80-10-10
A type of blended
mortgage loan which avoids private mortgage insurance (PMI). It
consists of an 80% - 30 year first lien at market rates, a 10% - 15
year second lien at a slightly higher interest rate, and a 10% down
payment. Instead of having to come up with a 20% down payment, a
buyer is able to avoid PMI with
only 10% down. While the interest rate on the second note is a bit
higher, the total monthly payment is usually lower than a 90%
mortgage with PMI. In addition, the extra interest paid for the
second lien is tax deductible, whereas PMI is not. It is also
possible to payoff just the second lien, thereby lowering the future
monthly payments. Some lenders also offer 75-15-10 and 80-15-5
programs. This type of mortgage also gives the consumer the option
of having a non-escrowing loan without a 20% down
payment.
Abstract of Title
A condensed version
of the history of title to a piece of land that lists any transfers
in ownership, as well as any liabilities attached to it, such as
mortgages.
Abutting
The joining,
reaching, or touching of adjoining land. Abutting pieces of land
have a common boundary.
Acceleration
Clause
A provision in a
written mortgage, note, bond or conditional sales contract that, in
the event of default, the whole amount of principal and interest may
be declared to be due and payable at once.
Acceptance
An offeree’s consent
to enter into a contract and be bound by the terms of the offer.
Accretion
An addition to land
through natural causes.
Acknowledgment
A declaration made
by a person to a notary public, or other public official authorized
to take acknowledgments, that the instrument was executed by him and
that it was his free and voluntary act.
Acre
A measure of land
equal to 43,560 square feet.
Ad
Valorem
Designates an
assessment of taxes against property. Literally, according to value.
Additional
Principal Payment
A payment by a
borrower of more than the scheduled principal amount due in order to
reduce the remaining balance on the loan.
Adjustable
Rate Mortgage
(ARM)
A mortgage loan
whose interest rate fluctuates according to the movements of an
assigned index or a designated market indicator--such as the weekly
average of one-year U.S. Treasury Bills--over the life of the loan.
To avoid constant and drastic fluctuations, ARMs typically limit how
often and by how much the interest rate can vary.
Adjusted
Basis
The original cost of
a property plus the value of any capital expenditures for
improvements to the property minus any depreciation taken.
Adjustment
Date
The date on which
the interest rate changes for an
adjustable-rate mortgage (ARM).
Adjustment
Period
The period that
elapses between the adjustment dates for an
adjustable-rate mortgage (ARM).
Adjustments
Money that the buyer
and sellers credit each other at the time of closing. Often includes
taxes and down payment.
Administrator
/ Administratrix
A man/woman
appointed by a court to settle the estate of a deceased person when
there is no will. Contrast with executor/executrix.
Adverse
Possession
The right of an
occupant of land to acquire title against the real owner, where
possession has been actual, continuous, hostile, visible, and
distinct for the statutory period. The requirements for adversely
possessing property vary between states, but usually include
continuous and open use for a period of five or more years and
paying taxes on the property in question.
Affidavit
Written statement
signed and sworn to before some person authorized to take an oath.
Agency
The legal
relationship between a principal and an agent. In real estate
transactions, usually the seller is the principal, and the broker is
the agent: however, a buyer represented by a broker (i.e., buyer as
principal is a growing trend. In an agency relationship, the
principal delegates to the agent the right to act on his or her
behalf in business transactions and to exercise some discretion
while so acting. The agent has a fiduciary relationship with the
principal and owes to that principal the duties of accounting, care,
loyalty, and obedience. Also see buyer's broker.
Agent
A person authorized
to act for and under the direction of another person when dealing
with third parties. The person who appoints an agent is called the
principal. An agent can enter into binding agreements on the
principal's behalf and may even create liability for the principal
if the agent causes harm while carrying out his or her duties.
Alienation
Clause
A clause in a
mortgage, which gives the lender the right to call the entire loan
balance due if the property is sold; due-on-sale clause.
Amenities
Non monetary
benefits and satisfactions derived from property ownership, such as
a pleasant view, pride in home ownership, etc.
Amendment
A modification to an
existing contract, mutually agreed to by all parties. Examples
might include a change in the purchase price due to a low appraisal,
or a change in the closing date.
Amortization
The operation of
paying off indebtedness, such as a mortgage, by installments. The
conventional amortization periods are15 or 30 years. (See
term)
Amortized
Mortgage
A mortgage
requiring periodic payments that include both interest and
principal. Also see self amortized loan.
Annual
Membership
The amount that is
charged annually for having a line of credit available. Often
charged regardless of whether or not you use the line.
Antitrust
Laws
Federal and state
laws prohibiting, among other things, monopolies, monopolistic
practices, restraint of trade, and price fixing.
Application
An initial statement
of personal and financial information, which is required to approve
your loan.
Application
Fee
Fees that are paid
upon application. Charges for property appraisal and a credit report
are usually included in the application fee.
Appraisal
A determination of
the value of something, such as a house, jewelry or stock. A
professional appraiser--a qualified, disinterested expert--makes an
estimate by examining the property, and looking at the initial
purchase price and comparing it with recent sales of similar
property. Courts commonly order appraisals in probate, condemnation,
bankruptcy or foreclosure proceedings in order to determine the fair
market value of property. Banks and real estate companies use
appraisals to ascertain the worth of real estate for lending
purposes. And insurance companies require appraisals to determine
the amount of damage done to covered property before settling
insurance claims.
Appraised
Value
An estimate of the
present worth.
Appreciation
An increase in value
or worth of property. Opposite of depreciation.
Asking
(list) Price
The price placed on
property for sale.
Assessor
A local government
official who determines the value of the property for taxation
purposes.
Assignee
A person to whom a
property right is transferred. For example, an assignee may take
over a lease from a tenant who wants to permanently move out before
the lease expires. The assignee takes control of the property and
assumes all the legal rights and responsibilities of the tenant,
including payment of rent. However, the original tenant remains
legally responsible if the assignee fails to pay the rent.
Assignment
A transfer of
property rights from one person to another, called the
assignee.
Assumable
Mortgage
An existing mortgage
that can be taken over by the buyer on the same terms given to the
original borrower.
Assumption
of Mortgage
The transfer of
title to property to a grantee wherein he assumes liability for
payment of an existing note secured by a mortgage against the
property; should the mortgage be foreclosed and the property sold
for a lesser amount than that due, the grantee-purchaser who has
assumed and agreed to pay the debt secured by the mortgage is
personally liable for the deficiency. Before a seller may be
relieved of liability under the existing mortgage, the lender must
accept the transfer of liability for payment of the note. Also known
as simple assumption. Contrast with
subject to mortgage.
Attachment
Method by which a
debtor's property is placed in the custody of the law and held as
security pending outcome of a creditor's suit.
Attorney's
Opinion of Title
An instrument
written and signed by the attorney who examines the abstracts of
title, stating his opinion as to whether a seller may convey good
title.
Attractive
Nuisance
Something on a piece
of property that attracts children but also endangers their safety.
For example, unfenced swimming pools, open pits, farm equipment and
abandoned refrigerators have all qualified as attractive nuisances.
Auction
A public sale of
property to the highest bidder.
Balloon Mortgage
A mortgage where the
final payment is considerably larger than the preceding payments.
Contrast with amortized mortgage.
Balloon
Payment
A large final
payment due at the end of a loan, typically a home or car loan, to
pay off the amount your monthly payments didn't cover. Many states
prohibit balloon payments in loans for goods or services that are
primarily for personal, family or household use, or require the
lender to let you refinance the balloon payment before forcing
collection.
Bill
of Sale
A written instrument
given to pass title to personal property.
Blanket
Mortgage
One mortgage on a
number of parcels of real property.
Blockbusting
The illegal practice
of inducing panic selling in a neighborhood by making
representations of the entry, or prospective entry, of members of a
minority group; panic peddling. See
Fair Housing.
Bond
(1)
A written
agreement purchased from a bonding company that guarantees a person
will properly carry out a specific act, such as managing funds,
showing up in court, providing good title to a piece of real estate
or completing a construction project. If the person who purchased
the bond fails at his or her task, the bonding company will pay the
aggrieved party an amount up to the value of the bond.
(2)
An
interest-bearing document issued by a government or company as
evidence of a debt. A bond provides pre-determined payments at a set
date to the bond holder. Bonds may be "registered" bonds, which
provide payment to the bond holder whose name is recorded with the
issuer and appears on the bond certificate, or "bearer" bonds, which
provide payments to whomever holds the bond in-hand. Mortgage
interest rates are closely related to long term bond interest rates.
Bonus
to Selling Agent (BTSA)
Compensation, above
and beyond the sales commission, offered to the real estate agent
who brings the buyer to the transaction. A BTSA is used to provide
an extra incentive for real estate agents to show a particular
listing. Often the bonus is tied to closing within a certain time
period or the property selling for a certain price. A buyer's agent
should not consider the BTSA a factor in any negotiations between
buyer and seller. Realistically, most BTSA's tend to disappear
during initial negotiations, even though they should never be
considered as negotiable after they have been offered. Any bonus to
selling agent should be contained in a written agreement between the
seller and listing broker. The BTSA is technically offered by the
listing broker, not the seller, and thus should not be a subject of
negotiation.
Breach
of Contract
Failure, without
legal excuse, of one of the parties to a contract to perform
according to the contract.
Brokerage
For a commission or
fee, bringing together parties interested in buying, selling,
exchanging, or leasing real property.
Building
Line
A line fixed at a
certain distance from the front and/or sides of a lot beyond which
no structure can project. See set back.
Bundle
of Rights
Ownership in real
property implies a group of rights, such as the right of occupancy,
use and enjoyment, the right to sell in whole or in part, the right
to control the use, the right to bequeath, the right to lease any or
all of the rights, the right to the benefits derived by occupancy
and use of the property, etc.
Buy
Down
A cash payment,
usually measured in points, to a lender in order to reduce the
interest rate a borrower must pay.
Buyer's
Broker
A licensee who has
declared to represent only the buyer in a transaction, regardless of
whether compensation is paid by the buyer or the listing broker
through a commission split. Some brokers conduct their business by
representing buyers only.
Calendar Year
A year using the
actual number of days in each month for a total of 365 days in a
year (366 days in a leap year).
Cap
The maximum
allowable increase, for either payment or interest rate, for a
specified amount of time on an adjustable rate mortgage.
Capital
Gains
The profit on the
sale of a capital asset, such as stock or real estate. If you sell
your primary residence, you can exclude $250,000 in profit from
capital gains tax. A couple can exclude $500,000.
Capitalization
The estimation of
the value of income producing property by dividing the annual net
income by the capitalization rate.
Capitalization
Rate
The rate of expected
return on investment property. A ratio of income to value.
Cash
Out
Receiving money back
when refinancing your present mortgage. Not available on homestead
property in Texas (See homestead).
CC&R
See
covenants,
conditions & restrictions.
CCCS
See
Consumer
Credit Counseling Service.
Ceiling
The maximum
allowable interest rate over the life of the loan of an adjustable
rate mortgage.
Census
An official count of
the number of people living in a certain area, such as a district,
city, county, state, or nation. The United States Constitution
requires the federal government to perform a national census every
ten years. The census includes information about the respondents'
sex, age, family, and social and economic status.
Certificate of Eligibility
The document given
to qualified veterans which entitles them to VA guaranteed loans for
homes, business, and mobile homes. Certificates of eligibility may
be obtained by sending DD-214 (Separation Paper) to the local VA
office with VA form 1880 (request for Certificate of Eligibility).
Chain
of Title
A history of
conveyances and encumbrances of a property from some starting point,
whereby the present owner derives title.
Channeling
The illegal practice
of directing people to, or away from, certain areas or neighborhoods
because of minority status; Steering. See
Fair Housing.
Chattel
See
personal
property.
Cleaning
Fee
A nonrefundable fee
charged by a landlord when a tenant moves in. The fee covers the
cost of cleaning the rented premises after you move out, even if you
leave the place spotless. Cleaning fees are illegal in some states
and specifically allowed in others, but most state laws are silent
on the issue. Landlords in every state are allowed to use the
security deposit to clean a unit that is truly dirty.
Clear
Title
A land title that
doesn't have any liens (including a mortgage) against it.
Closing
The conclusion of
the sales transaction when the seller transfers title to the buyer
in exchange for consideration. In Texas, these proceedings are
usually held at a title company.
Closing
Costs
Costs the buyer must
pay at the time of the closing in addition to the down payment which
may include points, title charges, credit report fee, document
preparation fee, mortgage insurance premium, inspections,
appraisals, prepayments for property taxes, deed recording fee, and
homeowners insurance. Closing costs can vary considerably from one
financial institution to another.
Closing
Statement
A detailed written
summary of the financial settlement of a real estate transaction,
showing all charges and credits made, and all cash received and paid
out.
Cloud
on Title
A claim or
encumbrance that may effect title to land.
Co-op
See
cooperative housing or
cooperative sale.
Co-tenants
Two or more tenants
who rent the same property under the same lease or rental
agreement. Each co-tenant is 100% responsible for carrying out the
rental agreement, which includes paying the entire rent if the other
tenant skips town and paying for damage caused by the other tenant.
Collateral
Something of value
deposited with a lender as a pledge to secure repayment of a loan.
Commingling
The illegal practice
of combining or mixing clients' funds with the agent's own funds.
Commission
The compensation
paid to a licensed real estate broker or by the broker to the
salesman for services rendered. Usually a percentage of the selling
price of the property.
Community Reinvestment Act
The federal law
which requires federally regulated lenders to describe the
geographical market area they serve. Deposits from that area are to
be reinvested in that area whenever practical.
Comparables
Properties which are
similar to a particular property and are used to compare and
establish a value for that property.
Compound
Interest
Interest which is
computed on the principal and any unpaid accumulated interest.
Contrast with simple interest.
Condemnation
The act of taking
private property for public use, through due process under the right
of eminent domain, with compensation to the owner.
Condominium
A form of real
estate, usually a dwelling with individual ownership of separate
portions of the building plus shared ownership of the common areas.
Consideration
The price or subject
matter, which induces a contract; may be in money, commodity,
exchange, or a transfer of personal effort.
Constructive
eviction
The provision of
housing that is so substandard that, for all intents and purposes, a
landlord has evicted the tenant. For example, the landlord may
refuse to provide light, heat, water or other essential services,
destroy part of the premises or refuse to clean up an environmental
health hazard, such as lead paint dust. Because the premises are
unlivable, the tenant has the right to move out and stop paying rent
without incurring legal liability for breaking the lease. Usually,
the tenant must first bring the problem to the landlord's attention
and allow a reasonable amount of time for the landlord to make
repairs.
Consumer Credit Counseling Service (CCCS)
A national
non-profit agency that, at no cost, helps debtors plan budgets and
repay their debts. One major criticism of CCCS is that each office
is primarily funded by voluntary donations from the creditors that
receive payments from debtors repaying their debts through that
office. The goal of CCCS is to insure that consumers repay the
debts that they owe. CCCS may arrange easy payment plans that
increase the chances for repayment, but harm a consumer's credit in
the process. Agreeing to a payment plan and following it to the
letter may not stop creditors from reporting delinquent repayment
information to credit bureaus for each month the payment falls short
of the previous minimum amount.
Contingency
A provision in a
contract stating that some or all of the terms of the contract will
be altered or voided by the occurrence of a specific event. A
common example is a Buyer who enters into the purchase of another
home before his current home is sold. The Buyer will usually ask
for the Seller to make the sale contingent upon the sale of the
Buyer's current home. If the Seller receives another offer for the
property, the first Buyer must either agree to buy the home without
any contingency, or step aside and let someone else purchase the
home.
Contract
A legally
enforceable agreement to do, or not to do, a particular thing for a
consideration.
Contract
for Deed
A contract for the
sale of real estate where the deed (title) of the property is
transferred only after all the payments have been made. Also known
as a land contract, agreement of sale, conditional sales contract,
or installment contract. Buyers should be wary of this type of
contract, since they can lose their entire investment if the owner
declares bankruptcy, before the deed has been transferred.
Contract
for Exchange of Real Estate
A contract for the
sale of real estate in which the consideration is paid wholly or
partly in real property instead of cash.
Contract
of Sale
The agreement
between the buyer and seller on the purchase price, terms, and
conditions necessary to both parties to convey the title to the
buyer.
Conventional
Loan
A real estate loan,
which is not insured by the FHA or guaranteed by the VA.
Conveyance
Written instrument,
such as a deed or lease, that evidences transfer of some ownership
interest in real property from one person to another.
Cooperative
Housing
(1)
A form of real
estate, usually a dwelling in which residents own shares, but do
not directly own the space they inhabit. Rather, owning a share of
the building entitles the shareholder with the right to inhabit a
certain space within the dwelling, such as an apartment. Shares are
usually proportional to the amount of space in each apartment.
(2)
A living
arrangement in which residents must perform certain duties or chores
to benefit the entire residence, in addition to paying room and
board. A common form of dormitory living.
Cooperative
Sale
A sale of property
in which the buyer is brought to the transaction by a real estate
agent who works for a different real estate broker than the listing
agent. Both brokers/companies have agreed to cooperate in closing
the property, and typically, splitting the commission. Offers of
cooperation and compensation are commonly found in the MLS property
listings.
Cost
Approach to Value
An estimate of value
based on current construction costs, less depreciation, plus land
value. Contrast with the income approach to value and
the market data approach to value.
Counter
Offer
The rejection of an
offer to buy or sell that simultaneously makes a different offer,
changing the terms in some way. For example, if a Buyer offers
$160,000 for a home, and the Seller replies that he wants $175,000,
the Seller has rejected the Buyer's offer of $160,000 and made a
counteroffer to sell at $175,000. The legal significance of a
counteroffer is that it completely voids the original offer, so that
if the Seller decided to sell for $160,000 the next day, the Buyer
would be under no legal obligation to pay that amount for the
property.
Covenant
A restriction on the
use of real estate that governs its use, such as a
requirement that the property will be used only for residential
purposes. Covenants are found in deeds or in documents that bind
everyone who owns land in a particular development. See
Covenants, Conditions & Restrictions.
Covenants,
Conditions & Restrictions (CC&Rs)
The restrictions
governing the use of real estate, usually enforced by
a homeowners' association and passed on to the new
owners of property. For example, CC&Rs may tell you how big your
house can be, how you must landscape your yard or whether you can
have pets. If property is subject to CC&Rs, buyers must be notified
before the sale takes place.
Credit
Bureau
A private,
profit-making company that collects and sells information about a
person's credit history. Typical clients include banks, mortgage
lenders and credit card companies that use the information to screen
applicants for loans and credit cards. There are three major credit
bureaus, Equifax, Experian and Trans Union, and
they are regulated by the federal Fair Credit Reporting Act.
Credit
File
See credit
report.
Credit
Insurance
Insurance a lender
offers or requires a borrower to purchase to cover the loan. If the
borrower dies or becomes disabled before paying off the loan, the
policy will pay off the remaining balance. Federal and state
consumer protection laws require the lender to disclose to existing
and potential borrowers the terms and costs of obtaining credit
insurance because it can affect the terms of the loan.
Credit
Limit
The maximum amount
that you can borrow under a home equity plan.
Credit
Report
An account of your
credit history, prepared by a credit bureau. A credit report will
contain both credit history, such as what you owe to whom and
whether you make the payments on time, as well as personal history,
such as your former addresses, employment record and lawsuits in
which you have been involved. An estimated 50% of all credit reports
contain errors, such as accounts that don't belong to you, an
incorrect account status or information reported that is older than
seven years (ten years in the case of a bankruptcy).
Credit
Score
In the mortgage
lending world, credit scores either make or break you when it comes
to obtaining a home mortgage or getting the best rate you can.
There are three different scores available to a mortgage lender each
being generated by the three different credit agencies. The most
popular, known as a Fico score is from Experian (formally TRW), then
there is a Beacon score from Equifax, and finally a Emperica score
from Trans Union. This is the "mortgage scoring" system used to get
a conventional mortgage.
Simply, credit
scores are numbers calculated based upon your credit history. The
better your credit, the higher your number or score will be - the
worse your credit, the lower the score. The number of inquiries or
times your credit has been pulled in the past 90 days will also
lower your "score". In some instances, lack of credit results in "no
score" on your report requiring you to provide "alternative credit"
via your rental, utility or telephone payment histories. There's
plenty you can do to improve your score if you know how the system
works. Just don't expect much help from your lender--most consider
the actual formulas a trade secret and don't want people angling for
an advantage. Congress is currently working on legislation to
provide consumers with access to their credit scores and the
formulas used to calculate these scores.
There are some
lenders that do not rely on credit scores to the degree that most
do. Some times, credit reports contain inaccuracies that lower your
score, this is when a lender has to use a common sense approach to
approving your loan. In some instances you may have to correct your
credit report, wait for your score to improve, then reapply for the
loan. Talk with your mortgage broker or lender to understand what
your options are.
Creditor
A person or entity
(such as a bank) to whom a debt is owed.
Cul-de-sac
A dead end street
which widens sufficiently at the end to permit an automobile to make
a "U" turn.
DBA
Doing Business As.
Business names or aliases filed with the county.
Debenture
Bonds issued without
security.
Debt
Service
The total amount of
credit card, auto, mortgage or other debt upon which you must pay.
Debt-service Ratio
The measurement of
debt payments to gross household income which may include, in
addition to the main wage earner's salary, salaries of other wage
earners, commissions, bonuses, overtime, etc.
Deceptive Trade
Practices Act
Part of the federal
Consumer Protection Act originally passed in 1973 and made
specifically applicable to real estate in 1975, specifically
prohibiting a lengthy number of false, misleading and deceptive acts
or practices. The Texas Supreme Court has defined a deceptive trade
practice as one "which has the capacity to deceive an average,
ordinary person, even though that person may have been ignorant,
unthinking, or credulous." Also see Texas Deceptive Trade
Practices - Consumer Protection Act.
Deduction
In tax law, an
amount that you can subtract from the total amount on which you owe
tax. Examples of federal income tax deductions include mortgage
interest, charitable contributions and certain state taxes. For
example, if Aimee receives an income of $60,000 in 1998 and pays
$12,000 in mortgage interest during that same year, she can deduct
$12,000 when she fills out her federal tax return, leaving an amount
of $48,000 upon which she must pay tax.
Deed
A written instrument
by which title to land is conveyed.
Deed
in Lieu (of foreclosure)
A means of escaping
an overly burdensome mortgage. If a homeowner can't make the
mortgage payments and can't find a buyer for the house, many lenders
will accept ownership of the property in place of the money owed on
the mortgage. Even if the lender won't agree to accept
the property, the homeowner can prepare a quitclaim deed that
unilaterally transfers the homeowner's property rights to the
lender.
Deed
of Trust
The legal instrument
used in Texas in lieu of a mortgage, in which the property is
conveyed in trust to a trustee to be held as security for a loan.
Deed
Restrictions
Common name used in
the Houston area to denote covenants, conditions & restrictions
(CC&Rs). Deed restrictions cover allowable land uses and home
types and sizes within a neighborhood. They are especially
important within Houston, and unincorporated parts of Harris County,
since zoning does not exist in these areas.
Default
Non-performance of a
duty arising under a contract or otherwise.
Defeasance
A clause in a deed,
lease, will or other legal document that completely or partially
negates the document if a certain condition occurs or fails to
occur. Defeasance also means the act of rendering something null and
void. For example, a will may provide that a gift of property is
defeasable--that is, it will be void--if the beneficiary fails to
marry before the will maker’s death.
Delivery
The actual transfer
of the deed, or an act of a seller showing intent to make a deed
effective, without which, there is no transfer of title to the
property.
Depreciation
A loss in value.
Descent
Acquisition of
property through inheritance laws when there is no will (when a
person dies intestate).
Devise
A transfer of real
estate by will or last testament.
Disclosure
The making known of
a fact that had previously been hidden; a revelation. For example,
in many states you must disclose major physical defects in a house
you are selling, such as a leaky roof or potential flooding problem.
Discount
Points (or points)
The amount paid
either to maintain or lower the interest rate charged. Each point is
equal to one percent (1%) of the loan amount (i.e., two points on a
$100,000 mortgage would equal $2,000).
Discount
Rate
(1)
The rate charged member banks who borrow from the Federal Reserve
System.
(2)
The rate used to convert future income into present value.
Dispossess
To oust from land by
legal process.
Dominant
Tenement
Property that
carries a right to use a portion of a neighboring property. For
example, property that benefits from a beach access trail across
another property is the dominant tenement.
Down
Payment
An amount of money
the buyer pays which is the difference between the purchase price
and the mortgage amount.
Dual
Agency
Representing the
buyer and the seller in the same transaction by the same agent.
Since there is an inherent conflict in fiduciary obligations to two
different principals, dual agency, at best, is a risky undertaking.
TRELA requires that all parties to a dual agency have full knowledge
and consent (Disclosed Dual Agency). Contrast with
intermediary.
Due
on Sale
A clause in a
mortgage agreement providing that, if the mortgagor (the borrower)
sells, transfers, or, in some instances, encumbers the property, the
mortgagee (the lender) has the right to demand the outstanding
balance in full.
Duress
Forcing action or
inaction against a person's will.
Earnest
Money
A deposit made by
the buyer as evidence of good faith in offering to purchase real
estate and to secure performance of the contract. Earnest money is
typically held by a title company, in an escrow account, during the
period between acceptance of the contract and the closing.
Earnest
Money Contract (EMC)
A contract for the
sale or purchase of real estate in which the purchaser is required
to tender earnest money to evidence good faith in completing the
contractual obligations. Almost every sales contract for real estate
in Texas will be an earnest money contract. Also see sales
contract and promulgated contracts.
Easement
A right to use
another person's real estate for a specific purpose. The most common
type of easement is the right to travel over another person's land,
known as a right of way. In addition, property owners commonly grant
easements for the placement of utility poles, utility trenches,
water lines or sewer lines. The owner of property that is subject to
an easement is said to be "burdened" with the easement, because he
or she is not allowed to interfere with its use. For example, if the
deed to John's property permits Sue to travel across John's main
road to reach her own home, John cannot do anything to block the
road. On the other hand, Sue cannot do anything that exceeds the
scope of her easement, such as widening the roadway.
Easement
by Prescription
A right to use
property, acquired by a long tradition of open and obvious use. For
example, if hikers have been using a trail through your backyard for
ten years and you've never complained, they probably have an
easement by prescription through your yard to the trail.
Economic
Obsolescence
Loss of value of
real property due to external forces or events; eg., a sewer plant
is built next door to the subject property. Contrast with
Functional Obsolescence.
Effective
Interest Rate
The cost of credit
on a yearly basis expressed as a percentage. Includes up-front costs
paid to obtain the loan, and is, therefore, usually a higher amount
than the interest rate stipulated in the mortgage note. Useful in
comparing loan programs with different rates and points.
Effluxion
of Time
The normal
expiration of a lease due to the passage of time, rather than due to
a specific event that might cause the lease to end, such as
destruction of the building.
Egress
An exit, or the act
of exiting. The most famous use of this word was by P.T. Barnum, who
put up a large sign in his circus tent saying "This Way to the
Egress." Thinking an egress was some type of exotic bird, people
eagerly went though the passage and found themselves outside the
circus tent. Compare ingress.
Emblements
Annual crops
produced by cultivation. They are deemed to be personal property.
Eminent
Domain
The right of
government to take private property for public use, through court
action known as condemnation. The Fifth Amendment to
the United States Constitution allows the government to take private
property if the taking is for a public use and the owner is "justly
compensated" (usually, paid fair market value) for his or her loss.
A public use is virtually anything that is sanctioned by a federal
or state legislative body, but such uses may include roads, parks,
reservoirs, schools, hospitals or other public buildings. Sometimes
called expropriation.
Enclave
Community
Smaller in scope
than master-planned communities, enclave communities typically
blend different price ranges of residential neighborhoods with
amenities such as public recreation areas and parks, neighborhood
schools and extensive landscaping. Recreation areas may include
public swimming pools, tennis courts, and children's play grounds.
Many offer large water features and gated access.
Encroachment
A fixture, or
structure, such as a wall or fence, which invades a portion of a
property belonging to another. Solutions range from paying the
rightful property owner for the use of the property to the
court-ordered removal of the structure.
Encumbrance
A cloud against
clear, free title to the property which does not prevent conveyance,
such as unpaid taxes, easements, deed restrictions, mortgage loans,
etc.
Endorsement
Writing one's name,
either with or without additional words, on a negotiable instrument,
or on a paper attached to it.
Equal Credit
Opportunity Act
The 1974 federal law
(Title VII of the Consumer Credit Protection Act) which requires
fairness and impartiality without discrimination on the basis of
race, color, religion, national origin, sex or marital status, or
receipt of income from public assistance programs in the extension
of credit, and good faith exercises of any right under the Consumer
Credit Protection Act (eg. the creditor must state reasons for
denial of credit).
Equal
Treatment/Different Impact
It is possible to be
guilty of discrimination even by treating two individuals the same.
If the results of the treatment are discriminatory, or tend to
exclude or otherwise harm members of a minority group, or have
discriminatory impact, they are against the law. For example, an
apartment house which rents only to doctors and lawyers, where there
are few, if any, minority doctors or lawyers in the area, may be a
violation of the Fair Housing Laws.
Equity
The difference in
dollars between a house's value and the mortgage amount.
Escalator
Clause
The clause in a
contract permitting adjustments of the payments.
Escheat
The reversion of
property to the state in the event the owner thereof dies without
leaving a will (intestate) and has no heirs to whom the
property may pass by lawful descent.
Escrow
A trust arrangement
by which none or more parties deposit things of value with an
authorized escrow agent in accordance with the terms of a real
estate agreement.
Escrow
Account
(1)
A third party account that holds money safely while a sale is in
progress.
(2)
An account used to save monies required for the payment of an
eventual debt. Often used by lenders to save for property taxes,
hazard insurance, homeowner's dues, etc.
Escrow accounts are
typically non-interest bearing for the contributors, but may pay
interest to the entity holding the account (lenders, title
companies, lawyers, etc.).
Estimate
of Value
An appraisal; the
appraised value.
Et
Ux
Abbreviation for "et
uxor", meaning "and wife".
Eviction
Removal of a tenant
from rental property by a law enforcement officer. First, the
landlord must file and win an eviction lawsuit, also known as an
"unlawful detainer."
Exception
As used in the
conveyance of real estate, an exception is the exclusion of some
part of the property conveyed, with title of that excepted part
remaining with the grantor. For example, in most subdivision
developments, mineral rights are not conveyed to the purchaser of a
lot, but remain the property of the developer. Contrast with
Reservation.
Exclusive
Agency (EA)
A listing agreement
which gives the listing agent the right to sell the property for a
specified time. The owner reserves the right to sell the property
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