvements so they become real property, for example, pluming fixtures, cabinets, ceiling light bulbs, house keys, etc.

FLOOD DISASTER PROTECTION ACT  Federal lay that requires the purchase of flood insurance as a condition of receipt of federal-related financial assistance for acquisition and/or construction of a building in Special Flood Hazard Areas (SFHA) of any community. 

FORECLOSURE  A procedure designed to terminate a borrower's interest in the property and enable the lender to acquire the value of the pledged collateral. 

FREDDIE MAC  An affilate of the Federal Home Loan Bank, that purchases conventional, FHA, and VA loans from members of the Federal Reserve Systems and the Federal Home Loan Bank System. Formerly known as Federal Home Mortgage Corporation.

GOOD FAITH ESTIMATE  in a transaction subject to RESPA, the written estimate of what a lender proposes to change the borrower.  It must be presented to the borrower within three days of receipt of the borrower's loan application. 

HOME EQUITY LINE OF CREDIT (HELOC) A form of revolving credit in which a person's home serves as collateral.

HOME EQUITY LOAN A junior loan in which the homeowner uses in his home for a loan for home improvements, consolidating and paying credit and consumer debts, car purchases, education, medical expenses, etc. 

HOUSING AND URBAN DEVELOPMENT (HUD) Department of federal government that includes FHA and administers RESPA, the Fair Housing Act and the Interstate Land Sales Disclosure Act, makes rules to implement them, and provides investigations to enforce them. 

HUD-1 SETTLEMENT STATEMENT The standard form used to disclose all charges imposed in the transaction separately, and in detail. 

INTEREST ONLY LOAN a non-amorting loan in which the lender costs of doing business and provide a profit. 

INTEREST RATE rent or charge paid for use of money, expressed as a percentage per month or year of sum borrowed. 

JOINT TENANCY undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship;i.e., the right to share equally with other surviving joint tenants in the interest of a decreased joint tenant. 

JUDICIAL FORECLOSURE Foreclosure of property through the court.

LEAD-BASED-PAINT  Used in housing prior to 1978, lead can be present in drinking water, in paint used to decorate the interior or exterior of a home, in the dust within a home, and in soil around the home.  it can enter the body when an individual breathes lead particles or swallows led dust and eventually causes cancer. 

LEASE a contract between an owner and tenant, setting forth the conditions upon which a tenant may occupy and use the property, including the term of occupancy.

LEASE WITH OPTION TO PURCHASE  Gives a tenant the right to buy the property he is leasing at preset terms prior to the end of the term of the lease. Also called a lease option. 

LESSEE One how contracts to rent, occupy, and use property under a lease agreement; a tenant. 

LESSOR An owner who enters into a lease agreement with a tenant; a landlord.

LIEN a form of encumbrance that makes property security for the payment of a debt or discharge of an obligation, i.e.,judgment, taxes, mortgage, deed of trust etc.

LIFE ESTATE  An estate or interest in real property held for the duration of the life of one or more persons, including the person holding the estate or some other person. 

LISTING AGREEMENT  An employment contract in which a principal authorize an agent to find persons to buy, lease, or rent his property. May also be used by a prospective purchaser or lessee to employ an agent to locate property.

LOAN-TO-VALUE RATIO  the percentage of a property's value that a lender can or may loan to a borrower. An 80% LTV means a lender may loan 80%of the property appraised value to a borrower.
MARKET VALUE  The most probable price a property should bring in a competitive and open marker under all conditions requisite to a fair sale.

MEDIATION  An attempt by a third party to get parties to a contract to agree to a resolution of their conflict. Neither party has to agree to mediation or be bound by meditation. 

MOLD  Fungus that can sometimes produce chemicals, called mycotoxins, which may cause illness in people who are sensitive to them or who are exposed to large amounts in the air. 

MORTGAGE  A written contract hypothecating the borrower's property as security for a loan. 

MORTGAGEE  A lender who receives a mortgage as a security for a loan. 

MORTGAGOR  A buyer who gives a lender a mortgage hypothecating his property as a security for a loan.

NATIONAL ASSOCIATION OF REALTORS  An organization which lobbies at the national level for the industry, and also creates a code of ethics, model forms and policies, and provides educational opportunities for members. 

NET LEASE  provides for the tenant to pay a rent amount that is net income to the landlord.  In addition to rent, the tenant pays some or all of the property expenses, property taxes, and property insurance premiums separately. 

NONCONFORMING USE  Buildings and land uses that had been legal prior to the effective date of a zoning change, that no longer conform to the new requirements. such buildings and uses will remain legal. 

NOTE  A promise to repay a loan on specified terms. Evidence of a debt. 

OPTION  An agreement to keep open, over a specified period of time, an offer to sell, purchase or lease property. 

ORIGINATION FEE  Generally of 1-2% of the loan amount as compensation for processing the loan package. 

PARTNERSHIP  An association of two or more persons to operate as co-owners of a business for profit. It may be a general partnership or a limited partnership.

PERSONAL PROPERTY  Any property that is not real property (e.g., a table)

PLANNED UNIT DEVELOPMENT  A common interest subdivision in which owners own interests in or portions of the property in common. Each lot is sold separately and open space property owners (e.g., a club house or pool) is owned by a homeowner's association (HOA).

PRELIMINARY TITLE REPORT  A report of the title insurance company based on a title search, disclosing the current status of the title to interested parties contemplating a transfer of title or interest or a new loan affection the real property. 

PREPAYMENT PENALTY  A clause providing for a fee for the privilege of paying off the loan ahead of schedule. 

PROMISSORY NOTE  A document signed by a borrower and given to the lender to provide legally acceptable evidence of the borrower's debt and his promise to repay the debt. 

PROPERTY MANAGEMENT  An organized profession dealing primarily with the management of buildings. 

QUITCLAIM DEED  passes any present interest the signer may have in the property, without any warranty. 

REAL ESTATE INVESTMENT TRUST (REIT)  A trust formed to allow investment in real estate as long-term investment, providing income from rentals, as well as long-term capital gains when property is sold. 

REAL ESTATE SETTLEMENT PROCEDURES ACT (RESPA)  A law, administered by HUD, that requires lenders of federally-related loans to finance a purchase, refinance or obtain a home equity loan or line of credit using residential real property as security to provide borrowers with information about the process of settlement (or closing0 of the transaction. 

RECONVEYANCE  An instrument used to show satisfaction of a deed of trust. 

RECORDING  Enables people to give public and constructive notice concerning documents affecting the tittle to real estate. Once recorded, the information in a deed or other document is available for public inspection. 

REFINANCE  The repayment of a debt from the proceeds of a new loan, using the same property as security for the new loan. 

RIGHT OF FIRST REFUSAL  Gives a lessee the first opportunity to lease additional space or to purchase the property, if the landlord decides to offer additional space for a lease or other property for purchase. 

RIGHT OF SURVIVORSHIP  the surviving co-owners' rights to acquire the interest of a deceased co-owner. 

S CORPORATION  A corporation that does not pay corporate income tax; instead each stockholder declares his share of the profit as personal income and can deduct his share of the losses. 

SATISFACTION  Recorded when a mortgage is paid off, in order to clear the mortgage lien from the records. 

SECTION 1031  EXCHANGE A transaction that relates to an exchange of like kind property (e.g., real estate for real estate or personal property for personal property) that enables one of the parties to defer taxes on his gain. Also called a taxed-deferred exchange, tax-free exchange, or non-taxable exchange. 

SELLER DISCLOSURE STATEMENT  A signed statement from the seller given the buyer a record of the seller's knowledge of the title, water source and systems, sew/septic systems, structural concerns, mechanical systems, community associations and geographical hazards. 

SELLER'S AGENT  An agent who has entered into an agency relationship with only the seller in a real estate transaction.

SELLER'S MARKET  When the demand for house exceed the supply.

SETBACK LINES The minimum distance a structure must be set back from a street, lot line or other boundary. 

SETBACK  distances between lot lines and improvements. 

SETTLEMENT COSTS Funds the buyer and seller pay to close the transaction. What is included, the amount, and who pays depends on the transaction and its terms, the existence of any liens against the parties or the real estate, and the type of financing to be used in the sale. 

SIMPLE INTEREST  Interest paid only on the principal owed.  The basic simple interest formula has three components; interest, rate, and loan balance.  The formula is: Annual Interest=Rate x Loan Balance. 

STRAIGHT LEASE  Provides for a fixed rental amount to be paid periodically throughout the term of the lease, e.g., $1,000 per month. Also called a flat lease or fixed lease. 

SUBLEASE  A transfer of some of the lessee's right for the remainder of the lease term, or a transfer of all his rights for less than the original term of the lease. 

SUBORDINATION CLAUSE  An agreement to waive some rights in favor of another, such as to move from first lien to junior lien position. 

SURVEY  The process by which a parcel of land is measured and its area is ascertained.

TENANCY BY THE ENTIRETY  A common law tenancy that can generally only be created by husband and wife, with the main advantage being its right of survivorship. When one spouse dies, the other owns the whole property, without probate, free and clear of that spouse's debts (but not free of incurred jointly by both spouses).

TITLE  Evidence of rights or ownership of real property acquired through purchase, inheritance, devise, gift, or foreclosure.

TITLE INSURANCE POLICY  A contract by which the insurer agrees to pay the insured a specific amount for a loss caused by defects of title to real estate, in which the insured has an interest as purchaser, mortgagee or otherwise. 

TITLE SEARCH  An examination of public records, laws and court decisions, to ensure that no one exempt the current owner has a valid claim to the property, and to disclose past and current facts regarding ownership of the subject property. 

TRUST DEED A security instrument used in some states in lieu of a mortgage, involving three parted - the borrower who signs the trust deed (grantor or truster), a neutral third party to whom the truster hypothetically deeds the property as security for the payment of the debt (trustee), and the lender (beneficiary) who benefits from the pledge agreement in the event of a default. Upon default, the trustee can sell the property and transfer the money obtained at the sale to the lender.

TRUSTEE  In a deed of trust, the third party who has a power of sale allowing him to foreclose and sell the property without court approval, upon default on a loan.  

TRUSTOR  In a deed of trust, the borrower. Also called a grantor. 

UNDERWRITING  Insuring something against loss; guaranteeing financially. 

VACANCY RATE  The ratio between the number of vacant units and the total units and the total number of units in a multi-tenant building development. 

VALUE  The relationship between an item desired and a potential purchaser for the item. 

VARIANCE  Special permission to allow a land use that would normally be in violation of current zoning, but would not change the basic character of the area and would be consistent with the general objectives of zoning in the area. 

VESTED  Bestowed upon someone;secured by someone, such as title to property. 

WARRANTY DEED A deed used to convey real property, which contains warranties of ownership, encumbrances and defense of the title against lawful claims of third persons. 

WRAP-AROUND MORTGAGE A second mortgage, which is subordinate to an existing unsatisfied first mortgage on the property, and which includes the total of the amount borrowed on the junior lien and the balance of the first lien. 

WRIT OF EXECUTION A court order to the sheriff to sell a debtor's property to satisfy a judgement. 

ZONING  Act of city or county authorities specifying type of use to which property may be put in specific areas. 

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 John L. Scott - Ashland

 Chelle Fowler, Broker

 320 E. Main Street,

 Oregon 97520

 Licensed in the State of Oregon

 Each Office Is Independently Owned and Operated

 (541) 261-2175 Cell

 (541) 488-1311 Office

 (541) 488-1511 Fax

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