It is very important to understand the real estate definitions.

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Number one real estate school – Rowlett Real Estate School
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ADA
ADA
(See Americans with Disabilities Act),
APR

(See Annual Percentage Rate.)
ATCF
Acronym for after-tax cash flow. It is equal to the cash throw-off (CT) or before-tax cash flow (BTCF) minus income taxes: BTCF – Income taxes = ATCF.
Absentee owner
Out of area owners that delegate the management of real estate investment property.
Abstract of title
A collection of all recorded documents that affect the title to a parcel of real estate.
Acceleration clause
A clause in a mortgage contract stating the right of the lender to accelerate the payment of all principal and interest when the borrower misses a payment.
Acknowledgment
A formal declaration that a contract was signed freely and voluntarily.
Acre
43,560 square feet.
Actual notice
The process of “giving notice to the world” that a transaction took place by advertising the transaction publicly.
Ad Valorem
Is a Latin expression for “On the Value”. Taxes are called ad valorem because they are calculated on the value of the property.
Adjudication withheld
A court decision at any point after the filing of a criminal complaint, to continue court jurisdiction but stop short of pronouncing judgment. The person, although technically guilty of the charge, will not be convicted of the crime or “adjudicated as guilty.- This opens the possibility that the records of the case may be expunged or sealed at a later date.
Adjustable-Rate Mortgage (ARM)
A mortgage with periodic adjustments in interest rate, usually every six months. ARM rates are calculated against a money index, such as the six-month Treasury bill (T Bill) rate index, or at specific intervals over the maturity of the loan to reflect and be more closely aligned with the changes in the Prime Rate.
Adjustment interval
The period between one rate change and the next on an adjustable-rate mortgage.
Advance fee
A fee charged to a developer by a broker to market and advertise a listing.
Adverse possession
The act of taking title of a piece of property by long-term, hostile, unauthorized use of the land.
Agent
A person entrusted with someone else’s business.
Agricultural
Defined in FS 475 as more than 10 acres of land zoned for farm use.
Alienation
the complete and voluntary transfer of title to real estate from one person to another.
Americans with Disabilities Act (ADA)
A civil rights law enacted in 1990 prohibits discrimination against people with disabilities in the areas of employment, transportation, telecommunications, and public accommodation. It addresses access issues such as wheelchair ramps.
Amortize
To write off gradually and systematically a given amount of money over a specific number of time periods.
Amortized mortgage
A mortgage contract where a portion of the monthly payment is applied to the interest and another portion is applied to repay the principal. At the end of the life of the loan, the original note is either partially paid (amortized) or paid in full (fully amortized).
Annual percentage rate (APR)
The total annual cost of credit, including interest, fees; discount points, and other loan costs.
Appraisal
The process of estimating the value of real property. In Florida, 475 FS and 61J1 FAC regulate appraisal. A real estate broker can perform an appraisal, as long as the document is not used in a federally related Transaction and he or she does not represent himself or herself as a state-certified appraiser.
Appreciation
The increase in the value of a property over time.
Appurtenances
When something is installed onto a property, it can be called an appurtenance. Meaning it is passed on to a new owner if the property is sold. An appurtenance can be something tangible like trees or a shed or something abstract such as an easement.
Arbitration
The process in which a third party makes a binding decision for two parties who are in a dispute. The parties usually have an opportunity to provide information regarding their claims and points of view.
Arm’s length transaction
A transaction among parties who are each acting in his or her own best interest.
Arrears
Items that are paid in arrears are paid at the end of the period to which they refer. Taxes are paid in arrears after the use of the property such as property taxes.
Asbestos
a heat-resistant fibrous silicate mineral having insulating properties. Asbestos is used in fire-resistant and insulating materials such as brake linings. Asbestos was used for heated pipe insulation.
Assemblage
The combining of adjoining properties into one large tract.
Assessed value
The valuation placed on a property by a public tax assessor for the purpose of taxation.
Asset
The resources and property owned by an individual or a corporation. Real property, securities, savings, and other things of value are assets.
Assignment
A document with the authorization and instructions to transfer one parties’ rights and or obligations to another. A contract is made assignable by including the words “and/or assign- to the name of the buyers. Normally permission of the seller is required to make a contract assignable.
Assumable
A mortgage that is assumable allows a new home buyer to undertake the obligation of the loan with no change in loan terms. This type of loan does not have a due on sale clause.
Assumption
The process in which a buyer assumes or takes responsibility for a loan that was originally issued to someone else. It is extremely difficult to find an assumable loan.
Automated underwriting
The electronic process for determining the credit risk classification of a loan on the secondary market by using a software application produced either by Fannie Mae or Freddie Mac.
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Balance Sheet
A financial statement showing a company’s assets, liabilities, and net worth on a given date.
Balloon Payment
A mortgage loan in which the borrower pays only interest or a small portion of the principal. At the end of the life of the loan, the outstanding principal balance must be paid in a single payment.
Bargain and sale deed
A deed that carries with it no warranties against liens or other encumbrances but that does imply that the grantor has the right to convey title. Warranties may be added to the deed at the discretion of the grantor.
Base industries
The primary industries or businesses that attract outside investment and/or outside money into the area.
Base line
Lines on the earth that run east/west. Used by surveyors for reference when describing land under the government survey method.
Basis
The total cost of acquisition of a property. Usually referred to as adjusted basis, it is calculated by adding the cost of the improvements to, and subtracting the depreciation from, the original sale and purchase price.
Benchmark
A permanently affixed mark that establishes the exact elevation of a place. It is used by surveyors in measuring site elevations, or as the starting point for surveys.
Bequest
A gift of personal property awarded under a will.
Bilateral contract
A bilateral contract is a legally binding document that calls for both parties to perform. A sale and purchase contract is a bilateral contract.
Biweekly mortgage
A mortgage payment plan in which half of the monthly premium is paid every other week, 52 weeks per year, netting 26 half payments to the lender per year. As result, the borrower has made one extra full payment, shortening the life of the loan.
Blanket mortgage
A mortgage that covers multiple parcels or building lots, usually in land development projects.
Blind advertisement
An advertisement or commercial without the name of the Real Estate brokerage corporation.
Blockbusting
The act of soliciting listings by scaring people with the idea that members of a protected class may move into the area.
Broker
Individual or firm acting as an agent between buyers and sellers in a real estate transaction. A commission is usually charged for this service.
Broker associate/salesperson
A licensee who meets the education requirements of a broker but chooses to work as a sales associate.
Buffer zone
A strip of land that divides two areas with different zoning. A buffer zone may be a green area with trees.
Building code
The government adopted regulations that specify minimum standards of construction for buildings to protect public safety and health.
Building inspection
A building inspection is an inspection performed by a building inspector, who is employed by either a city, township or county and is usually certified in one or more disciplines qualifying them to make a professional judgment to determine the structural integrity and whether a building meets building code requirements.
Building permit
A document obtained from the local government that conveys permission to construct a building in accordance with the terms of the permit. Local governments exercise control over the quality and types of structures that can be built in a given area by means of building permits.
Bundle of rights
Five rights attached to real property: Disposition, Enjoyment, Exclusion, Possession, and Control. DEEP C
Business broker
Real estate licensees who specialize in the sale, purchase, and lease of businesses.
Business opportunity
Real Estate Law defines “business opportunity” as the sale or lease of the business and goodwill of an existing business enterprise or opportunity. The sale almost always includes the inventory, fixtures, lease assignment, and goodwill. This is normally done by a broker that specializes in business opportunities.
Buyer brokerage agreement
An employment contract between a buyer and a broker.
Buyer’s market
A market in which there is an excess of housing that allows buyers to negotiate prices downward
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Canceled
A canceled license is an ineffective license.
Capital Gain
Profit made on the sale of assets.
Cash flow
The amount of cash derived over a certain period of time from an income-producing property. A positive cash flow is large enough to pay the expenses of the property while a negative cash flow does not cover all operating costs.
Cease to be in force
A license ceases to be in force when some formal requirements aren’t fulfilled by a licensee.
Certificate of occupancy
A document obtained from the local government conveys permission to use a building. It states that the building is fit to be occupied. Gives the electric company permission to connect electricity to the building permanently. It is also known as a COO.
Chain of title
A chain of title is the chronological arrangement of deeds and conveyances transferring title to a particular parcel of real estate starting from the first source of title to the present holder.
Check
A check is a government survey method of land description. It is a 24 square mile unit containing sixteen townships arranged in a square of four townships east to west and four townships north to south. This term is NOT used in a legal description of land.
Citation
A citation is an order from the local government that identifies a violation when there is no substantial threat to the public health, safety, or welfare or if a violation is in the process of being corrected. Specified violations carry a fine as a penalty. Citations can only be issued on an initial, single violation. Repeated violations can precipitate a formal hearing.
Co-mingle (co-mingling)
To co-mingle (co-mingling) literally means “mixing together”. Used in a legal sense it is a breach of trust in which a fiduciary (broker) mixes funds that he holds in the care of a client with his own funds. This is a violation under 475 F.S. and is prohibited.
Comparative Market Analysis (CMA)
The comparative market analysis is an analysis of a property’s value by evaluating similar, recently sold, properties to indicate a reasonable
Competent
To be competent means legally fit, having sufficient ability or authority to make business decisions and judgments. Possessing the necessary reasoning abilities or legal qualifications, qualified, capable and sufficient abilities to act for one’s self.
Complaint
A complaint is an accusation or charge that a person named has committed a specific offense. The pleading that initiates a civil action. A statement of disagreement or discontent. concurrency (concurrent estate) in real estate is a concept in property law that describes the various ways in which a property is owned by more than one person at a time. They are referred to as co-owners, co-tenants, or joint tenants.
Condemnations
Condemnations are an administrative or judicial process by which real property of a private owner is taken without his or her consent for public use.
Condominium
A condominium is a concept of ownership of a single residential or commercial unit in a multi-unit structure which can be acquired. The owner holds title directly in his or her individual unit and a proportionate interest in common areas of the structure and the underlying land.
Conflicting demands
Conflicting demands are when a buyer and seller demand that the broker release escrowed funds which are termed an escrow dispute. If the broker receives conflicting demands for escrowed funds or if the broker has good faith doubt over which person is entitled to the escrowed property. The brokers must give written notice to FREC within 15 days of the last party’s demand and institute an authorized settlement procedure within 30 days.
Conforming loan
A conforming loan is a mortgage loan that conforms to GSE guidelines. In general, any loan that does not conform to GSE in a non-conforming loan. Since 1970, Fannie Mae was authorized by the United States Government to purchase residential mortgage loans. Fannie Mae worked with Freddie Mac to develop uniform mortgage documents and national standards for what is now called a conforming loan.
Consent to transaction
A consent to transaction is a requirement of the seller to the transaction. An agreement between the seller and a buyer that requires the seller to consent to any transaction by the buyer and to verify the contract is current and not in default.
Construction lien
A construction lien is a lien filed against a commercial or residential property by a contractor, sub-contractor, or supplier who has not been paid in full for work already completed. When there is a lien, the property can not be sold until the lien is paid off. All 50 states have lien laws. In Florida, there is a time limitation for filing the paperwork which must be observed for the lien to be valid.
Construction notice
The construction notice is that which the law regards as sufficient to give notice and is regarded as a substitute for actual notice.
Contract
A contract is an oral or written agreement between two or more parties that establishes, changes, or ends a legal relationship. It is basically an enforceable promise to do or not to do a certain thing.
Contract for deed
contract of deed is sometimes known as a “land contract” or an “installment sale agreement”. It is a contract between a seller and a buyer of real property in which the seller provides financing to buy the property for an agreed-upon purchase price and the buyer repays the loan in installments. Under the “contract for deed,” the seller retains title until the loan is repaid. Often there is a balloon payment to cut down the fully amortized installment period.
Conversion
Conversion is an unauthorized act of using funds or property of another for personal use. The action is a form of fraud.
Cooperative (apartment)
A cooperative (apartment) is a specific unit in an apartment building in which a person has received a proprietary lease through the purchase of shares in the cooperative (corporation), trust, or partnership which holds title to the entire building.
Corporation
A corporation is created under the laws of the state as a separate legal entity that has the privileges and liabilities that are distinct from those of its shareholders. There are many types of corporations.
Cost-depreciation
The cost-depreciation approach is based on the principle of substitution. No one would pay more for an existing property than the cost to purchase land and have comparable improvements constructed on that land, assuming no unusual time delay. The value of the subject property can be estimated using “reproduction costs” or “replacement costs”.
Credit
Credit is (1) the ability of a person to borrow money or obtain goods on time because of the favorable opinion the lender or supplier has to his/her reliability and solvency. (2) in a closing statement that which is due to the buyer or seller, the opposite of a debit
Curable
Curable, in terms of real estate, is the portion of physical deterioration due to normal wear and tear from use, negligence, or aging of a building. If it can be repaired and add value to the building that is more than the cost of the repair, then it is curable; otherwise, it is incurable.
Customer
The customer (also known as a client, buyer, or purchaser) is the recipient of a good, service or product, or an idea obtained from a seller, vendor, or supplier.
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Debit
A debit is an accounting term. It is the left side entry in double-entry accounting on a balance sheet. Credits are on the right side of a balance sheet. Debits and credits are a system of notation used in bookkeeping to determine any financial transaction. In financial accounting or bookkeeping, DR (Debit) is the left side of the ledger, and CR (Credit) is on the right side of the ledger account
Debt service
Debt service is the cash that is required for a particular time period to cover the repayment of interest and principal on a debt. Debt service is normally calculated on a yearly basis. Making payments on a mortgage is one form of debt service.
Dedication
Dedication is a deliberate transfer of land by its owner for public use and accepted by the public.
Deed
The deed is a written agreement that has been signed and delivered, by which one individual, the grantee, conveys title to real property to another individual; the grantor, a conveyance of land, tenements, or hereditaments from one individual to another.
Deed in lieu of foreclosure
A deed in lieu of foreclosure is an alternative to a foreclosure sale. A mortgagee who is in default can voluntarily deed the property to a lienholder in lieu of payment of a debt.
Deed restriction
A deed restriction is a clause in the deed that limits the use of land. A deed restriction could be that alcoholic beverage cannot be sold on the land for 20 years but restrictions that prohibit people of a certain ethnic group is unenforceable and illegal.
Demand
Demand is the desire to own anything; the ability to pay for it and the willingness to pay for it. It is how much of a product (real estate) is desired by buyers. Demand can move between low and high depending on the amount a buyer is willing to buy at a specific price.
Deposit
Deposit is money or other valuable security, or real property entrusted to a person as security of the performance of a contract. If the depositor fails to fulfill his/her obligation or performance of a contract, they generally lose their deposit.
Depreciation
Depreciation is a decline or loss in value of an asset with the passage of time, due in particular to wear and tear. Depreciation of assets or investment property can be offset against income over a specific period of time.
Designated sales associate/person
A designated sales associate/person under Florida Statute 475.2755. Any commercial real estate transaction where the buyer and seller both have assets of over one million or more. The broker, at the request of the customer, may designate sales associates to act as single agents for customers in the same transaction.
Discount points
Discount points are a type of pre-paid interest mortgage borrowers can purchase that lowers the amount of interest they will have to pay on subsequent payments. Each discount point generally costs 1% of the mortgage loan amount and, depending on the borrower, each point lowers your interest rate by one-eighth percent of your interest rate. Discount points are tax-deductible only for the year in which they were paid.
Disintermediation
disintermediation is the act of removing funds from a savings bank and placing them into short-term investments on which the interest rate yields are higher i.e., one may remove $10,000 from his/her savings account and invest it to buy stock without the bank’s permission.
Dual agency
A dual agent is when one real estate agent represents both the home buyer and seller in a fiduciary transaction. A dual agent must be loyal to both the buyer and the seller. Dual agency is illegal in Florida.
Due on sale clause
The due on sale clause is a clause in a promissory note that stipulates that the full balance may be called due upon sale or transfer of ownership of the property used to secure the note. The lender has the right, but not the obligation, to call the note due in such circumstances.
E
Earnest money
A earnest money deposit is sometimes called earnest payment or simply earnest or, alternatively, a good faith deposit toward the purchase of real estate or a publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious (earnest) about wanting to complete the real estate transaction.
Easement
An easement is a right held by one property owner to make use of the land of another property owner for a limited purpose as a right of passage. Property law defines it as the right to enjoy a limited use of his neighbor’s land, as by crossing it to reach his property.
Elective share
The elective share is a term used in American law relating to the inheritance which describes a proportion of an estate that the surviving spouse of the deceased may claim in place of what they were left in the decedent’s will. It may also be called the “widow’s share”, “statutory share”, “election against the will” or “forced share”.
Encroachment
Encroachment is an illegal intrusion of a building or structure which is in whole or in part on a neighbor’s property or infringing on another person’s property illegally. A current survey is required to determine if an encroachment exists.
Environmental impact
environmental impact is an assessment of the possible positive or negative impact that a proposed project may have on the environment together consisting of natural, social, and economic aspects including air quality, water pollution, noise pollution, waste management, radiation, etc.
Equity
Equity is the value or interest an owner has in real property over and above any mortgage indebtedness or other liens against the property. In residential real estate, it is the difference between fair market value and unpaid mortgage balance.
Equity of redemption
Equity of redemption refers to the right of a mortgagor in law to redeem his property once the liability secured by the mortgage has been discharged.
Escrow
Escrow is generally money held by a third party on behalf of transacting parties until the terms and conditions of the escrow instructions made by the parties to the escrow are completed or otherwise terminated.
Escrow account
An escrow account is an account at a bank established by a broker under the provisions of the license law for the purposes of holding funds on behalf of the broker’s principal or some other person until the consummation or termination of a transaction or a trust account held in the borrower’s name to pay obligations such as property taxes and insurance premiums.
Estate for years
Estate for years is an estate, interest in real property, held under a rental agreement by which the owner gives another the right to occupy or use the land for a period of time.
Estoppel certificate
An estoppel certificate is a contract clause in which one party asserts that mortgage debt, collateral pledged, and so on, is correct on the date the agreement was made. This prevents the borrower from claiming differently at a later date. Also called an estoppel clause.
Exclusive right to sell listing
a contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else, except that the seller(s) may name one or more individuals or entities as exemptions in the listing agreement and if the property is sold to any exempted individual or entity, the seller(s) is not obligated to pay a commission to the listing broker.
Exclusive right to sell listing
A contractual agreement under which the listing broker acts as the agent or as the legally recognized non-agency representative of the seller(s), and the seller(s) agrees to pay a commission to the listing broker regardless of whether the property is sold through the efforts of the listing broker, the seller(s), or anyone else, except that the seller(s) may name one or more individuals or entities as exemptions in the listing agreement and if the property is sold to any exempted individual or entity, the seller(s) is not obligated to pay a commission to the listing broker.
F
Familial status
Familial status is a characteristic determined by a person’s household type, such as marriage and existing or prospective children. Referred to in the fair housing law and Fair Credit Reporting Act, it prohibits denying rights to people under 18 who live with a parent or guardian. Pregnant women are specifically covered. A landlord can not refuse to rent to someone based on familial status. So, for example, a single mother could expect fair treatment.
Farm area
Real estate farming is the strategy where real estate agents work in a particular area to position themselves as the go-to resource for a particular neighborhood.
Federally related transaction
A federally related transaction is any real estate-related financial transaction that a federal financial institutions regulatory agency (FFIRA) has either contracted for or regulates and requires the service of an appraisal. A real estate-related financial transaction involving the sale, lease, purchase investment in or exchange of real property, including interests in property or financial thereof. Also, refinancing of real property using real property as security for a loan or investment including mortgage-backed securities.
Fee simple estate (fee simple ownership)
Fee simple estate (fee simple ownership) is where the law recognizes this form of estate (ownership) in real estate as the highest form. The property owner is entitled to the full enjoyment of the property limited only by zoning laws, deed or subdivision restrictions, or covenants. Also known as “free ownership” and “estate of inheritance”.
Fiduciary
A fiduciary is a term that refers to a legal relationship that is confidential between two parties. The real estate agent’s responsibility is to protect the privacy of the client and to keep all of the client’s information confidential. A real estate agent has a fiduciary relationship with their principals only.
Florida resident
For application and licensing purposes, the FREC rules define a resident of Florida as a person who has resided in Florida continuously for a period of four calendar months or more within the preceding year. This pertains to mutual recognition.
Formal complaint
A formal complaint is an outline of the charges against a licensee that must be answered within 21 days.
Further assurance
Further assurance is a provision in a deed containing a covenant or warranty to perform any further acts the grantee (buyer) might require to a perfect title to the property.
G
General agent
A general agent is a representative authorized by the principal to perform only acts related to a business or to the employment of a certain kind (i.e. legal, real estate, banking, etc.)
General partnership
A general partnership is an association of two or more persons for the purpose of jointly conducting a business, each of the partners is liable for all of the firm’s debts and the actions incurred in the conducting of that business.
Going concern value
Going concern value is the value of a business or enterprise, including real estate, goodwill, and earning capacity.
Good faith doubt
Good faith doubt is when a broker has doubt as to which party should receive the escrowed property.
Goodwill
Goodwill is an accounting concept meaning the value of an entity over and above the value of its assets resulting in an intangible asset perhaps from the reputation the firm enjoyed with its clients.
Government lot
A government lot is a fractional piece of land of less than a quarter section, resulting from geographical features (e.g., lakes, streams) interfering with land surveying.
Government survey system
The government survey system subdivides land into identifiable descriptions using surveying lines developed by the federal government.
Grantee (buyer)
The grantee is the party who receives title to real property from the seller (grantor) by deed.
Granting clause
Granting clause is the portion of an instrument of conveyance, such as a deed that specifies the names of the parties involved, the words of conveyance, and a description of the property.
Grantor (seller)
The grantor is an individual who conveys or transfers ownership of property. In real property law, an individual who sells land is known as a grantor.
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