RL Wilson, P.C. Law Firm

Glossary of Texas Real Estate Terms

The following is a glossary of frequently-encountered terms in the Texas real estate industry. For Answers to many of your Frequently Asked Questions [FAQ] see Sword of Justice Trey Wilson’s real estate and construction law blog

(Economic) External Depreciation is a reduction in property’s value caused by factors outside the physical boundaries of the subject property, such as social, environmental or political factors; also known as economic depreciation.

(Preferred) Functional Depreciation is a loss in value within a structure due to changes in tastes, technical innovations, market standards, or any outdated style. The item in question may be curable, such as lack of air conditioning in Florida, or incurable, such as exceptionally low ceilings in a warehouse, depending on the costs of correcting the item as compared to the benefits expected if the correction is made.

1031 Exchanges are an exchange of like properties on a tax-deferred basis.

180-Day Exchange Period is the rule in Revenue Code Section 1031 stating that an exchanger conducting a Delayed exchange must close the sale of the replacement property within 180 days of closing the sale of the relinquished property.

401(k) is a retirement investment plan that allows an employee to put a percentage of earned wages into a tax-deferred investment account selected by the employer.

45-Day Rule is the rule in Revenue Code Section 1031 stating that an exchanger conducting a Delayed exchange must identify a replacement property within 45 days of selling the property he or she is relinquishing.

Abstract of Title is a brief history of the title to a particular parcel of real estate. It is a summary of the public records that exist regarding that parcel and presents a compressed listing of the various events and changes that have affected the title to that parcel over time. It chronicles any transfers in ownership as well as any divisions of ownership interest. It also records liens and other encumbrances that may be associated with the property. Most abstracts are accompanied by a certificate that identifies the period of time covered by the abstract, but there are no standard forms or methods for presenting or creating an abstract.

Acceleration Clause is a clause in the mortgage document that, if enforced, makes the entire balance of the mortgage due to the lender immediately upon default.

An Accrued Item Expense will be billed to the buyer but are owed by the seller.

Actual Authority is the express or implied authority that a principal gives an agent in a relationship of agency.

Actual Damages Compensation is given to an injured party for losses that were a result of the actions or omissions of another party.

Actual Notice "Notice" is the communication (sometimes required by a contract or by law) that alerts an individual to some fact. "Actual notice,"” then, is some form of communication given directly to the individual being alerted to the existence of the fact– that is, it is notice he or she has received personally. One can also gain "actual notice" on one’s own, without receiving any explicit communication from another person. For example, one would have direct knowledge--that is, "actual notice"--about a property after researching that property through public records or by performing a property inspection.

Ad Valorem Taxes are general real estate taxes, calculated according to the assessed value of individual properties. The term ad valorem is Latin for according to value.

Adjusted Basis is the purchase price of real estate plus the cost of improvements, less depreciation.

Affidavit of Title is the document in which the seller states that he or she has had no judgments, bankruptcies or divorces since the date of the title examination, that he or she possesses the property, that there are no unrecorded deeds or contracts for the property, that all repairs and improvements have been paid and that there are no defects in the title.

An Agency Relationship is a relationship created when one party designates another to represent his or her interests in dealings with a third party.

An Agent is the individual authorized by a principal to make decisions on behalf of the principal and represent the principal’s interest.

Air Rights are the right to use, control and occupy the space above a particular parcel of real estate.

Alderson Exchange is a type of 3-party 1031 exchange wherein the buyer purchases the property of a third party in order to exchange it with the seller. Although this is not a complete list and varies from state to state, the prudent real estate professional should be apprised of laws and forms of this notice to explain to his or her buyers and sellers. In some instances, failure to provide the forms to buyers gives them a right to terminate the contract up to closing or for so many days after receipt of notice. And worse, if a buyer discovers a condition not disclosed by a seller or his agent (on notice that such a condition exists) prior to closing, legal action can be brought by the buyer for fraud and deception in the transaction, for which substantial damage awards sometimes awarded.

Americans with Disabilities Act prohibits discrimination against individuals with disabilities in employment, public services, telecommunications, public accommodations, and commercial facilities.

Amortization is to pay down the principal of a loan over time; a loan that is so paid down is said to be amortized; the period of time it takes for such a loan to be paid off is called the amortization period.

Amortization is the repayment of a financial obligation over a period of time in a series of periodic installments. Specifically, it is the payback of the principal owed to the lender. The effect of amortization is to build up the paper value of the investor's (owner's) equity and to reduce the debt obligation. It should be noted that a portion of each payment consists of a blend of interest and amortization of principal. The interest portion is tax deductible, whereas the amortization is not. The repayment of a financial obligation over a period of time in a series of periodic installments. Specifically, it is the payback of the principal owed to the lender. The effect of amortization is to build up the paper value of the investor's (owner's) equity and to reduce the debt obligation. It should be noted that a portion of each payment consists of a blend of interest and amortization of principal. The interest portion is tax deductible, whereas the amortization is not.

Amortization Rate is the percentage of a periodic payment that is applied to the reduction of the principal; in a level-payment mortgage this corresponds to the sinking fund factor.

Amortization Term is the time period over which the principal amount would be retired on the basis of the periodic installments paid.

An Amortized loan is a financial obligation that is repaid over a period of time by a series of periodic payments.

Annuity is a contract (generally with an insurance company) for a lump sum or scheduled premiums that are paid out. The annuity issuer guarantees an income for a certain period or for the remainder of one’s life.

Apparent Authority is the authority created when an agent who has no actual authority is falsely represented as having such authority by the principal to a third party.

Appraisal is the process by which the value of a piece of real estate is determined; any value so determined is called the appraisal value.

Appraisal Report is an appraiser’s written or oral estimate of value submitted to a client based on a specified definition function of value for the subject property as of a specific date, giving all details of the data utilized in the appraisal process.

Appraised Value is an estimate by an appraiser of the amount of a particular value, such as market value, assessed value, or insurable value, based on the given assignment.

An appraiser is a person who engages in the procedure of estimating the value of real property or personal property.

Appreciation is an increase in the value or worth of something due to economic or related causes such as supply and demand, which may prove to be either permanent or temporary. It is the opposite of depreciation.

Appropriation is the actual method by which a district imposes a real estate tax.

Area is the surface size of a two-dimensional figure such as a triangle or rectangle, expressed in terms of square units such as square feet or square yards. It is formulated by the equation length x width = area for rectangles; one-half base x height = area for triangles; pi x radius squared = area for circles, etc.

Asbestos is a naturally occurring mineral fibers found in rocks, used to strengthen materials, provide thermal and acoustical insulation on exposed surfaces, and fireproof a product or material. It has been linked to cancer of the lungs, stomach, and intestines, and a disease called asbestoses.

Assessment Roll is part of the procedure for levying special assessments in which the assessment is spread over affected properties.

Assignment is the transfer of all title, rights and interest that a contract entails to another party from the individual or entity who currently owns such title, rights or interests.

Assignment of Lease is a transfer by the tenant (lessee) of his or her interest in the lease to a third person (see sublease).

The Association of Real Estate License Law Officials (ARELLO) is an international organization that promotes uniform standards for license law administration and enforcement.

Assumption is taking over the obligation or commitment of another, as in a loan, insurance policy, etc.

The Baird Exchange is a type of 3-party 1031 exchange wherein the buyer and seller swap properties and the buyer sells the property he or she has acquired to a third party.

Balance is the appraisal principle that states that the highest property values are realized when improvements are proportional to one another and the land in size and type.

Banker’s Year is an evenly based system used for calculations that assumes twelve calendar months, each containing thirty days, for a total of a 360 day year.

A Banking Year is the 360-day year (or 12 months of 30 days) that is often used for banking and other financial accounting.

Bankruptcy is a provision of Federal Law whereby a debtor surrenders his assets to the Bankruptcy Court and is relieved of the future obligation to repay his unsecured debts.

The Bargain and sale deed is a deed without a warranty, generally containing only the minimum standards for valid conveyance, that conveys all of a grantor’s interest to a grantee; a deed that differs from a quitclaim in practice and use in that it transfers one’s complete interest, which is usually known, as oppose to a quitclaim deed that transfers all of one’s title, which is generally unknown.

Basis is the value of property used to calculate gain or loss; the basis is usually the purchase price.

Bench Mark is a fixed location of known elevation set by a government agency commonly used as a permanent reference point for the metes and bounds method of land location and description.
A Bilateral Contract is an agreement where both parties give consideration and promise to perform the actions specified in the contract.

Black Mold is a slimy, black fungus particularly hazardous to humans when growing indoors that is linked to rashes, headaches, nausea, muscle aches, and fatigue.

A Block is a grouped or connected series of lots segmented from other lots by a series of streets or major thoroughfares.

Blockbusting is encouraging the panic selling of homes at below market value by raising fears that the entry of persons of a particular minority group will result in decreased property values in a neighborhood and negatively impact the area.

BOMA International The Building Owners and Managers Association is the oldest and largest professional organization for property managers and owners.

Boot is a distribution of the proceeds from an exchange (cash boot) or the reduction of debt through an exchange (mortgage boot), which is recognized and taxed.

A Breach of Contract occurs when there is a violation of the terms of a legally binding agreement. When a breach of contract occurs, the non-breaching party can rescind the contract, sue for damages or sue for performance of the contract.

Breach of Lease is any violation of the terms of the lease by either the lessor or the lessee.

Broker is one who draws contracts, deals in the sale of property and/or negotiates for another in exchange for compensation; one who may lawfully employ salespersons and own a real estate office.

Brownfield Real property is the expansion, redevelopment or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant.

A Calendar Year is the standard practice of measuring a year based on twelve months with an unequal number of days in each totaling 365 days, or 366 on leap year.

Capital Gains is the capital an investor receives when he or she sells or exchanges an asset, equal to the sales price of the property, less the investor’s basis.

Capitalization Rate (CAP) is the percentage used in the income capitalization approach to appraisal that represents an annual rate of return on one's investment. (V=I/R) where: V=Value, I=Net Operating Income, and R=Capitalization Rate.

CERCLA The Comprehensive Environmental Response, Compensation, and Liability Act, also called Superfund, addresses liability and management of hazardous waste.

Chain of Title is a part of a title search that shows a record of a property’s ownership by displaying the complete line of property owners in chronological and successive order.

Charitable Gift Annuity (CGA) is an annuity (income stream) that is exchanged for an asset.

Chattel is personal property, as opposed to real estate, which is movable.

The Civil Rights Act of 1964 Act includes the prohibition of discrimination in housing programs that receive any amount of federal funding.

The federal Civil Rights Act of 1968 prohibits discrimination in the sale or rental of property on the basis of race, color, religion, or national origin. Later amendments added prohibitions against discrimination based on sex, handicap, and familial status.

The Civil Rights Acts of 1866 and 1870 provides that all persons, regardless of their race, color, or previous position of servitude have the same right to make and enforce contracts to the full and equal benefit of all laws and proceedings for the security of persons and property.

Client is the person(s) or entity(ies) with whom a real estate broker or a real estate broker’s firm has an agency or legally recognized non-agency relationship.

Closing is finalizing steps of a real estate transaction, when the real property is turned over to the purchaser on the closing date.

Closing Costs are various fees and expenses payable by the seller and buyer at the time of a real estate closing (also termed “transaction costs”) set out in the settlement statement.

Closing Date is the date on which the seller delivers the deed and the buyer pays for the property.

Common Enemy Doctrine is a rule attributing responsibility for natural occurrences like water damage to each individual landowner, regardless of a neighbor’s actions.

Competent Parties are persons legally capable of entering a contract; this means that he or she must be of the majority age and be mentally competent.

Competitive Market Analysis (CMA) is a system of comparisons of recent sold, pending and currently-for-sale home prices in a specific area for houses that are similar in size and features to the subject property. It is prepared by the real estate professional prior to or in conjunction with obtaining a listing to assist the seller in determining an initial asking sales price for the property.

The Conditions under surface disclose the location of any transportation pipelines for natural gas and related products beneath the property’s surface.

Consideration refers to something of value that is given to show acceptance or acknowledgement of a contract, such as money or a promise.

Constructive Notice is the act of recording documents and making information accessible to prospective buyers and lenders.

A Contract is a legally binding and enforceable agreement between two or more persons regarding an exchange (of money, promises, property or services). In order to be valid, a contract must include an offer, acceptance and consideration. A contract is also a legally enforceable document promising to either engage in or refrain from some action.

A Contract for Deed, also known as an installment contract or contract sale, is a type of agreement where the seller holds the title until the buyer has paid in full.

Cost is the money provided for materials, labor, land and profits necessary to bring a property into existence.

Cost Approach is a method of appraising property based on the depreciated reproduction cost (new) of all improvements, plus the market value of the site.

Cost of Credit is the amount one pays on borrowed money; an interest rate.

Counteroffer is a rejection of an offer to buy or sell, with a simultaneous substitute offer.

Credit is a liability or equity entered in a party’s favor. On closing statements, credits reflect expenses paid or expenses that are owed to the party.

Cubic is a three-dimensional measurement based on the total volume of an object.

Customer is a party to a real estate transaction who receives information, services, or benefits but has no contractual relationship with the real estate professional or the real estate professional’s firm.

Debit is an amount due or owed. On closing statements, debits reflect charges made to parties.

Deceptive Trade Practices Act is a law that allows an individual to sue a provider of goods or services for fraud or misrepresentation.

Deduction is an amount of money subtracted from income when calculating federal income tax.

A Deed is a written instrument (usually under seal) that, when properly delivered and executed, transfers or conveys a property owner's right, interest or title in a property. We should note that a deed is importantly different from a title--a title is not an instrument of conveyance, but a deed is.

Deed books are part of the public record, found in the county clerk’s office or recorder’s office, in which copies of deeds are recorded; libers.

Deed in trust is a special deed that conveys interest to a neutral, third party for security on an outstanding debt; a security device similar to a mortgage.

Deed of reconveyance is a deed used to transfer title from the trustee back to the trustor (borrower) upon full payment of the loan.

Deed of release is a special purpose deed given by lien holders, remaindermen or mortgagees to relinquish their claims on a property.

Default is the failure to make timely debt payments or to comply with other conditions of an agreement.

Deficiency Judgment pays off the remaining balance of a defaulted loan, plus accrued interest and expenses, if a foreclosure sale does not generate enough money to pay off a loan.

Delayed Exchange is the most common type of 1031 exchange, where the exchanger sells the property he or she is relinquishing before buying a replacement property. The Revenue Code requires that exchangers conducting a delayed exchange follow the 45-day and 180-day rules when exchanging. Also known as a Starker Exchange.

Delinquency is failure to make payments on time.

A Demise is a transfer to another of an estate for years, for life, or at will.

Depreciation (Accounting) is a method of allocating the cost of an aging asset over its estimated useful life. For income tax purposes, depreciation is a provision for the estimated wear and tear of an asset. Depreciation deductions can be claimed as a tax deduction on real estate improvements, not land, regardless of whether the market indicates an increase or decrease in the value of the property.

Depreciation (Real Estate) is a loss in value from wear, use or obsolescence (disuse).

Direct Deeding is a type of 3-party 1031 exchange wherein the exchanger deeds his property to a second party, and the second party pays a third party who then deeds his or her property to the exchanger.

A Disability is a physical or mental impairment that substantially limits one or more of the major life activities of an individual; a record of such an impairment; or being regarded as having such an impairment.

Disclosure is an obligation to reveal all the facts of a transaction. This means making known any adverse details that may affect the results of the transaction.

Disclosure document is a notice of environmental hazard which describes a hazardous condition and its remedies, issued by the EPA and required to be given by the landlord to tenants who may be at risk of harm.

Discount is the amount of money paid at the front end to acquire a loan. This amount is deducted from the principal at the time the loan is made and thus represents interest paid in advance. The discount is normally stated in terms of points or percentages.

Discrimination is unfavorable or unfair treatment of a person or class of persons, in comparison to others who are not members of that class, on the basis of race, sex, color, religion, national origin, familial status, or physical/mental handicap.

Distribution is the time when a retirement plan actually starts to pay a retirement income.

Double Exposure is when an agent breaches fiduciary duties to one or both parties due to the conflicting obligations of preexisting agency relationships with either party.

Dual Agency is the relationship created when an agent represents both the principal and the third party in a transaction.

A Dwelling is any building, structure or portion of a building that is occupied as, or designed or intended for occupancy as, a residence by one or more families; any vacant land, which is offered for sale or lease for the construction of any such building.

Earnest Money is a deposit made by a purchaser of real estate to show good faith.

Economic Fixity is an economic characteristic of land describing the commodity's investment permanence.

Electromagnetic Forces are claims that they cause cancer or other health problems, but professionals have not established their legitimacy as a health concern; they could be considered when property is bought or sold, so real estate professionals need to know about them.

Emblements Fructus Industriales, or annually cultivated plants, which, even when attached to the earth, are usually considered personal property.

Eminent Domain is a legal term referring to the power of the government to take land from private owners for public use. This is one of the four basic government powers of taxation, eminent domain, escheat and police powers. When a property is taken from its private owner, the owner must be paid fair market rates or fair compensation.

Encumbrance is a claim against a property that affects its title or use

The Endangered Species Act passed in 1973, can have a profound impact on land value. The Bureaucratic regulations have substantially expanded this act over the years, so landowners have given it increased attention.

An Enforceable Contract is a contract where all the terms and conditions are valid and the parties bound by the contract are responsible for carrying out the obligations set forth in the contract.

Environmental Impact Statement is a required statement for federally funded projects of the total expected environmental impact a project will have.

Environmental Site Assessment also called a Due Diligence Audit, is an investigation carried out to determine any environmental hazards or concerns that could either affect the use of a property or impose future financial liability on its owner. Assessments can be Phase I, Phase II or Phase III, depending on the extent of environmental damage.

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in lending on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant is of legal age) or on the basis of the applicant’s receipt of income from a public assistance program.

The Equalization Factor is an adjustment applied to the assessed values of real estate in individual districts, used to distribute taxes more equitably.

Equitable Lien is a lien created by courts and derived from common law.

Equity Skimming is a type of scam in which a person offers to take over a delinquent mortgage loan and pay the owner a sum of money when the property is sold; typically the scam artist collects rents and allows the lender to foreclose.

Escrow is an agreement between two or more parties providing that certain instruments or property be placed with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.
An Escrow Account is held by the lending institution into which the borrower pays taxes, insurance and special assessments and from which the lender pays these sums as they become due.

Escrow Closing describes a closing transaction where a disinterested third party presides over the closing. Paperwork is handled through this third party, and the other parties might not be present at the closing

An Estate is the extent of an individual’s right or ownership in land.

Ethics is the study of standards of conduct and moral judgment, which includes the system or code of morals of a particular person, religion, group, professional, etc. It is also the required conduct (to act otherwise would be unlawful) of real estate professionals as outlined in the National Association of REALTORS® Code of Ethics.

Eviction is the forcible removal of a tenant and his or her personal property from leased premises. Violation of covenants by the tenant results in actual eviction; violation of covenant by the landlord results in constructive eviction.

Evidence of Title are any tools (documents) that can provide proof of ownership; such as an attorney’s opinion of title or a title insurance policy.

Exchange Accommodation Titleholder (EAT) is an entity defined by Revenue Procedure 2000-37 where an exchanger parks title to a property when conducting a safe harbor Reverse Starker exchange.

Exclusive Agency Listing is an employment contract expiring on a specified date and giving one broker the exclusive right to sell a particular property and earn a fee or commission upon the acceptance of an offer to the Seller. Such exclusive listings still allow the owner of the property to sell directly to a buyer and not pay a commission, but rather just a fixed amount for efforts expended by the broker for services such as placing signage, running ads, brochures, MLS and so on.

The Exclusive Right To Sell Listing is an employment contract giving one broker the exclusive right to collect a commission over if the property is sold by anyone within a specified period of time, including the owner.

Executed Contract is a type of contract in which all the terms have been fulfilled.

Executory Contract is a type of contract in which the terms have not been fully performed by the parties in the agreement.

Expense-to-Income ratio is the ratio of the housing expense of a borrower, or PITI, to the net income of the borrower.

Expiration Of Listing Period is the clause in a listing agreement that states the expiration of the broker employment contract. All listing agreements must have this clause in them for the contract to be enforceable.

Express Actual Authority is the power that has been granted by a principal to an agent either in writing or orally.

Express Agreement is the method of creating an agency relationship where the principal specifically appoints or hires an individual to serve as his or her agent, and the agent accepts the position. This can be an oral or a written agreement.

An Expressed Contract is an oral and written contract that allows each party to explicitly express their conditions and promises.

The Fair Housing Act, as amended in 1988, prohibits discrimination in housing based on race, color, religion, national origin, sex, physical or mental handicap, or living with children, except that housing for older persons may exclude children.

Familial Status is an act or practice is considered discrimination on the basis of familial status if it is unfavorable or unfair to families containing children under 18, domiciled with a parent or other person having legal custody, or to anyone who is pregnant or planning to adopt.

Family Wealth Replacement Trust is a trust that is created for wealth transfer, preferably on a tax favorable basis, and that is generally funded with life insurance.

Fee Simple Estate is private ownership of property which allows the owner to use and distribute property as he or she sees fit.

(FHA) Federal Housing Authority; the Federal Housing Administration, which operates under the Department of Housing and Urban Development, administers the government home loan insurance program. This program allows prospective homebuyers to get a loan in order to finance their home by removing the risk from the lender.

(FHLMC) Federal Home Loan Mortgage Corporation, also known as Freddie Mac, purchases first mortgages on residences.

Fiduciary is a trustee; a person who, in good faith and candor, under his or her own volition acts primarily for the benefit of another; (Adjective) relating to a trust or like a trust in nature.

A Fiduciary Relationship is the agency relationship that creates a duty between a broker and a principal called a “fiduciary duty.” The law imposes the duties of obedience, loyalty, disclosure, confidentiality, accountability and reasonable care. A real estate professional owes his or her complete fiduciary duty to the principal, except in those circumstances where an employment contract is entered into with the buyer instead, making the duty to that person. However, a broker must treat the buyer fairly in all dealings, whether or not the broker has a fiduciary duty.

First User Loan is a loan to finance construction of a new structure or purchase of manufactured home where the structure was constructed for sale or the manufactured home was purchased for purposes of resale and the loan is used as or converted to a loan to finance purchase by the first user.

A Fixture is property that has been attached to a house so long that it has become real property and whose removal would cause damage or a loss of value. Examples include built-in bookcases, sinks, toilets, tubs, track lighting, plumbing fixtures and electrical devices connected to electrical current.

(FNMA) Federal National Mortgage Association, also known as Fannie Mae, supplies home mortgage funds through a congressionally chartered, shareholder company.

Forbearance is when one party does not take actions in which he or she is legally entitled to take.

Foreclosure is the legal procedure by which real estate securing a debt can be sold to satisfy the debt.

Formaldehyde is a colorless, pungent-smelling gas that can cause watery eyes, burning sensations in the eyes and throat, nausea and difficulty in breathing in some humans exposed at elevated levels. It is an important chemical used widely by industry to manufacture building materials and numerous household products.

Fraud is a false statement or promise made by one party that results in a loss for another party.

Freehold Estate is a form of real estate interest that requires the property owner to have actual ownership and possession of the property. In a freehold estate, the estate has an unspecified period of duration.

Friable is the soft or crumbling form of asbestos, considered more dangerous than asbestos in hard form.

A General Agent has a great degree of authority in limited areas of the principal’s affairs, such as a Property Manager.

A General Lien is a lien affecting all of the property an individual or institution owns, including both real and personal property.

General warranty deed is a deed in which the grantor agrees to protect the grantee against any other claim to title and attests to the absence of any title defects prior to and during the grantor’s prospective ownership.

Granting Clause is a statement of the grantor’s intention to transfer a property.

Gratuitous Agency is an agency relationship where the agent has waived any compensation. The relationship is still held to all agency duties.

A Habendum Clause is used in a deed to define the degree of the title being conveyed; Latin, meaning “to have and to hold.”

The Highest and Best Use is the one most profitable and efficient use of any given tract of land, which must be legal, finically viable, productive, and physically plausible.

Holding Period is the amount of time between the day a property is bought and the day it is sold.

Housing for Older Persons are senior citizen, or adult communities exempt from the ban on discrimination against families with children.

Implied Actual Authority is the power granted to an agent that has not been expressly stated by a principal but is necessary to carry out those acts that were expressly stated.

An Implied Agency is created when a principal allows an individual to believe that he or she is representing the principal.

An Implied Contract is created by actions but not necessarily written or spoken.

An Improvement is a permanent or nonpermanent addition to real property that usually increases its value.

Improvement Exchange is a 1031 exchange wherein the value of construction and improvements on a property is added to the exchange value of the property for tax purposes.
An Inactive Licensee is a broker or salesperson who may renew their license but may not engage in any real estate activities listed under the Real Estate License Act, Chapter 1101of the Texas Occupations Code; a broker who may not sponsor salespersons and/or market/negotiate real estate for compensation; a salesperson who may not market/negotiate real estate for compensation.

Income Capitalization Approach is a method of estimating the present value of the property’s anticipated income benefits.

Indoor Air Pollution refers to formaldehyde gas, radon, and asbestos. These three types are considered most dangerous and difficult to assess. Tobacco smoke, viruses, fungi, and volatile organic compounds may also contribute to indoor air quality problems.

Innocent Landowner Defense is when a defendant landowner can be found innocent of liability for toxic waste cleanup.

Interest is a charge made for the use of money over a period of time.
An Intermediary is a real estate broker in Texas who represents both the buyer and the seller. A salesperson or affiliated licensee cannot act as an intermediary.

Investment Statement is the portion of the plan document that describes the investment strategies and options for the employees.
An Involuntary Lien is a lien that goes into effect without the owner taking any action to initiate it.

IRA (Individual Retirement Account) is an investment account in which a person can set aside income up to a specified amount each year and usually deduct the contributions from taxable income, with the contributions and interest being tax-deferred until retirement.

Irrevocable Gift is a monetary gift or exchange that a person cannot cancel or modify.
The IRS The Internal Revenue Service, the governing body, part of the Department of Treasury, is responsible for administering the U.S. Revenue Code. It is also known as a statutory year.

IRS Lien is a general lien imposed by the Internal Revenue Service when a person fails to pay federal income tax.

Joint and Several Liability is when parties are both individually and jointly liable for damages.

Land is an all-inclusive description of the natural environment for the purposes of legal ownership, which includes the Earth’s surface, the space below it, the space above it, and all things naturally attached to it, such as trees and water. Landfill, settling, soil movement, fault lines – Any problems with the real property itself that could lead to problems with improvements.

Latent Defect are hidden defects about the property that may not be identified in an ordinary inspection but could alter the customer’s decision regarding the property.

Lawsuits affecting property, depending on the state, is when a prior judgment could result in a “cloud on title” to property for the current owner.

Lead Based Paint is a term to describe if the improvements were built before 1978. This then presents the possible existence of lead based paint (known to cause birth defects and mental disorders) which must be disclosed.

Lead Poisoning is when lead, a metallic element found worldwide in rocks and soils, accumulates in the blood, bones and soft tissue of the body. High concentrations of lead in the body can cause death or permanent damage to the central nervous system, brain, kidneys and red blood cells.

Lease is any agreement that creates a landlord/tenant relationship that provides exclusive possession right to the tenant. The property thus transferred is referred to as a leasehold estate.

Lease Agreement is an agreement in which an individual or corporation may receive possession, or temporary ownership, of real property for a specific period of time. A lease agreement transfers the right of possession to the tenant, but the landlord retains reversion rights.

Lease Option (Also called "lease with option to buy") is a lease in which the tenant/lessee has the option to purchase the lease either during the term of the lease or upon its expiration.

A Lease with Purchase Option is an agreement that provides the renter with a limited right to buy a property, usually available within a specified time frame with predefined conditions.

Leasehold Estate is a form of property ownership that provides for only temporary ownership. In contrast to freehold estates, leasehold estates are of limited duration, have fewer property ownership rights and are usually created with a lease agreement. There are four basic types of leasehold estates: estate for years, periodic estate, tenancy at will and tenancy at sufferance.

Legal Description is the full description of the real property and details of any personal property improvements, either attached or having their own separate title (for example: mobile homes usually have a separate title), that will be included with the sale. Sometimes referred to as the “property description”, it can usually be found in the recorded document that conveys the property to the seller and in the county appraisal district records where the property is located. Referencing a property’s legal description is considered more accurate and binding than referencing its physical address.

Lessee, in a lease arrangement, is the party that rents and will occupy the property.
In a lease agreement, the Lessor is the landowner or party leasing out the property to another party.

Libers are books comprised of photocopies of recorded documents; found at the county clerk’s office.
A Lien is a claim or charge against property that serves as security for obligations or debt.
In the Lien Theory borrowers are considered the owners of mortgaged land, and lenders obtain a lien on the property.

Lienholder is a person or entity who holds a lien.

Like kind is the designation of two properties by the Revenue Code, based on the nature or character of those properties, allowing them to be exchanged without incurring capital gains taxes.

Liquidated Damages is the amount of money required to satisfy a loss that results from a breach of contract.

Listing Agent is the agent who lists a seller’s property. Also called a listing broker.

Listing Agreement is the written contractual agreement between the property owner(s) and the real estate broker or agent that embodies the terms of the “listing”. It covers marketing of the property and any fees or commissions a licensee is to receive upon “procuring” a buyer during the term of the listing. The requirements for being a valid listing agreement are discussed in more detail later in the course.

Listing Broker is the broker who secures a property for sale or lease by obtaining a written listing agreement from the property owner(s). Obtaining a listing is usually done by an agent for the broker, sometimes referred to as the “listing agent”; but the actual agreement must be entered into with the broker.

Loan Discount is an amount paid to the lender to lower the lending rate; loan discounts are expressed in points, where 1 point = 1% of the loan; 8 points is equivalent to a 1% interest rate reduction.

Loan-to-Value (LTV) ratio is the ratio of the amount of a loan to the value of the property to be purchased; used in determining such things as buyer payment restrictions and veteran eligibility.

Long-Term Capital Gain is a gain taxed according to federal capital gains tax rates, with a holding period longer than one year.

Lot An individual parcel of land for sale or development, with a mapped perimeter, and located in a tract.

Malice are intentional omissions or withholding information that can cause substantial injury to another party.

Management Agreement is an employment contract between the owner of real estate and an individual property manager or property management firm.

Management Plan is a written report of what property management will accomplish for the property and how it intends to do so.

Market is a particular geographic region or demographic section in which there may be a demand for certain goods or services; for our purposes, the goods demanded would be realty.

Market Analysis is a demographic and economic account of the local market for a subject property and comparable properties.

Market Value, in a normal and fair real estate market, this is the price that will most likely result in a sale and be deemed acceptable by both buyer and seller.

Marketable Title is the right of ownership to a property that is free from any defects or doubt.

Material Fact is the information that affects the value of the property or the ability of a party to act in a transaction.

Metes and Bounds is a legal land description method that distinguishes the exact dimensions and location of a lot in reference to a fixed and permanent monument.
Under Modified Lien Theory borrowers hold title to mortgaged property, but lenders can take immediate possession of it in the event of default.

Mortality Tables are tables that statistically determine a person’s probability of living to a certain age.

Mortgage is a document wherein a borrower gives a lien against or title to his or her property to a lender as collateral for the loan amount.

Mortgage Insurance Premium (MIP) is the amount paid by the borrower for private mortgage insurance, which insures the lender against loss in the event of borrower default.

Mortgage Modification is an alternative to foreclosure in which homeowners refinance their mortgage loans or extend the term of their loans in order to lower the monthly payments.

Mortgage Reduction Certificate is the document issued from the lender that shows the amount owed on a mortgage loan. This is issued in some areas when the buyer takes over the seller’s mortgage loan.

Mortgagor is a person who obtains a mortgage.

Multiple Listing Service (MLS) is a marketing service usually run exclusively for members of a board of Realtors, and sometimes owned by it as well. Through an MLS all member brokers pool their listings to share information among the membership and publish commissions that are offered to other agents who bring possible buyers for the property. Since the service requires a membership to participate in, members establish procedures for sharing commissions, standards for required information, etc. Multiple listing services generally require that property owners sign an exclusive agency or exclusive right to sell listing with participating brokers in order to have access to the service.

NAR® Code of Ethics is a code designed to establish a public and professional consensus against which the practice and conduct of REALTORS® and REALTOR-ASSOCIATES® may be judged.

National Association of REALTORS® (NAR®) are brokers, salespeople, appraisers and other real estate professionals are the residential and commercial REALTORS® that comprise NAR®. NAR® requires its members to adhere to a strict code of ethics, which forces its members to operate at a higher standard.

Net Listing is an employment contract in which the broker’s commission is based on the excess of the sales price over a pre-decided amount. Such listings are illegal in some states and not recommended in most others, because they involve price speculation.

Net Price is the amount a seller receives after deducting sales expenses.

Non-fungible Commodity is an object that has no precise equal or substitute, such as a tract of land.

Non-Qualified Product, unlike a qualified product, is funded with tax dollars already paid. An annuity is a common non-qualified product.

Notice of additional tax liability notifies the buyer whether there has been a change of usage or other circumstance that might result in an additional liability for property taxes upon ownership transfer.

Novation is the substitution of a new contract for an existing agreement by canceling the old contract or substituting a new party for the old.

Offer in Compromise is an agreement between a delinquent taxpayer and the IRS in which the latter will accept a lesser amount of money to remove the IRS tax lien.

Open Listing is a type of listing agreement in which more than one broker may be employed to sell the property, but only the broker who is the procuring cause of the sale receives a commission. This listing is also known as a “simple listing” or a “general listing”. Additionally, the owner is not obligated to pay anyone a commission if the owner personally sells the property and no broker is the procuring cause. Such a listing is often used by builders and developers, who agree to pay a sales commission to any broker who procures a buyer for a house or lot in a designated subdivision.

The Owner's Bundle of Rights is the intangible ownership rights associated with real property rather than real estate, including the right to control the property within the framework of the law, the right of exclusion, the right of possession, the right of disposition and the right of enjoyment; the difference between real estate and real property.

Parcel is a piece of land or realty.

Partial Claim is a one-time-only payment that brings a mortgage up to date, financed by the FHA insurance fund.

Passing Papers describes a closing transaction where the parties meet face-to-face and exchange documents.

Payoff Statement is the document issued that shows the exact amount needed to pay an existing loan.

Percentage Lease is a lease of property in which the rental is based on a percentage of the volume of sales made upon the leased premises. It usually stipulates a minimum rental and is regularly used for retailers who are tenants.

Performance is where one party promises to perform or not perform a specific action, which meets the obligations under a contract or agreement.

Physical Depreciation is a reduction in a property’s value of the improvements resulting from a decline in physical condition; can be caused by action of the elements or by ordinary wear and tear.

PITI stands for Principal, Interest, Taxes and Insurance.

A Plan Document is a document that structures the intent and application of a retirement plan.

Polychlorinated Biphenyls are mixtures of up to 209 individual chlorinated compounds. Because they are good insulators and do not burn, they were used in old electrical equipment. They have not been manufactured in the United States since 1977 because they are harmful to human health.

Possession is a legal term referring to the right of a property owner to occupy property. In a lease arrangement, the property owner's right becomes a constructive possession by right of title.

Pre-Foreclosure Sale Homeowners can sometimes sell their properties before a foreclosure sale takes place, but they have a limited time to do so.

A Prepaid Item is an item for which the seller has already paid but has not used up.

Price is the amount of money requested or exchanged for a piece of property.

Principal is the individual who authorizes another party (the agent) to act on his or her behalf.

Principals are the contracting parties involved in a contract or the individuals who are making an exchange in a transaction. For example, in a listing agreement, the seller is the principal who hires the broker (the other principal in the listing contract) to represent him or her in the sale or lease of his or her property. In a real estate transaction, the seller and buyer are the principals in the exchange. Though the examples just mentioned involve only two principals, there can be more than two principals associated with a contract or a transaction.

Principal (2) is the unpaid amount of a loan, not counting interest.

Private Mortgage Insurance (PMI) insures the lender against loss in the event of borrower default; the insurance is paid for by the borrower through the MIP.

Procuring Cause are the action(s) that started a process leading to a sale.

Profit is the amount received after something is sold minus the original price and sales expenses, i.e. net price minus original price.

Promissory Note is a note wherein the borrower acknowledges his debt and agrees to pay the lender according to the terms of the loan.

Promulgate means to mandate for use or required for use.

Property Address is the address of a property, usually posted on that property. Sometimes a property can have two different addresses: a 911 emergency address and a U.S. Post Office mailing address, which can lead to legal difficulties in documents not containing a legal description. Like the legal description, property addresses can usually be found in the County appraisal district records where the property is located.

Property Analysis is an account of the current fiscal and physical condition of a subject property.

Property Management is the operation of an owner’s property by a professional property manager for compensation. Such operation entails marketing of space, advertising and rental activities, collection, recording and remitting of rents, maintenance of the property, tenant relations, hiring of employees, keeping proper accounts and rendering periodic reports to the owner.

A Property Manager is the one who oversees the physical and financial maintenance of an owner’s property, often a member of a real estate brokerage firm or a property management firm.

Property Owner(s) is the generic term used to represent an individual, group of individuals (including married couples), or any other form of partnership, company, trust or legal entity capable of owning title to real property.

Prorate is to allocate between seller and buyer their proportionate share of an obligation paid or due; for example, to prorate real property taxes or insurance.

Proration is the act of dividing money proportionately.

Puffing are exaggerated statements that a broker or salesperson may sometimes make about a property or home. These statements are not usually considered misrepresentative and cannot usually be grounds for a lawsuit.

Qualified Exchange Accommodation Arrangement (QEAA) is a contract between an exchanger and an EAT, required to conduct a safe harbor Reverse exchange under Revenue Procedure 2000-37.

Qualified Intermediary is an entity that facilitates an exchange between a buyer and a seller by taking title to the relinquished and replacement properties and deeding them to the other principals. The Qualified Intermediary is recognized by the IRS as a safe harbor in 1031 exchanges and is required in all exchanges that involve the sale of the exchanger’s property.

Qualified Product generally allows for accumulation of money for retirement on a pre-tax basis. That is, some of the taxes that a person would pay are used to gather interest and do not become taxable until the funds are distributed. The most common qualified products are 401(k)s and IRAs.

Quiet Enjoyment is the right of a tenant to use a property without interference.

A Quitclaim deed conveys a grantor’s interest in a subject property, if any, to a grantee while making no claims as to the existence of title or title defects; a deed that, out of convention, conveys unknown interest. Radon Gas (mostly noted in southern states) – Natural issue from ground that is potentially hazardous to health if it permeates enclosed areas.

Radon is a problem caused by elevated levels of exposure that may cause lung cancer. Any home may have this problem new and old homes, well-sealed and drafty homes, and homes with or without basements.

Rate is the cost per unit of something such as taxes, insurance or interest.

Rate of Return is the percentage relationship between the earnings and the cost of an investment.

Ratification is one of the methods for creating an agency relationship or granting authority: it occurs when a non-agent acts as an agent or an agent acts outside of the scope of his or her authority and the principal subsequently agrees to the action.

Real Estate means leasehold, as well as any other interest or estate in land, whether corporeal or incorporeal, freehold or non-freehold, in state or out of state; all land and everything permanently attached to it; realty.

Real Estate License Act Chapter 1101 of the Texas Occupations Code; is the state law that created and empowers TREC and requires brokers and salespersons to obtain proper licensure.

Real Estate Recovery Fund is a monetary pool set aside to reimburse members of the public who have been financially injured by brokers or salespersons.

Real Estate Transfer Tax are taxes on the conveyance of real estate, imposed by some states and municipalities.

Real Property Also known as real estate, includes land, property, plus improvements to land.

REALTOR® is a real estate professional who subscribes to the NAR® Code of Ethics as a member of the local and state boards. This is the professional designation for a member of the National Association of REALTORS® or its affiliated local groups.

Reasonableness Rule is a rule that may attribute liability for water damage to a neighbor, if he or she has made unreasonable alterations to his or her land.

Recorded Plat is a surveyor or developer's map indicating individual lots, blocks, and tracts recorded in the public records office that is used for property description.

Recording is the act of filing a legal instrument in the public records of the county. The title company is normally responsible for recording the new title and mortgage deeds from each purchase or refinance closing.

Redemption refers to the reinstatement of a mortgage or loan in default. Redemption may occur before a foreclosure sale and in some cases after a foreclosure sale.

Redlining is a refusal to finance housing for persons living in a certain area, or a restriction on the number of loans granted in a certain area.

Rent is the usually periodic and fixed consideration received from a lessee (tenant), as set forth in the lease agreement, for the use and possession of a property.

A Rent schedule is a statement of a property's proposed rental rates. A landlord and property manager can work together or separately to determine the rental rates by considering the building's estimated expenses, current market characteristics and goals for the future use of the property.

Rental market is the relative supply of and demand for rental property in a given area (such as a neighborhood, region, state or nation).

The Resident Manager resides on the premises in order to supervise security and physical maintenance issues at all times. The resident manager may be an employee of a property management firm, and may also be referred to as a building superintendent.

Residential Unit means all or that part of real property occupied as the residence of the owner.

Revenue Procedure 2000-37 is a procedure developed by the IRS providing a safe harbor where no gain or loss is recognized for exchangers conducting Reverse exchanges.

Reverse Exchange or Reverse Starker Exchange is a type of 1031 exchange where the exchanger purchases a replacement property before he or she sells the property to be relinquished. Often, but not always, conducted under the guidelines of Revenue Procedure 2000-37.

Reversion is the return of a property to the original grantor upon the occurrence of an event specified in the grant.

Roth IRA is an individual retirement account in which a person can set aside after-tax income up to a specified amount each year. Earnings on the account are tax-free, and tax-free withdrawals may be made after age 591/2.

Rule is a section of the Texas Administrative Code (TAC) written and enforced by TREC, but published by the Secretary of State’s Office, which pertains to professional ethics and practices.

Sale Leaseback is a real estate investment arrangement in which the current owner simultaneously sells a property but then leases it back from the buyer. This guarantees the new owner with a rental stream, making it a more attractive investment for the buyer; for the seller, leasing the property offers liquidity and several operating tax advantages.

Sales Agreement is a contract where a seller promises to transfer property ownership to a buyer for a set price.

Sales Comparison Approach is a means of estimating value by comparing recent sales of comparable properties to the subject property after making appropriate adjustments for any differences. This method is effective in an active market in which sales comparables can be identified and information collected and verified. The comparable properties selected should be substantially similar to the subject property and should be arms length transactions.

Sales Price is the actual amount received for the transfer of ownership as opposed to the list price or asking price.

Salesperson is a licensed person who, when sponsored by a broker, may engage in the sale of real estate.

Sandwich Lease in a subletting situation, is the original lease between the lessor (landlord) and the initial lessee (tenant) is sometimes called a sandwich lease. Legally, that lease is held by the initial tenant. Thus, that tenant's lease rights are sandwiched between the lease rights of the subtenant and the ownership rights of the landlord.

Secured Loan is a loan that places a lien or title against a property as security for the loan amount; opposite of an unsecured loan.

Security Deposit is a payment made by the tenant, which the landlord holds during the lease term, and which may be kept wholly or in part on default or destruction of the premises by the tenant. It is also, a typical consideration item for most rental and lease agreements. With most lease agreements, the tenant is required to submit a security deposit with the landlord to cover any damage beyond normal wear and tear that may occur to the property.

Seller’s Disclosure Notice is a notice—required by law in most states to be completed by sellers of real property—informing potential buyers of the condition of the property as well as what personal property currently attached to the real property that will not transfer at closing with the property. It also states the latent structural defects as well as any other known defect or hazardous condition of the real property and any other personal property attached to the real property (i.e., air-conditioner, water heater, etc.). This list now includes any prior incidents of the following:

Selling Agent is the agent who procures a buyer for the property in a transaction.

A Settlement is the division of expenses and monies between the buyer and seller.

Settlement Statement lists each party’s expenses and gives the total amount that the buyer must bring to the settlement. Also known as a Closing Statement.

The Seven Protected Classes protected under the federal Fair Housing Act are persons of all races, religions, sexes, national origins, and colors; persons with handicaps; and families with children, related or adopted, or pregnant women. Individual states often expand the number of protected classes.

Severance is turning real estate into personal property by disuniting some element, which then transfers by bill of sale rather than deed; i.e. cutting down a tree to make lumber.

Short-Term Capital Gains are gains taxed as normal income, with a holding period of one year or shorter.

Simultaneous Exchange  is an exchange, unlike a Delayed exchange, where both the sale of the relinquished property and the sale of the replacement property are closed on the same day.

Situs Economic is  a land characteristic describing the location preference for some land over other land.

Special Agent is the type of agent who has very limited authority in one specific transaction. Real estate agents are special agents.

Special Assessments are taxes levied for public improvements; they may be voluntary or involuntary.

Special Forbearance is the establishment of a repayment plan, a temporary reduction in payments or a temporary suspension in payments as an alternative to foreclosure for those who experience an increase in basic living expenses or a decrease in income.

Special warranty deed is a deed, most commonly used by fiduciaries, in which the grantor only guarantees the absence of title defects occurring during his or her ownership only; a conveyance instrument attesting that the grantor has not clouded or otherwise defected the title.

Specific Lien is a claim against a particular parcel of real estate.

Specific Performance is a court order that requires a party to a contract to fulfill his or her obligations, as specified by the contract.

Standard of Practice are interpretations of various Articles of the Code of Ethics. They are not part of the code itself but are meant to compliment and supplement its meaning. This is a professional code of behavior for real estate professionals promulgated by the National Association of REALTORS®.

Starker Exchange See Delayed Exchange.

Statute of Frauds is a law that requires specific contracts to be in writing and signed by all the parties bound by the contract.

Statute of Limitations is a law that establishes the maximum period of time that an individual can wait before filing a lawsuit.

Statutory Lien is a lien established by state or federal law for a specific set of circumstances.

Steering is any statement or practice of a real estate seller that discourages someone from considering a particular location, home, or apartment, and encourages them to consider another location or property because of their race, color, sex, religion, national origin, family status, or handicap.

Strict Liability means liable regardless of fault.

A Subagent is a license holder who represents a principal through the principal’s agent but is not affiliated with the agent.

Sublease is the secondary lease in which a tenant leases out the property to another tenant. The original lease between the tenant (lessee) and the landlord remains. However, the original tenant's lease rights are now transferred to the sub-lessee.

Subordination agreements are compromises between lien holders to change the priority of their liens.

Subrogation allows the title insurance company to assume the rights of the original claimant to recover any damages against anyone responsible for the claim.

Substantive Dialogue is a meeting, or written communication that involves a substantial discussion about a real estate transaction.

Suit to Quiet Title is a court action which requires the establishment of ownership when there is cloud on the title.

Sunset Act is a common state law, which, in Texas, requires the Sunset Commission to evaluate all state agencies every twelve years for efficiency and need.

Sunset Commission is the state agency that performs evaluations required under the Sunset Act; the agency responsible for recommending whether to retain or abolish a reviewed state agency every twelve years.

Survey is the process of measuring the exact boundaries of a property; the document showing the exact boundaries of a property.

Taking In the context of the Endangered Species Act, taking means the killing of any environmentally protected plant, animal, fish or insect.

Tax is a charge imposed by a governmental institution on individuals, organizations or property.

Tax favorable is having a tax advantage—incurring little or no tax.

Tax Lien is a lien imposed by a governmental institution on property for nonpayment of taxes.

Tax Lien Certificate is when a state sells a tax lien by auction, the winner receives a tax lien certificate; it provides a yield that must be paid by the delinquent taxpayer upon redemption or title to the property after a specified period of time.
A Tax Sale is a sale of property resulting from unpaid taxes.

Tax Shelter is a technique used to defer or lower income-tax payments.

Tax-deferred are tax requirements that are deferred until a specific event or age.

A Tenant is an individual or tenant who occupies the property of another, for consideration of rent.

Texas Administrative Code (TAC) is a physical compellation published by the Secretary of State’s Office containing ethical and professional standards for both members of and those professionals licensed by state agencies.

Texas Real Estate Commission (TREC) is the state Commission, which is composed of nine members, six of whom are real estate brokers and three of whom are members of the public, responsible for administering the Texas Real Estate License Act.

Third Party refers to the party who negotiates with the principal through the agent. Often called the customer.

Title is the legal right of property ownership; the intangible, just possession of realty.

Title Evidence includes the abstract and attorney’s opinion, the title insurance, the certificate of title or the Torrens certificate.

Title Insurance protects a policyholder from any losses from defects that occurred prior to ownership.

Title Parking is the practice whereby an exchanger has an entity, such as an EAT, temporarily hold title to a property that will be exchanged.

Title Search is the assessment of related public records in order to find any gaps in the chain of title.
Under Title Theory lenders are considered the owners of mortgaged land.

Title VIII The part of the Civil Rights Act of 1968 also known as the Fair Housing Act

Tort is an action that is an intentional or negligent wrongdoing or a breach of duty. The injured party can sue the party who committed the tort for damages.

Tract is the land bought for a specific type of grouped development, such as a subdivision or industrial complex.

Trade Fixtures are articles of personal property installed, in rented buildings, by the tenant, to help carry out a trade or business. Trade fixtures are removable by the tenant before the lease expires and are not true fixtures.

Underground Storage Tanks are any federally regulated underground tank, and all piping connected to the tank, that is buried at least 10 percent underground and contains some type of hazardous chemical (usually petroleum).

Underwriting Process is the process by which an applicant is qualified for and then receives a loan.

Unenforceable Contract was once a legally binding agreement; however, due to the statute of frauds or the doctrine of laches, the parties bound by the contract now cannot seek legal remedies.

Unilateral Contract is a contract where two parties are involved; however, only one party is bound to act.

Unsecured Loan is a loan where there is no collateral pledged for the loan, and it is backed only by the borrower’s signature.

URAR (Uniform Residential Appraisal Report) is a form used for VA, FNMA, HUD, FHLMC and FMHA loans in estimating property value.

USPAP (Uniform Standards of Professional Appraisal Practice) is an annual publication printed by the Appraisal Foundation that defines key appraisal terminology and offers guidelines for completing non-biased and accurate appraisals.

VA The Veterans Administration is responsible for providing federal benefits for veterans and their dependents.

Valid Contract is a legal agreement that complies with all the essential elements of a contract and is binding and enforceable on both parties.

Value is the power of a good or service to command other goods or services in exchange; the present worth of future rights to income and benefits arising from ownership.

Variable Annuities are an annuity that gains its value from securities investments.

Veterans Entitlement is the amount of money a veteran is entitled to under the VA loan program, based on his or her service record and the amount of entitlement currently being used.

Void Contract is an agreement that has no legal effect or impact because it does not meet the minimum requirements of a contract.

Voidable Contract is an agreement that may be terminated or rescinded by either party.

Volume is the size of a three dimensional figure such as a cube. Measurements are typically represented in terms of cubic units, such as cubic feet or cubic yards.

Voluntary Lien is when a person takes some action that places a lien on his or her property. A mortgage lien is an example of a voluntary lien.

Warranty of Authority is the rule that an agent cannot be held responsible if the principal does not or cannot follow through on his or her promises.

Waste is a real estate term referring to damage of property, particularly by a lease tenant or life tenant.

Wealth Replacement is generally, a life insurance policy that is funded and is used to provide wealth replacement almost always on a tax-free basis.

Wear and Tear refers to that deterioration which occurs as a result of intended use, without negligence, carelessness, accident, misuse or abuse.

Wetlands as defined by the U.S. Army Corps of Engineers are "Areas inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions.”

Zoning is a legal mechanism that prevents conflicting land uses and promotes orderly development used by local governments to regulate the use of privately owned real property by specific application of police power.