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Real Estate Glossary of Terms
Looking for the definition of a real estate
term? Click on a letter of the alphabet below to go to that letter's
corresponding page of terms.
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CANTILEVER
- A projecting beam or overhanging portion
supported at one end only.
CAPITAL GAIN - The taxable profit
derived from the sale of a capital asset.
CAPITAL IMPROVEMENT - Any structure which is erected as a permanent improvement to real
property; any improvement which is made to extend the useful life of a
property, or to add to the value of the property.
CAPITALIZATION - A mathematical
process for converting net income into an indication of value, commonly used
in the income approach to appraisal.
CAP
RATE (CAPITALIZATION RATE) - The
percentage selected for use in the income approach to valuation of improved
property. The cap rate is designed to reflect the recapture of the original
investment over the economic life of the improvement, to give the investor
an acceptable rate of return (yield) on the original investment, and to
provide for the return on borrowed capital.
CERTIFICATE OF REASONABLE VALUE (CRV)
- A certificate issued by the Veterans Administration setting forth a
property's current market value estimate, based upon a VA approved
appraisal.
CERTIFIED CHECK - A check which
the bank guarantees to be good, and against which a stop payment is
ineffective.
CERTIFIED PROPERTY MANAGER - A
professional property manager who has qualified for membership in and is a
member of the Institute of Real Estate Management, and is
designated a CPM.
CHAIN
OF TITLE - The recorded history of
matters which affect the title to a specific parcel of real property, such
as ownership, encumbrances and liens, usually beginning with the original
recorded source of the title.
CHATTEL - Personal property which
is tangible and moveable.
CLEAR
TITLE - Title to property that is
free from liens, defects or other encumbrances, except those which the buyer
has agreed to accept, such as mortgage to be assumed, the ground lease of
record, and the like; established title; title without clouds.
CLIENT TRUST ACCOUNT - An account set up by a broker to keep client's monies segregated from
the broker's general funds.
CLOSING - The final stage of
consummating a real estate transaction when the seller delivers title to the
buyer, in exchange for the purchase price.
CLOSING COSTS - Expenses of the
sale which must be paid in addition to the purchase price (in the case of
the buyer's expenses), or be deducted from the proceeds of the sale (in the
case of the seller's expenses).
CLOSING STATEMENT - A detailed cash accounting of a real estate transaction prepared by
an escrow officer or other person designated to process the mechanics of the
sale, showing all cash that was received, all charges and credits which were
made, and all cash that was paid out in the transaction; also called a
settlement statement.
CLOUD
ON TITLE - Any document, claim,
unreleased lien or encumbrance which may impair or injure the title to
property or make the title doubtful because of its apparent or possible
validity.
CLUSTER DEVELOPMENT - The grouping of housing units on less than normal size home sites,
with the remaining land being devoted to common areas.
CODE
OF ETHICS - A written system of
standards of ethical conduct. The Code of Ethics of the National Association
of REALTORS®, first written in 1913, establishes the high standards of
conduct for members of the REALTOR® community.
COLLATERAL - Something of value
given or pledged as security for a debt or obligation. The collateral for a
real estate mortgage loan is the mortgaged property itself, which has been
hypothecated.
COLOR
OF TITLE - A condition which has
the appearance of good title, but which in fact is not valid title, as where
title is founded on some written document which on its face appears valid
and effective, but which is actually invalid.
COMMERCIAL PROPERTY - A classification of real estate which includes income producing
property such as office buildings, gasoline stations, restaurants, shopping
centers, hotels and motels, parking lots and stores, and other similar uses.
COMMINGLING - To mingle or mix;
for example, to deposit client funds in the broker's personal or general
account. A licensee found guilty of commingling can have the license
suspended or revoked by the Real Estate Commission.
COMMISSION - The compensation paid
to a real estate broker (usually by the seller) for services rendered in
connection with the sale or exchange of real property.
COMMITMENT - A pledge or promise
to do a certain act, such as the promise of a lending institution to loan a
certain amount of money at a fixed rate of interest to a qualified buyer,
provided the loan is obtained on or before a certain date.
COMMON AREAS - Land or
improvements designated for the use and benefit of all residents, property
owners and tenants.
COMMON ELEMENTS - Parts of the
property which are necessary or convenient to the existence, maintenance and
safety of the condominium, or are normally in common use by all of the
condominium residents.
COMMON LAW - That body of law
which is based on usage, general acceptance, and custom, as manifested in
decrees and judgments of the courts; judge-made law, as opposed to codified
or statutory law.
COMMON WALL - A wall separating
two living units.
COMMUNITY PROPERTY - A system of property ownership based on the theory that each spouse
has an equal interest in property acquired by the efforts of either spouse
during marriage.
COMPARABLES - Recently sold
properties which are similar to a particular property being evaluated, and
which are used to indicate a reasonable fair market value for the subject
property.
COMPOUND INTEREST - Interest which is computed upon the principal sum plus accrued
interest.
CONCESSIONS - Discounts given by
landlords to prospective tenants to induce them to sign a lease.
CONDEMNATION - Either a judicial
or administrative proceeding to exercise the power of eminent domain (the
power of the government to take private property for public use).
CONDOMINIUM OWNERSHIP - An estate
in real property consisting of an individual interest in an apartment or
commercial unit, and an undivided common interest in the common areas such
as the land, parking areas, elevators, stairways, and the like.
CONSIDERATION - An act or
forbearance, or the promise thereof, which is offered by one party to induce
another to enter into a contract; that which is given in exchange for
something from another.
CONSTRUCTIVE EVICTION - Acts done
by a landlord that so materially disturb or impair the tenant's enjoyment of
the leased premises that a tenant is effectively forced to move out and
terminate the lease without liability for any further rent.
CONSTRUCTIVE NOTICE - Notice of certain facts which are implied bylaw to a person because
he could have discovered the fact by reasonable diligence or by inquiry into
public records.
CONTINGENCY - A provision placed
in contract which requires the completion of a certain act or the happening
of a particular event before a contract is binding.
CONTRACT - A legal agreement
between competent parties who agree to perform or refrain from performing
certain acts for a consideration. In real estate, there are many different
types of contracts, including listings, contracts of sale, options,
mortgages, assignments, leases, deeds, escrow agreements, and loan
commitments, among others.
CONVEYANCE - The transfer of title
to real property by means of a written instrument such as a deed or an
assignment of lease.
COOPERATING BROKER - A broker who joins with another broker in the sale of real property.
COOPERATIVE OWNERSHIP -
Cooperative ownership of an apartment unit means that the apartment owner
has purchased shares in a corporation which holds title to the entire
apartment building.
CO-TENANCY - A form of concurrent
property ownership in which two or more persons own an undivided interest in
the same property.
COUNTER-OFFER - A new offer made
as a reply to an offer received from another; this has the effect of
rejecting the original offer, which cannot thereafter be accepted unless
revived by the offeror's repeating it.
COURTESY TO BROKERS - The practice of sharing commissions with cooperating brokers.
COVENANT - A written agreement or
promise of two or more parties by which either pledges to perform or not to
perform specified acts on a property, or which specifies certain uses or
non-uses of the property.
COVENANTS AND CONDITIONS -
Covenants are promises contained in contracts, the breach of which would
entitle a person to damages. Conditions, on the other hand, are
contingencies, qualifications or occurrences upon which an estate or
property right would be gained or lost.
COVENANTS RUNNING WITH THE LAND -
Covenants which become part of the property, benefiting and/or binding
successive owners of the property.
CUL
DE SAC - A street which is open at
one end only, and which usually has a circular turnaround; a blind alley.
CUSTOMER TRUST FUND (CTF) - An
impound account maintained for the purpose of setting up a reserve to pay
certain periodic obligations such as real property taxes, insurance
premiums, lease rent, and maintenance fees.
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