Real Estate Glossary Terms Beginning With – C

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Updated: November 22, 2021

Terms Beginning With - C

Property Development & Investment Glossary, Terms & Definitions

Cadastral map

A map that shows legal boundaries and ownership of real property and is used in conjunction with title registration. A cadastral programme is a comprehensive inventory of land in a given region, organized by ownership, description, and valuation for tax purposes.

Cadastre

A land information system based on parcels.

Caissons

A 3-4 foot deep hole dug into the soil and embedded in bedrock.

A structure's foundation.

Call

When describing or "running" a boundary, a reference to a course, distance, or monument is made in the surveying or platting of a parcel of land.

Call provision

1. A provision in a mortgage or trust deed that allows the mortgagee or beneficiary to pay off the mortgage obligation in full on a certain date or upon the occurrence of specified events.

2. The capacity of the borrower to redeem or call in a bond.

3. The chance to purchase real estate. (A put option is a sell option.)

A clause in a mortgage deed that allows the lender to accelerate the debt if a particular event occurs prior to the initial maturity date.

Call report

A mortgage delinquency report.

CAM (Common Area Maintenance)

Shopping centre charges that aren't included in the base rent. These charges pay for things like hallways, parking lots, security and advertising.

CAN-SPAM Act

A federal regulation passed in 2003 that establishes national rules for commercial e-mails. It applies to any firm that uses e-mail in its marketing activities. CAN-SPAM demands that the subject line clearly and accurately describe the message's content. The "to" and "from" information must be valid, and customers must be able to "opt out" of receiving future communications. Additionally,

Cancelation option

Lease provision that provides the tenant or owner the right, but not the responsibility, to terminate the lease before it expires.

Cancellation clause

A clause in a contract that gives the party the right to cancel the contract if a certain event occurs.

1. A provision that may be incorporated in a commercial or industrial lease allowing the lessor or lessee the right to terminate the lease term upon the occurrence of specific defined events or occurrences by the payment of definite amounts of money as consideration from one party to the other. Such payment often covers the party whose rights are being canceled's expenses or losses, such as unamortized costs of special upgrades, brokerage fees, and potential rental loss before the property is re-rented.

The consideration fee given to the landlord, as well as any unamortized cost of upgrades, are deductible income tax expenses in the year the tenant cancels.

If the landlord terminates the lease, the cancellation fee paid to the tenant is considered a capital expenditure by the landlord and is amortized over the remaining lease period. The tenant's cancellation payment is similar to a sale, and if the lease is for non-depreciable land, it is a capital asset, and the tenant is allowed to report the cancellation fee as a capital gain in the year of receipt.

2. A clause in a residential lease that allows the landlord to cancel the lease if the fee simple property is sold; otherwise, the new owner must assume title pursuant to the lease.

3. A provision that makes a sales contract only valid if a previous deal is canceled. Before accepting a "backup offer," the seller should include a language stating that acceptance is contingent on the earlier accepted contract being written canceled.

Cant

A corner is cut off by an angled line or surface.

Cantilever

A projecting beam or overhanging section of a structure that is solely supported on one end, such as a bay window or balcony.

When one floor extends beyond and over a foundation wall, it is called an overhang.

Cantilevered void

Material used in soils with extremely large pores.

Cap

A maximum or restriction on the modifications made to an adjustable-rate loan's payments, interest rate, or principal.

A column, pilaster, door cornice, molding, or fireplace's top part.

Cap flashing

A weather in the shape of a L that repels water. Waterproofing material was put behind the base flashing to keep water out.

Capacity of parties

The legal power of individuals or organizations to form a binding contract. A person with full, limited, or no contracting capacity will engage into a contract.

Full contracting capacity: A person's unrestricted power to enter into legally enforceable contracts. Most people, even illiterates, have full contracting capacity and are referred to be competent parties.

Limited capacity to contract: A person's ability to engage into a contract that is legally binding on that person only under particular conditions. Minors, for example, have restricted contracting ability, which implies that a minor's contract is valid only if the minor does not disaffirm a contract formed during while in minority or shortly after achieving majority. Minors' contracts to obtain such requirements.

No contracting capacity: A person's incapacity to engage into a legitimate contract under any conditions. Such incapacity can occur when a person has been declared mad or when an executive of a corporation is not permitted to sign a contract on its behalf. Incapacity would also encompass activities of a company that go beyond the authorities granted in the articles of formation.

Capital

Amounts of money or property invested in an asset with the purpose of generating wealth; conversely, the excess of production over consumption.

That money and/or property that constitutes the wealth possessed or utilized by a person or business operation; a person's or firm's acquired riches

This is the loan's original amount less the interest charge.

Capital Adequacy

A regulated institution (such as a bank or building society) is required to maintain a particular minimum amount of capital in proportion to its risk profile. These regulated businesses may be able to achieve the capital adequacy requirement by securitizing their assets and removing them from their balance sheet without recourse, obviating the need to retain capital for the securitized assets.

Capital and interest

This is a sort of loan in which the borrower repays a certain amount of money on a monthly basis until the loan is fully paid off, plus interest.

Capital assets

Except for those specifically enumerated by the Commissioner of Internal Revenue, all assets held by a taxpayer (whether or not related to the person's trade or business). Assets that are fixed or permanent in nature, or those used in the operation of a business or trade.

Except for property held principally for sale to consumers in the ordinary course of one's trade or company by a taxpayer. Capital assets include the taxpayer's own dwelling, land held for investment, stocks, securities, and company machinery or equipment.

Capital expenditure

An upgrade to a property that will persist longer than a repair. Rather than being expensed, this item is added to the property's base.

An outlay of finances that extends the usable life of a capital asset or increases its value.

The cost of a capital enhancement that increases the asset's life. A capital investment on depreciable property must normally be amortized throughout the life of the property or that portion of the property to which the improvement pertains. Repairs and expenses are not presently tax deductible.

Expenditures for replacements and changes to a structure (or improvement) that considerably extend its life and worth.

Capital formation

Raising loan or equity capital for real estate initiatives.

Capital gain

When an asset is sold, the capital gain is realized.

the profit between your purchase and sale prices, which is now liable to capital gains tax.

The amount of money that comes from the sale of a piece of property that is more than what the buyer paid for it.

The taxable gain on the sale of a capital asset. The capital gain is the difference between the sales price and the property's basis, after accounting for closing expenses, capital improvements, and permitted depreciation.

A capital gain is deemed long-term if the asset has been owned for more than 12 months and short-term if the asset has been owned for 12 months or less. Short-term profits are taxed like regular income, but long-term gains are taxed at rates ranging from 5% to 28%.

With all of the recent changes to the tax law, it is critical to understand how sales are taxed. This is determined by other sources of income, the length of time the asset has been held, and the type of asset. Keeping records is critical.

The revenue or profits obtained from the sale of real estate are taxed at a lower rate than earned income.

This is the profit a seller makes on a sold asset.

Capital gain tax rate

The tax rate applied to the part of the taxable gain on sale that is related to an increase in the property's market value.

Capital gains Tax ( CGT)

For properties owned for at least one year, there is a tax on net capital gains, which is now half the amount of income tax.

Capital goods

Products that are intended to be used in the creation of other goods or services.

Capital growth

The growth in an asset's worth over time.

Capital improved value

The amount of money that a property may reasonably be expected to bring in if it were sold at the time of a municipal valuation.

Capital improvement

Any building created as a permanent improvement to real property; any improvement done to increase the usable life of a property or its value. A roof replacement, for example, is considered a capital improvement, whereas screen door maintenance is not. Other common capital upgrades include a new boiler, a paved driveway, landscaping, and major renovation.

An object that adds to the value of a home.

Capital loss

A loss incurred as a result of the selling of a capital asset.

A loss incurred as a result of the disposal of a capital asset, securities (such as stocks), or bonds. If the taxpayers' capital losses exceed their capital gains, the excess can be used to offset taxable income such as wages, up to a $3,000 yearly maximum, or $1,500 if married filing separately. If their net capital loss exceeds their yearly limit, the excess can be carried over to the following taxable year until the loss is entirely deducted.

Capital losses on the sale of a taxpayer's own dwelling are not recognized.

Capital market

The financial sector of the economy is responsible for allocating financial resources among consumers and businesses in need of financing.

Capital recovery

The fraction of an overall capitalization rate that is made up of the owner's capital investment being recovered.

Capital Return

The difference between the value at the start of the measurement period and the value at the end of the measurement period.

Capital structure risk

The risk connected with the investor's funding arrangement. Increased utilization of mortgage debt (financial leverage) in particular raises the riskiness of the equity investor's return.

Capitalization

The process of figuring out how much a business is worth by discounting its stable net operating income at the right rate.

The process of converting a revenue stream into a property value.

1. A mathematical technique for translating net income into a value indicator, as utilized in the income approach to valuation. The mentioned value is calculated by dividing the property's net revenue by an acceptable (capitalization) rate of return.

2. The par value of a corporation's shares plus the face value of existing bonds and loans.

Capitalization (CAP) rate

The proportion chosen for use in the income method to improving property valuation. The CAP rate is intended to reflect the recapture of the initial investment during the economic life of the improvement in order to offer investors with an appropriate rate of return (yield) on their original investments as well as the return of the invested equity. In other words, if the property includes a depreciating building, the CAP rate provides for the return of invested capital in the building by the end of the economic life (the recapture rate that allows for future depreciation of the building) as well as the return on the investment in the land and the building (similar to yield).

For instance, if a building has a 50-year economic life, the annual recapture rate is set at 2%. If the investment rate of return is 8% and the recapture rate is 2%, the overall capitalization rate for the building is 10%.

The conditions under which the particular investment is operated, as well as the availability of capital, current interest rates, and risk, all determine the optimal CAP rate. If the property makes $100,000 per year and the cap rate is 9%, the following formula is used to determine how much the property is worth to the investor: $1, 111, 111 = $100,000 + 0.09. Only an expert appraiser can choose the right CAP rate; a 1% discrepancy in the proposed CAP rate can result in a value estimate variance of 122%.

The capitalization rate (CAP rate) is a measurement of an investment's risk; the higher the risk, the higher the CAP rate; the lower the risk, the lower the CAP rate.

Divide net operating income by the expected value or resale price to get the current rate of return.

A gauge of a property's value based on current rent, as well as an indicator of investor expectations. It's computed by dividing the year's net operating income (NOi) by the property's valuation.

The link between a real estate investment's net income and its monetary value. This correlation is often stated as a percentage.

The percentage derived by dividing the revenue generated by a property (or a defined stake in a property) by the property's value or sale price ( or the specified interest in the property). (See also total capitalization rate.)

The percentage rate at which a future flow of money is transformed into a present-value amount.

This is a portion of the investment that the investor will get each year from the property's net income.

Capitalize

To increase a property's tax base by a certain amount.

1. To supply money; to finance.

2. An accounting technique in which a firm reports a cost as a capital asset rather than charging it to the year's expenses. This is often done with capital expenditures, such as a new roof.

Capped rate

Mortgages are a sort of variable rate loan, but they have an interest rate cap above which payments cannot increase.

Capture rate

A project's ability to attract a percentage of total demand within a specific market sector. It is also known as the penetration rate.

Caravan

A slang word for a group inspection tour of listed homes by a broker's sales personnel in various regions of the nation.

Carport

A roofed structure with at least one side exposed to the elements. A carport is often constructed by extending the roof of a home to one side and is primarily intended or used for motor vehicles. This phrase is typically associated with little one- and two-family homes. A garage in a multifamily property may have one or more sides open to the elements.

Carried Interest

The excess cash flow generated by a fund that will be dispersed to limited partner investors and the general partner sponsor in accordance with the conditions of the offering memorandum and limited partnership agreement. For example, a fund may agree to distribute 80 percent of the remaining cash flows to investors while keeping 20%. The carried interest of the investor is referred to as 80%, while the carried interest of the fund sponsor is referred to as 20%.

Carryback financing

A kind of financing in which the seller accepts a note for a portion of the purchase price, which is secured by a junior mortgage (a second or third mortgage), wraparound mortgage, or contract for deed.

Carrycost rule

It's a tool that banks use to assess borrowers for mortgages.

Carrying Capacity

The maximum level of growth density or usage that an environment may tolerate without experiencing unwanted or permanent damage.

Carrying charges

1. The ongoing expenditures of property maintenance, such as taxes, insurance, utilities, and interest. These expenses are frequently split between the buyer and seller during the closing of a real estate transaction.

2. Property ownership costs accrued up to the time the property is developed. Typical carrying charges include a developer's fees for paying property taxes and interest on land purchase and construction loans while the property is under construction. Also known as "front money."

If a developer has a pending development and little or no revenue to absorb tax deductions, the developer should capitalize the carrying expenses. If the land is unimproved or unprofitable, the developer can capitalise yearly truces, mortgage interest, and other genuine carrying charges over a ten-year period. The decision to capitalize is made each year when filing a tax return. The developer must deduct the expenditures when the project is done.

Carrying costs

Those expenses incurred as a result of owning a property.

Carve out

Refers to commercial loans in which the lender "carves out" certain personal responsibilities in a nonrecourse loan. Rather than providing the borrower with a blanket exemption from personal culpability, the lender makes an exception for defaults caused by environmental issues, fraud, misapplication of money, bankruptcy, or enabling an uncontested involuntary bankruptcy filing.

Case-Shiller Index

The Case-Shiller Index, developed by Fiserv and released monthly by Standard & Poor's, contains numerous evaluations of the average change in house values in 20 separate and two composite retail markets. It is calculated using data from single-family house repeat sales. Transactions are examined to rule out potential distorting variables such as non-arm's-length (no family members) sales, significant improvements to the property, when the property type has been altered, and suspected incorrect data. Known as the S&P/Case-Shiller Home Price Indices.

Casement

These are windows that open outwards to the left or right and are hinged on the side.

Casement Frames of wood or metal

Part of a window sash that is enclosed.

Cash basis

When cash is received, revenue is recognized, and when cash is paid out, expenses are recognized.

Cash equivalency

A change made to a similar property sale that was funded in a way that was not typical of the market. The adjusted sales price should be the amount that would have been paid if conventional financing had been employed. A transaction with the seller carrying back a no-interest loan, for example, would be adjusted lower using cash equivalency rules.

Cash flow

After service and operating costs have been subtracted, the surplus revenue pouring into a property investment or business is frequently charted monthly.

Spendable income from an investment after subtracting all operational and fixed expenditures, including principle and interest, from gross income. The amount of cash obtained from the operation of an income-producing property during a specific time period after debt service and operational expenditures, but before depreciation and income taxes." "Net true after-true" "An allowance for income tax related to income is included in cash flow, or cash available for distribution. Cash throw-off is another term for pre-tax cash flow.

Cash flow is not the same as "net profit." To calculate net profit, the owner deducts depreciation but does not subtract loan amortization.

The actual shelter offered during ownership and the expected growth in the property value that may be obtained upon sale are two advantages of investing in renovated, income-producing real estate. As a result, even if monthly cash flow is negative, an investment might be lucrative. Real estate tax shelters were severely reduced in the 1986 Tax Reform Act.

The discrepancy between the income generated by the property and the expenses incurred. The owner's net spendable income is represented by this cash flow.

After running expenses and debt, the residual income generated by an investment property.

Cash flow analysis

The examination of income and expenditures from the start of a project to its completion, usually on a year-by-year basis.

Cash flow statement

A yearly financial report that shows the net profit after taxes. A cash-flow analysis is frequently prepared by the property management so that the property owner may assess the return on investment in the property.

Cash flow Waterfall

The sequence in which the available cash flow is distributed to investors or holders of various classes of issued securities after all expenditures have been paid.

Cash method

Accounting technique for reporting revenue in the taxable year in which it is actually or constructively received, as well as reporting costs when they are really paid out. Income is constructively received when it is credited, set aside, or otherwise made accessible to the taxpayer without significant constraints or restrictions, allowing the taxpayer to receive it on request. The cash approach is also known as the receipts and disbursements method. It differs from the accrual approach of accounting. For real estate brokerage firms and other service enterprises, the cash basis is the standard way.

Cash reserve

Is the minimum percentage of total customer deposits that commercial banks must retain as reserves with the central bank.

Cash-On-Cash

Before-tax cash flow divided by capital invested in the property; a means of determining how effectively money invested in the property is utilized.

Cash-On-Cash rate of return

The estimated after-tax cash flow in the first year divided by the initial cash expenditure necessary to buy the investment.

Cash-On-Cash return

An investment's rate of return. Divide the cash flow by the down payment to arrive at this figure.

The net cash flow obtained from the property divided by the equity invested in the property yields a measure of the short-term return on property investment.

Cash-out

An indication in a listing that the seller prefers to get the full sales price in cash rather than accepting less by refinancing a purchase-money mortgage or selling under a contract for deed. In other words, carryback financing is not permitted. It might refer to a "cash to mortgage" transaction in which the buyer pays the seller's equity in cash while assuming or taking subject to the existing mortgage.

Cash-out Refinance Mortgage Loan

A mortgage loan obtained to refinance an existing mortgage loan when the new loan's size exceeds (by more than 1% ) the amount needed to satisfy the previous loan's payments, closing expenses, and any outstanding subordinate mortgage loans. The borrower is free to utilize the extra funds as they see fit.

Cashier's check

A bill of exchange (check) drawn by a bank on itself as drawer (typically signed by its cashier) and payable on demand, similar to a promissory note executed by the bank. A cashier's check (or a certified check) is favoured above a regular personal check for closing a deal, and it (or a certified check) is frequently required of the property buyer under the contract conditions.

A cashier's check, on the other hand, is still susceptible to the maker's stop-payment order. Only if the maker gets bank certification, not when the payee has the maker's check certified in the maker's bank, is the certified check subject to a stop-payment order. 

Casing Wood

Are commonly used to decorate as well as trim around doors and windows.

Catch-Up

After a preferred interest has been given, this type of promoted interest is used to achieve a certain return split between GP and LPs.

Catwalk

A small footing on a bridge or along a massive building's girder. A catwalk can also be defined as a walkway strung from one girder to another or built over exposed attic joists.

Caulking

A flexible putty-like material used to seal gaps at permanent connections on a structure to limit air and moisture passage, such as when making building windows waterproof.

Sealant is a term for the techniques and materials used to seal joints or seams in various buildings and some forms of pipes.

Cause of action

Facts or situations that give birth to the right to sue.

Caveat Emptor

Beware of the buyer.

Latin equivalent of "Beware the buyer." Buyers should evaluate the items or real estate before making a purchase because they are purchasing "as is" and at their own risk.

The present legal trend is to mitigate the impact of this archaic concept. Today, the seller has a stronger affirmative responsibility to disclose any and all circumstances that may impact the buyer's purchasing choice. Many jurisdictions now require sellers to provide a written notice about specific property problems to buyers of one to four unit residential properties. Buyers should not regard the seller's disclosure as a warranty or guarantee. Buyers have both the right and the need to "find" concerns regarding the property that are significant to them. In other words, the written seller's disclosure shifts the responsibility of disclosure from the seller to the buyer.

While some sellers may "forget" to make certain disclosures, purchasers should keep in mind that sellers cannot disclose information about which they are unaware. Because the courts have typically concluded that a potential purchaser, as a member of the public, can rely on the assertions made by a licensed salesperson or broker, licensees must nevertheless disclose those concerns of which they are aware.

In the case of residential leases, the caveat emptor concept has been significantly modified.

Previously, a landlord would lease residential property "as is," with no need to make it habitable or repair it. In some states, this theory has been superseded in residential leases by an implicit warranty of habitability, under which the landlord is required to make the premises fit before the tenant moves in and to maintain the premises fit during the lease.

The buyer must inspect the property before closing and does so at his own responsibility.

A notice informing a buyer that the products he or she is purchasing are defective.

CCA (Chromated Copper Arsenate)

To protect wood from termites, use a chemical wood preservative.

Cease and desist order

An order from a government official telling someone who is breaking the law to stop. Many state authorities, for example, can issue a cease and desist order against a responder who has committed a discriminatory conduct, or against a seller of condominiums or subdivisions who has broken the law.

Ceiling joist

It connects the structure's walls and supports the room's ceiling.

Celotex

A roofing and insulating materials manufacturer.

Cement

Is a binder, which is a substance that hardens and sets and can bind other materials together.

Cemetery lots

When a landowner or cemetery authority dedicates property only for cemetery use, a specific land-use designation is formed. Many states exclude cemetery owners from paying real estate taxes.

The selling of cemetery lots is normally exempt from subdivision rules. Although cemetery lot salesmen are not needed to have a real estate license, they are sometimes required to have a particular cemetery salesperson's license. When you buy a cemetery property, you usually only get a burial easement or license, not a fee simple title to the land. Each joint tenant owner has a legal right to burial.

Due to a lack of developable land, several developers are considering developing the airspace over cemeteries. The modern tendency in cemeteries is toward the lawn cemetery, which has no erect tombstones and resembles an open park.

Central business district (CBD)

The business heart of a town or city; typically the largest and oldest concentration of economic activity.

a big city's designated downtown commercial district

The central economic, governmental, recreational, professional, and service activities of a city are centred in the downtown region.

The hub of urban activity where products and services are traded.

The primary business area in the heart of a city's downtown.

Central place pattern

A distribution pattern in which comparable economic units, such as a certain type of convenience service or retail outlet, are distributed uniformly over the market region.

Central place theory

The hypothesis that if the surrounding landscape were a flat, undifferentiated plane, centre sites would be positioned to minimize the distance between all locations in the tributary region. It goes on to emphasize that the greater the city, the larger the tributary area must be.

Ceramic tile

A material used to finish a house's floor or walls.

Certainty equivalent technique

A technique aimed at establishing substitute cash flows that leave an investor indifferent between absolutely definite delivery of the substitute amounts and the anticipation of obtaining the point estimates, together with the associated risk.

Certainty equivalents

Cash flows determined by the certainty-equivalent approach should be substituted.

Certificate of Claim

A contingent pledge to refund an FHA-insured mortgagee for certain costs incurred during the foreclosure of an insured mortgage if the revenues from the sale of the property are sufficient to cover the costs.

Certificate of Completion (CC)

A document produced by an architect or engineer following an examination of a property attesting to the construction's compliance with plans and specifications. The construction contract's final payment is then due and payable. A certificate of occupancy is sometimes known as a completion order. 

Certificate of Currency

A document from an insurance company that shows that a building is covered.

Certificate of Eligibility

A certificate given to veterans who qualify for a VA loan by a Department of Veterans Affairs regional office.

The Veteran Housing Act allows regional administrators to reinstate a veteran's entitlement to loan-guarantee benefits after the veteran's property purchased with an existing VA-guaranteed loan has been disposed of and (1) the loan has been paid in full; (2) the administrator has been released from liability under the guarantee; or (3) any loss suffered by the administrator has been repaid in full. It is no longer necessary to transfer property ownership for a convincing purpose.

Veterans are now permitted a one-time only opportunity to reclaim entitlement by repaying the debt without having to sell the home.

The act also allows regional administrators to restore a veteran/entitlement seller's to loan guarantee benefits and release the veteran from VA liability when another veteran agrees to assume the outstanding balance on the veteran/existing seller's VA-guaranteed loan and consents to the use of his entitlement to the same extent that the veteran/transferor used the original entitlement. However, this is not a lender's release. Otherwise, both the veteran/transferee and the property must fulfill the legal standards. Reinstatement of eligibility is never automatic; it must always be requested, ideally when the property acquired with an existing VA-guaranteed loan is sold.

A paper offering veterans assistance in obtaining a Veterans Administration loan.

Certificate of Insurance

A certificate issued by an insurance company confirming that a specific policy insuring certain parties is in force for specified amounts and coverage. When a business lease requires the lessee to maintain specific specified insurance coverage, this certificate is frequently given.

An insurance company's document confirming the property insurance coverage.

Certificate of limited partnership

To form a limited partnership, a paperwork must be filed with the proper state government.

Certificate of no defense

1. A legal document signed by a mortgagor that specifies the precise outstanding balance of a mortgage, the current rate of interest, and the date the interest was paid. It also specifies that the mortgagor has no defenses or offsets against the mortgagee at the moment the certificate is executed. After signing a certificate of no defense, the mortgagor cannot later argue that he or she did not owe the amount specified in the certificate.

A certificate of no defense, also known as an estoppel certificate, is most commonly used when the mortgagee is selling the mortgage to a third party and the purchaser wants to be certain of the amount and conditions of the mortgage as well as that the mortgagor admits the entire amount of the obligation. Most mortgage arrangements include a language requiring the mortgagor to sign a certificate of no defense upon receiving written notice from the mortgagee.

2. A certificate of no defense in a landlord-tenant scenario is a statement by the tenant stating forth the amount of rent payable and the period of the lease and recognising that the tenant claims no defenses or offsets against the landlord. When the landlord sells the property or assigns the lease, a certificate of no defense is occasionally necessary. This is often referred to as an offset statement or an estoppel letter.

Certificate of Occupancy (CO)

A document provided by a local authority allowing a property to be occupied.

The local building inspector's certification that a structure is safe to occupy.

A governmental certificate confirming that a building is ready and appropriate for habitation and that there are no building code violations.

Some condominium developers include wording in the sales contract stating that once the units are ready for occupation, the buyer must accept the unit regardless of any construction faults that may exist, albeit acceptance does not preclude the buyer from seeking recourse for such problems. Once the building has been approved for occupancy, the developer may conclude individual sales, transfer ownership to buyers, and, most importantly, begin paying down the construction loan and eliminating interest payments.

Certificate of payment

A certificate provided by an architect to a contractor for the sum determined by the architect to be properly due.

Certificate of Reasonable Value (CRV)

The Department of Veterans Affairs issues a certificate stating a property's current market value estimate based on a VA-approved assessment. The CRV sets a limit on how much a VA-guaranteed loan can be for a specific property. Because secondary financing is limited under VA restrictions, if the purchase price exceeds the CRV, the veteran may pay the difference in cash. The Veterans Administration maintains the right to investigate the source of monetary payments.

Certificate of Title

A property's specs, ownership, and existing and discharged mortgages are all detailed in this document.

a piece of paper used to keep track of who owns what. The proprietor has one copy and the Titles Office has the other. The Titles Office annotates both copies when the property is sold.

This document tells you about the land's dimensions, who owns it, and if there are any liens on it.

An attorney's opinion on the legal status of a property's title.

A statement of opinion on the status of a title to a piece of real property written by a title firm, a professional abstractor, or an attorney based on an inspection of specific public records. This certificate of title is not to be confused with the certificate of title provided to a Torrens system landowner or a title insurance policy.

A certificate of title does not guarantee ownership, but it does certify the condition of ownership as of the date the certificate is issued, based on an examination of public records kept by the recorder of deeds, the county clerk, the county treasurer, the city clerk and collector, and clerks of various courts of record. Taxes, special assessments, regulations, zoning, and construction codes may also be included in the certificate.

A certificate of title does not protect you from "off-the-record" issues including hidden liens, rights of parties in possession, and survey and location issues. It also doesn't cover "hidden faults" in the records, such as fraud, falsification, lack of expertise, or failure to deliver. A title insurance policy, not a certificate of title, protects against risks such as off-the-books and concealed problems. An owner's certificate of title is usually not provided for less than the property's purchase price. In most cases, a mortgagee's certificate is produced for the amount of the loan being certified. Any change in ownership necessitates the issuance of a new certificate. The person requesting the title documentation, such as a mortgagee, owner, or vendee, is generally the only one who is liable.

The certificate of title preparer is solely accountable for carelessness in creating the report, and this obligation is generally restricted to personal assets or the assets of the local abstracting firm where the preparer works.

In many states, the sellers must pay for a certificate of title that certifies the title's condition as of the closing date. The difference between the cost of the certificate of title and the cost of the title insurance policy is paid by the customer who wants title insurance.

Certified appraiser

A person who has completed the necessary schooling and examinations and has been certified (licensed) to value real estate in that state by the authorized state agency. Certain forms of real estate involving federally connected loans can only be appraised by certified appraisers.

Certified check

A check that the issuer (typically a bank) guarantees is valid, and against which a stop payment request is rendered useless if the payee receives certification.

Payment via certified check relieves the buyer's obligation to execute under a contract immediately. Payment by personal check, on the other hand, is conditional and does not release the buyer's obligation until the check clears (that is, is paid by the depositor's bank).

Escrow businesses typically need certified checks from buyers who use out-of-state banks, which is why many brokers advise their customers to open a local checking account and transfer cash for the closing of a transaction. Many escrow companies now demand all parties to submit their closing payment by certified check before the conveyance documents are recorded.

Some brokers demand potential purchasers to make an earnest money deposit with a certified check.

Certified copy

A genuine copy of a document (such as a deed, marriage certificate, or birth certificate) signed by the person in possession of the original.

Certified historic structure

Any structure listed on the National Register of Historic Places or located in a registered historic district and designated as having historic value to the district.

Certify

To affirm; to guarantee in writing, as in a certified check; to endorse, as with a suitable seal.

Certiorari

A higher court's evaluation of a case or proceeding performed by a lower court, officer, board, or tribunal in order to certify the record of such proceeding. A method of seeking judicial review.

Cession deed

A type of deed used to transfer an adjoining owner's roadway rights to a government entity. A cession document is used by subdividers who donate their roadways to the municipality.

This is the process of transferring property to another entity.

Cesspool

A porous underground pit designed to trap and temporarily hold sewage and other liquid waste until it decomposes and is absorbed into the soil. Buyers should check with their local building authorities to see whether they need to upgrade to a septic system.

Ceteris paribus

A Latin phrase used by economics to emphasize that demand schedules are only valid if all factors influencing buyer behavior other than price remain constant.

CFM (cubic feet per minute)

The rate at which air flows into or out of a space is measured.

Chain

1. An engineer's chain is made up of I 00 wire links, each one foot long.

2. A surveyor's chain is a series of wire links that are each 7.92 inches long. The chain's overall length is four rods, or 66 feet. One acre is equivalent to ten square chains of land. The chain unit is a measuring system used in the United States Public Land Surveys.

A land measurement of 66 feet in length used in surveying. There are 100 links in each chain.

Chain of title

From the time the initial patent was awarded until now, a history of ownership of a piece of property is kept.

A collection of deeds and other papers that track the transmission of the fee, as well as any interests that may limit it, from the beginning to the current owner.

The documented history of things affecting the title to a given parcel of real estate, such as ownership, encumbrances, and liens, generally beginning with the initial recorded source of the title. The chain of title depicts repeated changes in ownership, each one connected to the next to form a "chain".

Following the original gift, ownership of a certain property typically moves through multiple hands. If any link in a property's chain of title is broken, the present "owner" no longer has lawful title to the property. For example, if there was a counterfeit deed anywhere in the chain, no future grantee would have received legal title to the land.

An abstracter searches and notes the chain of title (also known as running the chain of title) during a title examination at the county recorder's or clerk's office, tracing the title from the original grant to the current ownership. In the United States, title chains in colonial states usually go back to a gift from King George III of England. The deeds of transfer in chains of title in those states added to the Union after the founding of the United States typically come from the patent issued by the United States government. In a few states, such as Louisiana and Texas, chains of title usually reach back to before the federal government acquired the property.

The instrument must be discoverable or traceable via linking conveyances from the current owner through consecutive owners to a common grantor to be included in the unbroken chain of title. If not, there is a "gap" in the chain, which results in a "cloud" on the title. In these situations, a judicial action known as a suit to quiet title is frequently required to demonstrate ownership.

The document and its contents are considered to be given constructive notice by all papers in the chain of title. If, on the other hand, a document is not documented in the chain of title, and even a thorough search of the grantor-grantee index fails to show its existence, then no constructive notice of its existence is given. A wild deed is a deed that has not been properly recorded and is not valid against a subsequent documented deed to a good-faith purchaser.

Abstractors seldom go back more than 60 years in practice. Some states have passed legislation that extinguishes some interests and remedies certain title faults that occurred before the "root of title" was documented. The most recent transfer (deed, court order) that provides a basis for title marketability and has been on record for 40 years or more is known as the root of title.

Other chain of title issues develop when a person obtains title under one name and then transmits it under a different one. In such circumstances, the grantor should specify the name under which she obtained title, such as "Sally Hines, who obtained title as Sally Fromm." Because the chain of title is so important, the parties' names must be consistent and spelt out correctly in all papers.

The current owner relinquishes historical title to the original owner.

Chain store

Any of a number of retail establishments under same ownership and administration that sell the same products and follow the same policies. A shopping center's anchor tenant is frequently a prominent chain retailer.

Chair rail

It's a form of molding that's attached horizontally to the wall across the room's perimeter.

Chalet

A-frame house is a kind of structure that originated in the Swiss Alps and is commonly seen in mountainous settings, particularly ski resort areas. It has broad, overhanging eaves that provide protection from heavy winter snowfall.

Chalk line

A chalk line for alignment purposes.

Change

An evaluation concept that recognizes the continual presence of economic and social influences. The appraiser must look at real estate and its surroundings as though it were in transition, noting trends that might effect the property in the future.

Change date

The date on which an ARM's interest rate is recalculated.

Change order

On a construction project, an order to a contractor from the owner, architect, or engineer authorizing adjustments or revisions to the original work as shown in the contract drawings, plans, or specifications. Typically, a standard AIA form is utilized. Typically, a modification order modifies the initial contract price.

Condominium developers typically demand buyers of pre-construction apartment units to file modification orders and pay for unique alterations to the initial apartment package, such as custom carpets or appliances.

When the owner or architect authorizes a change in the specifications, price, or time specified in the building contract in writing, an order is issued.

A project owner's unilateral written order to the contractor to amend the contract amount, conditions, or timeframe.

Characterization

The delineation or portrayal of a site's fundamental traits or attributes.

Charter

A formal document that captures the project's rationale, objectives, scope, and approval.

Chase

A hole in a wall that allows anything to pass through.

Chattel

A tangible personal property item. The term chattel comes from the term cattle, which was one of the first essential assets. Actual chattels are attached to real properties, whereas personal chattels are mobile. A chattel real is an example of a lease.

A bill of sale is used to transfer chattels. The Uniform Commercial Code governs the transfer of chattels and their use as debt security.

Personal belongings that can be relocated.

Chattel mortgage

Personal property is used to secure a mortgage. Chattel mortgages have been replaced by security agreements under the Uniform Commercial Code.

A personal property-backed mortgage.

Check (cheque)

A negotiable document signed by the maker or drawer directing a bank to pay money to the payee or bearer.

Checks

A grid system component specified as a 24 mile by 24 mile region utilized in a government rectangular survey.

Chimney

A masonry stack that extends above the surface of the roof and transports smoke to the outside. The flue transports the smoke inside the chimney.

Chimney cap

Edging of decorative stone or concrete around the top of the chimney stack that protects the masonry from the weather and enhances draught in the chimney.

Chimney flashing

A strip of material, generally metal, put across the chimney-roof junction to make the seam waterproof. Flashings are utilized anywhere a vertical structure breaks up the slope of the roof.

Chimney pot

A pipe made of fireclay or terra-cotta that protrudes from the top of the chimney stack. The chimney pot is both ornamental and functional, increasing the draught of the chimney.

Chink

A method for installing fibreglass insulation around outside frames and corners of exterior walls.

Chip board

In the roofing sheathing and outside wall, wood panel is commonly used to replace plywood.

Choropleth map

A map made up of regions of varying sizes and shapes that indicate qualitative phenomena (for example, soil fertility) or quantitative phenomena (for example, elevation); it typically has a mosaic aspect.

Churning

The practice of shifting property in order to achieve a competitive edge. To prohibit some tax avoidance transactions, the Internal Revenue Code incorporates numerous "antichurning" rules. These antichurning limitations apply to property transferred to or from a related party, as well as some leased property transactions.

Cinder fill

To help with water drainage, a layer of cinders is put between the ground and the basement floor or between the ground and the foundation walls.

Circle

A road that is circular in shape and has just one entry point to the adjacent street.

Circuit

Electrons from a voltage or current source flow down this passage. An electric circuit is a closed route in which electric current flows. The "source" of electrons is the place where those electrons enter an electrical circuit.

Circuit Breaker

An automatic switch that interrupts the flow of electric current in a circuit that has been rapidly overloaded or otherwise stressed.

Circulation allowance

The amount of space required to have adequate access to, from, and around work areas.

Cistern

The storage of rainwater collected from a roof in an artificial reservoir or tank, frequently underground.

City planning

A technique for developing land use plans used by municipalities to achieve specific goals in the exploitation of land within the municipality.

Civil engineer

An engineer who specializes in the design and building of public works such as highways, water and sewage systems, bridges, dams, and water retention systems.

Civil rights act of 1866

Jones v. Alfred H. Mayer Company, affirmed in 1968, is a federal law that forbids all forms of racial discrimination. As a result, while the Civil Rights Act of 1968 exempts some people and organizations, the 1866 forbids all forms of racial discrimination. There are no exceptions when it comes to race. Jones also stated that racial discrimination in the sale or rental of privately held property is banned. The 1866 Act is enforced by federal courts, not HUD.

Cladding

A layer of protection or insulation that is attached on the outside of a building or other structure.

Claim of right

Occupation of property by someone who does not have a legal right to it but claims one anyhow. It's a claim to a fee simple title by an adverse possessor, either under the guise of some apparent colour of title or as a plain claim. For instance, a father gives his daughter the family farm, which she manages for 25 years until the father passes away. No deed was ever created as required by the frauds act. Because of her claim of right, most courts would conclude that, while an oral grant is illegal in and of itself, it would ripen into title by adverse possession when accompanied by an actual entrance and possession for the necessary amount of time.

When an occupant constructs a fence two feet onto a neighbor's land, thinking it is the occupant's, there is a clear division in court rulings. Some courts conclude that if the occupant feels he already owns the property, there can be no adverse possession because there is no hostile claim of right.

Clapboard

Exterior finish for frame homes made of narrow planks that are thicker on one edge.

Class “A”

Underwriters Laboratories provides a fire rating for roofing. This roofing code is required in some regions for fire safety reasons.

Class “C”

Underwriters' Laboratories has assigned the lowest fire rating to roofing materials.

Clayton antitrust act

The Sherman Antitrust Act of 1890 was clarified and supplemented by a federal legislation enacted in 1914. Clayton specified certain forms of illegal commercial activities that aided in the formation of monopolies, and it barred exclusive sales contracts, local price cuts to keep rivals out, some rebates, and certain corporate stock acquisitions and interlocking directorates.

Clean out

A passageway to a drain line that has been opened.

Cleanout door

An outside door at the foot of the chimney enabling easy collection of ashes from the ash dump.

Clear span

The state of a structure in which a specific floor space is devoid of posts, support columns, or shear walls.

The quantity of floor space that is not obstructed by columns.

Clear title

Title to property that is free of liens, defects, or other encumbrances, save those accepted by the buyer, such as a mortgage to be absorbed or a limitation of record; established title; title free of clouds

A title that is unencumbered or unburdened by any flaws.

A clear title is one that is free of any liens or levy from creditors or other parties, and one that leaves no doubt about legal ownership.

Clearing account

A bank account used to deposit funds temporarily before they can be moved to a permanent account.

Clearing title

Examining all recorded and unrecorded instruments affecting a specific property and taking any required measures to rid or cure the title of any faults or clouds in order for the title to become a good, marketable title.

Client

a person who hires an agent or valuer and is obligated to pay a commission or fees to such agent or valuer.

The person or group for whom a property is built. Community groups, businesses, corporations, government agencies, and individual homeowners could all be included.

A person who hires another person to execute a service for them.

A principle is the person who hires an agent to execute a service for a price. The client is due the duty of care and diligence, as well as fiduciary responsibilities in common-law states and statutory duties in areas where the common law has been repealed. A broker may represent a seller, a buyer, a landlord, or a renter, depending on the transaction.

Client trust account

A trust account is a separate bank account established by a broker to keep a client's funds separate from the broker's general finances. In general, state law requires each broker to deposit cash not immediately released to escrow into a trust fund account with a bank or authorized depository within a set period following receipt. The trustee of the client trust account is the broker, and any monies put in the account must be accessible for withdrawal on demand. A single client trust account may normally service all of the broker's customers, as long as complete records are kept and made available for examination by the appropriate state licensing body. The primary broker at an agency is liable for all trust funds, and while the broker will normally approve a salesperson to deposit client funds in writing, the broker is ultimately accountable for the account. According to state rules, these accounts may or may not yield interest, and if interest is earned, the state will stipulate who may profit from the income earned. When significant money are involved, the broker may recommend the use of an interest-bearing account—there should be a clear understanding of who would profit from the interest (usually the buyer, not the seller or the broker).

One of the primary reasons for requiring a broker to keep a client trust account separate from the general account is to keep these funds from becoming "frozen" during legal actions against the broker, such as creditor attachments or probate of a dead broker's estate. Furthermore, because the account is custodial, the Federal Deposit Insurance Corporation personally covers each client's assets up to $250,000 provided the account is properly identified as custodial and the identity and interest of each owner in the deposit is stated on the depositor's records. If the broker combines personal or corporate money with client funds, this protection will not apply.

When operating as property manager for many income rental properties, a broker should set up a management trust account in addition to a client trust account for use with earnest money deposits. A basic ledger system is adequate rather than opening a separate trust account for each transaction.

Climate

The overall or typical state of the atmosphere at a certain location on the planet.

Clip ties

Sharply cut metal wires that protrude from a concrete foundation wall.

Closed mortgage

A "lock-in" mortgage is one that cannot be repaid for a set amount of time or until it reaches maturity.

Closed-end fund

An offering by a partnership that closes after the sale of a certain number of units unless the partnership is amended.

A real estate fund from which investors cannot demand that their capital be redeemed or given back, and from which new investors cannot generally subscribe for additional units for cash unless when formally capital raising. They are generally limited-life structures, but the name 'closed-ended' refers to the fact that, unlike an open-ended fund, a finite number of units will be issued for a lengthy period of time.

Closed-end mortgage

A mortgage with a "no further encumbrance" provision that prevents the mortgagor from using the property as collateral for other loans.

Closed-wall construction

Factory-finished wall components with factory-installed electrical and plumbing systems arrive at the construction site.

Closing

The completion of a real estate deal in which the buyer receives ownership rights in exchange for a monetary payment to the seller.

The transfer of possession and title to real estate from one seller to another.

When a real estate transaction is completed, the seller transfers title to the buyer in exchange for payment of the purchase price. Closing may not occur until the documents are recorded in some locations; nonetheless, under general real estate law, title is transferred upon delivery of the deed to the grantee. In many states, the buyer and vendor do not meet together; each performs alone.

The word closing has various informal connotations in real estate industry. The word "closing a sale" refers to the process of getting the buyer and seller to agree on and sign the purchase agreement; the term "legal closure" refers to the exchange of title and money; and The actual disbursement of funds as ordered in the closing or settlement statements is referred to as financial close. "I'm going to the closing this afternoon," a person generally means going to the attorney's office, broker's office, mortgagee's office, or escrow business to complete the deal (sign the final documents, such as a mortgage, deed, or assignment of lease). When the purchase agreement is written, the broker normally estimates the closing date. A typical timeframe is thirty to forty-five days, which allows the buyer to see the property, investigate the title, and arrange financing while the seller prepares the conveyance paperwork and clears any title issues. The processing period is generally shorter if the purchase agreement asks for a contract for deed.

Closings can be handled by licensed escrow firms, lenders, banks, attorneys, brokers, or the parties themselves. Although the procedures are normally not governed by law, certain components of the closure, such as the federal Real Estate Settlement Procedures Act, may be (RESPA).

Unless a different date (such as the date of occupancy) is expressly indicated in the purchase agreement, prorations of expenditures split by buyer and seller (typically for such operations items as real property taxes and ground lease rent) are ordinarily determined as of the closing date. In this case, the phrase closing date refers to the legal closing date, which is the day on which the seller's and buyer's title paperwork are given and recorded.

Settlement agents are required by IRS laws to submit information of the closure to the IRS using Form 1099-B. Residences with four or less units must be recorded when they are sold or exchanged.

The final stage in completing a real estate deal.

Closing agent

A neutral third party in charge of putting together documentation for real estate transfers. A closing agent can also be a real estate broker, a lender, a title insurance business, and/or an attorney who is involved in the transaction.

Closing costs

Expenditures that must be paid in addition to the purchase price (in the case of the buyer's expenses) or subtracted from the selling profits (in the case of the seller's expenses). Some closing fees are mandated by law, while others are determined by local tradition and practice. To avoid disagreements, the contract should specify which party is responsible for certain "closing cost" components. The following are typical expenditures that the seller and buyer can face in a typical transaction.

Expenses incurred by the seller - cost of clearing title, certificate of title Title insurance, continuance, and abstract (when required by the sales contract) Fees for preparing a deed, a lease transfer, or a bill of sale Tax on conveyance Commission paid by the broker Fee for escrow (share with buyer) arrears interest/old loan Consent of the lessor to assign Penalty for prepayment Stacking and survey (if required) Inspection for pest control.

Buyer's Expenses - Fees for a new loan or assumption, new loan/prepaid interest Fees for registering deeds and mortgages Fee for escrow (share with seller), If needed, title insurance is available. Reimbursement of prepaid taxes to the seller Fees for appraisals and inspections Attorney costs for negotiating a deed contract Transfer of condominium fee Septic/well inspection

Other variable charges, such as real property taxes, prepaid insurance premiums, interest on assumed debts, rentals, and so on, must be apportioned between the seller and the buyer in addition to these closing costs, which are fixed at a certain amount regardless of the closing date.

Because these expenditures are directly tied to property ownership, they are often prorated as of the day title to the property passes, making the sellers liable for expenses incurred during their ownership of the property and the purchasers liable for expenses incurred after they acquire title. In some cases, the buyer is responsible for the costs as of the closing date. The lender must send the borrower a copy of HUD's settlement cost brochure Shopping for Your Home Loan (available at www.HUD.gov) and provide a good-faith estimate of closing costs expected to be incurred in financing the property under the federal RESPA rules. If the pamphlet and estimate are not delivered when the loan application is completed, they must be mailed within three business days. Until the property is recognized, the application is not deemed complete.

Expenses incurred as a result of the closing.

Settlement costs are costs in addition to the purchase price of a property that typically include a mortgage origination fee, title insurance, an attorney's fee, and pre-payable items such as taxes and insurance payments that are collected in advance at closing and held in an escrow account until needed.

These are fees that are paid at the end of a real estate transaction.

Closing date

The date when a transaction is completed.

Closing protection letter

The title insurance business issues this document to insured lenders and, in rare uncommon situations, insured owners. When their agents or approved attorneys manage the closing, the title insurers are responsible for any carelessness, fraud, or mistakes that may occur ("quasi-fidelity coverage").

Closing statement

A document that lists all of the lender's and purchaser's costs and accounts for all of the proceeds from a real estate sale.

A complete cash accounting of a real estate transaction prepared by a broker, escrow officer, attorney, or other person appointed to handle the transaction's mechanics, detailing all cash received, all charges and credits made, and all cash paid out. The HUD-1 settlement sheet is utilized for federally connected loans and is known as a closure statement, settlement statement, or adjustment sheet. The statement reveals how the buyer and seller split all closing and adjustment charges, as well as prepaid and unpaid expenditures. Separate closing statements are generated in many locations for the purchasers, indicating credits, charges, and the amount due at closing; the sellers, showing credits, charges, and the cash they will get at closing; and the broker, displaying a thorough accounting of all money received and expended throughout the transaction.

In a real estate transaction, the income and expenses used up are totaled.

Closure

The process of returning to the start point in a metes-and-bounds description. The description has no legal significance until the stated property is so "closed."

Cloud on title

Any document, claim, unreleased lien, or encumbrance that may undermine or injure a property's title or put doubt on its legitimacy on the surface. A title search will normally show any clouds on title, which may be cleared from the public record with a quitclaim deed or a quiet title case started by the property owner. Unless it is for a small annoyance item, the owner is usually precluded from passing a marketable title while the "cloud" persists.

(1) a recorded contract for deed that has not been withdrawn from the record but under which the buyer has defaulted; (2) a recorded option that was not exercised but still exists on the record; (3) a recorded mortgage paid in full but no satisfaction recorded; (4) property sold without the wife's release of her dower interest; (5) an heir of a prior owner with a questionable claim to the property; (6) a situation in which one of many heirs has not signed a deed; (7) a lis pendens (pending litigation) having been dropped but not removed from the record; (8) a lessee in default having an option to purchase, which is likely to

A claim or encumbrance on a property that causes the title to be tainted.

Cluster development

Housing units are clustered on smaller-than-normal home plots, with the remaining land used as communal amenities. Instead of building ten units per acre on a ten-acre plot, a developer may cluster 20 units per acre and set aside five acres for a common space with recreational facilities.

Cluster zoning

A zoning restriction that specifies a maximum residential or unit density for an entire area. According to flexible site-planning principles, the developer can concentrate or distribute the density within the region. This is in contrast to traditional zoning rules, which assign zoning on a lot-by-lot basis and set the same maximum density for all single-structure lots within a zoning district.

A type of zoning in which the density of an entire area is determined.

Clustering

A land development strategy in which buildings and infrastructure are clustered close yet huge continuous swaths of open space are left undeveloped.

Co-mortgagor

A person who signs a mortgage as a cosigner.

Co-obligor

One who shares an obligation with another, like someone who signs a promissory note with another person.

CO. An abbreviation for “Certificate of Occupancy”

Is an essential document that certifies a building's legal use and occupancy.

Coastal zone management act

The National Interest in Effective Planning, Management, Beneficial Use, Protection, and Development of the Saltwater and Great Lakes Coastal Zones Act of 1972 recognized the national interest in effective planning, management, beneficial use, protection, and development of the saltwater and Great Lakes The legislation requires governments to plan and create management strategies for their coastal zone's land and water resources.

Code of ethics

A set of written ethical conduct guidelines. Real estate brokerage is a business that needs specialized knowledge and expertise. Because of the nature of the connection between a broker and a client or other parties in a real estate transaction, brokers must adhere to a high level of ethics to guarantee that they operate in the best interests of both their principal and any third parties.

Most professional organizations have self-governing regulations in place, which include the imposition of sanctions for improper or negligent activity. Although these rules are officially only applied to members, courts are increasingly turning to the profession's code of ethics.

The National Association of REALTORS® (NAR) subscribes to a code of ethics that is constantly changing. The National Association of Realtors has released the pamphlet Interpretation of the Code of Ethics, which applies the code to real-life scenarios. There are also recognized Standards of Practice that interpret some of the articles of the Code of Ethics and can be used to back up claims of code breaches. Each four-year cycle requires REALTORS® to undergo ethics training. The Code is available at www.realtor.org in six languages: English, Chinese, Korean, Spanish, Tagalog, and Vietnamese."

Codicil

A will supplement or amendment that does not usually invalidate the whole will. A codicil must follow the same procedures as a will and be attested by the requisite number of witnesses.

Coefficient of correlation

A measure of how interrelated the values of variables in a sample or population are.

Coefficient of determination

A measure of the proportion of variation in the dependent variable caused by changes in the value of the independent variable. The word r-square is used in regression analysis.

Coefficient of multiple correlation

A percentage of the variance in the dependent variable that can be "explained" by variation in the independent variables.

Coefficient of runoff

The proportion of rainfall converted to overland or surface flow as represented by a number assigned to a kind of ground surface.

Coefficient of serial correlation

A measure of how closely results in later times are connected. The coefficients that can be used vary from zero to plus or minus one.

Coefficient of variation

The anticipated outcome is divided by the standard deviation of the distribution of potential outcomes.

Coefficients

In a regression equation, the estimated associations between an independent variable and a dependent variable. The coefficient additionally considers the effect of other independent variables and indicates the explanatory variable's marginal contribution to the anticipated value.

Coinsurance

1. A typical clause in building insurance plans that requires the policyholder to keep insurance on their property equivalent to at least 80% of the replacement cost. If the property is not covered for that amount and a loss occurs, the insurance company will prorate the insured's portion of the loss. For example, if the building is only insured for 60% of its worth and a $10,000 loss occurs, the insurance company will only pay $7,500 (60 percent + 80% [or percent] = $10,000). Because property values are continually rising, property owners should examine their insurance coverage on a regular basis to ensure that they stay under the 80 percent requirement. In addition, the insured can purchase inflation protection. In any case, any insurance policy's liability is restricted to the policy's face value. One explanation for the 80 percent rule is that fire often destroys no more than 80 percent of a building's worth; a portion of the structure is usually salvageable. Commercial and industrial hazard policies typically include coinsurance requirements, while homeowners' policies typically include a similar form of coinsurance coverage.

A typical clause is as follows:

If the amount of insurance in this policy on the damaged building at the time of loss is less than 80% of the complete replacement cost of the structure immediately prior to the loss, we will pay the larger of the following sums, up to the maximum of liability under this policy pertaining to the building:

(a) the real cash worth of that section of the building destroyed; or

(b) that portion of the cost to repair or replace, without deduction for depreciation,

2. Insurance coverage backed by a number of different insurers.

A condition in an insurance policy that specifies the minimum percentage of value that must be insured in order to recover the entire loss amount.

Cold air return

A vent that draws cold air into a furnace to be heated and returned to a room

Cold call

An unsolicited enquiry by a real estate office or salesperson to a potential buyer or seller as a means of introducing the firm or salesperson to the prospect. Making cold calls after 9:00 p.m. and before 8:00 a.m. is illegal under the federal Telephone Solicitation Act. Furthermore, the new federal do-not-call rule forbids companies from making unwanted phone calls to anyone who have registered their phone numbers.

Cold canvass

Obtaining listings by soliciting homes door to door. When looking for listings in a certain location, or properties of a specific kind or with specified amenities, real estate agents typically use this strategy.

Collapsible corporation

The premeditated use of a company to convert ordinary income into capital gain in order to evade corporate taxation—a circumstance that is prohibited by IRS guidelines. This notion is best appreciated by considering the following scenario: Two real estate brokers form a company to build a condominium. The firm develops the structure, significantly increasing the land's value. The dealers sell their stock in the business to a third party before selling the units and claim capital gain treatment on the sale of their shares. If an IRS agent looked into this transaction, he or she would most likely use the collapsible company guidelines if the property was owned for less than three years. The IRS would therefore allege that the stock transaction was analogous to the development sale and would be similarly taxable—that is, at ordinary income rates. These investors are penalized by the collapsible corporation laws, which classify the sale of their stock as ordinary income, as it would have been if the corporation had sold the development itself. Prior to the 1986 Tax Reform Act, these principles were crucial. Since 1986, a corporation's assets cannot be liquidated without the gain being recorded, and shareholders' shares cannot be sold without the gain being recognized at the corporate level.

Collar

Lange designed to be placed on top of a vent pipe in order to seal the roofing above the vent pipe opening.

Collar beam Nominal

Is a horizontal element that connects two rafters and is commonly used in the building of household roofs.

Collateral

A borrower's promise of marketable real or personal property as security for a loan.

Assets that are valuable to both the borrower and the lender, and that the borrower commits to the lender as collateral for the monies borrowed. If the borrower fails to meet their responsibilities under the loan arrangement, the lender might use these pledged assets to compensate them.

Property that has been offered as security for a debt.

Collateral is a pledge of specified property by a borrower to a lender in order to secure repayment of a loan.

Collateralized debt obligation (CDO)

A securities backed by a pool of different forms of debt, such as corporate bonds offered on the capital markets, institutional lender loans to firms.

Color of title

A situation in which a title looks to be fine but is really invalid due to a flaw (paper title).

A ten-acre property, for example, is deeded to the buyer by the seller. The buyer takes ownership of the property without realizing the seller was in possession of a fake deed. As a result, the buyer does not have legal ownership of the property. Because the adverse claimant under colour of title only needs to possess a portion of the premises described in the ineffective conveyance to acquire title to the entire ten-acre parcel, the buyer can acquire legal title to the entire ten-acre parcel by occupying the premises for a prescribed period of time, even if he physically occupied only part of the ten acres. If no deed was involved and the buyer negatively occupied only a portion of the ten acres, the buyer would only obtain title to the land actually occupied after the stipulated term ( or fenced or cultivated). A claimant who is not under colour of title also has a higher burden of evidence on each of the adverse possession factors.

To gain title by adverse possession in some states, a possessor of property under colour of title must be acting in good faith. That is, even when the deed is flawed, the possessor must think it is genuine (i.e., the possessor cannot be a squatter). As a result, the flaw in the deed cannot be so evident that a reasonable person would recognize it as invalid.

Color-infrared film

Photographic film that is sensitive to electromagnetic radiation in the visible and near-infrared wavelengths (usually from 0.4 to 0.9 millimeter).

Column

In architecture and structural engineering, a pillar is a load-bearing structural element.

Combed plywood

Modern residences frequently use this material, especially for interior finishes. Parallel grooves are combed across the exposed surface.

Combination

Combining two separate constructions into a single huge unit

Combustion air

The ductwork that is installed to supply fresh, outside air to the furnace and/or hot water heater. Normally, two separate air supplies are brought in - one high and one low.

Combustion chamber

The area where fir occurs in a furnace, boiler, or woodstove; this area is insulated with firebrick, molded, or sprayed insulation.

Comingle

Mixing funds, such as combining personal and company funds in a same checking account.

Commencement of work

As established by municipal legislation, the beginning of a noteworthy improvement in real estate. This precise period is significant in terms of a mechanic's lien's effective date (and consequently precedence over other liens like as mortgages), as well as shielding a builder against changes in zoning restrictions.

Commercial acre

The fraction of an acre of newly subdivided property that remains after roadways, sidewalks, parks, and other improvements have been made; the piece on which the developer is free to construct.

Commercial bank

A financial organization that serves as a secure depository and lender for a variety of commercial transactions (usually short-term loans). Commercial banks obtain the majority of their loanable cash from demand deposits (checking accounts), however they also receive capital from savings accounts, loans from other banks, short-term loan interest, and the equity invested by its owners.

Depository institutions that make short-term loans to firms for inventory finance and other working capital requirements.

Commercial leasehold insurance

Insurance to cover rent payments in the event that the insured (tenant) is unable to do so; commonly needed by a commercial lender in a shopping centre development as a condition of providing a leasehold mortgage.

Commercial mortgage-backed securities (CMBS)

Securities backed by one or more pools of commercial real estate mortgages, such as retail malls, industrial parks, office buildings, and hotels. The note holders get all principal and interest from the mortgages in a set order.

Commercial property

Commercially utilized premises (such as, office buildings, shops, warehouses and hotels).

Offices, motels, hotels, and retail stores are examples of real estate intended for commercial usage.

Income-producing property such as office buildings, petrol stations, restaurants, shopping malls, hotels and motels, parking lots, and stores are included in this category. Commercial real estate is generally designated for commercial use.

Commercial real estate

Improvements to real estate held for the purpose of generating revenue through commercial or business leases.

A property that is utilized by businesses for commercial reasons, such as offices, offices, and so on.

Commercial Zones

A commercial zone that includes hotels, retail stores, restaurants, and other service enterprises.

Commingled real estate funds

An investment advisor/fund manager pools investment cash from several pensior funds to acquire commercial real estate holdings.

Commingling

To mix or mingle, as in depositing customer monies in the broker's personal or general account. If a licensee is found guilty of commingling money, the state licensing office may suspend or revoke their license. Some instances of commingling are clear; others, such as a broker serving as a property manager and deducting a fee from the tenant's security deposit, are more complicated.

When a broker fails to deposit trust monies into escrow, a client trust, or an earnest money account at a bank or authorized depository within the time range required by law or regulation, commingling can occur.

When the broker retains a minimal amount of his or her own money in the client trust account to keep the account open, there is no commingling. The quantity is frequently governed by law or regulation. When ordered by the buyer (offeror), it is permitted in many states (but not all) to retain an uncashed check until acceptance of an offer; however, before the seller accepts the offer, the broker must clearly disclose the fact that the check is being kept in an uncashed form.

Not paying checks before an offer is accepted as a policy may help the broker avoid difficulties. A personal check is frequently used as an earnest money deposit when a buyer files an offer. If the broker deposits the check in the client's trust account and the offer is rejected, the broker may be forced to repay the earnest money deposit before knowing whether or not the buyer's check has cleared. The buyer will be annoyed and their business relationship will be lost if the broker takes too long to refund the earnest money deposit. The broker, on the other hand, is out of money if the deposit is returned and the check bounces.

Conversion, which is the real misuse of client funds, is a more severe violation than commingling.

Commission

The fee paid to a real estate broker for services given in connection with the sale or exchange of real property (typically by the seller). To be eligible for a commission, a broker must be licensed in the state, have a documented employment agreement (listing) with the seller, and sell the property or execute a legitimate contract of sale.

Any attempt by a group of brokers to establish brokerage rates would be a violation of antitrust laws. The commission is often expressed as a percentage of the total sales price, a flat charge, or even an hourly rate, and the precise cost is open to negotiation. "Commission rates are negotiable and are not established by law," many listing contracts now declare. Before a broker may collect a commission, certain states need a documented employment agreement (listing). Some states require a notification in the listing agreement that commissions can be negotiated.

A broker will frequently split the commission with another broker who assisted in the transaction. Except for deferred commissions earned under a previous broker, a broker must process money via the salesperson's employing broker to divide a commission with a salesperson linked with another broker. Only via the employing broker may a salesperson take payment directly from a customer.

Regardless of whether the buyer completes the transaction, once the seller accepts an offer from a ready, willing, and able buyer, the seller is theoretically accountable to the broker for the entire commission. However, in cases where the broker knew or should have known that the buyer was unable to complete the transaction, the courts have a tendency to restrict the broker from pursuing the seller for the whole compensation. Naturally, if the offer is conditional, the broker will not be able to receive a commission until the condition is met. Also, because the broker did not negotiate the transaction, the broker normally does not get a commission if a property is marketed and then taken under condemnation or sold at a foreclosure sale.

If the deal is not completed for any of the following reasons, a broker who has generated a ready, willing, and able buyer on the listed terms is typically still entitled to commission:

-> The owners (sellers) reconsider and refuse to sell.

-> The purchaser defaults and declines to purchase. When the buyer fails due to no fault of the seller, several state courts are refusing to enforce the commission arrangement.

-> The spouse of the property owner refuses to sign the contract or deed.

-> There have been no corrections to the owner's title defects.

-> In relation to the transaction, the owner commits fraud.

-> The owner is unable to provide possession in a timely manner.

-> The owner insists on clauses not included in the advertisement, such as the right to limit the property's usage.

-> The seller and buyer agree to cancel the agreed purchase contract.

A broker cannot share a commission with someone who is not a licensed salesperson or broker, according to most license regulations. Certain pieces of physical property (a broker gifting a new TV to "a friend" for producing a valuable lead) and other premiums (vacations, etc.) have been included in the commission, as well as finder's fees and real percentages of the commission.

Payment of the commission is not the deciding element in whether the vendor pays the fee, the buyer pays the fee, both pay the charge, or neither pay the fee in an agency arrangement. To avoid any confusion that the broker must have represented the person who finally paid the broker's fee, sensible brokers should clarify and document who they represent and who is paying for their services.

Even if the commission is indicated as a discount (or a "contra") against the purchase price, courts have found that real estate brokers or salespeople buying property via their own brokerage business for personal use must nonetheless be truced on the commission they would have gotten for the sale. Commission revenue is considered "personal service" or "earned" income, regardless of whether it is received by an employee or an independent contractor.

After the broker receives the commission, it is normally split between the brokerage agency ("the house") and the salespeople participating in the transaction according to a predetermined formula.

Because commission splits differ so much from business to firm, salespeople must have a clear agreement (ideally in writing) with their employing broker on how, when, and what percentage of the total commission earned they will be paid. Some offices are 100% offices, meaning the linked licensee gets the whole commission and pays a monthly fee to support office expenditures.

Leasing commissions are often calculated as a percentage of the whole lease duration. For time and expenditures spent on showings that do not result in sales, the broker normally receives no monetary remuneration.

The commission paid to a real estate or mortgage broker for services done, which is based primarily on a percentage of the cost.

Payment received by a real estate salesperson for services done, generally represented as a percentage of the sale price of the property and not normally paid until the deal is finalized.

Commissioner

1. A state real estate commission member.

2. In a partition case, a person appointed by a court of equity to advise the court on the best manner of splitting a property among cotenants.

3. A court-appointed supervisor of a mortgage foreclosure sale.

Commitment

A pledge or promise to do something, such as a lending institution's guarantee to loan a particular amount of money to a qualifying buyer at a set rate of interest if the loan is made by a given date. Unlike a contract for sale, a party bound by a promise, such as a lender, cannot be required to expressly perform by a court; nonetheless, an unhappy party may seek money damages if the pledge is refused.

A traditional loan pledge might be unconditional or conditional. The borrower submits an application to the lender directly, generally on a standard form. The lender provides the borrower a commitment letter after examining the applicant's intent and financial ability to repay the loan.

In effect, this commitment letter is a formal offer to lend money on certain terms. The lending institution creates the required mortgage documents if the borrower accepts the commitment and meets any criteria imposed by the lender, such as producing sufficient appraisal and credit reports. The lending institution will allow the mortgage funds to be used for the purposes for which the loan was made, such as refinancing, once the mortgage documents have been completed and the title has been approved.

A conditional commitment for FHA loans is an agreement to lend a certain amount of money on a specific property, subject to FHA approval of an unknown borrower whose credit and eligibility must be examined. A solid FHA commitment is an agreement to insure a loan in a specified amount for a specific borrower on a specific property. When the loan is ultimately made, the conditional loan commitment fee is normally deducted from the closing fees. Conditional commitments from the FHA are valid for six months and can be renewed for another six months for an extra charge.

In major developments, developers may pay for or "buy" a permanent takeout finance commitment.

A title insurance company's commitment to issue a policy in behalf of a potential insured upon the acquisition of a certain property is also known as a commitment. Unlike a binder, however, it is not a contract for temporary insurance.

The commitment is for a limited time and specifies the kind of policy to be provided, the insured's estate or interest, title vesting, legal description of the property covered, and any coverage limitations.

The act of committing to fulfill a commitment.

Commitment fee

A fee given to a lender in exchange for a loan.

Commitment letter

A letter to a prospective borrower in which a lender specifies the terms and circumstances under which the requested cash will be provided. Typically, a specific time period is mentioned during which the commitment stays in force. Promise letters often indicate the terms under which the lender may cancel the commitment and any further stipulations on which the commitment is reliant.

Common area

Numerous-party zones are areas of a property that are used or available for use by multiple parties. Lobbies, stairwells, corridors, restrooms, and courtyards are all common areas in office buildings. They would include community rooms, clubhouses, lobbies, fitness facilities, and rooftop social spaces in an apartment complex.

Hallways, lobbies, restrooms, and stairwells are examples of space that is not used or occupied by tenants.

Common Area maintenance (CAM)

Fees levied by property owners to renters for the upkeep of common facilities. Tenants are charged for landscaping, snow removal, and utilities in common areas of retail centres, for example.

Typical commercial property expenses include maintenance and repayment charges, the cost of security personnel and alarm systems, and fees for common area management.

Additional expenses that a tenant pays for the upkeep of spaces that are shared by all residents.

Common area maintenance (CAM) charge

A clause in a shopping centre lease that requires the tenant to contribute to the common area operating costs.

Common areas

A condominium development's land or improvements are set aside for the use and benefit of all residents, property owners, and tenants. Parks, playgrounds, and grilling areas, which are also referred to as greenbelts, are typically found in common areas. Parking lots, malls, and traffic lanes are all regular sights in retail malls.

A section of a building that unit owners share, such as a playground, swimming pools, tennis courts, and other recreational amenities.

Common elements

Parts of a property that are required or convenient for the condominium's existence, upkeep, and safety, or that are commonly used by all condominium members. The common components are owned by all condominium owners in their entirety. The condominium owners' association is responsible for maintaining the common elements, and each owner is responsible for paying a monthly maintenance assessment that is prorated based on his or her individual common interest. Elevators, load-bearing walls, floors, roofs, passageways, swimming pools, and other ubiquitous features are examples.

Common expenses

All additional sums defined as common costs by or subject to the condominium declaration or bylaws, as well as the operational expenses of condominium common elements.

Common interest

The proportion of each condominium apartment's undivided ownership in the common components, as determined by the condominium declaration. The appropriate percentage is commonly calculated as the ratio of a given apartment's square footage to the total square footage of all apartment units, or as the ratio of a single apartment's purchase price to the total sales price of all apartment units. A percentage, such as 1.47 percent or 0.0147, is used to indicate the ratio. The proportion of common interest determines an owner's stake in the common components, the amount assessed for common property maintenance and operation, the real estate tax imposed against an individual unit, and the number of votes that owner has in the condominium owners' association.

Common law

Judge-made law ("case law"), as opposed to codified or statutory law, is the body of law based on use, popular acceptance, and custom as evidenced in court decrees and judgments ( or civil law as found in a few states like Louisiana). This style of jurisprudence started in England and was subsequently adopted by legislation or tradition in the United States.

Common profits

1. After deducting common expenditures, the balance of total income, rentals, earnings, and revenues from the common elements in a condominium.

2. Profits generated by a partnership or corporation's operations.

Common property

Gardens, driveways, and laundries are examples of shared owned areas on a strata-titled unit property.

Common wall

A condominium project's wall between two living apartments. Traditional party-wall restrictions do not apply since most developers designate the shared walls between two flats to be common components.

Community development corporations (CDCs)

Institutions that combine public and private resources to assist in the development of socioeconomically deprived communities.

Community development district CDD lien

A quasi-governmental entity with the authority to fund, build, run, and maintain infrastructure and related services inside a specific development or community. The CDD imposes taxes or assessments on landowners and has the authority to issue municipal, tax-exempt bonds. Its board is elected by the community landowners, and its actions are fully open to the public.

Community property

A property ownership system founded on the notion that each spouse has an equal stake in property obtained via either partner's work throughout the marriage. This system originated with Germanic tribes and spread across Spain's North and South American possessions. Under English common law, the system was unknown. California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington are among the states that have a community property system in place.

Separate property and community property are the two types of property in community property states. Separate property is property possessed by either the husband or the wife at the time of marriage, or property obtained by one spouse during the marriage by inheritance, bequest, or gift. Separate property is completely free of any claim or interest from the other spouse. All other property is community property, and each spouse immediately owns an equal share of it regardless of whose name is on the title.

If community property is involved, both spouses' signatures are necessary on a listing contract or any instruments of conveyance. Expert tax counsel should be sought when assessing the necessary tenancy for a buyer to take title.

Spouses can transfer their separate property without the necessity for the other to sign the deed. However, title insurance firms and others prefer both spouses' signatures to dispel any doubt about whether the property is separate or common property. Prudent licensees understand the need of collecting both parties' signatures on a conveyance instrument or any other document that may impact the title to real property, among other reasons. It's a good idea to write whether the grantor is a single individual on the document so that everybody who sees it knows right away that the grantor has no community property interest.

Dower, curtesy, and survivorship rights are not recognized in community states. When one spouse dies, half of the community property goes to the decedent's heirs, while the remaining spouse keeps his half portion.

A property ownership system based on the notion that each spouse has an equal stake in property gained via either partner's work throughout the marriage." This system originated with Germanic tribes and spread across Spain's North and South American possessions. Under English common law, the system was unknown. California, Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington are among the states that have a community property system in place. Separate property and community property are the two types of property in community property states. Separate property is property possessed by either the husband or the wife at the time of marriage, or property obtained by one spouse during the marriage by inheritance, bequest, or gift.

Separate property is completely free of the other spouse's interest or claim. All other property is community property, and each spouse immediately owns an equal share of it regardless of whose name is on the title.

If community property is involved, both spouses' signatures are necessary on a listing contract or any instruments of conveyance. Expert tax counsel should be sought when assessing the necessary tenancy for a buyer to take title.

Spouses can transfer their separate property without the necessity for the other to sign the deed.

However, title insurance firms and others prefer both spouses' signatures to dispel any doubt about whether the property is separate or common property. Prudent licensees understand the need of collecting both parties' signatures on a conveyance instrument or any other document that may impact the title to real property, among other reasons. It's a good idea to write whether the grantor is a single individual on the document so that everybody who sees it knows right away that the grantor has no community property interest.

Dower, curtesy, and survivorship rights are not recognised in community states. When one spouse dies, half of the community property goes to the decedent's heirs, while the remaining spouse keeps his half portion.

The husband and wife's natural claim to property obtained by their spouse during the marriage.

A property purchased as a couple during their marriage.

Community reinvestment act of 1977

A federal law that mandates lenders to expand credit to low- and moderate-income persons in order to satisfy the credit requirements of the communities in which they conduct business.

A legislative legislation that encourages mortgage lenders to engage actively in their communities and compels financial institutions to assess the "fairness" of their lending practices.

Community shopping center

A 150,000-square-foot commercial area with 20 to 70 store locations that falls between between a neighborhood centre and a regional centre, supported by more than 5,000 families.

A medium-sized shopping centre with 50 smaller retail establishments and a small department store or supermarket as the anchor tenant. 150,000 square feet is the average size.

A shopping mall that generally draws the majority of its customers within a driving radius ranging from IO to 15 minutes. Anchor tenants in community shopping malls are often a grocery store and a junior department store or a discount store. Retail space can range in size from 50,000 to 100,000 square feet.

This sort of centre is a bigger version of a community retail centre and is frequently anchored by a bargain department store.

Compaction

Extra dirt that has been matted down or compacted and put to a lot to fill up low spots or increase the parcel's level.

Extra dirt that has been matted down or compacted and put to a lot to fill up low spots or increase the parcel's level.

Company title

Strata title's predecessor. For certain older unit blocks, company titles still remain.

In this title, the people who own units in a private company are also owners of the company.

Comparable properties

In the sales comparison technique, properties similar to the subject property were utilized to determine a single indicative value for the subject property.

Comparable sales, comps

Using the prices of recently sold similar properties in the region to determine the current value of a property.

Comparables

Similar properties that have recently sold or leased and are being evaluated are used to determine a value for the subject property. The "comps" don't have to be physically identical to the topic or in the same area, but the highest and best use, land-to-building ratio, selling terms, and market circumstances should be similar, or very easy to change for comparison.

Similar properties that have recently sold or leased and are being analyzed are used to determine a value for the subject property. The "comps" don't have to be physically identical to the subject or in the same location, but the highest and best use, land-to-building ratio, sale terms, and market circumstances should be similar, or very easy to change for comparison.

Properties that are similar in terms of economics.

Similar properties to the subject; used to forecast anticipated prices, rents, or property values.

Comparative advantage

An economic theory created by economist David Ricardo that explains why certain locations prefer to concentrate on manufacturing a small number of commodities while sourcing much of their consumption from other areas.

Comparative market analysis (CMA)

An unbiased third party provides property price estimate reports.

Comparative market approach

A method of estimating a property's value based on recent selling prices of similar properties.

Comparative sales approach

An appraisal technique that examines recent sales data from comparable properties and derives conclusions about the worth of the property under assessment.

Comparative unit method

A method for calculating the cost of replication in which all construction components are summed together on a unit basis, such as cost per square foot. Framing, exterior finish, floor and roof construction are some of the components.

A method of estimating expenses by comparing them to similar structures whose construction costs are known. To make somewhat different-sized structures more directly comparable, expenses are represented in terms of some standardized unit of measurement, such as per square foot or per cubic foot.

Comparison activities

Clustering is the best geographical pattern for goods and services.

Comparison rates

A comparison rate is a tool that helps people figure out the true cost of a loan. In this case, it is a single percentage figure that takes into account both the interest rate and the fees and charges that can be found out about the loan.

Comparison year

Any year that is compared to the base year for the purpose of determining a rise or fall in operational costs during the period of a lease with an escalator clause.

Compass points

The 32 places of a compass used to identify directions while recording a metes-and-bounds description or other legal description.

Compensating balance

A borrower's funds placed with a lending institution in exchange for the lender making a loan or extending a line of credit to the borrower. This is more common with commercial loans than with residential loans.

Compensation

When a statutory authority compulsorily acquires all or part of a property, money is paid to the property owner. It considers factors such as market value, the impact on the property's balance, and revenue loss.

Compensatory damages

A court's award of damages to the plaintiff, designed to cover the plaintiff's actual injury or economic loss. Punitive damages or damages for gross negligence are not included in this award.

Competent party

A contracting party who has the legal capacity to enter into a legally binding agreement.

Competitive clusters

The collection of office and industrial buildings and sites near heavily frequented regions, such as interstate highways and freight lines, or near activity centres such as airports, universities, and hospitals.

Competitive market analysis (CMA)

A technique used by brokers and salespeople to assist consumers in determining the sale price of a property. It is not an evaluation. The CMA contains information about three sorts of properties identical to the subject property: sold, on the market, and expired prices. The "solds" represent what previous buyers were willing to pay for a comparable property to the subject property and serve as the foundation for the official appraisal. The "expired" represent the price that other buyers were unwilling to pay for a property similar to the subject property. A seller's agent should advise the seller on how to establish the list price in "competition" with other properties on the market. A CMA performed by the buyer's agent helps reassure the buyers that their offer is reasonable and comparable to what others have paid.

Complainant

Someone who files a complaint or initiates legal action against someone else (the respondent).

Complements

Goods or services used concurrently with the object under consideration. When the price of one commodity or service changes, the demand curves for its complements adjust.

Completion bond

A surety bond given by a landowner or developer to ensure that a proposed development is completed in accordance with specifications, free and clear of all mechanics' liens. A completion bond is distinct from a performance bond, which is granted to an owner by a contract party (often the contractor or subcontractor) to ensure contract performance, provided the party is paid.

The landowner or developer may have no underlying obligation to execute with a completion bond. As a condition of the county's approval of a planned subdivision, most county subdivision ordinances require the sub-divider to pay a cash completion bond. Some lenders demand an owner to give a completion bond in addition to a performance bond from the contractor, ensuring the lender that the development (which serves as the loan's security) would be completed whether or not the owner pays the contractor. The bond is drafted for the total construction cost and is only exercisable if the developer is unable to complete the project. If this occurs, the lender can use the bond revenues to finish the building and then sell it to recoup the interim loan monies.

A formal agreement that guarantees the completion of a property's construction.

Compliance inspection

1. A public official inspects a structure to ensure it complies with all building standards and specifications.

2. Inspection of a building site or structure by a lending institution (for conventional mortgage loans) or a government agent (for FHA or VA loans) to confirm compliance with all relevant criteria before a mortgage or construction loan advances are granted.

Component depreciation

Previously, depreciating the components of a building individually was utilized to save money on taxes (in contrast to composite or unitary depreciation, where the entire asset depreciates at the same rate). Component depreciation has the advantage of allowing for a significantly faster depreciation deduction on structural elements with a much shorter life than the structure as a whole. The bigger the potential tax savings, the shorter the component's life and the higher its cost in relation to the building as a whole. For example, a building's useful life may be 40 years, while various component sections, such as air conditioning (10 years), elevator (15 years), wiring (15 years), plumbing (15 years), and roof (15 years), have shorter lives.

Component depreciation is normally not available for property placed in service after 1980 as a result of the Economic Recovery Tax Act of 1981.

Compound amount

The total of principle and compounded interest during a certain holding period.

Compound interest

The aggregate of interest paid on principal and interest accrued

Interest is paid on both the original principle and the accumulated interest that has not been paid.

Interest revenue derived from previously accumulated interest held on deposit.

Interest is calculated on the principal amount plus interest already paid. All interest is added to the principal at the start of each new interest period, resulting in a new principal amount on which interest is calculated. Each interest period—interest accumulating daily, monthly, semiannually, or annually—this process repeats itself. For example, on a $1,000 savings account earning 5% yearly compound interest, the first year's interest is $50. The new principle sum in the second year is $1,050, making the second-year interest $52.50.

Some states specifically ban (as usurious) attempts to recover compound interest on loans, preventing the enforcement of contracts charging interest on interest. Simple interest, on the other hand, may be contracted for and collected under a new specific arrangement after it has become due.

Compounding

Future value calculation based on assumptions about the quantity or amounts invested and the interest rate paid on the invested amounts.

Comprehensive environmental response, compensation, and liability act (CERCLA)

The Superfund Amendments and Reauthorization Act of 1986 (SARA) reauthorizes a federal statute introduced in 1980 that holds owners, lenders, occupiers, and operators liable for environmental concerns uncovered on their site. The Superfund statutes establish a fund to clean up hazardous waste sites and respond to accidents and emissions on private property. In general, Superfund offers a method for identifying parties responsible for cleaning operations and allowing those parties to be reimbursed for cleanup costs.

The Resource Conservation and Recovery Act of 1976 (RCRA), which was developed with the "cradle-to-grave" approach to the regulation of the licensing and notification requirements for individuals who generate, store, treat, or dispose of hazardous waste, is linked to the CERCLA and SARA regulations. RCRA requires a permit from the Environmental Protection Agency for the treatment, storage, and disposal of hazardous wastes (EPA). The Environmental Protection Agency (EPA) is in charge of enforcing CERCLA, SARA, and RCRA. Furthermore, many states have passed their own Superfund legislation governing hazardous waste cleanup, with each having its own government agency to enforce the legislation.

CERCLA holds the government or a private party liable for hazardous waste releases that result in response expenses. A spill, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaking, dumping, or dispersing into the environment is considered a release. Even for a prior release, the buyer could be held accountable. Failure to disclose a spill in a timely manner can result in serious civil and criminal fines.

Liability under CERCLA is based on strict liability rather than fairness or negligence. Current owners and operators of a hazardous substance facility, past owners and operators of a hazardous substance facility at the time of disposal, and persons who transport or arrange for the treatment or disposal of hazardous substances at the facility are all considered "potentially responsible parties" under Superfund.

Those considering selling, buying, leasing, or managing real estate should examine the Superfund liability implications. If the property is believed to contain dangerous substances, the real estate agent should always consider hiring environmental experts to inspect the property for concerns. One strategy to restrict responsibility is to show that the buyer made "all appropriate inquiry" prior to purchase by conducting a due diligence inspection of the property. The site, public records, and nearby properties are investigated by experts engaged to conduct a Phase I audit of the property. Remediation is the process of correcting or removing dangerous contaminants.

Commercial lenders are worried that if the property is found to contain hazardous substances, the security for their loan may be jeopardized, hence they frequently require at least a Phase I audit before providing a loan. Lenders are also concerned that if they take back a property in foreclosure or assist in the administration of the secured property, they may be held liable under CERCLA. As a result, lenders want substantial environmental paperwork.

Comprehensive loss underwriting exchange (CLUE)

LexisNexis® Risk Solutions created a database of consumer insurance claims that participating insurance firms use when underwriting or rating new policies. Owners (sellers) have the right to access and question the accuracy of claim information, the type of damage and amounts paid, and the description of the property covered under the Fair and Accurate Credit Transaction Act (FACT Act). The data is kept for a period of five years.

Most insurance companies will utilize this information to make judgments about issuing policies and pricing premiums since they have discovered a link between consumers' historical loss history and their future insurance loss possibility. Buyers may find that their personal claims history makes obtaining affordable homeowners' insurance difficult.

Comprehensive planning

The overall guidance to a community's growth and development provided by a local government based on the community's aims and objectives.

Long-term planning by a local or regional government that encompasses the entire territory of a community and incorporates all aspects of its physical development, such as housing, recreation, open space, and economic growth.

Compression web

Part of a truss system that provides downward support and connects the bottom and top chords.

Compressor

A mechanical device that raises the pressure of a gas in order to convert it to a liquid.

Computerized loan origination (CLO)

A computer network linked to a large lender that allows home loan applications to be started in agents' offices across the country. Loan origination can be done by real estate brokers, insurance agents, lawyers, and others who earn a fee for doing so. HUD has authorized the practice as complying with RESPA as long as (1) the cost is fully disclosed, (2) numerous lenders are displayed on the computer screen to provide the borrower with a foundation for comparison, and (3) the fee is charged in dollars rather than as a percentage of the loan.

Concentration time

The amount of time it takes for a drop of rain to fall on the perimeter of a drainage basin and travel through the basin to the outflow.

Concentric circle theory

Cities tend to spread in concentric circles from their point of birth if there are no impediments, according to an economic theory of city growth. The central business area, a transition zone, a zone of independent working people's dwellings, a region of better residences, and a collection of commuter zones make up the model city.

Concentric ring model

E. W. Burgess developed a concentric ring concept of urban design in which the centre circle represents the core business area. It is next to a transition zone that has warehouses and other industrial land uses. This was followed by a ring of lower-income residential land use, which was then followed by a ring of middle- and upper-income land use.

Concentric zone model

Earnest W. Burgess created an urban economic model in the 1920s. The concentric zone concept was created to describe urban evolution by utilizing transitional zones.

Concessions

1. A discount offered by landlords to potential tenants in order to get them to accept a lease. Concessions are negotiable points in a lease that are resolved in the prospective tenant's favor. They can be found in both residential and commercial leases. Concessions affect the owner, thus every buyer of an income-producing property should review all current leases to see if any concessions exist that will lessen the amount of rent due in the future. Free cable TV, one month's free rent each year for the duration of the lease, a renovation or customization allowance, or even the owner's takeover of the prospective tenants' lease in another property are all examples of concessions. If this is the case, the value of these concessions should be calculated to reduce the contract rent amount. The tenant should also provide an estoppel certificate. Some state regulations demand particular phrasing on a lease to indicate concessions.

2. A lease of a section of property to operate a business on someone else's property, such as a refreshment stand in a recreational facility.

3. A governmental agency's right to conduct business through a franchise.

4. In appraising, extraordinary terms offered by a seller that may entice a buyer to pay a higher contract price for a property than if the seller had not offered the special terms.

A discount offered to potential tenants in exchange for signing a lease, generally in the form of free rent or cash for tenant upgrades.

Discounts are offered in a lease or sales contract to entice a party to sign the contract.

Lease terms, such as free rent, that decrease the tenant's lease cost and thereby offer renters with an incentive to lease the space from the owner.

Conciliation agreement

An agreement reached as a result of a settlement or a compromise. The Department of Housing and Urban Development (HUD) works to reach a conciliation agreement with the respondent charged with a discriminatory practice under the Federal Fair Housing Act. The complainant and the general public must be protected by the conciliation agreement. HUD takes no further action if an agreement is reached. The agreement could oblige the respondent to perform affirmative acts, such as selling or renting to the complainant, or to refrain from discriminating behavior in the future. If HUD discovers a violation of the conciliation agreement, it can suggest that the attorney general pursue a lawsuit.

Concrete

Cement, sand, gravel, and water mixed together. Typically used for sidewalks, garages, basement floors, patios, and foundations, among other things. Steel rods are also included in the mix.

Concrete basement floor

Concrete is usually reinforced with steel bars embedded within the concrete. The foundation walls and piers, as well as the basement floor, offer structural support. Concrete is chosen because it is both moisture resistant and cost effective.

Concrete block

It's a concrete brick.

Concrete board

As a tile backing material, a panel made of concrete and fibreglass is used.

Concrete cover

A cover metre is used to measure the gap between the top of embedded reinforcement and the exterior of the concrete.

Concrete slab

Roofs, floors, and bridge decks are all examples of concrete structures.

Concrete slump

A test was performed to determine the effectiveness of new concrete.

Concurrence estates

Estates are parcels of land that have many owners.

Concurrency

The necessity that public facilities and services, such as roads, sewerage, and schools, be constructed at the same time as new development.

Concurrent lease

A lease that spans the length of an existing shorter-term lease, with the new lessee inheriting the prior lessee's rights. In effect, the new lessee assumes control of the property and is entitled to the rentals until the first lease ends, at which point the new lessee has exclusive possession. The concurrent lease may cover the entire or a portion of the same premises as the previous lease.

Concurrent ownership

Joint tenants, tenants by the entirety, tenants in common, or community property owners are examples of ownership by two or more people at the same time.

Condemnation

The action of the government (federal, state, municipal, improvement district) to take private property for public use; a judicial or administrative proceeding to exercise the right of eminent domain. The condemnor is the entity that is taking the property, while the condemnee is the person whose property is being taken. A fee simple estate or any smaller right, such as an easement, may be acquired in the seizing of private property for public use. The taking of an owner's access to a street entry when the county develops a roadway or dedicates the land for county use is a common example of condemnation.

The Fifth Amendment to the United Declares Constitution states that "no person shall be deprived of life, liberty, or property without due process of law; and no private property shall be seized for public use without just compensation." Private property can be seized without the owner's agreement, with the owner's defense being that the land was not taken for a sufficient public purpose or, more commonly, that just compensation was not paid. The courts are increasingly defining the phrase "public use" broadly to encompass not only public facilities like highways, railroads, schools, and parks, but also property that provides intangible public advantages like scenic easements. In fact, the Supreme Court ruled in Keio v. New London in 2005 that local governments can condemn private property for private economic development if the municipality determines that such development will benefit the public, even if the property is not blighted and the new project's success is uncertain.

The actual appraised worth of the property at the time of the assessment is typically utilized to establish the amount of "'fair recompense." Certain factors, such as loss of goodwill, relocation expenses, inconvenience, and the value of improvements made to the property after the taking, are not taken into account when evaluating the value of condemned property. This exclusion is particularly damaging to operational enterprises whose real estate worth is significantly lower than their value as a going concern.

All preexisting liens and encumbrances are eliminated after a property is condemned, and their claims must be claimed against the condemnation award. When the final verdict is rendered, the condemnee usually receives the condemnation reward. Because the listing broker did not negotiate the transaction, the listing broker is usually not entitled to a commission if the property is condemned.

Tenants may be entitled to a part of the condemnation award to compensate them for the loss of their leasehold estates under the terms of their lease. To avoid this, many lessors include a condemnation provision in the lease, which states that if the property is condemned, the lease will be canceled and the revenues will go to the lessor.

Condemnation also refers to a public agency's decision that a property is no longer fit for use and must be closed or destroyed.

When a property is condemned or threatened with condemnation, the owner can defer any profit by classifying the sale as an involuntary conversion. Within three taxable years of the end of the tax year in which the conversion occurs, the owner must replace the converted property with property that is similar in use. Any revenues from the condemnation that exceed the cost of the new property are taxed."

A government action in which property is taken for public use and the owner is compensated.

The legal procedure involved in eminent domain, which is the government's right to purchase private property for public use without the owner's agreement in exchange for just compensation.

Condemnation proceeding

The result of a property owner's reluctance to voluntarily relinquish ownership at a price set by a government body seeking to convert the land to public use.

Condensation

Water droplet found on a building's exterior covering, usually during the winter. Louvers or attic ventilators reduce moisture condensation in attics.

Condensing unit

A portion of the cooling system is kept outside the structure. It produces heat by combining a compressor with a condensing coil.

Conditional sales contract

An executory contract is one in which the seller keeps title to the item sold but gives it to the buyers as long as they don't break any of the contract's terms. The seller has a security interest in the property and the buyer has an equitable interest in it under this type of contract.

A conditional sales contract is typically used to sell personal property (such as an air conditioner, a hot tub, or an appliance). A contract for deed is used when it involves real property. The seller must transfer legal title to the buyer after the buyer has fulfilled all of the criteria of the conditional sales contract. Under the Uniform Commercial Code, a security agreement has replaced the conditional sales contract that created a security interest in a fixture or an article that will become a fixture.

Conditional-use zoning

A zoning regulation that tentatively approves a specific land use and usually requires compliance with set standards. Such zoning might allow a hospital to operate in a residential zone but limit the types of services it can provide. Also referred to as special-use zoning.

Conditions

Certain terms in a contract on which the agreement's fulfillment is contingent.

Conditions, Convenants, and Restrictions (CC and Rs)

The guidelines that specify how a property should be utilized, as well as the safeguards put in place by the developer for the benefit of all house owners in a subdivision.

Condo

A frequent term for a condominium unit or development; can apply to a single unit or the complete structure.

Condominium

Ownership of a flat or unit, as well as the owner's interest in parts of the property used by other owners, is an American concept that is starting to catch on in Australia.

A type of shared ownership and control of property in which specific volumes of space (for example, flats) are owned individually while the building's common elements (for example, outside walls and lobbies) are owned jointly.

Individuals have fee-simple title to a specific unit in a multi-tenant building in this form of ownership. Each unit owner has their own mortgage and pays a portion of the property's common area upkeep and operation costs.

A kind of ownership structure in which title to specific sections of a property vests in individual users but title to common areas vests in all users collectively.

An ownership form that combines a fee simple estate for ownership of individual units with tenancy in common for ownership of common areas-describes a form of ownership rather than a style of building.

A multifamily residential residence is a type of real estate ownership. Each occupant owns his or her apartment outright and shares ownership of shared areas like corridors, elevators, and plumbing.

Condominium association

A condominium property's non-profit governing organization. When you buy a condo, you instantly become a member of the association.

An organization made up of all persons who own a condominium unit and acts as a governing and controlling body, generally through an elected board of directors.

Condominium bylaws

Condominium ownership is governed by government rules and regulations.

Condominium conversion

Similar properties in terms of economics.

A method for converting a structure to a condominium ownership structure.

Condominium declaration

The authorizing document that allows for the formation of a condominium. The statement desires both individual and communal portions of the property and provides for owners to be assessed for the expenses of maintaining and insuring shared spaces.

The master deed that creates or establishes the condominium organization.

When recorded, this paperwork creates a condominium. A master deed is another term for it.

Condominium hotel

A condominium that is utilized as a hotel.

Condominium map

The layout, location, unit numbers, and measurements of condominium units on a comprehensive site plan for a condo complex. An architect, land surveyor, or engineer certifies the condominium map, which is then submitted for record alongside the condominium declaration. Also known as a condominium scheme.

Condominium owners' association

A group of condominium unit owners, often operating as an unincorporated association, with the primary goal of controlling, regulating, and maintaining the condominium's common features. The percentage of undivided interest each owner has in the condominium is commonly used to determine voting power in an association. The board of directors of the condominium association is empowered by the bylaws to govern and administer the condominium's business, particularly in terms of common element maintenance and repair. The condominium association has the right to assess and collect sufficient funds to maintain the common areas and assure the condominium's financial stability. If a unit owner fails to pay their monthly fees or special assessments, the association may place a lien on their apartment, which can be foreclosed to fulfill the debt.

If specific revenue and expenditure standards are met, the condominium owners' association can elect to be regarded as a tax-exempt organization, which means it is not taxed on membership dues, fees, or assessments. At least 60% of the association's gross income originates from dues, fees, or assessments; at least 90% of its expenditures go toward acquiring, managing, maintaining, or improving association properties; and nearly all of the units or lots owned by members are used as dwellings (although they need not be owner-occupied).

Investment income and income from trade or business (for example, rental income or payments from third parties for use of the association's facilities) are nevertheless taxed as corporations.

Condominium ownership

An estate in real property made up of an individual interest in a unit (residential, commercial, or industrial) and an undivided common interest in the condo project's common facilities, such as the land, parking lots, elevators, stairways, and external construction. Each condominium unit is a legal entity that can be mortgaged, taxed, sold, or otherwise transferred in ownership without affecting the other units in the building. The aggregate value of each individual living unit and the proportionate ownership of the common areas are used to assess and tax each unit separately. In the event of a default on the mortgage note or other lienable payments, the unit might be foreclosed on independently.

In effect, the condominium allows for the ownership of a specific horizontal layer of airspace rather than the usual idea of vertical property ownership from the earth's centre to the sky.

The unit, the proportion of common interest, and the limited common elements are typically attached to one another and cannot be sold or transferred separately.

Condominium ownership is popular in many metropolitan and resort regions because of the shortage of good and useable property, as well as the tax and other benefits of fee ownership over apartment leases.

Many business and professional buildings, industrial plants, medical clinics, warehouses, recreational developments, and integrated apartment and office buildings use the condominium form of ownership in addition to residential condominiums. Condominium owners enjoy exclusive use of their unit, but they must still follow the declaration, bylaws, and house rules, which are in place for the protection and convenience of all condominium owners.

A condominium developer/owner is required by state law to execute and record a master deed, together with a condominium declaration, a true copy of the bylaws, a condominium map, floor plans, and elevations. The formation of a condominium is not an irreversible step; state regulations may allow all or most owners and lienholders to consent to the withdrawal of a building from condominium ownership. The voting power of unit owners is usually determined by a proportion of common interest (note that in a cooperative, each owner has one equal vote regardless of the unit size).

The right of first refusal of other owners may apply to the resale of a condominium. Resales, on the other hand, are not as restricted as they are in the cooperative type of common ownership.

Condominium units typically sell for less than single-family residences. However, a condominium's lifetime cost (mortgage, utilities, maintenance, and condominium fees) may be comparable to, or even larger than, other types of property.

Conduction

Heat or electricity is transferred through a substance as a result of temperature differences between different sections of the substance.

Conductivity

The ability of a material to transfer heat.

Conduit

A metal pipe that contains electrical wiring.

The legal entity that connects the originating loans of the lender (or lenders) to the eventual investor (s). The conduit acquires loans from third parties and pools them for sale in the CMBS market after a sufficient volume has been achieved. In the European CMBS market, the pool typically consists of fewer than twenty loans with a diverse set of properties. In the US market, on the other hand, the pool may contain anything from 50 to 100 loans backed by a variety of assets.

Mortgage-pooling agencies and private entities that offer mortgage-backed securities, utilizing the pool of mortgages created or acquired as collateral for the mortgage-backed asset.

Conduit electrical

Wire is inserted through a metal pipe.

Confession of judgment

A debtor's act of allowing judgment to be entered against him or her by a written statement to that effect without the creditor having to commence any legal actions. In most leases and judgment notes, a judgment clause (also known as a cognovit) empowers an attorney to make a judgment.

Confirmation of sale

A court-approved foreclosure sale conducted by an executor, administrator, guardian, conservator, or commissioner. In most situations, the court must additionally authorize the amount of the broker's commission.

Conforming conventional loan

A conventional loan that fulfills the requirements for secondary market purchase by Fannie Mae or Freddie Mac.

Conforming loan

A standardized conventional loan issued on uniform documentation that meets Fannie Mae and Freddie Mac's buying standards.

A loan made in accordance with Fannie Mae/Freddie Mac criteria.

Conformity

1. A valuation principle based on the idea that the more in harmony a property or its components are with the surrounding properties or components, the higher the contributory value.

2. When the four agents of production (labor, capital, management, and land) are in economic balance, maximum value is realized.

The utilization of land area within a specific area in order to maximize land value.

Connection line

A line that connects a surveyor's monument to a permanent reference point in land surveying.

Consequential damages

1. A monetary award granted by a court to compensate an injured party for all losses that a reasonable person could have predicted at the time the contract was made due to a breach of contract.

2. Damage caused by public authorities or neighboring landowners to a specific parcel of land that depreciates its worth without technically prohibiting its usage in whole or in part. When land is used for a public sewage treatment facility and private land located downwind of the plant suffers a loss in value owing to offensive odours, consequential damages may be awarded in an inverse condemnation action.

Conservation

Protecting and maintaining natural and scenic resources by federal, state, and municipal governments, as well as private landowners, in order to secure the greatest long-term benefits for all populations. Also, the property has a specific land-use designation in land-use and zoning rules that restricts it to noncommercial uses.

Conservator

A court-appointed guardian, protector, preserver, or receiver is tasked with administering the person and property of another (typically an incapacitated adult) and ensuring that the property is appropriately managed. Although the sale of protected real estate requires court approval, a conservator may not need a real estate license.

Consideration

The cost.

A commitment to refrain from undertaking a certain act, such as launching a justifiable lawsuit, made by one party to convince another to engage into a contract (the forbearance of a right). Consideration is usually something of worth, such as the purchase price in money; it can also include personal services or exchanged property. It is the agreed-upon and paid price for a promise, or it could be a return promise.

The actual consideration for the contract is the mutual exchange of promises by buyers and sellers to legally obligate themselves to do something they were not legally required to do previously; that is, the sellers agree to sell a property for a certain price, and the buyers agree to pay that price to purchase the described property. As a result, simply promising to pay money is sufficient consideration, and an earnest money deposit is not required to create a legally binding contract. The following are the general rules:

-> A recital of consideration in a deed should be used as presumptive proof that something of value was offered in exchange for the transfer of realty. A "good" consideration (love and affection) is sufficient to sustain a gift deed, even though most contracts require a "valuable" consideration. The actual consideration does not have to be declared unless a fiduciary executes a deed; it can be proven by any other legal evidence.

-> In practice, the price paid for real estate is determined by looking up the transfer tax paid (if any) on the deed and calculating the taxable consideration.

-> A real estate licensee who is a party to naming a false consideration may face discipline unless the consideration is manifestly trivial. 

-> A choice must be supported by actual thought.

-> The consideration for the use and occupancy of the premises in a lease is the periodic payment of rent over the rental term.

-> To support a contract, there must be present consideration. Betty, for example, saves Charley from a burning house. In return for Betty's efforts, Charley offers to convey his farm to her in writing. Betty can't have Charley's pledge specifically enforced if he changes his mind. A mortgage is also not legitimate if it is granted to secure an existing debt without any new compensation, such as a time extension, as an inducement for the mortgage's execution.

-> The adequacy of consideration to support a contract is rarely examined by courts. However, if the parties were not in an equal bargaining position and the party filing the case had not paid a fair and sufficient consideration, the court will dismiss the action for particular performance. For example, if the market value of the property in question is $200,000 (at the time the contract is executed), and a buyer (who did not disclose that he was a licensed broker) seeks particular performance of a purchase contract for $20,000, the court is likely to dismiss the action.

In cases involving an alleged fraudulent transfer under the Uniform Fraudulent Conveyance Act, the issue of adequacy of consideration also arises. Let's say a seller sells a property a couple months before declaring bankruptcy. If the price was insufficient, the trustee in bankruptcy will be able to set aside the conveyance as fraudulent. In some circumstances, inadequacy of consideration is used to prove undue influence and that the buyer was not a "bona fide purchaser" for value as defined by the recording laws.

The exchange of money or services for property.

The compelling basis for entering into a contract under contract law. In exchange for a promise, something of worth is offered.

Anything of value offered in exchange for convincing another party to engage into a contract.

Consolidate

To join a land sales registration with an earlier registration, especially when the property is developed and sold in successive phases or increments, to unite, combine, or incorporate by reference, as in combining two mortgages on one property into a single loan; to combine two or more parcels of land (the reverse of the subdivision process); or to combine two or more parcels of land (the reverse of the subdivision process). A developer with a 100-acre tract could subdivide 50 acres into 100 half-acre units and register the subdivision with state and federal agencies. When the remaining 50 acres are developed, the owner can combine this new registration with the 50-acre subdivision that was previously registered and sell both portions under the same registration. Consolidated registration of subdivided lands is permitted under both state and federal (HUD) requirements.

Consolidation of title

When multiple parcels of land are combined, a new certificate of title is produced to replace all previous certificates.

Constant

1. A fixed percentage added to a debt's face value. It evolves into the annual amount of money required to pay a specific net rate of interest on the declining balance and liquidate the principal debt within a specified time period; a method for calculating rate and term on an annual basis.

2. The required annual payment per dollar of mortgage money, which includes both interest and amortized principle. With each change in the interest rate and amortization term, the mortgage constant changes.

Constant maturity rate

A typical index for adjustable-rate mortgages (ARMs). The one-year constant maturity rate, for example, is the average of the market yield on any existing U.S. Treasury debt with exactly one year remaining to ultimate repayment, regardless of initial term.

Constant payment loan

A loan in which all installments are made at the same time throughout the payback period.

Constraint

Any aspect or condition of the built or natural environment that interferes with projected land usage.

Any constraint or impediment to the project.

Construction

The process of constructing a structure.

Construction allowance

The lessor pays a lessee money or other financial incentives to cover the cost of preparing a structure for the lessee's occupancy, in whole or in part. Partitions, wiring, lights, and ordinary carpets could all be covered by this budget. Known as tenant improvements.

A owner's contribution to the construction cost and/or alterations required to make a facility ready for a tenant's occupancy. This allowance may be a set amount or it may fluctuate depending on the kind of transaction.

Construction Contract

A contract between the owner and the contractor in which the contractor commits to build the owner's building (or other described project) in accordance with the contract terms and within a given timeframe in exchange for a mutually agreed-upon consideration to be paid by the owner.

Construction cost

The whole project cost, with usual overhead and profit, that must be paid.

the total of labor and material costs, as well as contractors' overhead and profits, incurred in the construction or improvement of a property

Construction cost estimate

Prior to the commencement of construction, a number is presented that estimates the overall cost of the project.

Construction draw

Advances on a building loan on a regular basis.

Construction Drywall

A type of construction in which the sheet material or wooden panel is applied dry.

Construction frame

When the structural sections of a building are made of wood, or when a wooden frame is utilized to support the structure, it is called a wooden frame construction.

Construction loan

A loan granted by a commercial bank to a builder to be used for the building of renovations on real estate, typically lasting six months to two years.

A short-term or interim loan used to finance the costs of construction on a building or development project, with loan proceeds issued in installment payments while work advances (called draws). As a result, the outstanding loan balance grows in lockstep with the value of the collateral. Interest is usually not charged on borrowed funds until the incremental construction draws are advanced. One or more long-term permanent loans, such as those taken out by individual condominium unit buyers, will take out (pay off) the construction loan after the project is completed. These loans typically have a loan-to-value ratio of 75 percent of the appraised value. Commercial banks and savings and loan associations are the most common providers of building loans.

A loan for the purpose of constructing a home, usually with a duration of less than three years. They're usually based on prime rates and are just paid interest with a balloon payment payable at the loan's maturity.

Loans used to cover the price of erecting the building or structures.

A short-term loan obtained for the purpose of building sponsorship.

Construction manager

Developers use this person to manage day-to-day building activity.

Constructive

A legal inference, such as constructive eviction or constructive notice.

Constructive eviction

Behavior by the landlord that makes it so hard for the tenant to enjoy the rented space that the tenant has no choice but to leave and end the lease without having to pay any more rent. This idea comes from modern property law, which now says

Any interference by the landlord with the tenant's possession of the leased premises, rendering them unfit for habitation. In this instance, the renter is not responsible for any subsequent rent payments.

Constructive fraud

Despite no evidence of dishonesty or intent to deceive, the law declares a breach of a legal or equitable duty false because of its tendency to deceive others. When a broker has a responsibility to speak, such as when a listing broker fails to reveal a known major foundation problem not easily visible on a routine examination, the broker may be prosecuted with constructive fraud.

Constructive notice

A legal presumption that a person is accountable for knowing certain facts that may be discovered by due diligence or a public record inquiry. The appropriate recording of a document serves as constructive notice of the document's existence and contents to the rest of the world. Possession of property also gives the party in possession constructive notice of their rights.

Rights under an unrecorded deed, contract for deed, lease-option, and adverse possession are examples of rights of parties in possession. Constructive notice, also known as legal notice, differs from actual notice, which is gained by express or direct knowledge throughout the course of a transaction.

When a fact is a subject of public record, the legal assumption is that everyone knows about it.

A legal doctrine that allows notice to be attributed even if a party is completely unaware of the facts. According to recording statutes, recording a document in the public record constitutes constructive notice to the rest of the world.

Constructive receipt

The unrestricted right to receive money is the same as the actual receipt of that money, according to a tax law principle. For tax purposes, receiving a demand promissory note is the same as receiving money. As a result, if a person has the right and ability to receive payment, which includes profit or income, that profit is taxed when that right exists, regardless of when payment is actually made.

Consultant

A financial adviser, for example, is someone who gives guidance in a specialized area. A real estate consultant who provides services similar to those of a real estate broker must be licensed by the state.

Consumer financial protection bureau (CFPB)

The Dodd-Frank Act established a consumer protection agency primarily responsible for rulemaking, supervision, and enforcement of federal consumer financial protection laws, including combining certain disclosures that consumers receive under the Truth in Lending Act, Regulation Z, and Regulation X of the Real Estate Settlement Procedures Act. It is a separate entity within the Federal Reserve.

Consumer good

The finished result of the manufacturing process.

Consumer price index (CPI)

An index that compares the current price to the price of a representative "market basket" of consumer goods in a given year.

The Bureau of Labor Statistics (BLS) of the federal Department of Labor prepares a statistical measure of changes in consumer goods prices. As of August 2009, the BLS had restricted reporting to three categories: food, energy, and all products except food and energy.

The CPI is divided into two categories: the CPI for all urban consumers (CPI-U) and the CPI for urban wage earners and clerical workers (CPI-W). For 1982-1984, the government established a base index of 100. The CPI-U was 230.379 in August, and the CPI-W was 227.056. The CPI is frequently used as a criterion in business lease rent changes.

The U.S. Department of Labor's Bureau of Labor Statistics publishes a monthly index that shows the cost of a variety of consumer products and services.

An index that measures the change in prices of goods and services over time, providing a gauge of inflation.

Consummate

To finish something. Usually, a sale of real estate is finalized when the deed, money, and conveyance documents are given to the buyer and the transaction is recorded.

Contents insurance

Insurance that protects your home's tangible assets, such as electronic products like plasma TVs and stereo systems, furniture, drapes, and carpets. Certain products, such as high-priced laptops, may necessitate supplementary insurance.

Contiguous

Close by; bordering or abutting; near, coterminous (having the same boundaries). Many state subdivision laws describe a subdivision as any land consisting of two or more lots, contiguous or not, sold as part of a common advertising and selling promotional plan. Condominium property does not have to be continuous (for example, if it includes a parking lot across the street), but it must be in the same general vicinity. Contiguous owners must give up some of their privacy for the sake of the community's overall well-being. Owners whose properties are adjacent to commercial companies and railroads, for example, may experience acceptable discomfort.

A partial release condition in a mortgage may often require that a partial release be granted only on a parcel that is adjacent to a parcel that has already been freed. The term "contiguous" should be properly defined so that the release clause is not contested on the basis of ambiguity and vagueness.

Properties that are close by and in close proximity.

Contingency

A contract clause that requires the execution of a specific act or the occurrence of a certain event before the contract becomes binding. A buyer will frequently submit a purchase offer contingent on securing finance or rezoning. In this scenario, the seller should make certain that the contingency is specific and unambiguous, with a clear cutoff date; otherwise, the buyer may be able to keep the seller's property indefinitely while attempting to obtain finance or rezoning. Any contingency clause incorporated for their benefit may be waived by the parties. For example, even if the buyer was unable to secure the zoning the original contingency in the contract for sale, the buyer might force the seller to sell the land. Contingency indicates a commitment to use one's best efforts to achieve it.

If a contingency is phrased excessively broadly, such as "contingent on my determining whether it is a fair bargain or not," the entire contract is deemed "illusory" and unenforceable by any party due to a lack of "mutuality of obligation." If the sale is contingent on a "acceptable" inspection or an attorney's evaluation of the lease, the courts will strive to enforce good faith and reasonableness criteria so that a party cannot back out simply because their plans have changed.

An option is not the same as a contingent sale. The optionee has complete control over whether or not to execute the option. The buyer must buy on the occurrence or non-occurrence of a defined event, such as loan qualification, under a contingency.

Not only is the financial contingency the most commonly utilized, but it is also the most contentious. A well-written contingency statement can nonetheless generate issues. Assume a financing contingency stated that the offer was contingent on the buyer obtaining a first mortgage loan commitment for $ 167,500 with interest not to exceed 5% per year and a term of not less than 30 years, and monthly payments for principal and interest not to exceed $800. 18 plus 1/12 the estimated annual real property taxes and annual insurance premium. Buyers agreed to get a loan in good faith and with due diligence. Buyers qualified for the loan, but refused to take it due of an interest rate escalation clause included by the lender. Even if a court allows some flexibility in the financing commitment, the inclusion of an escalation clause is a material deviation from the terms of the offer to purchase, and thus the buyer is not in breach of contract if he or she refuses to complete the purchase; the buyer is entitled to a refund of the deposit money. However, a buyer who qualified for financing on the terms given in an offer but later got divorced or changed circumstances to the point where he or she was no longer qualified at the time of closing may have difficulties defending a case for contract enforcement. A careful seller can include a language that says "the buyer's execution of any loan paperwork shall be deemed an acceptance of such loan and a waiver of this contingency."

There are some requirements that must be completed before a contract can be legally binding.

Contingency fund

A money set aside to cover unexpected expenses.

Contingency listing

A listing in a multiple listing service that has exceptional or special characteristics; the letter C is occasionally placed in front of the MLS number to indicate this. Shorter-than-average listing term, an unusual structure, or a short sale are all possible contingencies.

Contingent liability

A third-party responsibility is one that is undertaken by a third party. If the original obligor defaults, the obligation will fall to the third party.

Continuation

A "run to date" update of a title search. A preliminary title report is issued by the title company shortly after a sales contract or an offer to purchase is signed or escrow is initiated in a normal transaction. The title company is typically required to continue the search until the final documents are recorded by monitoring the public record to ensure that no intervening rights in the property have arisen. The grantee's title will be shown in the final title report. The continuance is normally paid for by the buyer.

Continuing education

Most states require real estate and appraiser licensees to complete a certain number of educational programmes before their licenses can be renewed or reinstated.

Continuity tester

An instrument that determines whether or not a circuit can conduct electricity.

Continuous operation clause

A clause in a shopping centre agreement that requires major tenants to keep their stores open during the lease period. Both the landlord and the other tenants gain from this clause.

Contour

A fictitious line on the ground with all of its points at the same height above or below a specified datum.

Contour interval

The variation in height between two neighboring contours.

Contour map

A topographic map depicts the lay of the land in a given area by connecting points of equal elevation at predetermined intervals, depending on the scale employed.

Contract

A contract between two or more parties that establishes or alters a legal relationship, usually by an offer and acceptance.

A formal and legally binding agreement between two or more parties that creates responsibilities that must be met.

A legally binding agreement between competent persons who agree to perform or refrain from undertaking specific activities in exchange for a compensation. In essence, a contract is an enforceable promise.

There are numerous forms of contracts in real estate, including contracts for sale, options, mortgages, leases, contracts for conveyance, escrow agreements, and loan commitments. Each of these contracts must meet the minimal conditions outlined in the following paragraphs.

Competent parties: Any contract must include at least two legitimate parties. As a result, Juan cannot consent to deed property to himself. He may, however, pass property to himself and Martina as tenants in common. Both parties must have at least minimal contracting capacity. Minors cannot deed property they own because they lack the capacity to impart property; such a deed would be voidable by the minor (in some states, it is automatically void). A minor, on the other hand, has the limited competence to engage into a legitimate contract to purchase property from an adult; such a contract would be enforceable by the minor against the adult, but would be voidable by the minor if he elected not to complete the purchase during his minority. A fiduciary and a company must have the proper authorization to enter into a contract. When a party to a contract dies, the heirs and assigns of the deceased may be obligated by the deal, depending on the terms of the contract.

Writing: Unless otherwise required by law, oral contracts are just as legitimate as written contracts. However, real estate contracts, with the exception of leases of one year or shorter, must be in writing to be enforceable. All key contract conditions must be thorough and certain, so that the entire agreement is set forth in writing and nothing material remains to be agreed upon in the future. Until the contract is signed, everything is negotiable. Once signed, the contract is no longer negotiable. To change the contract conditions, the parties must give and accept new consideration.

If the contract involves real property, the property must be accurately specified so that the parties may identify the subject matter of the contract. A thorough legal description should be included in each deed, mortgage, or lease assignment. Most contracts for sale include a good description of the property (location, size, and tax map number), but not a detailed legal description.

Meeting of the minds: There must be a genuine offer and an unconditional acceptance of that offer, so that the seller understands the conditions of the buyer's offer and the buyer understands the manner of acquisition of the designated property.

Consideration: The contract must be supported by consideration; that is, both parties must be forced to do something they were not previously bound to do. Most contracts require a valuable payment, such as a promise to pay money. A gift deed, on the other hand, is legitimate if it mentions a good, rather than a valuable, consideration, such as "for love and affection."

A contract must contemplate a valid purpose in order to be enforceable. Thus, a contract to lease a building for an unlawful gambling casino is unenforceable, as is a listing contract to pay a commission to an unlicensed person. A usurious contract is not entirely enforceable.

Signature: A party must sign a contract in order to be bound by it. In a typical real estate transaction, both the buyer and the seller sign the contract for sale.

If there is any uncertainty in a contract, the courts will interpret it most rigorously against the party who drafted it. For example, because the broker creates the listing contract, it is interpreted quite rigorously against the broker. Thus, if there was any uncertainty about whether the listing was an exclusive agency or an exclusive right to sell, the courts would interpret it as an exclusive agency.

It is not necessary for one legal document to represent the contract of the contracting parties, yet it may be advantageous to avoid any disagreement about whether a contract was created. Sometimes the elements of a contract (the offer and acceptance) emerge from various correspondence between the parties, thus a single formal contract is never actually signed. However, all parties must agree on all key provisions in the contract and should not leave anything to later negotiation. If this occurs, the "contract" may be interpreted as early conversations rather than an actual contract.

Some contracts may be discharged due to impossibility of fulfillment. For example, if the promisor of a personal service contract dies, the contract is usually discharged. As a result, a contract with a well-known architect to create a specific structure would very certainly be voided if the architect died. However, if the work and/or services can be performed by others, such as in a plumbing contract, the obligation will survive the promisor's death and bind the promisor's estate. Real estate contracts are typically binding on the deceased's heirs and assigns. The court may discharge a contract if it believes the terms would be difficult for a reasonable person or organization to perform.

The most important aspect of every contract is that both parties completely understand their agreement. Poorly drafted documents, particularly those containing lengthy legal jargon, are open to multiple interpretations and frequently result in litigation. In most cases, the parties engaged in a real estate transaction would be wise to retain the services of an experienced real estate attorney to design a contract that appropriately reflects the parties' true intentions. It should be noted that a broker who prepares legal contracts may be charged with the unlawful practice of law.

Contract administration

Managing the contractual parties' legal relationships and duties.

Contract close-out

All legal duties between the parties must be resolved and fulfilled.

Contract documents

The agreement between two parties, as well as all supporting materials that aid in defining, altering, or modifying the agreement and its associated circumstances in real estate development ( drawings, specifications, change orders, addenda). The phrase is used in the American Institute of Architects' (AIA) standard form documents, such as those between the owner, architect, and general contractor.

Contract for deed

A contract in which the seller agrees to hand over title to the buyer after all payments have been fulfilled.

A sales arrangement in which the deed conveying title is not delivered until after the buyer has taken possession of the property. This enables the seller to finance the transaction through installment payments and to have recourse to the property in the event of buyer/borrower failure.

A contract between a seller (the vendor) and a buyer (the vendee) for the sale of real estate in which all or part of the selling price is not paid right away. Over the length of the contract, the purchase price can be paid in installments of either principal and interest or just interest. The balance is due at the end of the contract. When the buyer has made all the payments, the seller must give the buyer good legal title through a deed or an assignment of lease (if the property is leasehold property). Under the terms of the contract for deed, the buyer gets possession of the property and equitable title to it. The seller, on the other hand, keeps legal title and remains primarily responsible for paying any mortgages on the property. A contract for deed is different from a lease-option because the buyer has an equitable title and has to buy the property.

The contract for deed document must meet the same requirements as any other contract. It will also have a long list of the rights and responsibilities of each party, similar to what you would find in a mortgage. This includes the use of the property, the risk of loss, the maintenance of the property, the payment of taxes and insurance, and what can be done if the other party doesn't follow through. Certain rights, like the right to accelerate or the right to prepay without penalty, must be written into the contract. Most of the time, both parties sign, acknowledge, and record the contract.

A land contract, agreement of sale, installment contract, articles of agreement, conditional sales contract, bond for deed, selling under contract, or real estate contract are all names for a contract for deed. The contract for deed is often the best way to sell or buy a property when there isn't a lot of money on the market and it's hard for potential buyers to get conventional financing. First-time buyers or immigrants who might not be able to get a bank loan at the time they sign a contract for deed but whose incomes will rise before the end of the agreement and allow them to refinance and pay off the contract for deed.

Sellers may prefer a contract for deed because it can lead to an installment sale, which lets them put off paying some tax. Also, if the buyer doesn't pay, the sellers can sue for strict foreclosure, which they can't do if the buyer has a mortgage. But a seller who chooses this option is breaking the contract and can't get a deficiency judgment for the amount that hasn't been paid.

Some contracts for deed say that either the buyer or the seller can change the contract into a normal security transaction. For example, if the buyer pays 40% of the price, the seller may have to give the buyer a deed and take back a purchase-money mortgage from the buyer for the rest of the price.

There are some bad things about using a contract for deed. From the point of view of the buyer:

-> Because the seller is not required to deliver good marketable title until the final payment, the buyer must continue to make payments notwithstanding any doubts about the seller's ability to perform until all payments are made. "The property is to be conveyed free and clear of all encumbrances save (those named above) and to remain free and clear except for the above-stated encumbrances," some attorneys stipulate. During the term of the contract for deed, the seller is discouraged from adding additional mortgages and encumbrances to the property.

-> The buyer may have trouble convincing the seller to convey the property after the transaction is completed. The buyer can easily persuade a seller to pay the costs of preparing the deed by withholding a substantial enough final payment. Furthermore, the seller may be suffering from a legal incapacity, be missing, insolvent, or dead at the time of final payment, and the property may be stuck in probate.

-> Covenants against assignment may prevent the buyer from assigning her stake in the contract for deed.

-> Liens against the seller may cast doubt on the title.

-> If the seller does not apply the buyer's payments to the underlying mortgage, difficulties may emerge unless a collection account is used.

From the seller's point of view:

-> If the buyer doesn't pay, the process of clearing the record title may take a long time and cost a lot of money. This is especially true if the buyer has a legal disability, is bankrupt, doesn't live in the country, or has put liens on the property in favor of people who may have to be brought into any action to clear the title.

-> The seller's interest in the contract for deed is harder to sell than a mortgagee's interest would have been if the seller had sold under a purchase-money mortgage.

-> The contract for deed is by definition a contract, and all contracts can be interpreted in different ways, which can lead to disputes and lawsuits.

A contract between a seller and a buyer of real estate in which the seller provides financing to the buyer in order for the buyer to purchase the property for an agreed-upon purchase price and the buyer repays the loan in installments.

Contract for sale

The legal contract between a buyer and seller that specifies the purchase price and other transaction information, as well as the precise way in which ownership rights are to be transferred. Is often recognised as the most crucial real estate deal.

Contract of sale

An agreement in writing that lays out the terms and conditions for buying or selling a piece of land.

A contract for the acquisition and sale of real estate in which the buyer agrees to pay a particular sum and the seller agrees to surrender title by deed or lease assignment (for leasehold property). The contract frequently serves as the initial guidance to the closing agent or escrow business to complete the mechanics of the deal, in addition to binding the parties to the purchase and sale of the property for the time required to close the transaction. All essential closing elements, such as who pays the various expenditures of the sale, who bears the risk of loss, the date of occupation, and the proration date, must be agreed upon in the contract. In essence, the contract of sale is an executory contract to convey property, acting as a conduit to the deed, which ultimately passes ownership. The remainder of the transaction is essentially mechanical once the sales contract is signed.

This contract is also known as a sales contract, a purchase agreement, a deposit receipt, an offer and acceptance, an agreement of sale, an offer to lease, or a purchase and sale agreement.

The contract of sale must be in writing, signed by both parties, contain the buyer's and seller's names, an acceptable description of the property (a full legal description is recommended in the sale of unimproved land), identify the sales price, and have a valid purpose in order to be enforceable. A married seller's spouse should also sign the contract so that the spouse is bound to renounce all marital rights (if any) when the deed is given. For example, if a wife does not sign, the contract is still valid and enforceable against her husband; nevertheless, she must be willing to participate in the deed in order to renounce her dower and/or homestead rights.

Unless the parties anticipate a particularly extended period of time to conclude the transaction, most contracts of sale are not recorded. A contract for deed, on the other hand, should be recorded to protect the buyer because it may be years before the buyer pays off the contract and gains legal title to the property.

If the buyer fails to complete the purchase under the terms of the agreement, the seller can keep the deposit as liquidated damages, sue the buyer for money damages, or sue the buyer to complete the purchase under the terms of the agreement. This final remedy of specific performance is available only in the rare case where monetary damages are insufficient to compensate the seller for the loss. If the seller defaults, the buyer may revoke the agreement and receive a refund of the deposit money, or the buyer may sue the seller for specific performance, which will compel the seller to sell the property on the agreed-upon conditions.

A standard, preprinted contract of sale form is often used by a broker. A broker who does not charge a separate fee for completing this form is not involved in the unlawful practice of law under most state statutes. This service is legal as long as it is performed incidentally to representing the client in the purchase or sale of real estate.

Contract price

An accounting phrase for the gain earned on an installment sale. The contract price is the selling price of a property minus any mortgages acquired or taken subject to by the buyer, plus any excess (if any) of any such liens collected, plus the seller's adjusted basis at the time of sale. The contract price is essentially the seller's equity in the property.

One of the benefits of a contract for deed for the seller is that it allows the "contract price" to be the same as the selling price, deferring taxes considerably more effectively than if the buyer accepted or took subject to the mortgage. Example: A taxpayer sells a property for $100,000 with a basis of $70,000 and a gain of $30,000; the down payment is $20,000 with an assumption of an existing $60,000 first mortgage and a purchase-money second mortgage of $20,000; the down payment is $20,000 with an assumption of an existing $60,000 first mortgage The contract price is merely $40,000, despite the selling price of $100,000. Thus, the gain ($30,000) represents 75% of the total amount the seller will receive ($40,000). As a result, just 25% of the down payment and each principal payment on a purchase-money mortgage is considered nontaxable return of basis, while the remaining 75% is.

If the property is sold under a contract for deed, the entire $100,000 selling amount becomes the contract price. As a result, just 30% of the upfront payment would constitute profit. The remaining gain is made up of 30% of the principal payments received under the contract for deed, which would be taxed only when they are received.

The amount for which a property is purchased.

Total selling price less any prior mortgage to which a property would be subject when sold under conditions that allow the transaction to be recorded for tax purposes using the installment sales technique. If the previous mortgage is greater than the seller's adjusted basis in the property, the difference must be added to the contract price.

Contract rent

The amount of rent that is agreed upon by the people who sign a lease. Appraisers often compare this to the market rent, which is how much the property would rent for if it were empty and on the open market.

The rent stipulated in the leasing agreement.

Contract terms

The specific needs of a completely enforceable contract, such as the price, down payment, any seller financing, inspection provisions, kind of evidence of title, type of deed, dates, and other transaction process elements.

Contract with contingencies

A purchase agreement that makes the purchase contingent on the buyer securing something, such as finance or a good engineering report.

Contractor

A person who enters into a contract or a covenant with a public body or a private party to build works or erect buildings for a certain price. A contractor is typically thought of as someone who agrees to provide labor and supplies for particular projects under the terms of a contract with an owner or principal. A general contractor is one whose business operations necessitate the use of more than two unrelated building trades or crafts, the work of which the contractor supervises or performs in whole or in part; the term does not apply to an individual who performs all work himself without the assistance of employees or other "specialty contractors." A contractor can either contract for the entire task as a prime contractor or work as a subcontractor for a general contractor.

A person who enters into a contract to deliver products or services.

A licensed organization or individual that enters into a contract for the construction of a building, road, or other facility with another organization or individual (the owner).

Someone who is qualified to work on construction projects.

Contractor, general

In charge of a project's implementation, supervision, and overall supervision.

Contractor, remodeling

A general contractor who specializes in renovation projects.

Contractor, specialty

A contractor who specializes in performing specialized work.

Contractor, sub

A subcontractor is a general or specialty contractor who works under the supervision of a general contractor.

Contractor's affidavit

A written declaration issued under oath before a notary public by a contractor that states the facts about the contract, subcontracts, material suppliers, and labor. This affidavit details the sums paid and unpaid, as well as the outstanding payments.

Contribution

The idea that the value of an improvement is how much it adds to the market value of the whole property, not how much it cost to make. A remodeled basement may not add the full cost to the value of the property, but a new bedroom will usually add more to the value of the house than the cost of installing it.

Control

The effective management of comparing actual performance to planned performance, analysing deviations, assessing potential alternatives, and taking remedial action as needed.

Control joint Tooled

To establish where the concrete should crack, straight grooves were employed.

Control point

Any station in a horizontal or vertical control system detected on a photograph and used to correlate the data depicted on the photograph.

Controlled business arrangements

Under the Real Estate Settlement Procedures Act (RESPA), an arrangement or combination in which a person or business owns more than 1% of a company that the person or business regularly sends business to. Such an arrangement is allowed, as long as the affiliation is written down, an estimate of the cost of the service is given, customers are free to get the service somewhere else, and the affiliated companies don't trade referral fees.

Convection

Heating air rises and draws cooler air behind it, resulting in currents.

Convenience activities

Some sorts of urban services and goods are classified so that users may receive the good or service from the nearest accessible source.

Convenience goods

Items are usually bought at the places that are the easiest to get to. They aren't usually very expensive or long-lasting, and they don't require a lot of thought when you buy them. Convenience goods are different from things that people buy when they study the retail market.

Convenience store

A store that sells food, drinks, and other things that people usually buy at random and on the spot, wherever is most convenient.

Conventional estate

A transaction estate is distinct from an estate created by operation of law, such as a life estate created under dower statutes.

Conventional loan

A loan secured by real estate that does not require government involvement in the form of insurance (FHA) or guarantee (VA). An institutional lender or a private party can be the mortgagee. The loan is conventional in the sense that it follows established guidelines and the lender relies entirely on the borrower's credit and the property's security to assure debt repayment. Loans insured by private mortgage insurance providers are classified as conventional.

Because conventional loans are not subject to the more severe government regulations that apply to FHA and VA loans, they are often more flexible in terms of terms and interest rates, albeit they may have a higher interest rate and bigger down payment requirements due to the higher risk involved. Lenders may be able to give zero-down-payment mortgages to low-income people with good credit in some instances. Institutional regulation, which can be statutory (federal, state) or self-created, applies to conventional loans.

A loan that is not insured by a government entity such as the FHA or the VA.

Conventional mortgage loan

A loan from a source other than the federal government.

Conventional mortgages

Mortgages that are not backed by the government in the form of FHA insurance or a Veterans Affairs (VA) guarantee.

Conversion

1. The conversion of an income-generating property, such as a rental apartment building or a hotel, into condominium apartments for sale to individual owners. The building is frequently renovated, existing leases are allowed to lapse or cancelled, and the project is registered with the appropriate state body and a condominium title is issued. Cost and market study, purchase, initial remodeling, appraisal, interim and long-term financing, tenant relocation, and sales are all processes that demand considerable knowledge. Existing tenants are frequently given a significant period of time to relocate if they choose not to purchase their property under state law. Many developers are considering condominium conversion as a solution to housing shortages due to rising construction prices. However, several towns have set limits (and sometimes moratoriums) on condominium conversions due to tenant relocation issues.

2. Taking possession of someone else's property. It's possible that the conversion is illegal (like when a broker misappropriates client cash) or that it's permissible (as when the government condemns property under the right of eminent domain). 

3. The process of converting a property from one use to another for tax purposes, such as from a personal residence to a rental property.

Convertibility

Converting a loan from an adjustable to a fixed rate schedule.

Convertible Apartment

A bedroom apartment with enough space to add another bedroom.

Conveyance

A document that transfers ownership of a piece of property.

A written instrument, such as a deed or a lease assignment, is used to transfer title or an interest in real property. A divorce decision or a property settlement agreement involving real property does not constitute an effective conveyance in and of itself. The Uniform Land Transactions Act provides a more straightforward means of transferring real estate title.

Conveyancing

The legal procedure of transferring property ownership from one individual or business to another

The legal process of giving someone else the right to own real estate.

Cooling load

The amount of cool air required to maintain a structure's temperature balance.

Cooling off period

It is possible to cancel a purchase contract, but only with a small penalty. Depending on where you live, it can take 2-5 days to get a countersigned contract back from the seller. In Washington, it doesn't start until that countersigned contract is sent back from the seller.

A grace time established by law or by contract during which a contracting party may lawfully back out of the contract; a right of rescission. In refinancing agreements involving a borrower's own dwelling, the federal Truth in Lending Act stipulates a cooling-off period. The federal Interstate Land Sales Full Disclosure Act provides for a seven-day cooling-off period. For condominium, time-share, and subdivision sales, many states have their own statutory cooling-off periods. However, contrary to popular opinion, there is no automatic right to withdraw a real estate purchase deal unless specifically stated by statute or contract.

Coop

A deal between two people to divide the commission on a real estate transaction.

A real estate company with multiple residential buildings.

Cooperating broker

A broker who aids another broker in the sale of real estate (typically the "listor"). Typically, the cooperating broker is the (selling) broker who located the buyer who has made an offer to purchase a property listed with another (listing) broker. Because there is no contractual link between the participating broker and the seller, the cooperating broker must rely only on the listing broker for a commission. Cooperating brokers should be aware that collaboration does not always imply pay; they should constantly double-check the listing broker's compensation offer.

Negotiations about properties listed with a single broker should be conducted with that broker, not with the owner (except with the consent of the listing broker).

Cooperative

A type of common property ownership in which inhabitants of an apartment building do not own their apartments but rather possess shares in a corporation that does.

An apartment purchased by the renter through purchasing shares in the business that owns the building rather than merely purchasing the unit.

A type of individual apartment ownership in which the property is held by a corporation in which each resident is a shareholder with the right to a private lease for a specific unit.

Cooperative ownership

Apartment unit ownership in which the apartment owner has purchased shares in the corporation (or partnership or trust) that owns the entire apartment complex. The cooperative owner is essentially a shareholder in a corporation with a building as its primary asset. The owner receives a proprietary lease giving occupation of a specific unit in the building in exchange for stock in the corporation. As a result, the owner occupies the unit under a lease but does not own it, and his or her investment is considered as personal property. Each unit owner is responsible for a pro rata share of the corporation's expenses, such as mortgage payments, real estate taxes, maintenance, and payroll. If a cooperative's income is produced from tenant/owner rents, the owners can deduct their individual portion of the taxes and interest charges for tax purposes. The stock certificate is usually readily assignable; however, the proprietary lease usually has rigorous assignment limitations.

A co-voting op's power is normally one vote per unit. A single mortgage on the entire building may be taken out or assumed by the co-op corporation. Because they are purchasing personal property rather than real estate, co-op buyers may have more trouble securing financing.

The intended purchaser or lessee must typically be approved by the co-board op's of directors prior to resale. Boards have protested to rock singers, movie stars, and even former presidents, for example, and they are allowed to do so as long as the opposition is not based on any protected class under state and federal fair housing laws. When a co-op owner (tenant/shareholder) misses a mortgage or tax payment, the other shareholders must make up the difference or risk the entire project being sold for taxes or foreclosed under the blanket mortgage. One of the biggest disadvantages of co-op ownership is the contingent responsibility. Many co-ops charge a monthly fee to build up a prepayment reserve fund to cover real estate taxes to mitigate this risk.

"Ten shares of stock in Paige Apartments, Inc., entitling owner to exclusive use of Apartment 67 and parking slot #3, and co-use of common features."

A kind of corporate control in which each individual holds equity in the company. Each shareholder is then given a proprietary lease to live in one of the units.

Coordinate system

A mechanism for uniquely determining the position of any place on the planet.

Coped

A method of removing the top and bottom flanges of a metal Ibeam's end(s). This method allows it to fit within and be fixed to the web of another Ibeam in a "T" shape.

Coped joint

Making woodwork with an irregular surface.

Corbel the triangula

A mantel or horizontal shelf is held in place by ornamental supports.

Core real estate investments

Property investments that are significantly rented, have an ordered lease expiry schedule, are of good quality, and come from one of the four fundamental property types: offices, industrial, retail, or multifamily. The core property must also be well-maintained in a large city, have a debt-to-equity ratio of no more than 50%, have a low degree of tenant turnover, and an investment structure with sufficient control.

Core space

The square footage utilized for the public hallways, elevators, toilets, stairways, electrical and telephone rooms, and the cleaning closet of a building.

Core-plus real estate investments

Property investments are safer than core investments, but they are riskier. Core-plus properties offer additional chances for investors to raise their rate of return, but they are significantly riskier.

Corner bead

Before applying drywall mud, formed sheet metal covers the outside corners of the drywall.

Corner boards

Trim used on the outside corners of a frame structure to finish the ends of the siding.

Corner braces

The diagonal braces of the framed structure are used to stiffen and strengthen the wall.

Corner influence

How close or far away a property is from the intersection of two streets affects its value. Most of the time, commercial corner lots are worth more than inside lots.

Corner stakes

A surveyor uses metes and bounds to do a survey. Every change of course raises the stakes.

Cornice

A beautiful horizontal protrusion or molding that facilitates water drainage at the top of the outside walls under the eaves. Any molded projection on an interior or exterior wall, in the enclosure at the roof eaves, or at the roof rake.

Horizontal decorative molding that adorns a building or a piece of furniture.

Corporate resolution

The corporate secretary generally records a summary of a specific action performed by the board of directors of a corporation in the minute book.

Lenders frequently ask for a certificate of resolution to confirm that the corporate board of directors has approved the borrowing of funds or the creation of an account. A borrowing resolution is one that says something like this: "Upon motion duly made, seconded, and unanimously passed, the following resolution was adopted on the 5th day of October, 2012." It is hereby resolved that the Corporation borrows $250,000 from the Bank of Paradise to purchase a grocery shop." "The purchaser should get a resolution from the seller's board of directors authorizing the sale and selecting an authorized official to sign the conveyance instrument where the seller is a corporation. A resolution of the shareholders to authorize the sale is usually required if the corporation is selling most of its assets.

Corporation

The secretary of state registers a legal entity that limits the individual responsibility of the persons who make up the entity.

Corporate ownership structure has limited liability, but suffers from double taxation and does not allow losses to flow through to investors for present use.

A legal entity constituted under state law that is composed of an association of one or more individuals, but which is recognized by the law as having an existence and personality distinct from the individuals who are members of the association. The primary characteristics of a corporation are its perpetual existence (that is, the corporation continues to exist indefinitely and only ceases to exist if and when it is properly dissolved through legal proceedings), centralized management in the form of a board of directors, liability of a shareholder limited to the amount of his or her investment, and the ability of shareholders to freely transfer their corporate shares to other shareholders.

When a corporation is formed, it has the ability to contract independently and to hold title to real property in accordance with the powers granted to it by its articles of incorporation. In some cases, contracts entered into by a company that it is not authorized to enter (ultra vires, or "beyond its authority") may be deemed invalid. As a result, it is critical to determine whether or not the corporation has the authority to engage into the contract, as well as whether or not the individual signing on behalf of the corporation has that authority. To verify this information, obtain a copy of the contract's certificate of resolution allowing it from the board of directors and from the individual who signed it. Normally, board approval is sufficient to authorize the sale of corporate property; but, where the sale represents the majority of the company's assets, shareholder approval may be necessary.

For any new corporation purchasing real estate, it is critical to ensure that the necessary documents have been filed and that the corporation has been lawfully created; otherwise, the deed will be declared invalid due to the lack of an authorized grantor (grantor).

Dividends and other profits obtained by a corporation (other than a S corporation) are subject to special corporate income tax rates, and the investors are required to pay an additional tax on those dividends and other profits.

A closely held corporation is one in which the stock is owned by a small number of persons, all or most of whom are directly involved in the operation of the firm, and in which only a small amount of stock is held by outside investors. Corporations are subject to regulation in both the state in which they were formed and the state in which they conduct their business.

Artificial entities constituted by state law that have the authority to hold property and conduct business in their own names. They can purchase, sell, and enter into other contracts. Corporations, being legal entities, have a separate and distinct identity from their owners.

Corporeal property

Buildings, fixtures, and fences are examples of tangible real or personal property. Rents, easements, and goodwill are examples of incorporeal property.

Correction deed

Any sort of deed used to repair an earlier erroneous deed, such as when the grantor's name was misspelt or a small factual error was made. A correction deed, for example, is used to correct an incorrect description of a lot discovered when a property is resurveyed. The corrected deed is subject to the applicable recording charge despite being exempt from the transfer tax. Grantors who made a covenant of further assurance in the original deed may be obliged to execute a corrective deed. A suitable marginal note is added to the original deed. Also known as a confirmation deed, a reformation deed, or a confirmatory deed.

Correction lines

The way the earth's surface is curved is taken into account in the government survey method. Every fourth township line, every 24 miles, is used as a correction line for cost recovery. This line is used to measure and correct the distance between the north and south range lines to a full six miles.

Corrective action

Changes done to put the project's projected performance in line with the planned performance.

Corrective maintenance

The routine maintenance of a building and its equipment on a daily basis.

Correlated returns

Returns on one or more assets that tend to move in tandem as market circumstances change.

Correlation coefficient

A relative measure of an asset's tendency to change with the return of another asset over time.

Correlative water right

A modern law practiced in some jurisdictions that stipulates that a riparian owner with rights in a common water source is only entitled to a reasonable portion of the overall water supply for beneficial use of the land (such as irrigation). The owner has the sole right to take all of the water for certain beneficial uses under the appropriative water right, which is popular in various jurisdictions.

Correspondent relationship

A commercial arrangement in which a big lender offers to buy loans or review loan requests from a mortgage banker or mortgage broker.

Corridor

A corridor or hallway that serves as a common route to an exit. There is only one way to get out of a dead-end corridor.

Corridor development

Plans call for "finger development" of urban dwellings with rural land in between.

The expansion of enterprises or plants along major thoroughfares that connect two large industrial or commercial hubs that are some distance apart.

Cosigner

An additional signatory to a contract or note who is equally bound to perform as the contract's major party. A lender may require a barely eligible applicant to find a cosigner who will be responsible for paying the loan if the borrower defaults.

Cost approach

An assessment approach that determines the worth of a property by adding the cost of reconstruction to the cost of land.

An appraisal approach in which an estimate of land value is added to the expected cost of recreating existing improvements on the land (net of accrued depreciation) to obtain a value estimate for the entire property.

A method of valuing property based on the cost of reproduction or replacement of the improvement. The cost approach is also known as the summation approach since it entails putting together the independently determined building and land values.

The main processes are to (1) estimate the land value, (2) estimate the new building replacement cost, (3) deduct all accrued depreciation from the replacement cost, and (4) add the estimated land value to the depreciated replacement cost.

The land is assumed to be unoccupied and available for development when estimating land value. The appraiser determines value by comparing sales of similar land. Although land does not deteriorate, its value is affected by its current use and external influences.

The comparative cost method is frequently used to estimate reproduction costs based on current market costs to construct buildings that are equivalent in design, type, size, and construction quality.

This reproduction cost is reduced by depreciation owing to physical deterioration, functional obsolescence, and external obsolescence. Finally, the anticipated land value is added to the building's depreciated cost. The current replacement cost of the building plus the value of the land tends to establish the top limit of a property's value because most individuals will not pay more for a property than it would cost to buy a similar site and erect a similar structure on it.

A method for determining the value of properties with negative cashflow.

Cost basis

The original price of an item, generally the purchase price, is utilized to calculate a capital gain.

Cost controlling

Keeping track of changes to the project's budget.

Cost estimation

calculating the cost of resources required to fulfill project tasks

Cost recovery

A type of deduction that applies to real and personal property used in a trade or business or held to generate revenue. The Economic Recovery Tax Act of 1981 replaced depreciation with this approach, which applies to new and used real or personal property "put in service" by the taxpayer after 1980. Unlike depreciation, cost recovery is not based on a property's "useful life" or "salvage value." Instead, the entire cost (of the depreciable fraction) of property might be deducted over an arbitrary time period.

The Tax Reform Act extended the cost recovery periods for depreciable assets such as real estate. The cost recovery term for residential rental property has raised to 27.5 years, and the cost recovery period for nonresidential real property has extended to 39 years. The act also includes a mid-month convention, which states that property is considered to have been "put in service" in the middle of the month, regardless of the day it was actually placed in service.

Cost recovery allowance

An income tax provision that allows for the recovery of capital expenditures on property with a finite useful life that was bought on or after January 1, 1981 and employed in a trade or company or for income generating.

Cost recovery assets

Assets that are eligible for tax-deductible cost recovery allowances.

Cost segregation

A tax method that separates personal property from real property. Owners frequently do this because personal property can be depreciated at a faster rate if it is segregated from real estate and other personal property.

Cost-of-funds index

An index for adjustable-rate mortgages that is based on the weighted average of interest rates paid by thrift institutions on deposits (savings and loan associations and savings banks).

Cost-of-living index

An index number representing the relative change in the expense of living between two specified time periods (using a factor of 100). Escalator provisions in commercial leases typically relate to an increase in maintenance costs proportional to the rise in the cost of living or the U.S. Department of Labor's consumer price index (which uses a 1982 reference base of 100).

Cost-plus contract

A construction arrangement in which the owner pays the cost of all labor and supplies plus a fixed amount based on a set percentage of the cost, which represents profit and the contractor's overhead. A fixed-price contract is in contrast to this sort of contract.

Cotenancy

Two or more people own an undivided interest in the same property in this type of concurrent property ownership. Two or more people or other entities are said to be co-owners of a piece of real estate when title to it is vested in (or owned by) them.

There are various types of co-ownership, each with its own set of legal requirements. Tenancy in common, joint tenancy, tenancy by the entirety, community property, condominium and cooperative ownership, and partnership property are the most frequent kinds of co-ownership recognized by the various states.

The title to real estate is held in the names of two or more owners.

Counseling

A real estate specialization that entails offering expert, unbiased advice and professional help on a wide range of real estate issues. A counsellor strives to guide the client in making decisions among possible courses of action.

Providing professional, unbiased guidance on a wide range of real estate difficulties affecting any or all company sectors, such as merchandising, leasing, management, planning, financing, appraising, court testimony, and other related services.

Counselor of real estate (CRE)

The Counselors of Real Estate award this professional credential. Appendix B is available.

Counter flashing

When counter-flashing is constructed into a chimney and overlaps a replaceable piece of base flashing, two parallel pieces of flashing are utilized together. The counter is blinking. A flashing that covers shingle flashing and prevents moisture from entering a chimney.

Counterfort

A general contractor who specializes in renovation projects.

Counteroffer

An offer made in reaction to an offer, rather than an acceptance.

In response to an offer received from an offeror, a fresh offer is made. The impact of a counteroffer is that it rejects the previous offer, which may only be accepted again if the offeror repeats it.

If the seller makes any change to the offer after the buyer submits it for acceptance, the seller's adjustment becomes a counteroffer, which terminates the original offer and prevents subsequent acceptance. The seller has made a counteroffer if the seller changes the suggested closing date from 10:00 AM November 10, 2013 to 1:00 AM November 10, 2013, initials the change, and signs the sales contract. The parties' roles are then reversed. The buyer is under no obligation to accept or reject the counteroffer. The buyer must accept the terms of the counteroffer within a set amount of time to constitute a legitimate contract. It's important to note that simply asking if the offeror would be ready to amend the conditions of an offer does not constitute a rejection or counteroffer.

The seller would typically make a revision to the buyers' sales contract, initial and date the change, and send it to the buyers for acceptance. The buyers would effectively be making a counter-counteroffer if they wished to change the changed contract.

It's bad practice to rely on a contract with a lot of initialled revisions because it's impossible to tell whether a contract is genuinely valid. A written counter offer should be signed by both parties. If a buyer desires to respond to the seller's counteroffer form with a counteroffer, the buyer should typically start the process over by completing a new sales contract offer.

Each update should be time-dated because it is critical to be able to determine the sequence of events. In addition, the broker must give the signing party a copy of the revisions at the time they are made, not later.

When the first offer is rejected, the buyer or seller makes another offer.

Counterpart

An exact replica of the original document

A copy or duplicate of a document. Sometimes used to prepare conveyance documents when there are multiple parties and not enough time to send a single document for signatures to parties all over the country. In this case, a copy of the document can be sent to each person who needs to sign it, and then all the copies that have been signed can be recorded as one document. Most of the time, counterparts will be treated as a single document, even though they were not made at the same time.

County

A part of a state that has its own government. Usually, it is the biggest administrative unit in a state.

Course

In a wall, a continuous horizontal layer of similar-sized building material.

Court

1. A narrow street that is partially or completely surrounded by buildings, giving the impression of a tiny open square.

2. An open space with walls or buildings on two or more sides.

3. A court of law is an official session for the administration of justice. The United States Supreme Court is the highest court in the land, followed by the courts of appeals and circuit courts, which are intermediate courts, and district courts, which are lesser courts.

Specialized courts in the United States include the United States Tax Court, Patents Court, Bankruptcy Court, Court of Claims, and Customs Court.

Although state court systems differ, the core elements are similar to those of the federal system. In most cases, there is a supreme court; intermediate courts, known as appellate courts; and subordinate courts, known as district courts, county courts, lower claims courts, or small-claims courts. There are also courts that deal with traffic infractions, probate, and land disputes.

Courtesy to brokers

The practice of listing and cooperating brokers splitting commissions.

The listing real estate broker for a large condominium building, for example, may work for the developer. If the buyer's broker (called the selling broker) is a client of another broker, the listing broker may extend "courtesy" to the buyer's broker (called the selling broker) and divide a portion of the commission with the other broker. It is not uncommon for developers who own their own brokerage firm to refuse to provide politeness to "outside" brokers unless the project is experiencing marketing issues.

Covariance

An absolute measure of an asset's proclivity to fluctuate with the returns on other assets over time.

Cove molding

A concave molding that is used to finish interior corners.

Covenant

A contract between a landlord and a tenant, or a vendor and a buyer, that specifies what can and cannot be done to a property.

A written agreement that stipulates certain uses or non-uses of the property between two or more parties. Covenants can be included in leases, mortgages, contracts for deed, and deeds, among other real estate instruments. For breach of a covenant, damages may be sought.

Covenants found in warranty deeds (general and special) are promises made by the grantor that bind both the grantor and the grantor's heirs and assigns, guaranteeing that the title is of a certain character and that if the title is found to be of a different character, the grantor or the grantor's heirs will compensate the grantee for any loss suffered. Covenants are indicated in many areas by the use of words like "convey and warrant," "warrant generally," or "warrant specially" in a deed. The following are some common warranty deed covenants:

Acts of the grantor are prohibited: This clause appears in special warranty deeds where the grantor is a fiduciary, such as an executor, trustee, or guardian. In effect, the covenant declares that the grantor has done nothing to encumber the property and that she provides no assurances about the title prior to assuming ownership. This agreement does not "follow the land" (it does not benefit future grantees).

Seisin's Covenant: The grantor assures that he owns, is in possession of, and has the legal right to sell the property at the time of the conveyance. This covenant applies at the time of transfer and is only broken when the deed is delivered. If there is a lien on the land, the covenant is not broken; nevertheless, it is broken if the title is held by a third party or if the grantor does not hold the full extent of the estate he purports to transmit. When the grantor warrants that he "is seized of” a fee simple estate, but merely owns a life estate, the covenant of seisin is broken.

This covenant guarantees that the property is free and clear of any and all encumbrances not specifically excluded in the deed. As a result, any encumbrances must be stated as exceptions in the deed. Otherwise, if there is an encumbrance on the land that is not excluded in the deed, the grantees might recover their costs of paying off the encumbrance, such as unpaid taxes. This covenant, like the covenant of seisin, limits any recovery to the price paid and is broken, if at all, at the time of deed delivery. It encompasses all encumbrances, both known and unknown to both the grantor and the grantee. When there are open and visible physical encumbrances, such as an easement for power lines or an irrigation canal, the covenant against encumbrances is not broken.

Covenant of quiet enjoyment: The grantor guarantees that the grantee, as well as the grantee's heirs and assigns, will have the right to a property free of third-party acts or claims. Innocent grantees are thus shielded from title conflicts between the grantor and a previous claimant. Only an actual or constructive eviction by reason of a title superior to the grantor violates the vow of peaceful enjoyment.

Covenant of warranty of title: This covenant guarantees the grantee that the grantor will cover the costs of defending the grantee's title to the property if someone else makes a legitimate claim to it. If the covenant is breached because a third party has a better title, the grantee has the right to sue for damages up to the value of the property at the time of sale. "That the grantor will eternally warrant the title to said premises," it normally says.

Further assurance promise: This covenant requires the grantor to take any steps necessary to complete the grantee's title. It can also be used to compel a grantor to execute a correction deed if the original deed contains an error. When the grantor refuses to pay the requisite expenditures and charges for getting the required documentation, such as failing to record a satisfaction of mortgage when required or failing to obtain a quitclaim deed releasing an unrecorded interest in land or a dower interest, the covenant is breached. This covenant is normally enforced through a specific performance action rather than a damages suit. Also known as the further help covenant.

A promise entered into a deed or other document by which a party commits to do or not do specified things.

This is a formal promise.

Covenant against encumbrances

A guarantee that the property is free of liens, easements, or other restrictions, save as specified in the deed.

Covenant against removal

The mortgagee's restriction forbidding the mortgagor from removing or destroying any portion of the building without the lender's permission.

Covenant against waste

A limitation imposed by a mortgagee that prevents the mortgagor from allowing the building to degrade throughout the mortgage tenure.

Covenant not to compete

A promise made by a company seller not to compete against the purchaser in a particular geographic area for a period of time If the seller decides to launch a competitive firm, the purchaser is protected from losing all of his or her previous clients. It also enables the purchaser to amortize and write off the payment for the covenant over the course of the covenant's term of performance. Similar provisions have been incorporated into employment contracts for real estate brokers.

Such covenants, on the other hand, are often not favoured by the courts. Noncompete provisions are rigorously reviewed for probable violations of antitrust laws as well as for being unreasonably restrictive of a person's ability to do business or hold a job.

A contract that prohibits one party from competing against another.

Covenant of insurance

A mortgage condition that requires the mortgagor to have appropriate insurance coverage against fire and other specified perils.

Covenant of quiet enjoyment

A guarantee that the property will not be taken by someone who has a stronger claim to title.

Insurance protects a home owner or tenant from being deprived of his or her right to occupy a property.

Covenant of Right to Convey

The time grantor has the legal authority to convey the title.

Covenant of Seisin | Seizin

Assuring the grantee that the grantor owns the title being conveyed.

A guarantee that the grantor actually holds sound title and has the authority to pass it to the buyer.

A mortgage provision in which the mortgagor certifies that he or she is the legal owner of the property being mortgaged.

Covenant of title

The grantor's pledge or guarantee in conjunction with the transfer of title.

Covenant of Warranty

Converting a loan from an adjustable to a fixed rate schedule.

Covenant to pay taxes

A frequent mortgage agreement in which the mortgagor agrees to pay any property taxes and assessments incurred against the property throughout the mortgage term.

Covenants

Promises that property will be used in a specific way or will not be utilized at all.

Legally binding commitments for which the grantor is held accountable.

Covenants and conditions

Covenants are unconditional pledges written in contracts, the breach of which entitles a person to damages. Conditions, on the other hand, are contingencies, qualifiers, or occurrences that would result in the acquisition or loss of an estate or property right (such as a fee simple). Covenants are denoted by terms like promise, undertake, and agree, while conditions are denoted by words like if, when, unless, and given. Because these are merely limitations and do not constitute duties, failing to meet the condition does not entitle one party to seek damages from the other.

Conditions might be either preceding or after. A condition prior must occur or be accomplished before a right or estate is acquired; a condition subsequent results in the loss of a right or the termination of an estate upon its occurrence.

A lease, for example, may include covenants to fix or pay truces, assessments, or rent. If the tenant violates a covenant, the landlord may sue for damages. If the lease contains a condition and the tenant violates it, the leasehold interest is terminated. Thus, a business lease sometimes carries a provision in a defeasance clause stating the tenant will forfeit the lease if the renter is declared bankrupt or uses the premises illegally.

Promises can be conditions or covenants. Concurrent conditions in contracts for sale, for example, are also covenants. The seller's delivery of the deed and the buyer's payment of the purchase money are concurrent conditions; they are also covenants. Thus, the buyer might sue the defaulting seller for damages only after meeting the tendering performance condition (by placing the purchase money into escrow).

Covenants running with the land

Covenants are agreements that become part of the property rights and help or bind each new owner. For the burden of a covenant to run with the land, it must have been made in writing by a promise between a property grantor and a property grantee, it must "touch and concern" the land, it must have been the intention of the original parties that the covenant run with the land, and subsequent grantees must know about the covenant. A deed might say that you can't build a pigpen on the property as an example of a restrictive covenant. Such rules are enforced privately, not by the government, and they may not break any laws.

Covenants, conditions, and restrictions (CC&Rs)

Private limits on the use of real property; simply called restrictions in certain jurisdictions, these must be enforced by homeowners' groups rather than municipalities. The rights and obligations of owners of condominium units, townhouses, PUDs, and similar associations are likewise governed by CC&Rs.

Cover note

For a newly purchased property, immediate insurance cover is often offered by an insurance broker on behalf of the insurance company.

Coverture

A phrase used in common law to describe a woman's legal standing during marriage.

Cramdown

A provision that allows a bankruptcy reorganization plan to be implemented in certain circumstances without the permission of all creditors.

Crashing

Taking measures to shorten the project time at the lowest possible cost.

Crawl space

A shallow is a space beneath a building's living quarters that is surrounded by a foundation wall and has a dirt floor.

1. The area between the first floor and the ground surface, which is common in houses without a basement.

2. The space between the top floor's ceiling and the roof, which frequently serves as an attic.

Creative financing

A broad word that encompasses a wide range of creative financing approaches for property financing.

Any type of financing that isn't a traditional level-paid amortizing loan.

Credit

The ability to raise capital.

1. A person's obligations that are due or will become due.

2. In closing statements, that which is owed by either the buyer or the seller—the inverse of a charge or a debit. The credit appears in the accounting statement's right-hand column.

Credit bid

Amounts outstanding under a defaulted promissory note that a lender can bid at a foreclosure sale of one of its secured properties.

Credit default swap

A contract in which the protection seller agrees to pay the settlement sum to the protection buyer if specific credit events occur. This provides protection to the protection buyer in exchange for the protection buyer paying a premium to the protection seller.

Credit enhancement

A tool or method that works in tandem with mortgage collateral to improve the credit quality of mortgage-backed or other securities and, as a result, support the securities' desired credit rating.

Credit rating

A rating assigned to a person or organization to indicate creditworthiness based on current financial state, experience, and historical credit history.

A report obtained from a credit bureau by a lender in order to learn about the borrower's credit habits.

Credit report

A report that lists current and previous debts, as well as the borrower's ability to make timely payments and information obtained from public sources such as tax liens and judgments.

Credit reporting firms such as Du & Bradstreet, TransUnion, Equifax, and Experian maintain and issue this information.

Credit Score

A numerical expression that represents a person's creditworthiness based on a level analysis of their credit files. A credit score is primarily determined by credit report information obtained from credit bureaus.

Credit Scoring

A snapshot of a borrower's credit history and current use of credit at a given time, based on information kept by credit bureaus and other sources and calculated by a math formula. Sample scores range from 400 to 900, and the lower the number, the higher the risk of default. Loans are often given a letter grade based on the borrower's credit score, the number of missed mortgage payments, and/or bankruptcies. The lender will charge the borrower a higher rate of interest the lower the letter grade.

The statistical assessment of borrower creditworthiness, which has essentially replaced the use of credit reports and the subjective assessment of payment timeliness and debt levels.

Credit tenant

To obtain finance for a shopping mall, strong national retailers with high credit ratings are required.

Companies with general debt obligations rated "investment grade" by one or more U.S. rating agencies, such as Standard & Poor's and Moody's.

Credit union

Members (labor unions, clubs, churches, REALTORS®) deposit money in savings accounts, which provide greater interest rates than other savings institutions. Credit unions are exempt from paying income taxes. They primarily only issue short-term installment loans, but they may make loans backed by a lien on real property, such as second mortgages, on rare occasions. Credit unions are a fantastic place to look for both home renovation and mortgage loans.

Credit unions can provide 30-year real estate loans to members to finance their primary residences under the Federal Credit Union Act. Credit unions can also provide FHA/VA loans with interest rates that are comparable to market value. The National Credit Union Share Insurance Fund guarantees deposits up to $250,000 per depositor in federally chartered and state-chartered credit unions that apply and qualify. The fund is administered by the National Credit Union Administration (NCUA), a federal body that regulates and supervises the activities of federal credit unions.

Depository institutions whose charters limit them to serving a certain group of individuals who have a similar relationship, such as workers of a firm, government entity, labor union, or trade organization.

Creditor

Amounts outstanding under a defaulted promissory note that a lender can bid at a foreclosure sale of one of its secured properties.

A person who owes money to another.

Cricket

Another roof built on top of the main roof to raise the slope of the roof or valley. So that water can drain away from the chimney joint.

Cripple

A vertical frame of 2 by 4 inches installed above a window or door.

Critical activity

Any action or event on a critical path(s) that must begin and end on time in order for the project to be completed on time.

Critical path

The sequence of actions that defines the project's completion date.

Critical path method (CPM)

A network analysis approach for predicting project length by determining which sequence of activities (which path) has the least degree of scheduling freedom (the least amount of float).

Cross bridging

Before applying drywall mud, formed sheet metal covers the outside corners of the drywall.

Cross Tee

A "T"-shaped metal beam used in suspended ceiling systems to ensure the spaces between the main beams.

Cross-collateralization

A clause in a mortgage that allows the collateral for one mortgage to be used as collateral for other mortgages in the structure. This is a credit enhancement approach for strengthening the protection given to a lender by adding value to the structure. It's most commonly encountered in the context of commercial mortgage loans.

Cross-defaulting clause

A condition in many junior mortgages that states that if one mortgage defaults, the mortgage in which the phrase appears will also default.

Cross-sectional surveys

One-time sample from a population of interest for study. All elements are measured at the same time. Cross-sectional surveys give a "snapshot" of the variables being observed at the time of the survey.

Crown diameter, visible

A tree crown's apparent diameter as seen in a vertical aerial shot.

Crown molding

Encloses a large family of moldings that are intended to gracefully flare out to a finished top edge.

Cubicfoot Method

The process of calculating the cost of reproduction or replacement based on the volume of the structure.

Cul-de-sac

A blind alley is a street that is only open on one end and usually has a circular turnaround on the other end. In place of the typical grid plan with several junctions, cul-de-sacs have become popular in residential subdivisions.

Culvert

A drain or sewer that runs beneath a road, rather than immediately over it, to protect it from runoff or sewage.

A construction that allows water to flow beneath a road, railroad, trail, or other barrier.

Culvert Round

A 15- to 18-inch corrugated drain pipe built beneath a driveway and parallel to and near the roadway.

Cumulative use Zoning

Although it is not the type of use approved for the area, this zoning type allows for a higher priority use.

Cupping

A sort of warping that causes boards to curl up at the edges.

Curable depreciation

Depreciation that can be fixed at a cost that is reasonable and economic.

A property's deterioration that can be remedied.

Curb

A skylight is affixed to a short elevation of an outside wall above the deck of a roof.

Curb appeal

The first impression you get of a property, whether it's good or bad. This is usually from the street as you drive by.

On first impression, a property's aesthetic image and look are transmitted.

Curb line

On a road, the distinction between automotive and pedestrian rights of way.

Curb stop

A vertically buried cast iron pipe with a cover, near the yard's water faucet.

Current yield

Divide your current income by the cost of your investment.

Curtesy

A husband's interest in property owned by his wife at the time of her death, which is recognised in some states. The husband has no curtesy interest in his wife's property throughout her lifetime and hence does not need to sign off on any transfer deed executed by the wife on his curtesy rights (as a wife would on her dower rights). Depending on state law, a husband may have a vested life interest in one-third of his wife's real estate after her death. If a husband has abandoned or neglected his wife, he is usually not entitled to courtesies.

An interest in his wife's property held by a husband.

Curtilage

The lawn or a patio are examples of enclosed ground area surrounding a home.

Curvilinear

Having boundaries that are formed by curving lines. The employment of curves in street and lot layouts by subdivision developers, as opposed to the use of earlier grid patterns, is typically referred to as "curvy." This form of design pattern is more aesthetically beautiful, provides more seclusion, and is associated with fewer traffic accidents than other types.

Cushion

A sum of money incorporated into a contractor's bid for a project to safeguard the contractor from unanticipated events such as delays in governmental approvals, bad weather, and bidding errors.

Custodial maintenance

The day-to-day cleaning and maintenance necessary to preserve a property's value and renters happy.

Custody

1. The upkeep and maintenance of something.

2. Ownership of a property, as when a mortgagee transfers foreclosed property to the Department of Veterans Affairs (if it was a VA loan). This particular VA phrase may or may not include the property's right of possession.

Custom construction

A building project that takes place on property owned by the final purchaser and involves the construction of a structure to the exact requirements of the purchaser-user.

Customer

The third party who is not being represented by the agent. For example, the seller is the client of the listing agent. The buyer who doesn't have a broker can be a customer for the broker. On the other hand, if the broker is working for a buyer, he or she can "work with" a seller who is not being represented. Most state laws say that real estate licensees who work with customers must use reasonable skill and care, tell customers important and relevant facts about the property, say who will pay them, and do any other things that the law or regulations say they must do.

Customer trust fund (CTF)

An impound account used to set aside funds to cover recurring obligations such as real estate taxes, insurance premiums, leasing rent, and maintenance costs. Many lenders require the borrower/owner of a condominium apartment or other dwelling to keep such money on hand in order to assure timely payment of carrying charges.

Cut and fill

Excavation of a portion of an area with the excavated material used for embankments or fill areas on or near the property.

Cutin brace

Nominal 2" thick members, roughly 2 by 4's, are cut diagonally between each screw.

Cyclical movement

Shifts in the national economy's business cycle from prosperity to recession, depression, recovery, and back to prosperity.

Glossary Index

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