Terms Beginning With - D
Property Development & Investment Glossary, Terms & Definitions
The part of a wall below the dado rail and above the skirting board.
The money a person can get in a lawsuit if they were hurt or their property was damaged because of someone else's actions or lack of action. It is hard to figure out the right amount of damages for different kinds of injuries. In cases of fraud, courts often use the "benefit-of-the-bargain" rule, which says that the difference in cash between the real value of the property and the value that was falsely told to the buyer is what the buyer is owed as compensation. In some cases, the courts use the "out-of-pocket" rule, which says that the person who is suing for damages gets the difference, if any, between the actual value of what he or she paid (called the "consideration") and the actual value of what was received.
When a buyer backs out of a real estate contract, the seller often keeps the buyer's deposit as compensation. When people sign a contract, they may agree that the party that breaks the contract will pay a certain amount to cover any damages. Damages that a landlord could get from a tenant who broke a lease agreement would be the difference between the agreed or contract rent and the price the landlord would have to take in order to re-rent the property quickly. The plaintiff is always the one who has to prove damages.
Damp proof course DPC
A waterproof layer that is put under masonry walls to stop water from getting in.
To keep moisture out, a layer of plastic, lead, asphalt, or other water-resistant materials is applied between the interior and outside walls.
Application to building walls and floors to prevent moisture from entering the interior. Type of moisture-control method.
The top of a fireplace has an adjustable valve that controls the flow of warm gasses into the chimney.
The chimney is surrounded by a metal door.
Refers to information that has been gathered and put in a way that makes it easy to process and analyze.
The amount or degree to which data points in a set are spread or dispersed around their mean (also referred to as variation about the mean).
A file or files containing associated geometric and attribute data; a collection of related data.
The date on which a legal document is signed. Several dates proving different events, such as the day the parties signed the document, the day the document was acknowledged, the day it was recorded, and/or the day an action begins or finishes, are frequently included in certain agreements, such as deeds or long-term leases (e.g., option).
Most real estate contracts do not require a date to be valid. A date is helpful for proving that a deed was delivered on the specified date, deciding priority two unrecorded deeds, creating performance time constraints (such as "seller has 48 hours to accept from the date of this offer"), and proving that the statute of limitations has run.
If the parties to a purchase agreement want to close on a specific date (with no extensions), they should specify that date and specifically state that "time is of the essence."
The date may be essential in deciding who is liable for a casualty loss, personal injury to a guest, or liability for a special assessment in a contract for deed.
Avoid ambiguity by stating terms clearly, such as "the seller pays up to and including March 28." Unless the phrases to and including are used, a period that runs "to" a specific date does not include that date. rather than "Use 11:30 am or 11:30 pm instead of "to 12:00 am," which can cause confusion as to whether it is midnight or noon. Instead of mentioning "a 90-day period," "To prevent debates over whether it is calendar days or 30-day months, and if the first and last days are counted, specify a particular termination date.
The appraisal date, also known as the valuation date, is the day on which the value estimate is applied ("date of value"), rather than the date on which the report is published ("date of report").
Date of settlement
The day on which a vendor is required to deliver over a property to a buyer under the terms of the contract.
A reference system for measuring something else, such as horizontal or vertical position.
The datum plane is a level surface to which heights and depths are measured in relation to. The datum might be an assumed point (such as a monument), or it can be a natural feature such as a tide pool (that is, mean sea level).
Not attached to anything at all, the end of a pipe
Days on market
The number of days it takes to sell a property from initial listing.
The time between listing a property and getting it under contract or taking it off the market.
Doing business as is a phrase that is used to identify a trade name or a made-up business name.
Breast-high diameter: the diameter of a tree at 412 feet above the ground.
De facto is Latin for "in fact," as opposed to de jure, which means "by law." A de facto corporation is a business entity that has been formed despite the fact that the technical papers required by state law to constitute a valid company have not been filed.
This is the bare minimum. Transactions of less than $250,000, for example, are exempt from requiring an appraisal by state-licensed or state-certified appraisers under federal requirements.
De minimus settlement
An agreement between the Environmental Protection Agency and a person who may be accountable for dangerous substances under the Superfund law. The EPA is considering lowering the amount a landowner must contribute to the cost of hazardous waste cleanup if the landowner acquired the property without knowing or having cause to know about hazardous waste disposal.
Unlike a spring bolt, a deadbolt can only be opened by turning the lock cylinder with a key, making it a unique locking mechanism.
The part of a window unit that doesn't move and can't be opened or closed.
A single-entry street that sometimes leads to a cul-de-sac.
A deadline that must be reached.
An I.R.S. designation for someone who buys and sells real estate on a regular basis. If, at the time of the property's sale, the person held the property "mainly" for sale to customers in the ordinary course of business, the person is categorized as a dealer.
"Primarily" has been construed by courts to indicate "first and foremost." Any gains from the sale of property must be taxed at ordinary income rates, but losses can be deducted at ordinary rates. Furthermore, dealer property is not depreciable and does not qualify for IRC Section 1031 tax-deferred treatment or IRC Section 453, installment reporting of gains.
The position of a dealer is determined on a case-by-case basis. Depending on the details of each situation, one may be a dealer for some assets and an investor for others. Anyone who deals frequently must keep meticulous records of each transaction in order to establish their status as an investor rather than a dealer. The purpose for purchasing the property, the length of time the property was held, the number of sales activities of the owner, the existence of other income and other businesses, and the extent of improvements made on the property by the taxpayer are some of the IRS tests for determining dealer status. If the owner subdivides and develops the land, he or she is most certainly a dealer; but, there are exceptions, particularly with one-time subdividers.
To escape the passive income limitation on loss deductions, some real estate investors who actively manage their assets consider converting from investor to dealer status. Losses can only be used to offset income from other passive investments if an investor does not "materially participate" in the investment. Earned income, interest, and dividends cannot be used to offset passive losses.
A person who purchases and sells real estate.
One who buys and sells property interests for one's own account in real estate. Gains on dealer sales are recorded as regular income rather than capital gains.
Real estate owned for the purpose of resale to others is taxable in the United States.
A long-term note or bond issued as proof of debt. A debenture, unlike a mortgage note, is not secured by a specific property. In most cases, the issuer enters into an indenture or agreement with a trustee, such as a bank. The amount, interest rate, term, and unique features of the bond issue, such as its capacity to be expedited or converted, are all specified in the indenture. Many issuers employ subordinated debentures to avoid limiting future borrowing power - that is, loans that can be subordinated to other corporate loans under the conditions of the debenture. Sinking fund debentures need a particular amount to be escrowed each year in order for money to be available for redemption.
Fannie Mae issues debentures to fund mortgage acquisitions in the secondary mortgage market. If a borrower defaults on an FHA loan, the government provides the mortgagee with interest-bearing debentures once the title is transferred to the FHA.
Bonds backed by the borrower's income.
The opposite of a credit, a charge appears in the left column of an accounting statement or balance sheet. In a real estate transaction, it's used for bookkeeping and creating the closing statement.
A lender's responsibility to be repaid by a borrower.
Someone owes someone else money.
The practice of progressively paying off a debt by making periodic payments to the creditor.
The annual percentage of the loan's original principal amount that must be paid in order to fully repay interest and principal over the loan's term. The constant can be stated as a yearly or monthly percentage. A debt service constant is a term that is used sometimes.
Debt coverage ratio (DCR)
Annual net income divided by annual debt service. For example, a lender may require a qualified corporate borrower to have net income equal to 1.5 times the loan's debt service.
A lender's ratio that represents the loan amount in terms of net operating income, often between 1.05 and 1.30.
The link between a project's yearly net operational revenue and the requirement to repay borrowed cash in principle and interest. Debt coverage ratios are frequently used to assess a lender's margin of safety when it comes to mortgage loans.
A measure of how much NOI may fall before it becomes unable to service the debt, defined as net operating income minus debt service.
Ratio of annual debt service to annual net operating income. Divided by the cost of paying off the debt each year.
Investing with borrowed funds as opposed to one's own funds. Typically, in real estate, the property itself serves as security for the obligation.
A court order that says you don't have to pay money. Even though the Mortgage Debt Relief Act of 2007 gave tax relief, if a lender decides to forgive all or part of a promissory note payment after December 31, 2013, such as in a "short sale," the Internal Revenue Service requires the lender to file a Form 1099. The seller/borrower will have to pay taxes on the amount of debt that was forgiven, which is treated as ordinary income.
The sum of money required to make periodic principal and interest payments on an amortized loan or debt. If the periodic payments are constant and equal, a portion will be used to pay off interest and the remaining to reduce principal.
The monthly charge of repaying a mortgage loan, which includes interest on the outstanding balance as well as, in many circumstances, principle reduction.
The principle, interest, and additional fees mentioned in the credit agreement, as well as the regular installments on a loan.
Payments made to a lender Debt service responsibilities may include payments of simply interest or payments of both principal and interest in order to completely or partially amortize a debt over a predetermined time.
How much it costs to keep a loan.
Debt Service Coverage Ratio (DSCR)
The annual net cash flow created by an income-producing property divided by the annual debt service payments needed under the conditions of the mortgage loan or loans taken out to finance the property. This is a measure of a property's capacity to cover debt service payments and is usually represented as a multiple. If this ratio falls below 1.0, the property's cash flow will be insufficient to support debt payments.
Debt service ratio
Most of the applicant's wages will be enough to pay back the loan over the agreed loan term. Most lenders set a maximum DSR limit of between 30 percent and 33 percent, but this can vary from lender to lender.
Debt to equity ratio
The link between the total amount owing to the lender and the owner's invested capital; also known as the leverage ratio.
The proportion of borrowed money to equity funds.
A requirement from the bank that the borrower put up a small amount of cash before the loan can be given.
Debt to income ratio
The part of a borrower's income that is used to pay back debt.
Debt yield ratio
A mortgage underwriting ratio for loans secured by income-producing real estate. The ratio is calculated by dividing the property's net operating income by the amount of the mortgage debt. It denotes the cash flow rate to the loan amount if the lender becomes the owner.
A person who owes money; a borrower, a note maker; a mortgagor.
A deceased person, particularly one who has recently died.
The decibel (dB) is a unit of measurement for the loudness of sound based on the pressure created in air by a noise.
A methodical approach to discovering opportunities that have the potential to contribute significantly to defined investing goals.
A patio or porch is an open, flat flooring area that may cover a roof or surround a hot tub or swimming pool.
A way to keep the sheets of plywood or wafer board on the floor.
The first person or company to build a condo, PUD, or townhouse community. This person or company records all the necessary documents, including the CC&Rs.
Under state law, the developer of a condo must usually file and record this legal document in order to make a condo. The declaration usually includes a detailed description of the land where the project is located, whether the land is owned outright or leased, a description of the apartments, common elements, and limited common elements, a statement about how the building or buildings and apartments will be used, including any restrictions, and a statement about other detailed legal requirements, such as how the declaration will be served and how it can be changed. Usually, the declaration must be recorded, along with a true copy of the project's bylaws and a condominium map that shows the floor plan, elevations, and other things. Most of the time, the developer must also file a master deed or lease.
A master deed is a legal document that has important information and legal descriptions about a condo building.
Declaration of covenants
A document that is entered in the public records with a subdivision's plat map. It contains a list of the subdivision's restrictive covenants.
Declaration of restrictions
A list of all the rules, conditions, and restrictions that apply to a piece of land. When the subdivision plat is recorded, restrictions can be written on the map or plan or, if there are a lot of them, on a separate document called a declaration. Usually, the restrictions aim for uniformity by making sure that all lot owners follow the same building rules and restrictions. For example, the CC&Rs might say that lot owners have to build homes worth more than a certain amount or get approval from an architectural control committee before building. Once written down in the declaration, these rules stay with the land and apply to all future lot owners unless they are lifted after a certain amount of time has passed or by agreement of everyone who stands to benefit. If another owner breaks any of the rules, the owner can make the other owner pay for it.
Common parts of a declaration of restrictions are the following:
- "Every building or other structure must be built, put up, and kept in strict accordance with the plans and specifications that have been approved."
- "No building can be built on a lot closer than 35 feet to the street lot line, 30 feet to the back lot line, or 10 feet to the side lot lines," the law says.
- "No building or structure may be taller than 25 feet, measured from the highest natural grade at any point on the foundation of the structure to the highest point of the roof."
- "No animals, livestock, or poultry of any kind shall be raised, bred, or kept on any land in the subdivision except by special permit issued by the board of directors. But a reasonable number of dogs, cats, or other common pets can be kept without a permit."
- Restrictions can't break the law, like if they have to do with race or religion. They should be carefully written so there is no room for confusion. For example, if trailers aren't allowed, does that mean mobile homes are, too? Is there a swimming pool or a fence in the word structure? How does a home business work?
A document that is used to put restrictions on property on the public record.
Declining balance depreciation
A technique of depreciation in which the depreciation deduction is calculated by applying a rate to the remaining balance.
Declining balance method
A technique of calculating yearly depreciation or cost recovery allowances that offers the largest allowance in the first year of ownership and gradually decreasing allowances in subsequent years.
A way of keeping track of depreciation for income tax purposes that gives larger deductions in the early years of a property's life than a straight line. This method applies to property that was put into use before 1981.
In the IRS percentage tables used to figure out ACRS depreciation deductions for personal property, the declining-balance method of calculation is used. The 3-, 5-, 7-, and 10-year classes use the 200 percent declining-balance method and switch to the straight-line method at the right time. The 15- and 20-year classes use the 150 percent declining-balance method and also switch to the straight-line method.
A judgment of a court of equity requiring the terms of that judgment to be carried out.
A court order or decision.
To transfer specific subdivision lands to the local government.
Property is transferred from a private owner to the government for public use. Examples include the commitment of roadways, parks, or other places to local governments during subdivision construction.
A single-appliance electrical circuit is what it sounds like.
The gratuitous handover of privately owned land to the public with the expectation that it will be accepted and used for public purposes. A landowner can devote his or her full fee simple interest or a public right-of-way across his or her property.
Statutory and common law dedications are the two forms of dedications. A statutory dedication is performed by recording a subdivision map that has been approved by local officials and expressly stating those areas dedicated to the public, such as parks and roadways, on the map.
A common-law dedication is a contract, requiring an offer, proven by the owner's purpose and an unequivocal act of dedication, as well as public approval. The dedication might be explicit (as when a developer or subdivider deeds roads to the county) or implicit (as when an owner agrees to the public use of his or her land for the prescribed term). (See deed of cession.)
For example, the Rockefeller Center shutters its streets and walkways for one day each year to prevent the public from claiming a dedication. This demonstrates that the public's right to utilize the property is merely a license, and that Rockefeller Center is not devoted to the public. Some property owners additionally install a metal sign in their walkway that reads, "Private Property, Permission to Use Revocable." Signs that read "No Trespassing" may not be enough to prevent the public from claiming a dedication.
The dedication fee interest is comparable to a qualified fee. For example, if a dedicated public use is abandoned, the fee may revert to the owner, while the government is prohibited from diverting the land to a new use.
The dedication of land such as streets and open spaces is sometimes required before a proposed development can be approved by the government. In other circumstances, rather than dedicating land, the developer can pay a fee.
The owner of a property gives it to the public for usage.
Giving land to the public by the person who owns it.
The amount used in business that has to do with running and managing a property.
Expenses that are considered ordinary and essential throughout the course of a tax year and which reduce the amount of taxable income and, consequently, the amount of tax due. Individuals can claim deductions for mortgage interest and real estate taxes, while businesses can claim deductions for automobile and office expenditures, among other things.
The seller signs a written document transferring title to a chunk of land.
A legal instrument that transfers ownership of real estate from one party to another. The document must be signed, attested, presented, and accepted before it may be accepted.
A type of written contract used to transmit a permanent ownership interest in real estate.
A written instrument in which a property owner, known as the "grantor," conveys and transfers ownership of real property to a "grantee." Warranty deeds (most generally used), grant deeds, contract and sale deeds, quitclaim deeds, gift deeds, guardian's deeds, executor's deeds, personal representative's deeds (probate), sheriff's deeds, commissioner's deeds (foreclosure), and deeds in trust are examples of deeds. Rather than a deed, title to leasehold property is transferred using a "assignment of lease" instrument.
A deed must have the following elements to be valid between grantor and grantee:
Grantor: The deed must designate a grantor who is at least 18 years old and of sound mind. If the grantor's identity is otherwise established, a mistake in spelling of the grantor's name or signature will not invalidate the deed. If there are numerous grantors, each must be mentioned as a grantor in the deed in order for each grantor's interest to be conveyed, or each may transmit separately in separate deeds. (See also grantor.)
Grantee: There must be a genuine grantee. A deed delivered to a company prior to its formal formation (by filing its articles of incorporation) is null and void for lack of a grantee, as is a deed issued to the estate of a deceased grantee. A deed given to a minor or incompetent person is valid. A fake person's deed is null and void, yet a fictitious person's deed is valid. It is customary to include the parties' marital status, minor status, trustee status, or personal representative status. A grantor cannot be the sole grantee, but he or she may pass the deed jointly to another individual or to the grantor's organization.
A deed is not a legitimate conveyance until the grantee's name is entered in it by the grantor directly, by someone at the grantor's request and in the grantor's presence, or by a duly authorized in written agent of the grantor.
Consideration: A deed should include some mention of consideration, albeit it does not have to be the real consideration in most cases. Most deeds include a small sum of money, such as "for $10 and other useful and valued consideration." However, fiduciary deeds must state the actual consideration, and the contract of sale must state the actual consideration in all situations.
Conveyance words: Conveyance language, such as "I hereby grant and convey," differentiates the deed from a mortgage instrument.
Legal definition: The land conveyed must be legally described, either by metes and bounds, lot, block, and subdivision, or by a government survey. Because the full legal description is already recited in the recorded declaration, the unit designation and post office address are usually adequate in a condominium deed. If the deed attempts to transmit more property than the seller actually owns (via an erroneous legal description), the deed is not void but is usually legitimate for the portion of the description that the grantor truly owns.
Signature: The deed must be signed by the grantor. If the grantee is taking over an existing mortgage or agrees to abide by a restriction term in the deed, the grantee must also sign. Some states require the signature to be witnessed and/or notarized. A date of execution is not required, although it is common and helps to determine the date of delivery.
Delivery is the grantor's final act, indicating his or her intention for the deed to take effect. To be effective, a deed must be delivered and accepted during the grantor's and grantee's lifetimes; title passes and the deed is no longer an operational instrument, and its loss deed of trust or destruction has no effect on the grantee's title. When transferring Torrens-registered property, however, registration of the deed rather than the act of delivery gives title.
The destruction of a deed has no effect on the deed because it is only evidence of the title and not the title itself. As a result, even if the grantee destroys the deed with the goal to restore the grantor's original title, title cannot be reinvested in the grantor.
Though not required for legality, a deed is usually documented to protect the grantee against third-party claims. A deed must be correctly documented in the chain of title for it to be validly recorded.
Any written legal document that transfers, affirms, or confirms an interest, right, or property and is signed, notarized, delivered, and in some places, sealed.
Deed in lieu
Gives the title to the lender when the borrower is behind on payments but doesn't want the loan to be taken back.
Deed in lieu of foreclosure
A deed that an owner gives to a lender to transfer property that has a mortgage on it but the mortgage has not been paid. It is an alternative to going through with a foreclosure. For a lender, the biggest problem is that the deed doesn't get rid of junior liens like a foreclosure would. Also called an act of free will.
A deed provided to a lender in lieu of foreclosure by the owner.
Deed in trust
A deed that transfers real estate to a trustee, usually to establish a land trust. The trustee is given complete powers to sell, contract to sell, mortgage, and subdivide under the conditions of such an instrument. However, under the terms of the trust agreement, the beneficiary has authority over the trustee's exercise of these rights. In states that recognise land trusts, deeds in trust are used.
Deed of reconveyance
After a loan secured by a deed of trust has been paid to the lender, a document is used to transfer legal title from the trustee to the borrower (trustor) (beneficiary). Also known as a release deed.
Deed of trust
A legal document in which ownership to property is transferred to a third-party trustee as security for a debt owing to the beneficiary by the trustor (borrower) (lender). Also referred to as a trust deed. The fundamental distinction between a deed of trust and a mortgage is that it involves three parties. When a borrower repays a note secured by a deed of trust, the trustee must use a deed of reconveyance, also known as a release deed, to return title to the borrower.
A court foreclosure action is avoided in some areas (such as California) when the trustee can sell the property by a power of sale after giving the trustor a legally stipulated period of time to reinstate the outstanding loan. In some states, the borrower-trustor is granted a limited time (such as three months) to repay the loan balance plus a designated reinstatement charge and have the loan reinstated. As a result, if the trustor defaults, the trustee must wait the statutory period before accelerating the entire note.
For numerous reasons, lenders in many states prefer to issue residential property loans through a trust deed: (1) In states that allow it, a trustee may be given the authority to sell property after it has fallen into default without having to go through the lengthy judicial foreclosure procedure. (2) In a mortgage transaction, the statute of limitations may preclude an action on the note; however, this is not the case with a deed of trust with a power of sale, because the trustee technically owns the property and can sell it at any time after failure to repay the debt. (3) Trust deeds can be used to secure several notes. (4) An anonymous lender does not have to be specified in the deed of trust. (5) There is usually no statutory right of redemption after a power of sale sale.
One downside of naming a non-institutional trustee in a deed of trust is that it can be difficult to locate such a trustee after the debt has been paid and a reconveyance obtained. A corporate trustee should ideally be designated in the document.
As a security measure, the deed of trust is an alternative to the mortgage agreement. A deed of trust may be legally enforceable even if there is no promissory note in some areas; this is not the case with a mortgage.
A mortgage that transfers real estate to a third party by holding the deed in trust until the loan is paid off.
A deed that transfers ownership of property from an owner to a trustee, who holds the property as collateral for a mortgage loan advanced by another. A trust deed or trust indenture is another name for a trust deed or trust indenture.
In certain states, this instrument is used instead of a mortgage. The borrower transfers a trust deed to a trustee, who keeps the deed on behalf of both the borrower and the lender. The trustee delivers the deed to the borrower if the loan obligation is paid off in line with the terms of the note. If the borrower (trustor) fails to make payments, the trustee uses his power of sale to dispose of the property on behalf of the lender.
A deed that gives legal ownership of real property to a trustee, who holds it as security for a loan between a borrower and a lender.
Only the grantor signs the deed. An indenture deed, signed by both the grantor and the grantee, had a wavy or indented edge and could be confirmed by matching the edges of both copies. The grantee is bound by the deed poll (like a lease) upon acceptance of any covenants specified in the deed, even if the deed is not signed by the grantee.
A provision in a deed that restricts the use of the property conveyed.
Clauses in a deed place restrictions on the usage of land and constructions.
Deed provisions that limit how the property can be used in the future.
Deeds in lieu of foreclosure
A legal instrument created by failing debtors that conveys to the lender all rights to a property. This may not always imply a clean title. Only the defaulting borrower's interest at the time of transfer is considered.
Debt payments were not made by the due date.
The failure to carry out a contractual responsibility or obligation. A default is typically considered a violation of contract, and the non-defaulting party may seek legal recourse to recoup any losses. Nonpayment of money when due, failure to renew insurance policies, failure to pay real estate taxes, property damage, and so on are all examples of defaults in long-term leases or contracts for deed.
It is important to note that a buyer's good-faith inability to obtain financing under a purchase agreement contingency provision is not considered a default (the contract's performance is contingent on the buyer getting the property financed), and in this case, the seller must generally return the buyer's deposit.
Junior mortgages typically include a provision that allows the holder of the junior mortgage to advance funds to the mortgagor to rectify any default on a preceding mortgage. If the original mortgage remains in default and the lender forecloses, the junior mortgage would be wiped out.
Failure to fulfill a contract's agreed-upon obligations.
Failure of a mortgagor to meet any of the agreed-upon requirements in a security arrangement.
The failure of a borrower to satisfy the terms and conditions of a note as a result of continuous delinquency.
Breaking the terms of the mortgage agreement or failing to make the due instalments.
A court order that goes in favor of the plaintiff because the defendant didn't respond to a complaint or show up in court to defend the action.
The process of laying away cash or a portfolio of high-quality assets to pay off a debt's remaining interest and principal installments.
A provision used in leases and mortgages to defeat or cancel a specific privilege if a certain event occurs. A defeasance provision, which is commonly featured in mortgages, states that if the borrower pays the obligation on time (by the "law day"), the terms of grant are nullified and the mortgage is canceled, reinvesting title in the mortgagor. By common law and in title theory jurisdictions where title is transferred under a mortgage, automatic defeasance was crucial. The borrower must first secure and then record a satisfaction, reconveyance, or release deed to remove the lien of a paid mortgage or trust deed from the public records.
If a deed or sale-leaseback contract contains a defeasance language allowing reconveyance back to the grantor upon full payment of a debt, the courts may treat it as a mortgage.
A provision that allows the mortgagor to redeem the property after paying the mortgagee his debt.
Mortgage clauses designed to render a nominal transfer void upon fulfillment of the mortgagor's obligation.
A condition that may be included in commercial mortgages to protect lenders from prepayments during a period of dropping interest rates. Defeasance requires a borrower who prepays to acquire for the lender a set of US Treasury securities with coupon payments that perfectly mirror the cash flows the lender would lose as a result of the mortgage prepayment.
Mortgage loan language that allows a borrower to pay off their loan in full before defaulting and reclaiming their title and the mortgage lien that accompanies it at any time.
A title that can be taken away if certain things happen.
Defect in title
Any document that inhibits a seller from transferring clear title to an asset.
Defect of record
Any encumbrance on a title that has been made public record. Judgments, trust deeds, mortgages, other liens, and easements are examples of recorded flaws.
The defendant in a case who is being sued by the plaintiff; the person accused of wrongdoing and from whom restitution is sought.
The taxpayer's benefit by deferring payment of income taxes until the property is sold. The yearly depreciation deduction generates this advantage.
A commission earned but not fully paid; sometimes known as a residual. In a real estate transaction, for example, a broker earns a commission when the buyer signs and the seller accepts the purchase agreement. However, by prior agreement between seller and broker, the fee may be paid in part upon the down payment and in full-the residual-upon closing, which may be as much as 18 months away with a new project under development.
Deferred establishment fee
Some lenders charge a fee if the borrower has tried to get a new loan from another lender in the first few years of the loan.
Potential rent hikes as a result of a lease.
Building deterioration or value loss due to neglected maintenance. Curable physical depreciation refers to deterioration that can be reversed by making the appropriate repairs and modifications.
A prospective buyer of a building with a considerable amount of deferred maintenance should pay special attention to the expected repair and replacement expenses when evaluating the property's financial potential.
The lack of routine maintenance will have a detrimental impact on the property's usage and value.
When an issue is found, routine maintenance is not done.
Taking a promise to pay to pay a debt that will be reimbursed over time.
Deferred payment method
Also known as the cost-recovery approach or the return-on-capital method. Under the deferred-payment approach, no gain is taxable to the seller until payments received from the buyer exceed the basis of the property plus the cost of sale. This approach can only be utilized when the seller receives a portion of the sales price in the year of the sale, but the remainder of the payment is not demonstrated by a promissory note with a fair market value.
A tax-free exchange or installment sale is a legal deferral in paying income taxes under certain provisions of the Internal Revenue Code.
A judgment against a borrower, endorser, or guarantor for the balance of a debt when the security for a loan is not enough to pay off the debt. A deficiency happens when the sale of a property in foreclosure doesn't bring in enough money to cover the costs of the action and pay off the debt that was secured by the foreclosed mortgage. The shortfall is recorded as a personal judgment against the original mortgage holder and acts as a lien on the judgment debtor's assets. It can be enforced and paid out just like any other court judgment. If this judgment can't be paid, the lender probably has the right to take a bad debt deduction on his or her taxes. In the case of a corporate mortgage, this would be a bad business debt that could be fully offset against ordinary income.
In states where mortgages usually include a power of sale, creditors must bring a separate action to get a deficiency judgment because the court does not get involved. If the parties agree that the lender can only go after the collateral (the mortgaged property) if the borrower doesn't pay, they write that "this note is without recourse," which keeps a deficiency judgment from happening. In California and other states, the mortgagee can't get a deficiency judgment on a purchase-money mortgage because these states have passed "anti-deficiency" laws.
When a buyer takes over the seller's existing mortgage, he or she becomes personally responsible for any shortfall, along with the seller. But when a buyer buys a property "subject to" an existing mortgage, they can't be held personally responsible for any deficiency. This means that if the buyer defaults on the mortgage, the buyer's only responsibility would be to lose the property.
The borrower still gives the money on a defaulted debt, according to a court ruling.
A judgment obtained on a debtor's personal assets in addition to those held on a defaulted debt instrument.
Lenders have the legal authority to sue debtors if the profits of a foreclosure sale do not fully pay off an existing loan, as well as any late fines and penalties.
A mortgagee can get a court judgement for the amount that a foreclosure sale did not bring in to cover the mortgage debt.
In most cases, salespeople are not compensated by anyone other than their current employing broker. Deferred commissions from a prior job, on the other hand, are normally paid directly to the salesperson by the former employing broker. A cash-basis taxpayer or salesperson would not be required to pay income tax on earnings until they were actually received.
When the seller receives insufficient cash in an installment deal, fees are frequently postponed. For example, in the sale of a pre-construction condominium, the broker may earn a portion of the commission from the deposit and the remaining when the project is completed and the customer pays in full and receives title.
A mortgage in which the parties agree to lower the principal debt while raising the interest rate. The seller receives the same amount of money, but the buyer benefits from a larger interest deduction.
A surveying word that refers to 1/360 of a full rotation around a point in a plane.
Degree of operating leverage (DOL)
The percentage growth in operating profit from a change in occupancy level, at any occupancy level.
A system that uses the relative humidity of the home to control a mechanical ventilation system.
When the layers of a panel come apart because the glue isn't good.
When the "swap" of the properties is not simultaneous, an attempt to qualify a real estate transaction as an IRC Section 1031 exchange is made. Some tax practitioners set up intricate procedures to put the sales proceeds in a trust to be utilized to purchase properties in the future as a result of a small number of federal court judgments (the Starker cases). The current regulations set a 45-day purchase deadline and an 80-day closure date for the second property in the exchange (or April 15, unless the filing deadline is extended, whichever comes first). The exchange accommodator or middleman is the entity that holds the funds in trust and the title to the property.
Failure to pay an obligation when it is due.
Failure to meet a debt obligation by the due date indicated.
Not paying back a loan.
A financial commitment, such as a promissory note, that is past due.
Any quantifiable, tangible, verifiable product, outcome, or item required to finish a project or component of a project. This might also contain process documentation (deliverables).
The legal process of changing who owns something. Documents like deeds and mortgages must be sent and accepted before they can be used. Legal delivery has to do with the person who gave the document, not the act of handing it to someone else. The grantor must want the deed to be active and valid at the time the title is given to the grantee. The grantor must also want the grantee to become the legal owner. Also, the grantor must be of sound mind when he or she signs and acknowledges the deed, as well as when it is delivered.
For example, a grantor may give a deed to a grantee only so that the grantee's lawyer can look it over. This would not be a valid delivery because the grantor did not intend to give up all control over the deed.
If the right intent is there, the deed is validly delivered, even though the grantee may not be able to take possession and use the property until a later date. Delivery does not have to be physical or direct.
For instance, if the grantor gives the deed to a third party with instructions to give it to the grantee when a certain condition is met, delivery is made, and the third party holds the deed as the grantee's agent. In particular, when Juan gives a deed to an escrow agent with the instructions to give it to Sunita "when I die" and no other conditions are put on the delivery, it is a valid delivery and Sunita becomes the owner, even though she won't be able to take possession and use the property until Juan dies. But if Juan told the agent to give the deed to Sunita "in case I die," there wouldn't be a valid transfer of title because Juan didn't want it to happen right away.
When a grantor gives a deed to a third party, the grantor must give up all control over the deed. If the grantor does not do this, there is no effective delivery. When an escrow agent makes an unauthorised delivery before all of the conditions of the escrow have been met, there is no valid delivery. Once the property has been delivered and accepted, the grantee can't give back the property or the deed to the original grantor. To do this, the person who got the property must sign a new deed back to the person who gave it to them.
Even though a deed doesn't usually need to be recorded to be legal, some states say that the settlement agent can't close a deal and give out the money from the sale until the deed (or, if applicable, the assignment of lease or contract for deed) is recorded. So, the deal is over once the buyer has technically taken ownership of the item. Title to Torrens property is only transferred when the deed is registered with the registrar of titles and a transfer certificate of title is given to the new owner. It is not transferred when the deed is delivered.
If the grantee has the deed or if the deed is recorded, it is assumed that the deed was given to the grantee. On the other hand, a deed that is still in the hands of the grantor is thought not to have been delivered, but this can be proven wrong. This problem can happen when the grantor wants the title to be transferred right away but doesn't want the transfer to be made public at the same time. So, the grantor will ask the grantee to put off recording until after the grantor dies.
In the past, land title was transferred by livery of seisin, which meant giving the grantee possession of the land. This was sometimes shown by the grantor standing on the land and giving the grantee a stick or a handful of dirt. Sometimes, a witness wrote down what happened on a piece of paper. Today, the transfer of ownership is shown by the delivery of a document that shows the grantor's intent to give the property to the new owner.
A property is transferred from one person to another.
The legal process of transferring real estate ownership.
An observable, demonstrable intent that the grantor will transmit the deed to the grantee.
Delivery and acceptance
The act of giving a title to someone else through a deed.
- A land surveying term used in metes-and-bounds descriptions to describe the angle formed by two intersecting lines, represented by the Greek letter 𐤃
- A symbol that reflects the predicted percentage change in property value over a holding period and is used as a variable in the yield capitalization formula.
DEM (Digital Elevation Model)
A topographic surface represented in a data file as a series of uniformly spaced x, y, and z coordinates, with z representing elevation.
An economic word that refers to the complete spectrum of price-quantity interactions.
- A letter from a creditor demanding payment of a loan or lease balance.
- The desire for economic products that can be purchased at a specific price, in a specific market, at a specific moment; what the market will demand. Effective demand combines a desire to buy with the ability to pay. Demand is a necessary component of greatest and best use and value.
The quantity or volume of a product or service purchased or willing to be purchased in relation to the price.
A right that allows the lender to demand debt payments.
A graphical representation of the relationship between price and quantity of a commodity or service that purchasers will purchase from the market. Also known as a demand function.
Things or forces that affect how much people want to buy goods and services in a certain market.
A promissory note that allows the holder to call in the loan at any time after receiving notification. A term note, on the other hand, is not due until the date indicated.
A table that compares the quantity demanded to the price of a good or service at all relevant prices.
Demand to purchase
An increase in a market participant's inventory of a product at a certain price that is desired.
- A lease is a transfer of an estate or interest in real property to someone for a set period of time, for life, or at will - most typically for years. The term "demised premises" is frequently used in leases. The term "demise" is frequently used to refer to a covenant of quiet enjoyment, in which the lessor agrees to ensure that the lessee's use of the premises will not be disrupted by superior claims of others. Don't mix it up with devise.
- A synonym for the leasing term "let."
- Another word for death.
Premises or portions of real estate in which a temporary interest or estate has been transferred, such as a leasehold interest.
A provision in a lease in which the landlord rents the property and the tenant takes possession.
A partition or dividing wall that separates the areas rented by one party from those leased by others in a building containing two or more tenants.
Data on population and household characteristics by location, including age, employment, incomes, and education.
Information on a region's population based on statistics.
A population's size, composition, growth, dispersion, and change are all factors to consider.
Human population characteristics as defined by population size and density of regions, population growth rates, migration, vital statistics, and their impact on socioeconomic conditions
The study of human populations statistically, particularly in terms of size, density, and distribution. When considering commercial properties or retail centre sites, demographic data is helpful.
There is a clause in a lease that gives a landlord the ability to terminate the lease after giving adequate notice in the event that the landlord decides to demolish the structure. The clause is typically required solely by owners of older structures who wish to retain the option of constructing a new structure at some unspecified point in the future.
A provision in a lease that states that if or when the ground lease expires, the building shall be destroyed according to the terms of the contract. Before invoking this provision, the landlord must notify the renter within a certain time frame.
A decrease in value caused by the physical demolition of the premises. If an owner buys a property with the intention of removing the current structure, the demolition loss is a cost that must be applied to the land's basis. Furthermore, the cost of demolishing a registered historic structure cannot be discounted; instead, such charges must be considered as additional land cost.
Permission to tear down and destroy an existing building.
A unit of measurement for the number of dwelling units or the quantity of commercial/industrial space contained within an acre. For office and industrial space, the ratio of the building's floor area to the lot area is frequently stated as a floor/area ratio (FAR).
When referring to zoning requirements, the number of building units per acre or the number of occupants or families per unit of land area (acre, square mile); usually the land area to improvement area ratio.
In a particular space, the average number of people or units.
A subdivision-specific zoning regulation that limits the average maximum number of dwellings per acre that can be erected inside a subdivision. For example, if a subdivision's minimum lot size is 15,000 square feet, the developer can only build 2.5 houses per acre. If the region is density zoned at a maximum of 2.5 houses per acre, on the other hand, the developer can produce an open, clustered look by modestly reducing individual lot sizes. The sub-divider is in compliance with the ordinance regardless of lot size or the number of units clustered as long as the average number of units in the development is at or below the maximum density. Gross density is the term for this average.
Developers frequently attempt to collaborate closely with zoning officials in order to produce rules and standards that are most advantageous to living comfort and aesthetic qualities.
Amount of adjusted income that taxpayers can deduct from their taxable income for each person who is financially dependent on them.
A variable in regression or correlation analysis whose value is assumed to be influenced by the values of other variables (independent variables) included in the study.
In a regression equation, the variable that is "explained."
A size or quantity reduction. An asset's exhaustion, such as gas, oil, mineral oil, or lumber. In certain mining programmes, depletion can be deducted, providing considerable tax shelter benefits.
Person who prepares an affidavit.
There is a fee for the buyer to pay at the time of signing a contract to buy a house. This fee is usually 10% of the purchase price.
Money given in good conscience to ensure contract fulfillment.
Before contracts are written and exchanged, an initial payment is made to secure the lease or purchase of a property.
An amount of money offered by a potential buyer as a show of good faith in entering into a contract to purchase; also known as earnest money; a guarantee that the buyer will fulfil the terms of the contract. It is not essential to make an earnest money deposit in order to create a legitimate purchase contract because the mutual pledges of the parties to buy and sell are sufficient consideration for the contract to be enforced by the court.
Upon completion of the purchase by the buyer, the deposit money is put toward the total purchase price. If the buyer fails to meet his or her obligations under the contract, the seller may be able to retain the deposit money as liquidated damages. As part of the contract, it's common for the seller to share the deposit money with the broker, up to a maximum sum that does not exceed the broker's compensation (per the terms of the listing or the contract of sale). If the vendor fails to meet his or her obligations, the deposit should be refunded in full to the buyer.
To protect themselves, sellers frequently require a deposit that is sufficient to cover the broker's commission, the expense of the title search, as well as the loss of time and the option to sell elsewhere. It is entirely negotiated between the vendor and the buyer as to the amount. Some buyers use a big deposit as a bargaining technique to make their offers appear more compelling. An unsatisfied buyer who claims that the deposit was not properly applied as liquidated damages but rather as forfeiture or penalty may be entitled to a partial refund if the vendor requests an excessively large initial deposit. Some states have specified minimum deposit amounts; if the deposit exceeds the minimum amount, the seller has the duty of demonstrating that the deposit was, in fact, reasonable and not a punishment to the buyer.
A considerable sum of money is frequently deposited as a deposit in an interest-bearing account for the benefit of the buyer.
Sometimes there are disagreements over who owns the deposit. However, even though the money never belongs to the broker, the broker may collect a portion of the deposit if the buyer defaults, and in that case the seller retains the money as liquidated damages. In many places, the deposit money must be placed in a neutral escrow account and cannot be taken until the transaction is completed, or unless both the buyer and the seller have signed a written agreement authorizing the withdrawal of the deposit money.
Unless the sellers give the broker permission to receive deposit money on their behalf, the deposit money becomes the property of the sellers when it is accepted by the broker. If the broker disappears with the deposit money and the sellers had given the broker permission to accept the deposit, the sellers will be liable for the loss of the deposit money. The buyer's agent is responsible for the money until the sellers accept the buyer's offer to purchase, assuming the sellers have not allowed the broker to collect the deposit. As a result, if the broker were to take the money, the buyer would incur the consequences. Many exclusive-right-to-sell listing contracts expressly provide for such authorization, which can be found in the fine print.
A large amount of money that has already been paid.
A guarantee or bond that serves as a substitute for a financial deposit between contract signature and settlement.
A scheme that protects depositors against losses caused by bank failures.
The official testimony given before a trial by a witness or a party to a lawsuit (the deponent). Any party may take the testimony of another person in a deposition by employing an oral examination or written questions (called interrogatories) for the purpose of discovery (ascertaining evidence) or use as evidence, or both.
Depositors Insurance Fund (DIF)
The Federal Deposit Insurance Reform Act of 2005 merged the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund to make the Private Deposit Insurance Fund (PDISF). PDISF is a private insurance fund that is sponsored by businesses (SAIF). The DIF insures all deposits that are more than what the FDIC will cover. Since March 31, 2006, the DIF has been paid for by the banks when they pay their insurance premiums. The Dodd-Frank Act requires a minimum designated reserve ratio (ORR) of 1.35 percent of estimated insured deposits. It also requires the FDIC to figure out how to restore the fund's balance if it falls below 1.35 percent and pays dividends to the industry if the fund balance is more than 1.5 percent. All deposits over the FDIC's limits are covered by the DIF.
Each person who puts money in an insured account can get up to $250,000.
Depository Institutions Deregulation and Monetary Control Act (1980)
Federal legislation that phased off limitations on the rates that banks could pay on savings and time deposits and halted broad deregulation of federally regulated commercial banks and savings and loan institutions. The act deregulated the mortgage market by removing state usury ceilings that limited the interest rates that banks may charge for main mortgage loans, making more house loans available. The act allowed savings and loans to make consumer loans of up to 20% of total assets, including auto loans and credit card loans. It also increased deposit insurance for banks and credit unions in the United States from $40,000 to $100,000.
In general, the value of the purchased property less the value of the land (also known as the original cost basis).
The time span over which an asset's cost recovery is to be allocated. Depreciable life may be less or greater than projected service life for tax purposes.
The amount of years that an asset can be depreciated for tax reasons.
Property that is eligible for a tax-deductible depreciation allowance.
Depreciable real property (accounting)
Wear-and-tear property utilized in a trade or business or held for the purpose of generating income. As a result, the taxpayer's personal dwelling and land are not depreciable. If the taxpayer utilizes part of his home for business, he can claim a pro rata depreciation deduction for that portion. The business deduction, however, is subject to strict conditions under the tax code.
The 1986 Tax Reform Act drastically altered real estate depreciation laws. Cost recovery times have been lengthened, and rapid cost recovery methods have been phased out.
It is usually sufficient that the property is held with the prospect of creating revenue or making a profit, rather than the property actually producing income. Depreciation will be limited if a property is considered to be used for "hobby" reasons. Only improvements to real property, such as buildings, sidewalks, and fences, can be depreciated. Despite the fact that depreciation deductions have been replaced by "cost recovery," the latter is still limited to depreciable property and the depreciable portion thereof.
There is a drop in the value of the home.
An expenditure that reflects the depreciation of real estate improvements.
The deterioration of an asset's value as it matures.
The loss of an asset's value or usable life as a result of wear and tear, the action of the elements, or obsolescence.
An annual deduction that allows investors to lower the amount of taxable income they report by an amount calculated to represent the wear and tear on the property over time.
the deterioration of an asset's value over time.
A decrease in the value of a property as a result of time, decay, or changes in the neighborhood. The amount you can claim for tax reasons for the replacement of an asset is known as "book depreciation."
A decrease in the value of a property.
The depreciation of a property's utility and value.
The loss of a property's utility and value.
A loss of value due to any reason; any condition that reduces the value of an improvement in the cost approach. Depreciation is classified into three categories for appraisal purposes: physical degradation, functional obsolescence, and external obsolescence. The straight-line or age-life approach was once the most prevalent technique of calculating depreciation, but today many appraisers prefer the breakdown method, which divides depreciation into all three classes and measures each class independently, whether the deterioration is curable or incurable.
Decomposition or disintegration of an improvement, fractures, wear and tear, foundation sinking, structural faults, elements' actions, any loss of physical soundness, and termite damage are all signs of physical degradation.
Obsolete boilers, old plumbing, unreasonably high ceilings, out-of-date lighting fixtures, and outmoded architecture are all signs of functional obsolescence (inside property lines). Functional obsolescence can also be defined as a super-adequacy, such as a swimming pool that adds less to the property value than it costs.
Population declines, incompatible uses of land, legislative action (local, state, and national), changes in a neighborhood, and invasion of other factors that diminish the value of the property being appraised are all signs of external obsolescence (outside property limits). A shift in the market is defined as obsolescence that impacts the entire sector.
Accrued depreciation, often known as past depreciation, is depreciation that has already occurred as of the assessment date. Future depreciation, on the other hand, is an estimate of the value loss that will occur in the future.
It is improbable that any two properties will be appraised identically due to depreciation effects. Consider two structures that were created at the same time and with identical materials. Due to the independent influence of depreciation forces on the individual structures, the properties would have different values after two years; for example, one building may now contain termites.
A deduction utilized to recoup the cost of an investment in depreciable property. Depreciation can occur even if the market value of a property rises. Non-income-producing property, such as a personal dwelling, cannot be depreciated.
The annual amount of the depreciation deduction is determined by arbitrarily distributing the building's initial investment throughout its useful life. Consequently, tax depreciation is a statutory concept that occurs even if the property itself has increased in value. Land is not depreciable (although the cost of landscaping may be depreciated in certain cases). Therefore, there must be a basis allocation between the land and the structure. The majority of taxpayers utilize the allocation determined by the state tax assessor.
If the taxpayer does not take depreciation, the Internal Revenue Service will calculate the permissible straight-line depreciation and apply it to the taxpayer's basis upon the sale of the property. The taxpayer who is eligible for the depreciation deduction is the one who suffers the economic loss owing to the decline in value. Typically, this is the owner, however formal title alone is insufficient. A life renter, for instance, is entitled to the deduction as if she were the only owner of the property. When the life tenant dies, the depreciation deduction, if any, falls to the remainderman.
The accounting charge applied to account for the possibility that the asset will become economically obsolete before it deteriorates physically. The goal is to write off the initial cost by spreading it out over the asset's expected useful life. It shows on the profit and loss statement as well as the balance sheet.
A tax-deductible allowance for the loss of value or usable life of an asset as a result of wear, tear, obsolescence, or the action of the elements.
Excess depreciation taken on real property is liable to income tax when the property is sold; gains owing to recapture of depreciation deductions are taxable at 25%.
The amount of cumulative depreciation incurred on a property up until the resale period is restricted to the excess of the sales revenues over the initial cost.
The total amount of depreciation absorbed since the property was brought into use. When/if the property is sold, this sum is normally taxed at the depreciation recapture tax rate.
Depreciation recapture rate
When/if the property is sold, the tax rate that is applied to the depreciation recapture part of the gain on sale.
Division 40 (plant and equipment) and Division 43 (capital works allowance) are both non-cash deductions that can be claimed when you file your taxes. The tax depreciation schedule is the basis for these deductions.
Some assessors utilize percentage tables to give a uniform system of measuring the additional value of lots that accrue due to added depth, with the extra depth assessed according to the added utility it produces ( called depth influence). Tax assessors utilize depth tables to establish standardization in their assessment processes. The "4-3-2-1 rule," which said that the front quarter of the lot carries 40% of the value, the second, 30%, the third, 20%, and the fourth, 10%, was one of the first depth tables produced. The percentages for each few feet of the lot have been added to this rule. Many appraisers believe that standard preprinted depth tables are unreliable because they do not reflect the particular property's specific time and market conditions.
To show that someone owns land; to find the title.
The progressive withdrawal of water from dry ground.
Demand for a good or service that results from its usage in the creation of something else.
When an heir dies without leaving a will, the act of gaining property is known as intestate succession.
The acquisition of an estate by inheritance occurs when an heir inherits the property by operation of law. The hereditary succession of an heir to the property of an ancestor who dies intestate is referred to as descent.
Rights under descent laws differ from one state to the next. The law of the state in where the property is located will not only specify who will inherit the property, but it will also specify how much each individual will receive. When a person dies leaving a spouse and one child, the spouse and child normally divide the estate equally, with certain jurisdictions granting only one-third to the surviving spouse. If a spouse and two or more children survive, it is normal for the spouse to take one-third of the estate and the children to divide the remaining two-thirds equally among themselves. If there is a spouse but no children or descendants of the children, some state statutes give the spouse one-half of the estate and the other half is divided equally among collateral heirs such as the decedent's parents, siblings, and sisters; in other places, the surviving spouse takes all.
Every state makes provisions for lawfully adopted children, who are usually considered the adopting parents' heirs. They are not considered heirs of the adoptive parents' ancestors.
Illegitimate children inherit from their mother in most states, but not from their father unless he has admitted fatherhood in writing or parentage has been legally proven. Naturally, if he formally adopts such a child, that child will inherit as an adopted child. It is necessary to consult state law.
The section of a conveyance document that describes the property that is being conveyed. Documents such as deeds, lease assignments, certain leases, and mortgages must provide a detailed legal description of the property to be transmitted in order to be valid. A contract for the sale of real estate typically requires simply a description adequate to identify the property, such as a street address and/or tax map key number.
The description of a deed is typically separated into two parts: general and specific. The broad description typically identifies the lot in question through its location, name, or reference to prior known owners. It begins the specific description with "more particularly described as follows," or with a reference to public maps, plats, or other recorded facts.
The specific description precisely outlines the boundaries of the property in question. These boundaries can be defined by any of three fundamental types of real estate description: metes and bounds, government (rectangular) survey, and subdivision plat.
To avoid ambiguity, extreme caution must be applied. The "next contiguous 40 acres" is unclear since an acre can be any shape; the "south one-half of the farm" is sufficient if the property is rectangular but not if it is irregular in shape.
Mother Hubbard clauses are included in some contracts for large, bulk real estate sales. These provisions state that the description comprises all of the seller's property at the location or, if applicable, all of the seller's real estate in that specific area.
A formal representation of a property's measurements and location.
A statistical application that uses numerical expressions to describe the characteristics of a sample or the underlying population.
The procedure through which the architect develops the building's blueprints and specifications after receiving approval of the conceptual design.
A downpour of a certain strength and frequency of occurrence that serves as the foundation for stormwater management.
A method of constructing massive constructions in which the roles of architect and general contractor are combined.
A designated agent is classified under state law as the agent for either the buyer or the seller to the exclusion of all other agents in the brokerage in some states where it is allowed by law; another salesperson in the firm could be designated as the agent of the other party without creating a dual agency for the individual agents. A designated agency is a way to avoid a potential conflict of interest in an internal transaction.
When a brokerage business acts as an agent for both a selling and a buyer, the firm may assign one salesperson to service the buyer and another to assist the seller. The two salespeople are supposed to respect the privacy of the party they represent and to act in the best interests of that party.
Geographic information systems (GIS) software is designed for visual presentation and descriptive analysis of geo-coded data, and it offers a wide range of operations, queries, and mapping capabilities for use in desktop applications.
A single-family home that stands alone on its own piece of land.
A storm water management approach in which runoff is retained on-site and released later at a predetermined pace.
A neighborhood where the properties have been neglected and are in poor condition.
A person who prepares raw land for development by establishing roads, utilities, and other infrastructure; may also be a builder (one who actually constructs improvements on real estate).
A person who transforms undeveloped land into valuable real estate.
a person who acquires land and increases its worth by upgrading it (for example, by subdivision or development).
A person who tries to put land to the best possible use by building improvements such as commercial condominiums or subdivision projects. The developer plans and oversees the entire project, from site acquisition to construction and final sales, and occasionally even project upkeep.
Although the financial incentives for the creator can be great, the risks are also high. All elements of development are getting increasingly specialized and complex, thus developers commonly hire consultants, such as construction and finance specialists, to help them through the various stages.
A region that is rapidly expanding because of the recent construction of new homes.
A real estate activity including the addition of improvements such as buildings.
A contract between a developer and a buyer under which the developer will build a specific sort of property and the buyer will acquire it within a certain time frame.
A measure of the intensity of development or land use, as defined by the area covered by housing units, impervious surfaces, or building floor area, for example.
A developer is compensated for managing a development project on behalf of a client, such as a corporate or public sector agency.
Development impact fee
A fee that a local government charges a developer to cover the costs of providing essential services for the proposed project, like fire and police protection and road maintenance.
An interim loan to cover the expenditures of property improvement. In most cases, a property subdivider seeks funding to cover the costs of both on-site and off-site improvements (site preparation, roads, sewer, water, and drainage) to bring individual lots up to a standard that may be successfully marketed. The development loan frequently includes a schedule of partial releases that allows individual lots to be sold free and clear of the loan encumbrance. Large subdivision development loans are frequently organized in phases to correspond with the project's progressive development.
A loan used to make renovations to real estate.
The process of preparing raw land for the purpose of constructing; it typically include acquiring required government approvals, clearing and grading property, and establishing roads and utility facilities.
The rights to develop and improve a property that a landowner sells to another. Development rights are the premium paid by the developer for the opportunity of developing the property and bringing the future seller and the landowner together to create the leasehold estate in some regions where residential units are developed on land to be leased at economic or market pricing. Only the development rights are sometimes offered, and the purchasers lease the land directly from the landowner after the improvements are finished and sold. Frequently, a developer will buy a master lease along with development rights and then sublease the upgraded lots to the final buyers. The developer may sell development rights to a sub-developer if the landowner agrees to the assignment.
A variety of public and private partners hired by a developer to assist in the planning, design, building, marketing, and management of a development project.
A bequest of real estate.
A willful transfer of real property. The devisor is the donor, while the devisee is the beneficiary. The real estate passes to the heirs if there is no will. In some states, a deed is not necessary to transfer property via devise because the donor's will serves as the conveyance instrument.
A gift of real estate that comes from a will.
Conveyance or distribution of a decedent's real estate by will.
A person who receives property as a result of a will.
Differential cash flow
The difference formed when the cash flows of one alternative are subtracted from the cash flows of another.
Products that differ sufficiently from competitors to lower the degree of substitutability. Producers of distinct items have some pricing control.
Diffused surface waters
Waters that run off the surface of the ground due to rain, snow, or subsurface springs.
The process of turning a picture, map, or other visual into numerical format.
Alluvion is the gradual and undetectable washing away of soil along a river, with the resulting loss of soil; erosion is the polar opposite of alluvion.
Diminishing marginal utility
The economic notion that when more units of an item are owned or used per unit of time, the increased (marginal) utility of each subsequent unit is less than that of the preceding one.
DINK (Dual Income, No Kids)
Couples with two salaries or two sources of income who do not have dependent children; regarded strong chances for home ownership or other real estate ventures.
The procedure of calculating a property's worth by dividing its yearly net operational revenue by an overall capitalization rate.
site expenses (acquisition price plus legal fees plus commission), plus improvement expenses (plans and permits plus professional fees plus construction).
An FHA-approved lender's ability to obtain FHA single-family and multifamily mortgage insurance by adhering to FHA rules. Many of the FHA's mortgage insurance programmes can be underwritten by an approved lender who verifies that the mortgage conforms with applicable FHA standards under the direct endorsement programme. The lender is responsible for all appraisal obligations as well as credit analysis. Direct endorsement exposes FHA to the risk of loss due to default, but it offers it control by allowing it to withdraw the lender from the programme.
Direct market extraction
Estimation of the appropriate capitalization rate based on comparable property transactions.
Direct participation program (DPP)
A programme that allows investors to directly participate in an investment's cash flow and tax benefits.
Direct participation program licenses
Securities salesmen that offer real estate securities (such as resort condominiums with rental pools) and tax shelters in schemes that provide a direct "pass-through" of tax benefits are awarded national licenses by the nonprofit National Association of Securities Dealers (limited partnerships and REITs, but not stock in ordinary corporations). The Limited Representative License and the Limited Principal's License are the two types of licenses available.
Direct reduction mortgage
A mortgage that requires periodic payments of a set amount of principle (loan recapture). Because the interest percentage is reduced with each payment, the total payment varies. Financing between private parties is most likely to be found.
Because the amount paid on the principal is the same each month under the direct reduction payment plan, the mortgagor can readily determine how much has been paid on the principal. The amount of interest that is applied varies. As a result, the combined monthly principal and interest payments are higher in the early years of the loan than in a steady or level mortgage payment plan.
Direct sales comparison approach
A method of evaluating or appraising real estate based on the substitution concept (comparison). Using this method, an appraiser determines the worth of a property by comparing the prices paid for similar properties and arriving at a conclusion. The following are the three main steps in what was previously known as the market-data approach:
- Find comparable properties (properties with the same "highest and best use") that have recently sold in arm's-length transactions, usually within the last six months. Certain sales, like bankruptcy, short sales, or foreclosure sales, government sales, sales between relatives, and so on, are excluded. Adjust the contract sales price to an effective sales price, taking into account extraordinary seller concessions and market changes since the transaction.
- Compare these properties to the subject property and adjust the sales prices accordingly to account for any significant changes in the property, such as age, location, and physical attributes. Even when comparing vacant land, adjustments are required, such as utility hookups, soil type, and location. The amount of rooms, bathrooms, bedrooms, lot size, building age, style, and condition should all be identical.
- Bring all of the comparable data together and get to a value judgment.
The most trustworthy gauge of the market is the direct sales comparison approach, which is most commonly employed in evaluating residential property, where amenities are often difficult to measure.
This method can also be used in conjunction with the other two methods of determining value. Market data are utilized to establish the depreciation figure in the cost approach, while market data are used to determine the market rent and capitalization rate in the income approach. A live real estate market for the type of property being evaluated is required for the direct sales comparison approach.
Direct survey method
Personal interviews with key employees at all of the major firms in a given community to find out what percentage of each firm's sales come from outside the local economy. This is done to estimate each firm's basic employment and, by adding up all of the estimates, the total basic employment in that community. This is a costly and time-consuming method.
The general direction or location in which a community appears to be headed. Directional expansion is taken into account in mortgage underwriting and assessment because it affects supply and demand, highest and best usage, and the current and future value of real estate.
To repudiate or revoke a contract is a legal term. In the event that the contract is voidable, the injured party may choose to have it rescinded.
Demand segmentation entails disentangling and identifying the myriad of influences that shape the demand for a specific property in a specific market (in reference to tenure, household income, and geographic submarket).
Supply disaggregation refers to the steps used to determine what influences the availability of a specific property in a given market (including leased versus owned, unit type, price, and geographic submarket).
Money paid out or expended in a financial transaction, such as an escrow closing. Disbursements can be recorded as a credit or a debit on the closing statement (for example, when the net proceeds of the sale are paid to the seller) (as when attorney fees or the title search are paid). Construction loan draws and advances are other examples of disbursements.
The volume of water traveling through a cross section of a stream or swale per unit of time, generally expressed in cubic feet (or metres) per second, that flows through a stream channel or from a location.
When a loan is paid off, there is a fee.
Discharge of contract
The end or cancellation of a contract. Some common ways to get out of a contract's obligations are mutual cancellation, rescission, performance or nonperformance, accord and satisfaction, illegality, and in some cases, the statute of limitations, the statute of frauds, and the Bankruptcy Act, if the court won't enforce the contract. If a contract is broken, there is no way out, but the party who did not break the contract has options.
A region with a high concentration of groundwater seepage and springs.
"There are no guarantees, representations, oral understandings, or agreements except as written above," is a common phrase rejecting legal liability. However, making such a statement does not absolve the maker of any liability for fraudulent acts or misrepresentations. Exoneration clauses are sometimes known as exculpatory clauses.
"The material contained on this fact sheet is obtained from sources regarded as credible," says a frequent disclaimer seen in a brokers' information fact sheet. We cannot, however, guarantee the accuracy of such data." This form of disclaimer may be useful in protecting someone from liability for an unintentional factual error, but it will not protect someone who willfully makes a misleading statement.
Disclaimers are often enforced harshly against the party who drafted the disclaimer. As a result, a statement in a lockbox authorization form indicating the broker is not accountable for theft loss does not protect a broker who is negligent in giving out the lockbox combination.
To make known, to reveal A well-known risk-mitigation tool for real estate brokers.
The public disclosure of all relevant data, both good and negative, required to make an investment choice.
Disclosure and informed consent
Where a real estate agent fits in between the agency and the client.
- A creditor is obligated by the federal Truth in Lending Act to provide consumer borrowers with an information report. Disclosure reports are frequently required by state regulations in condominium, time-sharing, and subdivision transactions.
- Any statement of fact required by law, such as the federal Real Estate Settlement Procedures Act's settlement disclosure or the federal lead-based paint disclosures for property built before 1 978. Certain disclosures, as well as agency disclosure of who the broker represents, may be required by state law in condominium and subdivision transactions.
- Information provided by the seller to the buyer, which is now needed in the transfer of one-to-four housing properties in many states. The seller, not the real estate licensee, bears the responsibility of revealing the condition of the property. Buyers should not depend solely on the sellers' disclosures because they cannot reveal what they do not know, and some crucial information may be omitted. For instance, an elderly couple is getting ready to sell their home of 50 years. They show that there are no recognized plumbing issues. However, the buyers, a family with multiple little children who take numerous showers and wash numerous loads of laundry each day, may experience plumbing issues. Was the merchant telling the truth? No, but the buyers will very certainly have a plumbing issue.
The account the Federal Reserve Board needs from the lender of all the money-related parts of a loan.
A switch for 20 Amps of electricity.
To sell at a loss; the difference between face and cash value.
Some businesses specialize in buying discounted mortgages and real estate contracts (also known as paper). Often, the original lender will sell the mortgage at the current announced mortgage discount rate in order to pay out on the debt. If the discount rate is 12%, the lender might sell a $100,000 mortgage for 88 percent of its value ($88,000 or 12% below par).
Discounting any sort of loan usually raises the lender's effective yield and/or the buyer's interest expense.
A registered real estate broker who offers brokerage services at a reduced cost than the majority of brokers. Some discount brokers offer limited services, such as not sitting open houses or paying for advertising.
Discount department store
A specialized retail mall or a huge single store that focuses on inexpensive costs. Only qualifying members get access to some discount stores ("closed-door discount stores").
A loan fee that is added by the lender to make a loan with a lower interest rate than the market rate more competitive with loans with higher interest rates. Borrowers often pay discount points up front to get a lower interest rate over the long term. This is helpful if the buyer plans to keep the loan for a long time, but not so much if the loan will only be held for a few years. Each point is worth 1% of the amount of the loan. The points can be paid by either the buyer or the seller. Even if the seller pays the points, most of the time they can be used to lower taxable income in the same year they were paid. This is a benefit to the buyer.
The amount a borrower must pay to a lender in order to get a mortgage with a specified interest rate.
A decrease in net loan revenues to bring the effective interest rate up to par with the current market rate.
Lenders impose upfront financing fees in order to improve the yield on a loan.
When a borrower makes a single payment to a lender, the lender gives the borrower interest.
- A competitive annual rate of return on total invested capital required to compensate an investor for the risks associated with a certain investment.
- The rate at which the Federal Reserve lends money to banks that meet certain criteria. These are short-term loans that are intended to meet immediate cash demands rather than to supplement the bank's capital. As a result, the discount rate is more of a signal to the banking community than a cost of funds indication.
The present value of a future cash flow is calculated using a percentage rate.
A rate that evaluates the return on investment after the capital invested has been recovered.
A lower rate of interest on a mortgage for a specific period of time.
The rate in percent that money or cash flows are taken into account. The discount rate takes into account both the risk-free interest rate on the market and a risk premium.
Discounted cash flow
The present value of future money is calculated by multiplying predicted cash flows by the discount factor.
Used to measure return on a real estate investment, the present value of a future income stream as estimated by a certain discount rate (using present value tables). This metric gives greater weight to early dollars earned from an investment than later dollars. The internal rate of return method and the net present value method are two common approaches. Also known as present value analysis
The present value of a projected future cash flow, lowered by an estimated discount rate that reflects the difference between the current value of money and the value of money received at a later time period.
Discounted cash flow approach
An investment assessment strategy that combines adjustments for both the amount and timing of expected future cash flows and is often regarded as the best way to evaluate possibilities.
Discounted effective rent
The present value of the cash flows over the length of the lease.
The method of calculating the value of a property using mathematics based on the present value of expected future cash flows or income.
Using present-worth equivalents to express anticipated future cash flows.
The process of converting the value of future benefits from a real estate investment to a current (now) value.
The process of lowering the value of money received in the future in order to account for the opportunity cost of waiting for the money.
Lawyers preparing for trial may ask witnesses for the opposing side to produce documents and answer written or oral questions.
Discrete probability distribution
A probability distribution with a finite number of outcomes.
Money that can be invested, or money that is more than what is needed for basic needs.
Making a differentiation in favor of or against a person based on the group or class to which the individual belongs; failing to treat people equally under the law. Discrimination based on race is prohibited under the Civil Rights Act of 1866. In Jones v. Alfred H. Mayer Company, the United States Supreme Court maintained the 1866 federal legislation, ruling that it "prohibits all racial discrimination, private and public, in the sale and rental of property."
The federal Fair Housing Act of 1968, found in Title V III of the Civil Rights Act of 1968, went a step further than the 1866 law, making it illegal to discriminate on the basis of race, colour, religion, sex, or national origin when selling or leasing residential property or vacant land for the construction of residential buildings. Discrimination based on sex is prohibited under the Housing and Community Development Act of 1997. The Fair Housing Amendments Act of 1988 forbids discrimination based on physical and mental disabilities, as well as familial status, and empowers HUD to enforce fair housing rules while also increasing fines and punishments.
Discriminatory techniques in real estate transactions, including related financial practises, are forbidden under the law. Several federal laws prohibit discrimination in financing transactions, including the Equal Credit Opportunity Act, Title VIII of the federal Civil Rights Act, the Community Reinvestment Act, and the Home Mortgage Disclosure Act.
The following are exempt from the statute and its amendments:
- The sale or rental of a single-family home by an individual who does not own more than three such homes at any given time, even if the owner is not present at the time of the transaction or was not the most recent occupant. Individuals are only allowed to make one such sale per 24 months, and it must not involve a real estate licensee or discriminatory advertising.
- The renting of rooms or apartments in an owner-occupied building that can accommodate four or less households. If participation in the religious organisation is not restricted on the basis of race, colour, sex, or national origin, dwelling units owned by religious organizations and not managed commercially may be confined to people of the same religion.
- A private club that is not available to the public may limit the rental or occupancy of its accommodations to its members if the lodgings are not operated commercially.
- Children are not permitted in dwelling units in eligible elderly home circumstances.
Blockbusting, guiding, and redlining are likewise prohibited by the federal Fair Housing Act of 1968. The secretary of the Department of Housing and Urban Development is in charge of enforcing the statute. Within one year following an alleged discriminatory act, an aggrieved person may submit a complaint with the secretary or a delegate of the secretary. Conferencing, conciliation, and persuasion are the secretary's only options for resolving the conflict. A number of state and local fair housing legislation have been found to be "substantially equivalent" to the federal law. All complaints in that state or locality are referred to and handled by state agencies, including those filed with HUD.
An aggrieved party may also sue the alleged offender in federal or state court, depending on whether the state's fair housing rules are substantially equal. In circumstances when accused violators of federal law engage in a pattern of discrimination or behaviors that create an issue of wide public significance, the US attorney general may file a lawsuit. The Civil Rights Act of 1866 requires that complaints be handled immediately to a federal court.
Fair housing regulations must be followed by both real estate licensees and property owners.
Brokers should tell principals about the law's obligations and terminate the agency relationship with any principal who continues to discriminate. Many state and local governments have passed antidiscrimination legislation, which has an impact on real estate professionals. If there is a conflict between federal and local laws, the more restricted statute usually takes precedence.
Discriminatory restrictive covenants are prohibited by FHA and VA regulations for persons who participate in their respective lending programmes. Furthermore, racially restricting terms in deeds are not enforceable under the United States Supreme Court's ruling in Shelley v. Kraemer.
Affirmative marketing agreements have been formed by the Justice Department, HUD, and the National Association of REALTORS® to ensure that protected classes have free and open access to housing through comprehensive, voluntary programmes.
Discrimination in housing
Housing discrimination on the basis of race, color, religion, national origin, sex, family status, or handicap is illegal under federal and state law.
Individuals investing their own money instead of putting their savings in banks, savings and loan associations, and other similar organizations to be invested by those organizations. Investors avoid banks when they can get higher returns on safe investments like high-quality corporate bonds, money market funds, and government securities than they can on savings deposits. Disintermediation has a direct effect on the fact that there isn't enough money for mortgages because savings that are used for other things rarely end up in mortgages.
People who, in search of higher returns, remove their funds from big institutional lenders and invest directly in financial markets.
The emergence of situations in which the growth of deposits in banks and savings organizations turns negative as a result of alternative, more appealing direct investment options.
A legal notion utilized in federal discrimination proceedings to demonstrate a violation even when the defendant's acts have no obvious connection to a protected class. In a case involving disparate impact, intent to discriminate is not required. The disparate impact doctrine forbids a neutral restriction from having a statistically higher impact on a protected class than on other classes. Once a plaintiff establishes that there is a significant disproportionate impact on a protected class, the burden shifts to the defendant to establish that the statistical imbalance is due to a reasonable nondiscriminatory purpose.
For example, the United States Supreme Court has ruled that aptitude tests, which are required for employment yet fail far more African Americans than whites, have a disproportionate impact. A disparate effect analysis could be used to the house rules of a condominium association and their influence in a familial status or handicap issue.
Earnings from customers outside the target service region who make purchases (represents a revenue gain for retail establishments as sales are generated from consumers who reside outside the local trade area).
Waste from a septic tank is dispersed in a drainage region that is not close to the water source. Tile and gravel are used to drain the waste into the earth.
Eviction of someone who is not legally in possession.
The removal or improper possession of someone who is legally in possession of real property.
Distinguished Real Estate Instructor (DREI)
The Real Estate Educators Association confers this professional title on its members (REEA).
A common-law notion that allows a landlord to confiscate a tenant's goods in exchange for unpaid rent. The majority of states now require a court order. Also known as a landlord's warrant or distress for rent owing.
A landlord's legal right to confiscate a tenant's personal property in order to collect unpaid rent.
The interest of the fee owner, lessee, or mortgagee in different parts of a whole property.
Due to inadequate financial flow, a property is going to be foreclosed on or has already been foreclosed on.
A septic system that distributes the sewage from the septic tank to the absorption area.
District business centre
The hub of a large shopping centre in a suburb
A physical or biological alteration that has an influence on the environment, such as forest clearance.
Unsystematic risk that can be reduced in a portfolio by having securities and other assets with returns that are not completely connected.
Investing in a variety of sectors so that the overall investment program's success is not jeopardized by average outcomes.
Total risk is reduced by owning a variety of property types and spreading ownership across a large geographic area.
Allocating portfolio resources across various assets in order to lessen the risk of portfolio returns.
A way to lower risk by investing in things that have nothing in common with each other.
An interest in multiple parts of a whole property, such as a fee owner's, lessee's, or mortgagee's interest.
DLG (Digital Line Graph)
A digital representation of cartographic information; digital vectors derived from maps and other sources.'
An industrial structure with a main floor that is high enough to allow direct loading onto the beds of trucks parked at ground level outside.
Doctrine of constructive notice
A common law tradition that states that if a person is aware of a claim or regulation, he or she can be bound by it.
A legal document such as a conveyancing document (deeds, leases, mortgages), contract (options, swaps, purchase agreements), or other legal form (wills, bills of sale).
"Domus" is Latin for "house." The state in which a person has her genuine, permanent home and primary business establishment, and where she intends to return whenever she is away from it. A domicile is never lost after it has been created, unless there is a combination of particular purpose to forsake the old domicile, specific intent to acquire a new domicile, and actual physical presence in the new domicile.
It is possible to have only one domicile, even if a person has dwellings in several states and visits them at different periods of the year. Because domicile requires both physical presence and the intention to make the state one's permanent abode, factors such as local auto registration, driver's license, voting, paying taxes, membership in local organizations, local bank accounts, and local business interest are all important in proving the required intent.
The estate said to attach to and profit from the servient estate as a result of an easement appurtenant. An easement road, for example, goes over an owner's land (the servient estate) to provide access to a nearby piece (the dominant estate). The dominant estate is typically adjacent to the servient estate.
An easement appurtenant property that benefits from a servient tract.
Land that benefits from an easement.
Land that has an easement attached to it.
The person who receives a gift.
A person who makes or offers a gift. The donee is the person who receives the gift.
The person who gives a present.
A piece of the door frame that holds it in place.
Door jamb interior
The case around a door that it opens and closes into and out of.
A garage door opener that opens by itself.
When the door is shut, the door slab rests on this piece of wood.
A device that is mounted on the wall or the floor to keep a door from opening too far and damaging the wall.
DOQ (Digital Orthophoto Quadrangle)
A digital picture having orthographic projection qualities; produced from a digitized vertical aerial shot with image displacement due by camera tilt and relief of terrain removed or corrected. Orthophotos combine the photographic picture features with the geometric elements of a map.
A protrusion constructed from the slope of a roof, used to house windows on the higher story and offer more headroom. Common dormer types include the gable dormer and the shed dormer.
A roof opening with a slope, where the framing sticks out to make a vertical wall for windows or other openings.
In a settlement or closing statement, the act of writing a dollar amount down as both a debit and a credit. For example, taxes paid late would be split so that the buyer would get a credit and the seller would get a debit. Other things, like the money you put on deposit, only show up once on the statement.
Two escrows on the same property, in which the seller seeks to utilize the buyer's money to obtain title to property X in one escrow so that title to property X can be conveyed to the buyer in the second escrow. In some places, a double escrow is banned unless both the buyer and the seller have been fully informed that the buyer's money in the second escrow are being used to complete the seller's purchase in the first escrow, usually at a profit.
Example: Assume a seller had a $240,000 contract in escrow to acquire a certain property. The seller then signs a contract to sell the identical property for $250,000, the buyer deposits $10,000, and a new escrow is opened. The seller intends to utilize the buyer's funds to obtain title in the first escrow and then transfer title to the buyer in the second escrow. The seller is compelled to default on the original $240,000 contract when the buyer fails to put the balance of the purchase price in escrow. The buyer requests a refund of the $10,000 deposit, and the court rules that because the seller failed to place the deed in escrow, the seller was also in default and could not keep the buyer's deposit because, "The delivery of the deed and the payment of the purchase price are both dependent and concurrent conditions in a real estate sale contract. Neither party could put the other in default unless the other could or would perform."
Two pieces of glass are used to make a window or door.
Double hung window
A window with two sashes that slide vertically and move up and down together.
There are two horizontal boards on top of the studs. The plate gives the rafters a place to stand.
Two or more taxes paid on the same asset or financial transaction; typically used in reference to corporate income taxes and dividend income on earnings transferred to shareholders. A company, being a separate legal taxable entity for income tax purposes, must pay tax on its earnings under the corporate form of ownership. Earnings given to investors are subject to normal income taxation.
Pass-through firms, such as S corporations, real estate investment trusts (REITs), limited liability companies, mutual funds, and partnerships, are exempt from corporate taxes, essentially avoiding double taxation.
Double taxation also refers to the condition of paying two different taxes on the same property, such as state and federal taxes in different states. It could also apply to a circumstance in which federal estate taxes are paid twice: first on the death of one joint tenant and again on the death of the surviving joint tenant.
The frame's comer is formed by two vertical studs linked at right angles. The double studs are thicker and more supportive than conventional studs.
Double-declining-balance depreciation method
An accelerated depreciation technique that takes twice the yearly straight line depreciation.
As in many hotels, a building design in which residential units are positioned on both sides of a corridor. A single-load corridor has only one side with units.
Two boards laid on the edge of a door or window to make the top part.
In some states, a wife acquires a legal claim or interest in property held or acquired by her husband at any time during their marriage. The dower is an anticipated, or inchoate, interest during the husband's life that does not become a legal estate (called consummate dower) until the husband's death. The couple must be legally married (note that some states recognize common-law marriages). In states that still recognize dower, the wife must sign a release of her dower in order for the husband to pass clear title to his own property.
Dower rights have been repealed in many states, and dower has been replaced by the surviving spouse's entitlement to an elective share following the death of one spouse in states that have adopted the Uniform Probate Code.
The interest of a wife in her husband's property.
A common law clause that awards a woman a one-third life estate in all of a dead husband's real property.
The share of a deceased person's property that is handed to the surviving family members.
A wife's stake in her husband's property is protected by a legal life estate.
The sum of money that a buyer will pay at the moment of purchase. Even though the earnest money deposit is frequently included in the down payment, the phrases are not interchangeable. Earnest money is applied to the total cash down payment payable at the time of closing.
At the time of closing, the first equity paid on a piece of property.
The difference between what the house sold for and how much was owed on the mortgage.
Rezoning a property to allow for a less intense use.
The possibility of an investor losing money in a given business.
Rainwater is sent from the eaves to the ground by a vertical pipe composed of cement, metal, clay, or plastic.
A metal pipe used to carry rainwater from the roof's horizontal gutters to the ground.
The conversion of one zoning classification to another, such as from residential to conservation or from multifamily to single-family use, from a higher to a lower or more active to less active classification. In these instances, there is no taking by eminent domain and, as a result, no compensation is provided to the aggrieved landowner, who remains helpless as the value of his or her property diminishes.
A mortgage provision in which numerous properties are pledged as collateral, and a default on one property results in a default on the others.
Information (both proven and rumoured) about how much inventory will be taken off the market by the end of the forecast period.
A pipe that drains surplus water from the foundation by being buried at the bottom of the foundation wall.
A method of progressively removing water and moisture from land, either naturally or intentionally, using pipes and conduits.
The land area that contributes to runoff in a stream, river, or lake.
A network of stream channels that are often linked in a hierarchical form.
Dram shop insurance
Liability insurance for incidents involving the consumption of alcoholic beverages.
A "Giro" is a loan of money. In a construction loan agreement, a "draw" is the term for when money is given out over time. Also, a real estate brokerage company will sometimes give money to its more experienced salespeople in advance. This money can be used to pay for commissions that have been earned but not yet paid out or to pay for commissions in the future. When the commission is less than the advance, courts have said that a broker can't get back the difference between the advance and the commission.
The amount of progress billings that are currently available to a contractor who has a contract with a fixed payment schedule.
Loan funds are taken out at the time of settlement.
The amount of time that funds is taken from investors to invest in deals.
Any inducement—whether access to facilities such as good education systems and places of amusement or underlying social, economic, and environmental characteristics—that fosters growth and development in a geographic area.
A rail track segment that serves as a link between a main line and private industrial property's own industry tracks (spurs).
A part of a cornice or other horizontal exterior finish course that sticks out farther than the other parts so it can throw water away.
Allows water to drip from the outside of a door or window frame by using a metal flashing on the outside of the frame.
A way to estimate the trade area (and sales/revenue potential) of a given retail establishment or centre based on the central place theory concept of range and how far people are willing to travel to get retail goods, as measured by drive time or mileage.
Drug Enforcement Act
A federal legislation enacted in 1988 that gives federal drug enforcement officials the authority to confiscate real property where unlawful drug activity is taking place. Owners must prove either that they had no awareness their property was being utilized for unlawful drug activity or that they had information and made reasonable attempts to cease the illegal usage to avoid forfeiture of title.
Real estate licensees serving as property managers for absentee owners must be diligent in informing owners about unlawful drug activities on the managed property. Simultaneously, the manager must avoid falsely accusing a renter of unlawful drug involvement. Some states have their own regulations for seizing and forfeiting property used in criminal activity.
Except for the final step of disbursing monies and providing documents, a closing is complete. The parties have completed their signing and payment requirements, leaving the closure to be completed by the escrow agent.
A crystalline form of carbon dioxide Bricks are primarily cleaned using this.
The black roofing felt is being put on the roof.
A nonrecourse mortgage is a mortgage or deed of trust in which the lender turns entirely to the real property for debt collection in the event of failure; that is, there is no personal accountability for any deficiency upon foreclosure.
A nonrecourse loan is one that does not need repayment.
Fungus-caused wood rot that turns wood into a fine powder.
A piece of wood used to make an interior wall.
Any type of interior wall construction that does not use plaster as a finish. Drywall is typically made of wood paneling, plywood, plasterboard, gypsum board, or other types of wallboard.
A circumstance in which a person or corporation has an agency and fiduciary connection with both parties to a transaction - the seller and buyer.
A circumstance in which an agent (or agency in some states) represents both parties to a transaction. States that permit dual agency typically require licensees to obtain permission to the "potential" for dual agency early in the relationship. Generally, the written approval of both parties is required prior to the drafting and submission of an offer.
Some states restrict dual agency; instead, licensees may continue to engage with both parties as a transaction broker.
In the early 1980s, dual agency became a concern. Previously, under sub-agency, all licensees represented the seller and were supposed to act equitably with the buyer as customer. Common-law agency principles emphasize the fiduciary responsibility of loyalty owed by an agent to a principal. Thus, possible conflicts of interest exist when a broker represents both the seller, who desires the highest price, and the buyer, who desires the lowest price.
In many brokerage offices, the office represents the seller when taking the listing, so obligating each licensee to represent the seller. Similarly, if one licensee represents a buyer, all other licensees in the office also represent the buyer. Dual agency occurs when the represented buyer desires to pursue an office listing (in-house).
In an effort to avoid dual agency for internal transactions, certain jurisdictions now accept "designated/appointed agency." The broker may choose one licensee to represent the seller to the exclusion of all other licensees and another licensee to represent the buyer to the exclusion of all other licensees. Thus, designated/appointed agency avoids in-house multiple agencies unless the selling agent also represents the buyer.
The fact that a broker is compensated by one party does not necessarily make the broker the sole agent of that party.
A broker or salesperson who acts as both the buyer and the seller in the same deal.
An illegitimate or fraudulent contract for the purchase of real estate that has terms and financial circumstances that differ from the original or true agreement and misrepresents the parties' true intentions. The forged dual contract might then be presented to a lender in the hopes of securing a greater loan. Kiting is a term used to describe this fraudulent behavior. A contract like this might have the parties show a lower purchase price than was actually agreed on so that the buyer is eligible for the maximum FHA loan, or the broker may accept a large earnest money deposit in the form of a check, agreeing never to deposit it, in an attempt to impress the mortgage company with the buyer's financial resources. The broker must take steps to guarantee that the mortgagee is not misled in addition to advising the seller of the agreement not to deposit.
A broker who assists in the creation of a dual contract in any way may face license suspension or revocation, a misconduct fine, or civil penalties. Furthermore, the broker cannot be a party to the misleading consideration's name.
Some brokers have been accused of employing an addendum that compels the seller to deliver a sum of money to the purchasers at closing for carpet replacement or fence repairs when the money will not be used for the claimed reason. Instead, the buyers transfer the monies to the closing agent as part of or all of their equity investment in the property. Because such a kickback significantly lowers the purchase price for buyers who are not providing an equity investment with their own finances, such an addendum is not included with the FHA application. This type of dual contract practice is a federal criminal violation when a federally chartered lender is involved.
The practice of giving two contracts for the same transaction, which is prohibited.
A tube, pipe, or channel used to transport fluids, cables, wires, or tempered air. Telephone and electricity wires are frequently routed through underfloor duct systems.
Air from the furnace is sent to rooms in the house through pipes made of metal.
A payment deadline specified in a note or contract. The payment is past due if it is not received by the agreed-upon deadline. Most contracts stipulate that late payments are permissible during a grace period. The delinquency date is the last day of the grace period.
The timely analytical study of all reasonable factors affecting the development of a property, including environmental, financial, legal, and other factors.
- A reasonable, proper, and appropriate level of care and engagement. An stated or implied requirement in certain real estate transactions that a person employ good faith efforts to perform contractual obligations. A buyer who makes an offer contingent on receiving finance must conduct due diligence in order to obtain such funding. A buyer who fails to conduct a due diligence inspection of a property later determined to contain hazardous substances may be liable for full cleanup charges under Superfund rules.
- In securities law, the duty of the issuer or broker to ensure that the offering prospectus is truthful and does not misstate or omit material information.
- A period of time during which a buyer is allowed to have experts evaluate the property, study the title, and review the leases to assess whether the property meets the buyer's needs. If the buyers discover disagreeable conditions, they often have the right to withdraw from the transaction before the due diligence time expires.
The examination of all relevant information about a possible investment.
A potential purchaser's study and fact-finding procedure that allows them to make a more educated decision about whether to buy or invest. Under legal words, this is the level of caution that a reasonable and sensible person would use in the conditions of the transaction.
After a buyer and seller reach an agreement on a purchase price, the buyer is given time to check the information provided by the seller. The buyer, for example, will want to confirm the scale of specific running expenditures, the current rent charged to renters, the absence of environmental hazards, and so on. The due-diligence procedure is the process of "kicking the tyres" before the final closing.
Analyze the property or asset to find out if there is a legal or financial liability. Most of the time, this is done by the buyer before an agreement is made.
The process of looking at a property, its documents, and the way it is run. This can be done by the potential lender or buyer, or for them. Using a consistent standard of inspection and investigation, one can figure out if the real conditions match the information or not.
Due on sale
All outstanding debt must be paid when the property is sold or transferred under a mortgage contract.
Proceedings conducted in conformity with legal precedent, legislation, and constitutional rules, with the goal of protecting the rights of all parties involved in a dispute.
A clause in most mortgage loans that requires the borrower to pay off the mortgage debt when the property is sold. If the borrower doesn't, the note will automatically mature at the lender's choice. This clause makes it impossible for the new buyer to take over the mortgage unless the mortgagee agrees. If the mortgagee agrees, the mortgagee could raise the interest rate or charge an assumption fee. It is a part of contracts for deed and deeds of trust. It is also called an alienation clause, a non-assumption clause, a call clause, or a right-to-sell clause.
Even though such clauses are upheld in most states, some state courts and legislatures have thrown them out because they are an unreasonable restriction on transferring the property, at least without proof that the transfer will hurt the lender's security in the property (the "bankrupt-arsonist buyer").
A due-on-encumbrance clause, which can be found in a mortgage or a deed of trust, is similar to a due-on-sale clause. It lets the mortgage holder pay off the mortgage note early if the mortgagor gets a second loan on the property. The clause is there because the mortgagee thinks that any extra financing reduces the mortgagor's equity in the property and makes it more likely that the debt will not be paid. Some courts have also thrown out these kinds of clauses because they put unreasonable limits on how property can be sold.
Before 1990, there were no due-on-sale clauses in VA and FHA mortgages.
A mortgage provision demanding full payment of the mortgage at the time of selling. A new buyer will not be able to take on this form of financing.
The provision in a mortgage contract that mandates the borrower to repay the loan in full if the property used as security for the loan is sold.
A structure that houses two families and has separate entrances, kitchens, bedrooms, living spaces, and bathrooms for each. A two-family home with apartments that are either side by side (known as a twin in some locations) or one over the other.
Some duplex owners contend that a duplex is just the joining of two distinct single-family residences with a party wall in developments where single-family dwellings are prohibited. Many sub-dividers limit use to "detached single-family houses" to avoid such disputes. The rooms in a duplex apartment are spread out over two stories.
Under one roof, there are two residential units.
Two households can share a two-story apartment with two separate entrances.
A concrete panel and fibreglass, which are usually used to back ceramic tiles. They are often found on bathtub decks. Also called "Wonder Board."
Durable power of attorney
A power-of-attorney document that says the attorney in fact will still have power even if the principal is physically or mentally unable to do so. Like all powers of attorney, it ends when the person who gave it to the agent dies.
The time it takes to perform a project activity.
Menace is the use of illegal force or action by one person against another in order to force the other person to do something against her will. Menace is also the threat of force. You can use duress as a reason not to enforce a contract because there was no real agreement between the parties. The person who was forced to sign a contract can't use it against them. Courts don't give much weight to economic duress, which is when a person says he was forced to sign a contract because of money problems.
Firms up framing by being tucked in between stud walls or joists on the floor.
The term "residence" refers to a location where people can live.
Any building, structure, or part of a building or structure that is used and occupied for human habitation or is meant to be used for that purpose, as well as any accessories. Many cities and towns have laws about fixing, closing, and tearing down homes that are not safe for people to live in.
According to many zoning codes, a dwelling unit is a room or group of rooms that can be used by a family on its own and has a single kitchen, unlike a hotel room. Under the federal Fair Housing Act, this term refers to any place that is meant to be a home. Hotels, motels, and other similar places are not included.
DWV (drain waste vent)
The plumbing system is responsible for getting water and sewer gas out of the house.
A complex and ever-changing or evolving group of different and interconnected entities and agents that are put together into a whole that works and serves multiple and/or common goals. See also how the system and the market work.