Glossary

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
There are 139 names in this directory beginning with the letter C.
Cancellation
Termination of a contract with_out undoing acts that have already been per_formed under the contract. Compare: Rescission.
Cancellation Clause
A contract provision that gives the right to terminate the obligations upon the occurrence of specified conditions or events.
Capacity
The legal ability or competency to perform some act, such as enter into a contract or execute a deed or will. See also: Competent.
Capital
Money (or other forms of wealth) avail_able for use in the production of more money.
Capital Assets
Assets held by a taxpayer other than: 1) property held for sale to customers in the ordinary course of the taxpayer's business; and 2) depreciable property or real property used in the taxpayer's trade or business. Thus, real property is a capital asset if it is owned for personal use or for profit.
Capital Expenditures
Money spent on im_provements and alterations that add to the value of the property and/or prolong its life.
Capital Gain
Profit realized from the sale of a capital asset. If the asset was held for more than one year, it is a long-term capital gain; if the asset was held for one year or less, it is a short-term capital gain.
Capital Improvement
Any improvement that is designed to become a permanent part of the real property or that will have the effect of sig_nificantly prolonging the property's life.
Capital Loss
A loss resulting from the sale of a capital asset; it may be long-term or short-term, depending on whether the asset was held for more than one year, or for one year or less.
Capitalization
A method of appraising real property by converting the anticipated net in_come from the property into the present value. Also called the income approach to value.
Capitalization (Cap) Rate
Rate of return used to derive the capital value of an income stream, divide annual income by net operating income.
Capitalize
1. To provide with cash, or capital. 2. To estimate the present value of an asset us_ing capitalization.
Capture, Rule of
A legal rule that grants a land_owner the right to all oil and gas produced from wells on his or her land, even if it migrated from underneath land belonging to someone else.
Carrying Charges
Expenses necessary for holding property, such as taxes and interest on idle property or property under construction.
Cash Flow
The net operating income minus the total of all debt service payments. (See definition of "net operating income" below.).
Cash Out
Cash given to the borrower from the proceeds of a loan. While relatively common as part of a refinance, it is uncommon, but not impossible, as a benefit of a small percentage of non-conforming loans used for a purchase.
Caveat Emptor
A Latin phrase meaning "Let the buyer beware"; it expresses the idea that a buyer is expected to examine property carefully before buying, instead of relying on the seller to disclose problems. This was once a firm rule of law, but it has lost most of its force, espe_cially in residential transactions.
CC&Rs
A declaration of covenants, conditions, and restrictions; usually recorded by a devel_oper to place restrictions on all lots within a new subdivision.
Certificate of Eligibility
Issues by the Veterans Administration to those who qualify for a VA loan.
Certificate of Insurance
A document issued by an insurance company to verify the coverage.
Certificate of Occupancy (C.O.)
A document issued by a local government or agency permitting the structure to be occupied by members of the public.
Certificate of Reasonable Value
A document issued by the Veterans Administration, setting forth the current market value of a property, based on a VA-approved appraisal.
Certificate of Sale
The document given to the purchaser at a mortgage foreclosure sale; be_comes a sheriff's deed only after the redemp_tion period expires.
Certified Commercial Investment Member (CCIM)
A designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Certified Residential Broker (CRB)
A designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Certified Residential Specialist (CRS)
A designation awarded by the Realtors National Marketing Institute, which is affiliated with the National Association of Realtors.
Certiorari, Writ of
A writ in which a higher court requests a transcript of proceedings that took place in a lower court, for appellate re_view.
Cesspool
An underground pit used to catch and temporarily hold sewage while it decomposes and leaches into the surrounding soil.
Chain of Title
A history of conveyances and encumbrances affecting a title from the time that the original patent was granted or as far back as records are available.
Change, Principle of
An appraisal principle which holds that a property's value is constantly changing, in response to economic, social, and governmental forces.
Charter
A written instrument granting a power or a right of franchise.
Chattel
An article of personal property. Chattel
Chattel Real
Personal property that is closely associated with real property; the primary ex_ample is a lease.
Civil Law
The body of law concerned with the rights and liabilities of one individual in rela_tion to another; includes contract law, tort law, and property law. Compare: Criminal Law.
Civil Rights
Fundamental rights guaranteed to individuals by the law. The term is primarily used in reference to constitutional and statu_tory protections against discrimination or gov_ernment interference.
Civil Suit
A lawsuit in which one private party sues another private party (as opposed to a criminal suit, in which an individual is suedprosecutedby the government).
Clean Air Act
A federal law regulating the emission of air pollutants.
Clean Water Act
A federal law intended to re_duce water pollution.
Clear Title
A marketable title, one free of clouds and disputed interests.
Client
One who employs a broker, lawyer, ap_praiser, or other professional. A real estate broker's client may be the seller, the buyer, or both.
Closing
The formal meeting where loan documents are signed and funds disbursed. Note, however, that Federal law requires that funds not be disbursed for three business days on certain loans where personal residences serve as the security. (See definition of "recission" below.).
Closing Costs
The expenses which borrowers incur to complete the loan transaction. These costs may include title searches, title insurance, closing fees, recording fees, processing fees and other charges.
Closing Date
The date on which the seller delivers the deed and the buyer pays for the property.
Closing Statement
An accounting of funds from a real estate transaction, also known as a HUD-1.
Cloud on Title
An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title.
Co-mortgagor
Someone (usually a family member) who accepts responsibility for the re_payment of a mortgage loan along with the pri_mary borrower, to help the borrower qualify for the loan.
Code of Ethics
A body of rules setting forth accepted standards of conduct, reflecting prin_ciples of fairness and morality; especially one that the members of an organization are ex_pected to follow.
Codicil
An addition to or revision of a will.
Collateral
Property pledged as security for a debt.
Collusion
An agreement between two or more persons to defraud another.
Combined Loan-to-Value (CLTV)
The total of all loans relative to the value of the property. If a property has a value of $100,000 and three loans totaling $125,000, the CLTV is 125% ($125,000 / $100,000).
Commercial Bank
A type of financial institu_tion that has traditionally emphasized commer_cial lending (loans to businesses), but which also makes many residential mortgage loans.
Commercial Paper
Negotiable instruments, such as promissory notes, sold to meet the short-term capital needs of a business.
Commercial Property
Property zoned and used for business purposes, such as a restau_rant or an office building; as distinguished from residential, industrial, or agricultural property.
Commingling
Illegally mixing trust funds held on behalf of a client with personal funds.
Commission
A fee charged for brokerage services.
Commitment
The notification that a lender has approved a loan. Virtually all commitments are issued conditionally; that is, subject to some list of conditions that must be satisfied prior to funding actually taking place. Typical conditions include appraisals of a certain value, clean title, verification of representations by the borrower, etc.
Common Areas
1. In a building with leased units or spaces, the areas that are available for use by all of the tenants. 2. The common ele_ments in a condominium.
Common Elements
The land and improve_ments in a condominium or other common in_terest development that are owned and used collectively by all of the residents, such as park_ing lots, hallways, and recreational facilities available for common use. Also called common areas.
Common Elements, Limited
Common ele_ments that are reserved for the use of a certain unit or certain units, to the exclusion of other units; examples include assigned parking spaces and storage lockers.
Common Interest Ownership
The form of ownership that is involved in condominiums, townhouses, cooperatives, and time shares.
Common Law
1. Early English law. 2. Long-established rules of law based on early English law. 3. Rules of law developed in court deci_sions, as opposed to statutory law.
Community Property
In certain states (not in Minnesota), property owned jointly by a mar_ried couple, as distinguished from each spouse's separate property; generally, any property ac_quired through the labor or skill of either spouse during marriage.
Comparable Sales (Comps)
As part of the appraisal process, those relatively recently sold properties which will be compared to the subject property (the property being appraised) for the purpose of forming an opinion of value for the subject property. The facts and details of the comparable properties will be compared to those of the subject. In an urban setting, to be of credible assistance in this process, comparable sales must have the same use as the subject, have many similarities to the subject in terms of size of
Compensation
Paid to a broker for services in connection with a real estate transaction (usu_ally a percentage of the sales price).
Competent
1. Of sound mind, for the purposes of entering into a contract or executing a legal instrument. 2. Both of sound mind and having reached the age of majority.
Competition, Principle of
An appraisal prin_ciple which holds that profits tend to encourage competition, and excess profits tend to result in ruinous competition.
Compliance Inspection
A building inspection to determine, for the benefit of a lender, whether building codes, specifications, or conditions es_tablished after a prior inspection have been met before a loan is made.
Compounding
The process of accruing interest on the remaining balance on a monthly basis.
Condemnation
1. Taking private property for public use through the government's power of eminent domain. 2. A declaration that a struc_ture is unfit for occupancy and must be closed or demolished.
Condemnation Appraisal
An estimate of the value of condemned property to determine the just compensation to be paid to the owner.
Condition
1. A provision in a contract that makes the parties' rights and obligations depend on the occurrence (or nonoccurrence) of a par_ticular event. Also called a contingency clause. 2. A provision in a deed that makes title depend on compliance with a particular restriction.
Conditional Use Permit
A permit that allows a special use, such as a school or hospital, to operate in a neighborhood where it would oth_erwise be prohibited by the zoning. Also called a special use permit or special exception per_mit.
Conditions, Covenants, and Restrictions (CCR's)
Promises written into deeds and other instruments agreeing to performance or nonperformance of certain acts, or requiring or prohibiting certain uses of the property.
Condominium
Property developed for common interest ownership, where each co-owner has a separate interest in an individual unit, com_bined with an undivided interest in the common elements of the property.
Condominium Association
The unit owners' association of a condominium. See: Unit Own_ers'Association.
Confirmation of Sale
Court approval of a sale of property by an executor, administrator, or guardian.
Conforming Loan
A loan, which has underwriting criteria consistent with (i.e., conforming to) those strict guidelines of Fannie Mae, Freddie Mac, FHA or VA. These are typically the lowest interest rate loans with very good terms. (See definitions of "Fannie Mae", "Freddie Mac", "FHA", "VA" and "underwriting" below.).
Conformity, Principle of
An appraisal prin_ciple which holds that the maximum value of property is realized when there is a reasonable degree of social and economic homogeneity in the neighborhood.
Conservation
1. Preservation of structures or neighborhoods in a sound condition. 2. Preser_vation or controlled use of natural resources for long-term benefits.
Conservator
A person appointed by a court to take care of the property of another who is in_capable of taking care of it on his or her own.
Consideration
Anything of value given to in_duce another to enter into a contract, such as money, goods, services, or a promise. Some_times called valuable consideration. See also: Love and Affection.
Conspiracy
An agreement or plan between two or more persons to perform an unlawful act.
Constructive
Held to be so in the eyes of the law, even if not so in fact. See: Annexation, Con_structive; Eviction, Constructive; Notice, Con_structive; Severance, Constructive.
Consumer Price Index
An index that tracks changes in the cost of goods and services for a typical consumer. Formerly called the cost of living index.
Contiguous
Actually touching, having a common boundary.
Contour
The shape or configuration of a sur_face. A contour map depicts the topography of a piece of land by means of lines (contour lines) that connect points of equal elevation.
Contract
An agreement between competent parties to do or not do certain things for consideration.
Contract For Deed
A real estate installment selling arrangement whereby the buyer may use, occupy, and enjoy land, but no deed is given by the seller until all or a specified part of the sale price has been paid, same as land contract. When all the terms of the contract are satisfied, the Seller conveys the Deed.
Contract of Adhesion
A contract that is one_sided and unfair to one of the parties; a take-it-or-leave-it contract, in which the offerer had much greater bargaining power than the offeree.
Contract, Bilateral
A contract in which each party has made a binding promise to perform (as distinguished from a unilateral contract).
Contract, Broker and Salesperson
An em_ployment contract between a broker and an af_filiated salesperson, outlining their mutual obligations.
Contract, Executed
A contract in which both parties have completely performed their con_tractual obligations.
Contract, Executory
A contract in which one or both parties have not yet completed perfor_mance of their obligations.
Contract, Express
A contract that has been put into words, either spoken or written.
Contract, Implied
A contract that has not been put into words, but is implied by the actions of the parties.
Contract, Oral
A spoken agreement that has not been written down. Also called a parol con_tract.
Contract, Real Estate
1. Any contract pertain_ing to real estate. 2. A contract for deed.
Contract, Unenforceable
An agreement that a court would refuse to enforce; for example, a contract is unenforceable if its contents can't be proved or the statute of limitations has run out.
Contract, Unilateral
A contract that is ac_cepted by performance; the offeror has prom_ised to perform his or her side of the bargain if the other party performs, but the other party has not promised to do so. Compare: Contract, Bilateral.
Contract, Valid
A binding, legally enforcable contract.
Contract, Void
An agreement that is not an enforceable contract, because it lacks a required element (such as consideration) or is defective in some other respect.
Contract, Voidable
A contract that one of the parties can disaffirm without liability, because of lack of capacity or a negative factor affect_ing consent, such as fraud or duress.
Contractor
One who contracts to provide specific goods or services.
Contribution, Principle of
An appraisal prin_ciple which holds that the value of real prop_erty is greatest when the improvements produce the highest return commensurate with their cost (the investment). Also called the principle of increasing and decreasing returns.
Conventional Loan
A conforming loan with no government guarantee; that is, a Fannie Mae or Freddie Mac loan. (See definition of "conforming loan" above.).
Conversion
Changing property to a different use or form of ownership.
Convertible ARM
An Adjustable Rate Mortgage that offers the borrower the option to convert payments to a fixed-rate schedule at a specified period within the term of the loan. Conversion is made for a nominal fee, and the interest rate on the fixed-rate loan is determined by a rule specified in the ARM agreement.
Convey
To deed or transfer title to another.
Conveyance
The transfer of title to real prop_erty from one person to another by means of a written document, especially a deed.
Cooperative
A form of common interest own_ership. A cooperative building is owned by a corporation, and the residents are shareholders in the corporation; each shareholder receives a proprietary lease on an individual unit and the right to use the common areas.
Corner Influence
The increase in a property's value that results from its location on or near a corner, with access and exposure on two streets.
Corporation
An association organized accord_ing to certain laws, in which individuals may purchase ownership shares; treated by the law as an artificial person, separate from the indi_vidual stockholders.
Corporation, Domestic
A corporation doing business in the state where it was created (in_corporated).
Corporation, Foreign
A corporation doing business in one state or country, but created (in_corporated) in another state or another country.
Correction Lines
In the rectangular survey system, adjustment lines used to compensate for the curvature of the earth; they occur at 24-mile intervals (every fourth township line), where the distance between range lines is cor_rected to six miles.
Cost
The amount paid for anything in money, goods, or services.
Cost Approach to Value
One of the three main methods of appraisal, in which an estimate of the subject property's value is arrived at by es_timating the cost of replacing (or reproducing) the improvements, then deducting the estimated accrued depreciation and adding the estimated market value of the land.
Cost, Replacement
In appraisal, the current cost of constructing a building with the same utility as the subject property with modern ma_terials and construction methods.
Cost, Reproduction
In appraisal, the cost of constructing a replica (an exact duplicate) of the subject property, using the same materials and construction methods that were originally used, but at current prices.
Counteroffer
Rejection of an offer with a simultaneous substitute offer.
County
An administrative subdivision of the state, created by the state and deriving all of its powers from the state.
Course
In a metes and bounds description, a direction, stated in terms of a compass bearing.
Covenant
1. A contract. 2. A promise. 3. A guarantee (express or implied) in a document such as a deed or lease. 4. A restrictive cov_enant.
Covenant Against Encumbrances
In a deed, a promise that the property is not burdened by any encumbrances other than those that are dis_closed in the deed.
Covenant of Further Assurance
In a deed, a promise that makes the grantor responsible for any further acts necessary to make sure title is clear.
Covenant of Quiet Enjoyment
A promise that a grantee's or tenant's possession will not be disturbed by the previous owner, the lessor, or anyone else making a lawful claim against the property.
Covenant of Seizin
In a deed, a promise that the grantor actually owns the interest he or she is conveying to the grantee and has the right to convey it.
Covenant of Warranty Forever
In a deed, a promise that the grantor will bear the expense of defending the grantee's title if anyone asserts a rightful claim against it.
Covenant, Restrictive
A promise to do or not do an act relating to real property, especially a promise that runs with the land; usually an owner's promise not to use property in a speci_fied manner.
Creative Financing
Any financing arrangement other than a traditional mortgage from a third party lending institution.
Credit
A payment receivable (owed to you), as opposed to a debit, which is a payment due (owed by you).
Credit Line
A loan that allows revolving use of the credit; that is, after funds have been borrowed and repaid they may be borrowed again without applying for a new loan. Typically, a credit limit is established and some or all of the available funds can be optionally disbursed at closing. Undisbursed funds are available for the borrowers use at any time. Payments are required only on the outstanding balance. They are similar in use to a credit card except that they typically use checks to access the funds.
Creditor
One who is owed a debt.
Creditor, Secured
A creditor with a security interest in or a lien against specific property; if the debt is not repaid, the secured creditor can repossess the property or (in the case of real estate) foreclose on the property and collect the debt from the sale proceeds.
Criminal Law
The body of law under which the government can prosecute an individual for crimes, wrongs against society. Compare: Civil Law.
Cubage
The cubic volume of an object; in the case of a building, determined by multiplying the width by the depth by the height (measuring from the basement floor to the outside surfaces of roof and walls).
Cul-de-Sac
A dead-end street, especially one with a semicircular turnaround at the end.
Customer
1. From the point of view of a seller's real estate agent, a prospective property buyer. 2. A consumer third party.