Glossary of Terms

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z



Most terms and definitions have been provided by:

http://realestateglossary.internetcrusade.com
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.
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.
CERTIFIED CHECK
A check which the bank guarantees to be good, and against which a stop payment is ineffective.
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.
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.
CO-TENANCY
A form of concurrent property ownership in which two or more persons own an undivided interest in the same property.
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.
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.
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.
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.
CONDEMNATION
Either a judicial or administrative proceeding to exercise the power of eminent domain, i.e., 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 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.
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.
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 and benefit or bind successive owners of the property.