Real Estate Dictionary
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Dictionary Real Estate 5

Dictionary Real Estate continued:

REALTY (Real Estate; Real Property) - Physical land including any appurtenances to that land including all structures affixed to or erected up then land, and thus part of the realty. 

Examples of items that are part of the realty are trees, mineral deposits, and any mamade improvements to the property (e.g., gates, fences, a garage). An exception is currently growing crops, which are considered personalty (personal property).

Also included as being part of the real estate are the rights associated with its ownership, including the right to own or use the property (e.g., the Bundle of Rights). 

REASONABLE CARE AND DILIGENCE (Care) - This provision of Fiduciary Duty requires an agent to use their best effort and skill to help their client(s). This may include, for example, helping the client determine a property’s fair market value, demonstrating every reasonable effort to market the client’s property, and overseeing all aspects of the client’s sale or purchase.

While a real estate professional is expected to show competence and expertise in the field of real estate, the agent is not expected to be able to perform tasks outside of the scope of a licensed real estate professional. When skills beyond this scope are required, then the real estate professional is expected to acknowledge this and suggest that the client hire an expert in these other areas (e.g., inspector, engineer, lawyer).

RECORDER - A public official and/or public agency that keeps the local real estate transaction records for a specific geographical area.

RECORDING - The official filing of legal documents (e.g., lien, legal documents) and thus entering them into the public record. This may include entering the written record of a real property (real estate) title into the appropriate public record. This act serves to give constructive notice to the public.

REFINANCE - To obtain a new loan (e.g., a mortgage) in order to get better terms, such as a lower interest rate, and then using the new loan to pay off some or all of an existing (prior) loan; using the proceeds of a new loan to pay off a previous loan.

REMAINING TERM - The total number of payments made on a loan subtracted from the original number of payments due on the loan.

REPLACEMENT COST - The amount of money required to replace damaged personalty (personal property), not considering any deduction for depreciation.

RECISSION - The annulment or cancellation of a contract or a transaction either by mutual consent or by operation of law. For example, in some instances a home buyer may cancel a home equity transaction or a mortgage refinance within three days of initially closing the transaction. In some cases this may be done within the first three years.

RECONCILIATION - A final estimate of value of real property (real estate) that occurs at a late stage of the appraisal process. The reconciliation stage serves to “reconcile” the various approaches to value along with all other information gathered, and then puts it all in context to obtain the final estimate of value.

RECOVERY FUND - A fund that may be maintained by a real estate commission (e.g., the Texas Real Estate Commission) to be used, upon the issuing of a court order, to reimburse the public for any monetary loss that occurred as a result of the illegal acts of licensees.

REPLAYMENT PLAN - A borrower’s arrangement with a lender to make addtional payments that will serve to pay down the past due amounts, while also continuing to make regularly scheduled payments.

RESERVATION-A right that is reserved by a grantor (seller) in the lease or sale of real property (real estate). In the case of a sale of the property, the title passes to the grantee (buyer), though the use of the property may be reserved to the grantor. Also see Exception.

RESERVE FUND - A fund established to collect deposits incrementally over time to pay for an anticipated (foreseen) future event (e.g., painting, roofing) without causing an undue burden on just the current owners.

RESERVES - A portion of a monthly payment witheld by the loan servicer (e.g., mortgage company) in an escrow account in order to pay the property expenses of the borrower as these expenses come due. Some examples of expenses paid by Reserves include mortgage insurance, property taxes, homeowner’s insurance, homeowner’s association dues, and lease payments. Also called Impounds; Escrow Payments.

RESIDENTIAL PROPERTY--A category of housing that includes single-family homes, multi-family housing, residential duplexes, four-plexes, and other housing typically suitable for families.

RESPA - See Real Estate Settlement Procedures Act.

RESTRICTIVE COVENANT - A promise in writing in a mortgage or deed which either requires or prevents a particular use of a property. If a Restrictive Covenant is violated, it can lead to loss of the property or foreclosure on the property.  Some examples of Covenants are landscaping restrctions, parking restrictions, allowable architectural styles, maintenance rules that must be followed, a requirement that the real estate must be used for residential purposes, etc. Covenants may be included in deeds binding all owners in a particular developement. Also known as a Covenant. See CC&R’s.

REVERSIONARY RIGHT - A right of possession that may return to an owner (or grantor; lessor) when a tenant (or grantee; lessee) either vacates a particular piece of real property (real estate), passes away, or stops using the property for the agreed upon purpose. Also see Reservation.

REVOLVING DEBT - A credit plan that is extended by a borrower to a lender contemplating repeated future transactions, allowing the lender to impose a finance charge at particular times on the outstanding unpaid balance, or extending a particular amount of credit to the borrower with an agreement that the outstanding balance will be repaid within the term of the plan.

DRIGHT OF FIRST REFUSAL - A provision (term) in a contract taht gives a party to the contract the right to have an opportunity to purchas or lease a particular property before anyone else is allowed to purchase or lease the property.

RIGHT OF INGRESS OR EGRESS - The right to enter or leave specified premises.

RIGHT OF SURVIVORSHIP - The right of survivors in a joint tenancy or tenancy by the entirety arrangement to obtain the interests (take ownership) of a deceased joint tenant’s share of the real property. 

If only one of the original owners remains, that person will own the property in severalty as ownership is severed from all former co-owners.

The right of survivorship means that no will is required to effect the transfer of the real property interest to the surviving co-owner(s), avoiding delays and costs of probate.

Also see Joint Tenancy, Tenancy By The Entirety, and Tenancy in Common.

SALES LEASEBACK - A real estate transaction involving a buyer who leases a property back to the seller of the property for a pre-determined period of time. This is a financing technique often used by companies undergoing rapid expansion and desiring to free up capital for the expansion of their operations.

SECONDARY MORTGAGE MARKET - The market in which mortgage backed securities and mortgage loans are sold as well as purchased.

SECOND HOME - A property that a person occupies part-time in addition to their primary residence.

SECOND MORTGAGE - A mortgage with a lien position that is subordinate (junior) to a first mortgage; usually an additional loan that is imposed on the first mortgage, and which is secured when a borrower needs more money.

SECURED LOAN - A loan that is backed (secured) by specific property, such as a house or automobile.

SECURITY - Real property (real estate; realty) or personalty (personal property) that a borrower either pledges or gives to a lender as collateral for a loan. This collateral for the loan protects the lender’s interests.

Dictionary Real Estate continued:

SECURITY DEPOSIT - A deposit of money by a tenant with a landlord who holds the money to remedy a default due to failure to pay rent, damage to the premises, or failure to return keys to the premises when the tenancy is completed.

SELF-AMORTIZED LOAN (Self Amortized Loan) - A loan that repays the obligatin (debt) through systematic payments of both interest and principal so that the loan will be completely repaid (retired), with a zero balance, at the end of the term (period) of the loan. See Amortized Mortgage.

SELLER TAKE BACK - An agreement between a property seller and a buyer in which the seller provides the financing the buyer requires to complete the purchase of the property (e.g., a home).

SEPTIC TANK (Septic System) - Tank (system) for sewage settling which allows waste to flow into a leach bed.

SERVICER - A firm which provides various servicing functions such as collecting payments from a borrower for a mortgage, paying the insurance and tax fees incurred by the borrower, and managing escrow accounts for buyers.

SETTLEMENT - A real estate transaction’s conclusion which involves adjusting and prorating all credits, charges, and settlement costs.

HUD 1 STATEMENT (HU1 Statement)  - A summary of a real estate transaction’s fees, costs, credits, charges, disbursements, and any other money matters required to be finalized to complete the close of the transaction.

The HUD 1 Statement is typically prepared by a broker, escrow officer, lender, closing agent, or title company. 

The HU1 is a standard form that most lenders use at closing to disclose all of the items listed above, and to make sure they are in compliance with the provisions of the Real Estate Settlement Procedures Act. (RESPA).

The HUD 1 Statement is also called the Settlement Statement or Closing Statement.

SETTLEMENT STATEMENT - A summary of a real estate transaction’s fees, costs, credits, charges, disbursements, and any other money matters required to be finalized to complete the close of the transaction.

The Settlement Statement is typically prepared by a broker, escrow officer, lender, closing agent, or title company. 

The HU1 is a standard form that most lenders use at closing to disclose all of the items listed above, and to make sure they are in compliance with the provisions of the Real Estate Settlement Procedures Act. (RESPA).

The Settlement Statement is also called the HUD 1 Statement or Closing Statement.

SEVERALTY - Implies sole ownership of real property (real estate). Any other person or company that may have previously had an ownership interest in the property have had their interest “severed” from all other previous owners.

SEVERANCE - Refers to severing, or removing, an item that was previously a part of a particular piece of real property (real estate). For example, if you cut down a tree on the property then it is no longer a part of the real property, but instead it becomes personal property (personalty) as it is on the site though not attached to the site.

SIMPLE ASSUMPTION - The acquisition of a title to a property that already has a mortgage on it. The person acquiring the title is known as the grantee, and assumes (agrees to pay) the debt, and thus is liable for completing all of the payments due on the mortgage, and for fulfilling all of the loan’s terms an condtions. If the property is sold in foreclosure for an amount of money that is less than the amount due on the mortgage, the purchaer (grantee) who assumed the mortgage remains liable for the deficiency. Such a transfer of liability must be approved by the lender. Also called Assumption of Mortgage.

SIMPLE INTEREST - Interest that is calculated based solely on a loan’s principal (the unpaid balance), and with no compounding interest charges.

SINGLE FAMILY PROPERTIES - Properties comprised of one to four units. These may include condominiums, townhouses, and cooperatives as well as manufactured homes connected to a permanent foundation and classified as real property (real estate) by state laws.

SINKING FUND - A fund established to collect deposits incrementally over time to pay for an anticipated (foreseen) future event (e.g., painting, roofing) without causing an undue burden on just the current owners.

SLUSH FUND - A fund established to collect deposits incrementally over time to pay for an anticipated (foreseen) future event (e.g., painting, roofing) without causing an undue burden on just the currrent owners.

SOFT SECOND LOAN - A second mortgage, the payment of which is either forgiven or deferred until the real property (real estate) is resold.

SOLE PROPRIETORSHIP - A business owned by one person who files an individual tax return (instead of a corporate tax return) with the Internal Revenue Service.

SPECIAL AGENT - An agent whose responsibilities to their principal are limited to the performance of certain duties. An example of a Special Agent is a listing agent whose responsibilities includes finding a buyer for the principal’s real property (e.g., home), while the owner makes the final decision on whether to sell the home at a particular price.

SPECIAL ASSESSMENT - A special tax levied against particular parcels of land. A common reason for a Special Assessment is to pay for requested improvements (e.g., street lights) initially funded by the county or city government.

SPECIAL PURPOSE PROPERTY - Real property (Real estate) used for a specific purpose (e.g., school, church) not described by other property categories.

SPECIAL WARRANTY DEED - A deed from a seller (grantor) guaranteeing clear title only from the time that the seller first acquired the real property (real estate).

SPECIFIC PERFORMANCE - Carrying out a contract’s terms. A suit for Specific Performance is a legal action (remedy) forcing or compelling a party to a previously agreed upon contract to carry out (complete) the precise terms of the contract.

SPOT ZONING - A zoning change for a particular piece of real property (real estate), differing from the zoning rules applying to the surrounding properties/area. An example would be an attempt change a parcel of land in a residential subdivision, which is zoned as residential, to commercial, in order to open a store. These types of Spot Zoning changes may be challenged in court.

SQUARE MILE - A measurement equal to 640 acres; 5,280 feet by 5,280 feet.

STATUTE OF FRAUDS - Laws governing the enforceability of verbal (oral) contracts. Most states will enforce an oral lease agreement of one year or shorter.

STATUTE OF LIMITATIONS - A law declaring a specific time period during which actions may be presented to a court and beyond which they cannot.

Dictionary Real Estate continued:

STATUTORY LIEN - An involuntary lien. Examples include tax liens, mechanic’s liens, and judgment liens.

STEERING - The illegal practice of leading, channeling, or steering buyers of real property (real estate) away from or toward particular neighborhoods due to race, national origin, or other discriminatory criteria. Also see Channeling.

STEP UP - A lease featuring pre-arranged increases in rent. Step Up leases are often found in commercial lease contracts that cover extended periods of time. 

For example, a commercial warehouse in an industrial district may have a long term lease requiring a $100 rent increase every two years.

STIGMATIZED - A property with a negative history including such events as a suicide, murder, or other violent crime on the property, or with a known sex offender living nearby, or even with a rumored presence of ghosts.

STOP LEVEL--A predetermined level of a landlord’s operating costs in a gross lease that, when reached, requires the tenant to contribute more money.

STRAIGHT NOTE - A loan with a promissory note requiring periodic interest-only payments until the note reaches maturity, at which time the total principal of the loan is due in one lump sum.

SUBDIVISION - A tract of land that is divided into individual lots either for lease or for sale, thus creating a housing development.

An appraiser’s term for the real property (real estate) being appraised.

SUBJECT TO MORTGAGE - The situation created when a home buyer takes over the payments of the previous owner’s mortgage loan, yet is not personally liable for making thos payments. Instead the previous owner (the original borrower) remains liable for the entire unpaid balance of the debt in the case of default.

SUBLEASE - When a tenant (the original tenant) transfers their rights to a third party for the remaining time of their lease. The original tenant remains liable for the terms of the lease.

SUBLETTING - A tenant’s act of transferring their rights to a third party for the remaining time on their lease. The original tenant remains liable for the terms of the lease.

SUBORDINATE FINANCING - Financing on real property (real estate), such as a mortgage loan or any other lien, which has a lesser priority than the first mortgage on a property.

SUBORDINATION - The reduction or relegation, by agreement between the parties involved (e.g., lender, borrower), of a lien (e.g., mortgage loan) to a lower (subordinate) position than it previously occupied.

SUBPRIME - A category of loans providing greater leniency in underwriting provisions and an expansion of typical credit guidelines used to determine credit worthiness and eligibility for a loan. Also called B&C Lending.

SUBSTITUTION - A principle of appraising real property which states that the maximum value of the property is estimated by comparing the property to other equally desirable real estate nearby.

SUPERFUND - Refers to the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), also known as the Superfund, which was enacted to provide money for cleaning up hazardous waste sites and also to set standards for cleaning up hazardous waste.

SUPPLY - In terms of real estate, Supply refers to the number of homes or other real property (real estate) available for sale in a particular area (e.g., city, town, desirable neighborhood). 

A true consideration of Supply includes homes listed for sale with real estate agents as well as new homes being sold directly by developers and homes for sale directly by homeowners (FSBO).

SURETY BOND - An insurance policy which serves to protect against misconduct or theft by an employee.

SURVEY - For real estate purposes, a Survey is an exact (precise) measurement of real property (real estate) completed by a licensed surveyor, and showing the dimensions and all legal boundaries of a particular property as well as the locations of any improvements.

SURVIVORSHIP - When a co-owner of real property (real estate) in joint tenancy or tenancy by the entirety passes away, the other owner or owners automatically receive the deceased person’s interest in the property. 

If only one of the original owners remains, that person will own the property in severalty as ownership is severed from all former co-owners. 

The right of survivorship means that no will is required to effect the transfer of the real property interest to the surviving co-owner(s), avoiding delays and costs of probate.

Also see Joint Tenancy and Tenancy By The Entirety, and Tenancy in Common.

SWEAT EQUITY - A contribution - in the form of services and/or labor, and in lieu of cash - toward the down payment on a purchase of a property.

SWING LOAN - A loan that uses a home as collateral with a goal of providing short-term financing in order to bridge a gap in funding the construction or purchase of a new home until the owner/buyer’s previous home sells. Also called Brige Loan.

TAXES AND INSURANCE - Monies collected as part of the regular monthly payments of a home mortgage loan borrower, and then held in an escrow account on the borrower’s behalf in order to pay the borrower’s future taxes and insurance fees as they come due.

TAX LIEN - A state or federal general statutory lien which is imposed against real property (real estate) for failure to pay taxes.

TEMPORARY BUYDOWN - Money paid toward a home loan to reduce the monthly payment for the initial years of the loan. Also see Permanent Buydown; Interest Rate Buydown.

TENEMENT - Everything allowed to be occupied under the lease of a tenant.

TENANCY AT SUFFERANCE - An estate that is created when a tenant causes a landlord to “suffer” by failing to vacate the unit at the legal expiration date provided in the original lease.

TENANCY AT WILL - A leasehold estate that is created when an owner of real property (real estate) informally provides the right of occupancy to a tenant for an undetermined period of time. This estate is the only type of leasehold estate that ends when either the tenant or the landlord dies.

TENANCY BY THE ENTIRETY - A type of joint tenancy which creates joint ownership of real property (real estate) for a wife and husband only, providing each spouse with an equal undivided interest in the property such that if one spouse dies all of the property goes to the other spouse. Further, in the case of tenancy of the entirety, the right of survivorship means that no will is required to effect the transfer of reall property interest to the surviving co-owner, avoiding delays and costs of probate.

TENANCY FOR YEARS - An tenant’s interest in real property (real estate). This time period of this interest is defined by the terms stated in the lease document between the tenant and landlord, and thus the interest is said to be “framed in time.”

TENANCY IN COMMON - An ownership form allowing two or more persons to share an inheritable, undivided interest in property (e.g., each co-owner may do whatever they like with their share of the property) but with no right of survivorship (e.g., if one owner dies their interest passes to their heirs).

TENANT - A person (e.g., renter) who has temporary rights to possess a particular piece of real property (real estate).

TERM - The total time period of the mortgage loan; the life of the mortgage. At the end of the term, the mortgage is due - payable in full unless there is a renewal provided by the lender.

TERMITE INSPECTION - An inspection by a licensed professional inspector to determine whether a home has an existing termite infestation or any past termite-related damage. 

TESTAMENTARY TRUST - As set forth in a will, a testamentary trust is a trust that is created automatically when a trustor (originator of a trust) dies.

 TESTATOR - A legal term for someone who gives real property (real estate) to another person through a provision in a last will and testament.

THIRD PARTY ORIGINATION - A process that involves a lender who utilizes another party (a third party) to either partially or completely package, fund, process, originate, or underwrite a home loan.

TIE-IN AGREEMENT - An agreement that requires a client or customer to use two or more services. In regards to real estate (real property) transactions, tie-in agreements are illegal. For example, a real estate agent or real estate broker may not require a home seller to also use a mortgage company that is owned by the broker.

TIMESHARE (Time Share) - An ownership arrangement (form of real property ownership) allowing a buyer to receive an interest in real property (real estate) and also the right to use amenities and/or accomodations for a specific and recurring time period. Timeshare ownership is typically used for vacation properties, and the specific time periods involved are often one or two weeks per year.

TITLE - The legal document that provides evidence of ownership of real property (real estate). The title also serves as an indication of the accumulation of all the rights in a property by the owner of the property.

TITLE COMPANY - A company which provides title insurance policies and may also provide other title related services (e.g., escrow agents, closings).

Dictionary Real Estate continued:

TITLE INSURANCE - Insurance to protect both buyers and lenders (purchasers, mortgagees, etc.) from potential losses due to disputes (e.g. liens) regarding the ownership (e.g., title) of real property (real estate). The title insurance policy is a comprehensive contract of indemnity that guarantees the insured will be reimbursed if they suffer loss due to title problems (e.g., defects in the title). The title insurance only serves to cover events that have previously occurred and were not discoverable previous to the writing of the policy.

TITLE INSURANCE COMPANY - A company that writes policies for title insurance.

TITLE SEARCH - A thorough examination of public records (e.g., by an attorney) with the goal of discovering and determining if there are any defects (e.g. outstanding liens, clouds on title) in the chain of title to real property (real estate). Typically the search will involve an investigation of the recorded documents for the previous twenty to sixty years. When the search is done, a legal document is prepared as evidence of a person’s right to sell or own the particular property being checked, and may do see free of liens.

TITLE WITHOUT CLOUDS -  An established title that is free of defects, liens, and any other legal encumbrances. The only exceptions are encumbrances that the home buyer is willing to accept, such as an Assumable Mortgage that the buyer is willing to assume. Also called Clear Title.

TRADE FIXTURE - Items of personalty (personal property) which are used to conduct business. Although trade fixtures (e.g., business signs, shelving, etc.) may be attached to the real property (real estate), they remain as the personal property of the tenant (e.g. business owner) as long as they are removed (e.g., detached) from the property before the end of the lease.

TRANSACTIONAL BROKER - A broker/agent who facilitates a business transaction yet does not work for (e.g., have as a client) either party to the transaction. If the business transaction is a real estate sale and/or purchase, then the transactional broker will consider both the seller and buyer as customers (not clients). Also called Facilitator.

TRANSFER TAX - A state or local tax payable (levied) when the title to real property (real estate) changes ownership from one person or company to another. The Transfer Tax is typically stated per $1,000 of value. For example, if the deed tax was levied at $1 per $1,000, then if the home was sold for $300,000 the Transfer Tax would be $300,000 x .01 (1%), totalling $300.

TRIGGER TERMS - Particular loaassociated terms (e.g., interest rate, downpayment, loan term, etc.) which, if used by a lender in advertising, will “trigger” a requirement - according to the Federal Truth-In-Lending Law - that additional facts (e.g., the Annual Percentage Rate, or APR)--must be disclosed. The goal of these rules are to make sure a consumer (e.g., borrower) is fully informed.

TRIPLE NET LEASE - A lease that holds a tenant responsible for paying all of the property’s maintenance expenses, taxes, and insurance. Also see Net Lease.

TRUST - An agreement which allows the legal title to real property (real estate) to be handled by a trustee. The trust is created by a trustor, and the beneficiary receives the benefits of the trust.

TRUST ACCOUNT - An account used by a loan servicer to hold (impound) funds from the borrower to use as escrow payments to pay property expenses (e.g., homeowner’s insurance, property taxes). Also called an Escrow Account; Impound Account.

TRUST DEED - A legal document which serves as a security device for real estate (real property). In essence, the borrower is transfering the title to a third party (the trustee) so it may be held as security for the obligation (debt) that the trustor owes to the lender. A Trust Deed is very similar to a mortgage between a mortagee and mortgagor, except that in a Trust Deed there are three parties including the trustor (borrower), beneficiary (lender), and the third party known as the trustee who then holds partial title until the debt has been fully repaid. Trust Deeds are not used in all states. Also called Deed of Trust.

TRUSTEE - A person who holds the title to real property (real estate) for someone else’s benefit, and thus owes them fiduciary duties. The trustee has a legal responsibility to hold the property/title for the other person’s benefit and in their best interest, and this responsibility is enforceable by law

TRUTH-IN-LENDING LAW (Truth In Lending Law; Truth In Lending Statement; Truth-In-Lending Statement) - A regulation by the federal government of the United States (developed by the Federal Reserve System) to ensure that borrowers are fully informed. 

The Truth-In-Lending Law requires complete disclore of the terms of a loan including financing interest rates espressed as an annual percentage rate (APR) that takes into account specific upfront costs associated with particular types of financing and thus represents the “true cost” of brrowing money. This helps consumers accurately compare different loan options. 

The Truth-In-Lending Law specifically defines a loan’s finance charges as the total of all fees that the customer (borrower) is required to pay either indirectly or directly to obtain from a creditor (lender). 

Also addressed by the Truth-In-Lending-Law are loan advertising rules and such loan features as trigger terms which are loaassociated terms (e.g., interest rate, downpayment, loan term, etc.) which, if used by a lender in advertising, will “trigger” a requirement under the Truth-In-Lending Law that additional facts must be disclosed.

Also called Federal Truth-In-Lending Law.

ULTA (Uniform Residential Landlord and Tenant Act) -  Rules enacted by certain cities and states detailing specific rental requirements that must be adhered to by both tentants and landlords.

UNDERGROUND STORE TANK (UST) - A storage tank or combination of tanks and connecting  pipes as well as ancillary equipment and containment systems which, as defined by the Environmental Protection Agency (EPA), have a minimum of ten percent of their total combined volume beneath the ground.

UNIFORM RESIDENTIAL LANDLORD AND TENANT ACT (URLTA) - Rules enacted by certain cities and states detailing specific rental requirements that must be adhered to by both tentants and landlords.

UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE (USPAP)  - Standards that are generally accepted for professional practice in North America. The standards include appraisal services, personalty (personal property), and real estate.

UNILATERAL - A contract that requires (obligates) performance from only one of the parties to the contract. 

For example, if a potential home buyer has a contract detailing an Option To Buy, the buyer is not required to buy the home yet the seller is obligated to sell the home - thus it is a Unilateral Contract.

UPSET PRICE - The lowest acceptable price which real property (real estate), such as a home, may be sold for during a judicial foreclosure. This upset price is set by a court after the real estate is appraised.

UST (Underground Store Tank) - See Underground Storage Tank.

USURY - Charging a borrower interest rates that are higher than the rates permitted by law. Also called loan sharking.

VARIABLE RATE MORTGAGE (Variable-Rate Mortgage) - A mortgage loan that has an interest rate which may be adjusted either downward or upward periodically during the life (term) of the loan. 

The interest rate on an Variable Rate Mortgage is usually reset in accordance with an assigned index that fluctuates reflecting market conditions or a specific designated market indicator (e.g., weekly average of 1-year United States Treasurey Bills). When the interest rate changes, then the monthly payments that are due also typically change.

The interest rate adjustments on an Variable Rate Mortgage typically occur on a regular basis (e.g., every 12 months), and usually with a pre-set rate cap that sets a limit on how much the interest rate may increase (e.g., 2% annualy and 6% total over the term of the loan). 

Also called Adjustable Rate Mortgage (ARM); Adjustable Mortgage Loan.

VA - The Veterans Administration; a federal government agency which guarantees mortgage loans for veterans who qualify for the program.

VALID - Describes a legal contract that is still in effect as the parties to the contract continue to work toward its completion as initially stated in the contract.

VETERANS ADMINISTRATION LOAN - An Assumable Loan provided to a qualifying veteran by a private lender and guaranteed in part by the Veterans Administration to help limit the lender’s potential losses. Lenders must be approved by the Veterans Administration.

VARIABLE RATE - An interest rate which may periodically decrease or increase in accordance with an assigned index.

VENDEE - A purchaser; buyer.

VENDOR - A seller.

VETERANS ADMINISTRATION (VA) - The Veterans Administration; a federal government agency which guarantees mortgage loans for veterans who qualify for the program.

VOID - Lacks legal force/legal effect; not legally valid.

VOIDABLE - A contract which might seem to be valid (enforceable) yet may be declared invalid by one or more parties to the contract for a legal reason. For example, if the contract was entered into by a minor it is Voidable.

WAIVER - An intentional or voluntary relinquishment of  a claim or known right.

WARRANTY DEED - A deed which conveys the interest of the grantor, fully warranting a clear and good title to real property. The Warrany Deed binds the grantor by the warranties and holds them liable if the title has any defects or clouds such as mechanic’s liens, tax liens, or judgments. Also called General Warranty Deed.

ZONING - Property use regulations imposed by cities and/or counties to control property uses within particular designated areas, zones, or districts. The Zoning laws may dictate permissible densities, types of structures, building setbacks and heights, and land uses.

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