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Abatement. Stopping or reducing of amount or value, as when assessments for ad valorem taxation are abated after the initial assessment has been made.

Absentee landlord. An owner of an interest in income-producing property who does not reside on the premises and who may rely on a property manager to oversee the investment.

Absolute fee simple title. A title that is unqualified. Fee simple is the best title that can be obtained. (See also fee simple.)

Absorption analysis. A study of the number of units of residential or nonresidential property that can be sold or leased over a given period of time in a defined location. (See also feasibility study.)

Abstraction. Method of finding land value in which all improvement costs (less depreciation) are deducted from sales price. Also called extraction.

Acceleration. clause A provision of a mortgage requiring payment in full of the balance of the mortgage if monthly payments are missed.

Access. A way to enter and leave a tract of land, sometimes by easement over land owned by an- other. (See also egress and ingress.)

Accessibility. The relative ease of entrance to a property by various means, a factor that contributes to the probable most profitable use of a site.

Accessory buildings. Structures on a property, such as sheds and garages, that are secondary to the main building.

Accretion. Land buildup resulting from the de- posit by natural action of sand or soil washed up from a river, lake or sea.

Accrual basis. In accounting, a system of allocating revenue and expense items on the basis of when the revenue is earned or the expense incurred, not on the basis of when the cash is received or paid out.

Accrued depreciation. (1) For accounting purposes, total depreciation taken on an asset from the time of its acquisition. (2) For appraisal purposes, the difference between reproduction or replacement cost and the appraised value as of the date of appraisal.

Accrued expenses. Expenses incurred that are not yet payable. In a closing statement, the accrued expenses of the seller typically are credited to the purchaser (taxes, wages, interest, etc.).

Accrued Interest. The addition of daily interest calculated on the unpaid principal balance of the loan. Depending upon the type of loan, this interest is payable by the borrower or the federal government (i.e., subsidized Federal Stafford Loan).

Acquisition appraisal. A market value appraisal of property condemned or otherwise acquired for public use, to establish the compensation to be paid to the owner.

Acre. A measure of land, 208.71 by 208.71 feet in area, being 43,560 square feet, or 160 square rods or 4,840 square yards.

Adjustable-rate mortgage (ARRI). A financing technique in which the lender can raise or lower the interest rate according to a set index, such as the rate on six-month Treasury bills or the average cost of funds of FDIC-insured institutions. (See also amortized mortgage. )

Adjusted Gross Income. Taxable income from all sources. (See your Federal Income Tax From 1040EZ, line 3, or Form 1040, line 31.)

Adjustment. Decrease or increase in the sales price of a comparable property to account for a feature that the property has or does not have in comparison with the subject property.

Ad Valorem. According to value (Latin); generally used to refer to real estate taxes that are based on assessed property value.

Adverse land use. A land use that has a detrimental effect on the market value of nearby properties.

Aesthetic value. Relating to beauty, rather than to functional considerations.

Allocation method. The allocation of the appraised total value of the property between land and building. The allocation may be accomplished either on a ratio basis or by subtracting a figure representing building value from the total appraised value of the property.

Amenities. The qualities and state of being pleasant and agreeable; in appraising, those qualities that are attached to a property and from which the owner derives benefits other than monetary; satisfaction of possession and use arising from architectural excellence, scenic beauty and social environment.

Amortization. The reduction of loan debt through your monthly payments of loan principal. During the first few years, most of each payment is applied toward the interest owed. During the final years of the loan, payment amounts are applied almost exclusively to the remaining principal.

Amortized mortgage. A mortgage loan in which the principal and interest are payable in periodic installments during the term of the loan so that at the completion of all payments there is a zero balance.

Annual Percentage Rate (APR).The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report.

Anticipation, principle of. The principle that the purchase price of property is affected by the expectation of its future appeal and value.

Application. An initial statement of personal and financial information which is required to approve your loan.

Application FeeFees that are paid upon application. An application fee may frequently include charges for property appraisal and a credit report.

Appraisal. An estimate of quantity, quality or value; the process through which conclusions of property value are obtained; also refers to the report setting forth the process of estimating value. (See also appraisal process.)

Appraisal FeeA fee charged by an appraiser to render an opinion of market value as of a specific date. Required by most lenders to obtain a loan.

Appraisal Foundation. Nonprofit corporation established in 1987 and headquartered in Washington, D.C., sponsored by major appraisal and appraisal-related professional and trade groups.

Appraisal methods. The approaches used in the appraisal of real property. (See cost approach, income capitalization, approach, sales comparison approach. )

Appraisal process. A systematic analysis of the factors that bear on the value of real estate; an orderly program by which the problem is defined; the work necessary to solve the problem is planned; the data involved are acquired, classified, analyzed and interpreted into an estimate of value; and the value estimate is presented in the form requested by the client.

Appraisal report. An appraiser's written opinion to a client of the value sought for the subject property as of the date of appraisal, giving all details of the appraisal process.

Appraisal Standards Board. Created by the Appraisal Foundation and responsible for establishing minimum standards of appraisal competence.

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

Appraiser. One who estimates value.

Appraiser Qualification Board. Created by the Appraisal Foundation and responsible for establishing minimum requirements for licensed and certified appraisers and licensing and certifying examinations.

Appreciation. Permanent or temporary increase in monetary value over time due to economic or related causes.

Approaches to value. Any of the following three methods used to estimate the value of real estate: cost approach, income capitalization approach and sales comparison approach.

Appurtenance. Anything used with land for its benefit, either affixed to land or used with it, that will pass with the conveyance of the land.

Arm's-length transaction. A transaction in which both buyer and seller act willingly and under no pressure, with knowledge of the present conditions and future potential of the property, and in which the property has been offered on the open market for a reasonable length of time and there are no unusual circumstances. array. An arrangement of statistical data according to numerical size.

Assemblage. The combining of two or more ad- joining lots into one larger tract to increase their total value.

Assessed value. The value placed on land and buildings by a government unit (assessor) for use in levying annual real estate taxes.

Assessment. The imposition of a tax, charge or levy, usually according to established rates. (See also special assessment.)

Assessor. One who officially determines property values for the purpose of ad valorem taxation.

Asset. An item or property that is owned and has financial or monetary worth, such as cash, stocks, bonds, trusts, or real or personal property.

Assumability A feature of a loan which permits you to transfer your mortgage and its specified terms to the person(s) purchasing your home. Having an assumable loan could make it easier to sell your home, since assumption of a loan usually involves lower fees and/or qualifying standards for the new borrower than a new loan.

Assumption. The agreement between buyer and seller where the buyer takes over the payments on an existing mortgage from the seller. Assuming a loan can usually save the buyer money since this is an existing mortgage debt, unlike a new mortgage where closing cost and new, probably higher, market-rate interest charges will apply.

Balance. The appraisal principle that states that the greatest value of a property will occur when the type and size of the improvements are proportional to each other as well as to the land.

Balloon Payment. Usually a short-term fixed-rate loan which involves small payments for a certain period of time and one large payment for the remaining amount of the principal at a time specified in the contract.

Band of investment. A method of developing a discount rate based on (1) the rate of mortgage interest available, (2) the rate of return required on equity and (3) the debt and equity share in the property. A variation of this method is used to compute an overall capitalization rate.

Bargain and sale deed. A deed that contains no warranties against liens or other encumbrances but implies that the grantor has the right to convey title.

Base line. A reference survey line of the government or rectangular survey, being an imaginary line extending east and west and crossing a principal meridian at a definite point.

Base rent. The minimum rent payable under a percentage lease.

Bench mark. A permanent reference mark (PRM) used by surveyors in measuring differences in elevation. Benchmark. The standard or base from which specific estimates are made.

Beneficiary. The person who is to receive the benefits from a trust fund.

Book value. The value of a property as an asset on the books of account; usually, reproduction or replacement cost, plus additions to capital and less reserves for depreciation.

Borrower.Anyone who obtains money from a lender. The borrower typically makes a promise to repay the lender, which can be in the form of a legal document termed a promissory note.

Breakdown method. (See observed condition depreciation.)

Break-even point, That point at which total in- come equals total expenses.

Break-even ratio. The ratio of operating expenses plus the property's annual debt service to potential gross income.

Building capitalization rate. The sum of the discount and capital recapture rates for a building.

Building codes. Rules of local, municipal or state governments specifying minimum building and construction standards for the protection of public safety and health.

Building residual technique. A method of capitalization using net income remaining to building after interest on land value has been deducted.

Bundle of rights. A term often applied to the rights of ownership of real estate, including the rights of using, renting, selling or giving away the real estate or not taking any of these actions.

Capital. Money and/or property comprising the wealth owned or used by a person or business enterprise to acquire other money or goods.

Capitalization The process employed in estimating the value of a property by the use of an appropriate capitalization rate and the annual net operating income expected to be produced by the property. The formula is expressed as Income/Rate = Value

Capitalization rate. The percentage rate applied to the income a property is expected to produce to derive an estimate of the property's value; includes both an acceptable rate of return on the amount invested (yield) and return of the actual amount invested (recapture).

Capital recapture. The return of an investment; the right of the investor to get back the amount invested at the end of the term of ownership or over the productive life of the improvements.

Capitalized value method of depreciation. A method of computing depreciation by determining loss in rental value attributable to a depreciated item and applying a gross rent multiplier to that figure.

Capitalizing Interest.A process where a lender adds any unpaid interest to the principal of the loan, thereby increasing the balance due and the monthly payment.

Cash basis. A system of recognizing revenue and expense items only at the time cash is received or paid out.

Cash equivalency technique. Method of adjusting a sales price downward to reflect the increase in value due to assumption or procurement by buyer of a loan at an interest rate lower than the prevailing market rate.

Cash flow. The net spendable income from an investment, determined by deducting all operating and fixed expenses from gross income. If expenses exceed income, a negative cash flow is the result.

Cash flow rate. (See equity capitalization rate.)

Cash on cash rate. (See equity capitalization rate. )

Chain. A surveyor's unit of measurement equal to four rods or 66 feet, consisting of 100 links of 7.92 inches each; ten square chains of land are equal to one acre.

Chattels. Tangible personal property items.

Closing statement. The computation of financial adjustments required to close a real estate transaction action, computed as of the day of closing the sale; used to determine the net amount of money the buyer must pay to the seller to complete the transaction, as well as amounts to be paid to other parties, such as the broker or escrow holder. (See also settlement. )

Co-Borrower (Signer).A person who signs the promisory note for a loan in addition to the borrower. The co-borrower becomes equally responsible for the debt. If the borrower does not pay, the co-borrower is responsible for payment of the debt.

Comparables. Properties that are substantially equivalent to the subject property.

Compound interest. Interest paid on both the original investment and accrued interest.

Conditional use permit. Approval of a property use inconsistent with present zoning because it is in the public interest. For example, a church or hospital may be allowed in a residential district.

Conditions, covenants and restrictions (CC&R's). Private limitations on property use placed in the deed received by a property owner, typically by reference to a Declaration of Restrictions.

Conformity, principle of. The principle that buildings should be similar in design, construction and age to other buildings in the neighbor- hood to enhance appeal and value. contiguous. Adjacent; in actual contact; touching.

Contract. An agreement entered into by two or more legally competent parties who, for a consideration, undertake to do or to refrain from doing some legal act or acts.

Contribution, principle of. The principle that any improvement to a property, whether to vacant land or a building, is worth only what it adds to the property's market value, regardless of the improvement's actual cost.

Conventional loan. A mortgage loan, made with real estate as security, that is neither insured by the FHA nor guaranteed by the VA. Conveyance. A written instrument, such as a deed or lease, by which title or an interest in real estate is transferred.

Cooperative. A multi-unit residential building with title in a trust or corporation that is owned by and operated for the benefit of persons living within it, who are the beneficial owners of the trust or the stockholders of the corporation, each possessing a proprietary lease granting occupancy of a specific unit in the building.

Cost approach. The process of estimating the value of a property by adding the appraiser's estimate of the reproduction or replacement cost of property improvements, less depreciation, to the estimated land value.

Cost index. Figure representing construction cost at a particular time in relation to construction cost at an earlier time, prepared by a cost reporting or indexing service.

Cost service index method. (See index method. )

Covenant. An agreement written into deeds and other instruments promising performance or nonperformance of certain acts or stipulating certain uses or non-uses of property.

Credit-Based Loans. Loans that are made to based on future ability to repay the debt obligation.

Declaration of restrictions. Document filed by a subdivision developer and referenced in individual deeds to subdivision lots that lists all restrictions that apply to subdivision properties. (See also deed restrictions.)

Deed. A written instrument that conveys title to or an interest in real estate when properly executed and delivered.

Deed restrictions. Provisions in a deed limiting the future uses of the property. Deed restrictions may take many forms: they may limit the density of buildings, dictate the types of structures that can be erected and prevent buildings from being used for specific purposes or used at all. Deed restrictions may impose a myriad of limitations and conditions affecting the property rights appraised.

Default. Failure to perform a duty or meet a contractual obligation.

Deferment.Allows you to postpone payment of your principal and/or interest if you meet certain requirements. Deferments can be granted for a variety of reasons, including unemployment and continuing education. Deferments vary based upon the type of loan you have. To request a deferment on your Federal Stafford Loans, contact your lender and request the form. Failure to make your monthly payment can lead to default.

Demography. The statistical study of human populations, especially in reference to size, density and distribution. Demographic information is of particular importance to people involved in market analyses and highest and best use analyses in determining potential land uses of sites.

Depreciated cost. For appraisal purposes the reproduction or replacement cost of a building, less accrued depreciation to the time of appraisal.

Depreciation. For appraisal purposes, loss in value due to any cause, including physical deterioration, functional obsolescence and external obsolescence. (See also obsolescence.)

Depth factor. An adjustment factor applied to the value per front foot of lots that vary from the standard depth.

Direct capitalization. Selection of a capitalization rate from a range of overall rates computed by analyzing sales of comparable properties and applying the formula I/V = R to each.

Direct costs. Costs of erecting a new building involved with either site preparation or building construction, including fixtures.

Disbursement Notification. After the loan is approved, a letter goes out acknowledging approval and stating loan disbursement schedules, loan amount, and any fees (origination or guarantee). It marks the successful completion of the application process.

Disclosure Statement. Statement of the actual cost and terms of a loan, which includes the interest rate and any additional finance charges. You will receive your first statement after disbursement and your second when you begin to repay your loan.

Easement. A right to use the land of another for a specific purpose, such as a right-of-way or for utilities; a non-possessory interest in land. An easement appurtenant passes with the land when conveyed.

Economic life. The period of time during which a structure may reasonably be expected to per- form the function for which it was designed or intended.

Effective demand. The desire to buy coupled with the ability to pay.

Eminent domain. The right of a federal, state or local government or public corporation, utility or service corporation to acquire private property for public use through a court action called condemnation, in which the court determines whether the use is a necessary one and what the compensation to the owner should be.

Encroachment. A building, wall or fence that extends beyond the land of the owner and illegally intrudes on land of an adjoining owner or a street or an alley.

Encumbrance. Any lien (such as a mortgage, tax lien or judgment lien), easement, restriction on the use of land, outstanding dower right or other interest that may diminish the value of property to its owner.

Equalization The raising or lowering of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.

Equilibrium. (See neighborhood life cycle. ) equity. The interest or value that an owner has in real estate over and above any mortgage or other lien or charge against it.

Escalator clause. A clause in a contract, lease or mortgage providing for increases in wages, rent or interest, based on fluctuations in certain economic indexes, costs or taxes.

Escrow. The closing of a transaction through a disinterested third person called an escrow agent or escrow holder, who holds funds and/or documents for delivery on the performance of certain conditions.

Estate. The degree, quantity, nature and extent of ownership interest that a person has in real property.

Estate in land. The degree, quantity, nature and extent of interest a person has in real estate.

Externalities. The principle that outside influences may have a positive or negative effect on property value.

Federal Reserve Bank System. Central bank of the United States established to regulate the flow of money and the cost of borrowing.

Fee simple. The greatest possible estate or right of ownership of real property, continuing without time limitation. Sometimes called fee or fee simple absolute.

Fee simple defeasible. Any limitation on property use that could result in loss of the right of ownership.

Fee simple qualified. Ownership of property that is limited in some way.

FHA. The Federal Housing Administration. Insures loans made by approved lenders in accordance with its regulations.

Final value estimate. The appraiser's estimate of the defined value of the subject property, arrived at by reconciling (correlating) the estimates of values derived from the sales comparison, cost and income approaches.

First mortgage. A mortgage that has priority as a lien over all other mortgages.

Fixed expenses. Those costs that are more or less permanent and do not vary in relation to the property's occupancy or income, such as real estate taxes and insurance for fire, theft and hazards.

Fixed-rate mortgage. (See amortized mortgage.)

Fixture. Anything affixed to land, including personal property attached permanently to a building or to land so that it becomes part of the real estate.

Form appraisal report. Any of the relatively brief standard forms prepared by agencies such as the Federal Home Loan Mortgage Corporation and Federal National Mortgage Association and others for routine property appraisals.

Front foot. A standard of measurement, being a strip of land one foot wide fronting on the street or waterfront and extending the depth of the lot. Value may be quoted per front foot.

Going concern value. The value existing in an established business property compared with the value of selling the real estate and other assets of a concern whose business is not yet established. The term takes into account the goodwill and earning capacity of a business.

Grant deed. A type of deed in which the grantor warrants that he or she has not previously conveyed the estate being granted to another, has not encumbered the property except as noted in the deed, and will convey to the grantee any title to the property the grantor may later acquire.

Grantee. A person who receives a conveyance of real property from a grantor.

Grantor. The person transferring title to or an interest in real property to a grantee.

Gross building area. All enclosed floor areas, as measured along a building's outside perimeter.

Gross Income.Your income before taxes and deductions.

Gross leasable area. Total space designed for occupancy and exclusive use of tenants, measured from outside wall surfaces to the center of shared interior walls.

Gross living area. Total finished, habitable, above-grade space, measured along the building's outside perimeter.

Ground lease. A lease of land only on which the lessee usually owns the building or is required to build as specified by the lease. Such leases are usually long-term net leases; the lessee's rights and obligations continue until the lease expires or is terminated for default.

Ground rent. Rent paid for the right to use and occupy land according to the terms of a ground lease.

Growing equity mortgage (GERI). A type of loan that rapidly increases the equity in a property by increasing the monthly payments a certain percentage each year and applying those increases to the principal.

Guarantee Agency. The agency that insures the lender will receive repayment of the loan.

Highest and best use. The legally and physically possible use of land that is likely to produce the highest land (or property) value. It considers the balance between site and improvements as well as the intensity and length of uses.

Historical cost. Actual cost of a property at the time it was constructed.

Homeowners' association. Organization of property owners in a residential condominium or subdivision development, usually authorized by a declaration of restrictions to establish property design and maintenance criteria, collect assessments and manage common areas.

HUD. Department of Housing and Urban Development.

Improved land. Real property made suitable for building by the addition of utilities and publicly owned structures, such as a curb, sidewalk, street-lighting system and/or sewer.

Improvements. Structures of whatever nature, usually privately rather than publicly owned, erected on a site to enable its utilization, e.g., buildings, fences, driveways and retaining walls.

Independent contractor. A person who con- tracts to do work for another by using his or her own methods and without being under the control of the other person regarding how the work should be done. Unlike an employee, an independent contractor pays all of his or her expenses, personally pays income and social security taxes and receives no employee benefits. Many real estate salespeople are independent contractors.

Index method. An appraisal technique used to estimate reproduction or replacement cost. The appraiser multiplies the original cost of construction by a price index for the geographic area to allow for price changes.

Indirect costs. Costs of erecting a new building not involved with either site preparation or building construction; for example, building permit, land survey, overhead expenses such as insurance and payroll taxes, and builder's profit.

Industrial district or park. A controlled development zoned for industrial use and designed to accommodate specific types of industry, providing public utilities, streets, railroad sidings and water and sewage facilities.

Installment contract. A contract for the sale of real estate by which the purchase price is paid in installments over an extended period of time by the purchaser, who is in possession, with the title retained by the seller until a certain number of payments are made. The purchaser's payments may be forfeited upon default.

Insurable value. The highest reasonable value that can be placed on property for insurance purposes.

Interest. A percentage of the principal amount of a loan charged by a lender for its use, usually expressed as an annual rate.

Interest rate. Return on an investment; an interest rate is composed of four component rates--safe rate, risk rate, non-liquidity rate and management rate. Management rate. Compensation to the owner for the work involved in managing an investment and reinvesting the funds received from the property. Non-liquidity rate. A penalty charged for the time needed to convert real estate into cash. risk rate. An addition to the safe rate to compensate for the hazards that accompany investments in real estate. safe rate. The interest rate paid by investments of maximum security, highest liquidity and minimum risk.

Joint tenancy. Ownership of real estate between two or more parties who have been named in one conveyance as joint tenants. On the death of a joint tenant, the decedent's interest passes to the surviving joint tenant(s) by the right of survivor- ship.

Land. The earth's surface in its natural condition, extending down to the center of the globe, its surface and all things affixed to it, and the air- space above the surface.

Landlocked parcel. A parcel of land without any access to a public road or way.

Land trust. A trust originated by the owner of real property in which real estate is the only asset. Because the interest of a beneficiary is considered personal property and not real estate, a judgment against the beneficiary will not create a lien against the real estate. Thus land trusts are popular when there are multiple owners who seek protection against the effects of divorce, judgments or bankruptcies of each other.

Legal description. A statement identifying land by a system prescribed by law. (See also lot and block system, metes and bounds description and rectangular survey system.)

Letter of opinion. Report of property value that states the appraiser's conclusion of value or a range of values and provides only a brief summary of the supporting data and appraiser's analysis.

Letter of transmittal. First page of a narrative appraisal report, in which the report is formally presented to the person for whom the appraisal was made.

LID - Land improvement district. special tax or assessment passed on to home buyers to pay for roadwork and improvements. can last up to 17 years or more, can be billed, monthly, quarterly, or annually. Usually becomes lien on property and is passed down to future owners until paid off.

Lien. A right given by law to certain creditors to have their debts paid out of the property of a defaulting debtor, usually by means of a court sale.

Lot and block system. Method of legal description of an individual parcel of land by reference to tract, block and lot numbers and other information by which the parcel is identified in a recorded subdivision map. Also called lot, block and tract system and subdivision system.

Market value. The most probable price real estate should bring in a sale occurring under nor- mal market conditions.

Metes and bounds description. A method of legal description specifying the perimeter of a parcel of land by use of measured distances from a point of beginning along specified boundaries, or bounds, using monuments, or markers, as points of reference.

Mile. A measurement of distance, being 1,760 yards or 5,280 feet.

Mortgage. A conditional transfer or pledge of real property as security for the payment of a debt; also, the document used to create a mortgage gage lien.

Mortgagee. The lender in a loan transaction se- cured by a mortgage.

Mortgagor. An owner of real estate who borrows money and conveys his or her property as security for the loan.

Narrative appraisal report. A detailed written presentation of the facts and reasoning behind an appraiser's estimate of value.

Neighborhood. A residential or commercial area with similar types of properties, buildings of similar value or age, predominant land-use activities, and natural or fabricated geographic boundaries, such as highways or rivers.

Occupancy. Possession and use of property as owner or tenant.

Option. A right given for a valuable consideration to purchase or lease property at a future date, for a specified price and terms. The right may or may not be exercised at the option holder's (optionee's) discretion.

Orientation. Positioning a structure on its lot with regard to exposure to the sun, prevailing winds, privacy and protection from noise.

Origination Fee.The fee charged by the federal government to process a loan. The lender deducts the fee from the principal amount of the loan and pays the government directly.

Ownership in severalty. Individual ownership of real estate, not to be confused with the use of the word several to mean "more than one"; also called tenancy in severalty, sole tenancy or separate ownership.

Paired sales analysis. A method of estimating the amount of adjustment for the presence or absence of any feature by pairing the sales prices of otherwise identical properties with and with- out the feature in question. A sufficient number of sales must be found to allow the appraiser to isolate the effect on value of the pertinent factor (also called paired data set analysis and matched pairs analysis).

Partial interest. Any property interest that is less than full fee simple ownership of the entire property.

Payment Schedule. A summary of the terms of a loan, which includes the total principal amount, the date payment begins, and the interest rate.

Pay-off Balance.This is the amount you would pay if you were to pay off your loan today. It includes the outstanding principal plus any unpaid accrued interest.

Physical life. The length of time a structure can be considered habitable, without regard to its economic use.

Planned unit development(PUD). A subdivision consisting of individually owned residential and/or commercial parcels or lots as well as areas owned in common.

Plat. A map representing a parcel of land subdivided into lots, showing streets and other details or a single site.

Point of beginning. Place at which a legal description of land using the metes and bounds method starts.

Possession. The right of the owner to occupy property. When property is occupied by a tenant, the owner has constructive possession by right of title.

Prepaid items of expense. Expense items, such as insurance premiums and tax reserves, that have been paid in advance of the time that the expense is incurred. Prepaid expenses typically are prorated and credited to the seller in the preparation of a closing statement.

Price. The amount of money set or paid as the consideration in the sale of an item at a particular time.

Principal. (1) A sum lent or employed as a fund or investment--as distinguished from its income or profits; (2) the original amount (as of a loan) of the total due and payable at a certain date; or (3) a party to a transaction--as distinguished from an agent.

Promissory Note. This is your formal promise to repay the loan. It is a legally binding contract between the borrower and the lender, and includes the terms and conditions of the loan. A promissory note must be signed for every loan you receive. Keep your copy in your permanent files

Prorations. The adjustment of taxes, interest, insurance and/or other costs on a pro-rata basis as of the closing of a sale. (See also closing statement.)

Purchase money mortgage. A note secured by a mortgage or trust deed given by the buyer, as mortgagor, to the seller, as mortgagee, as part of the purchase price of real estate.

Quantity survey method. A method for finding the reproduction cost of a building in which the costs of erecting or installing all of the component parts of a new building, including both direct and indirect costs, are added.

Quit Claim deed. A conveyance by which the grantor transfers whatever interest he or she has in the land, without warranties or obligations.

Real estate. Land; a portion of the earth's surface extending downward to the center of the earth and upward into space including fixtures permanently attached thereto by nature or by man, anything incidental or appurtenant to land and anything immovable by law; freehold estate in land.

Real estate broker. Any person, partnership, association or corporation that, for a compensation or valuable consideration, sells or offers for sale, buys or offers to buy, or negotiates the purchase, sale or exchange of real estate, or who leases or offers to lease, or rents or offers for rent any real estate or the improvement thereon for others. Such a broker must secure a state license. For a license to be issued to a firm, it is usually required that all active partners or officers be licensed real estate brokers.

Real estate investment trust (REIT). Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits to the investors free of corporate income tax.

Real estate salesperson. Any person who, for a compensation or valuable consideration, is employed either directly or indirectly by a real estate broker to sell or offer to sell, or to buy or offer to buy, or to negotiate the purchase, sale or exchange of real estate, or to lease, rent or offer for rent any real estate, or to negotiate leases thereof or improvements thereon. Such a sales- person must secure a state license.

Real property. The rights of ownership of real estate, often called the bundle of rights; for all practical purposes, synonymous with real estate.

Reconciliation. The final step in the appraisal process, in which the appraiser reconciles the estimates of value received from the sales comparison, cost and income capitalization approaches to arrive at a final estimate of market value for the subject property.

Reconstruction of the operating statement. The process of eliminating the inapplicable ex- expense items for appraisal purposes and adjusting the remaining valid expenses, if necessary.

Reconveyance deed. A deed used by a trustee under a deed of trust to return title to the truster.

Rectangular survey system. A system established in 1785 by the federal government, which provides for the surveying and describing of land by reference to principal meridians and base lines; also called U.S. government survey system and section and township system.

Repayment Period. Found on your disclosure statement, this is the period of time during which you repay your loan. It begins when your grace period expires, and ends when you have fully repaid your loan. Please note the repayment period varies based on loan type and loan payment.

Replacement cost. The current construction cost of a building having exactly the same utility as the subject property.

Reproduction cost. The current construction cost of an exact duplicate of the subject building.

Residual. In appraising, the value remaining after all deductions have been made.

Resolution trust corporation (RTC). Federal agency created by the Financial Institutions Re- form, Recovery and Enforcement Act of 1989 to oversee management and liquidation of assets of failed savings and loan associations.

Reverse annuity mortgage (RAM). An instrument designed to aid elderly homeowners by providing them a monthly income over a period of years in exchange for equity they have acquired in their homes. RAM borrowers typically may obtain up to 80 percent of the appraised value of free-and-clear property.

Right-of-way. The right that one has to travel over the land of another; an easement.

Riparian rights. Rights of an owner of land that borders on or includes a stream, river, lake or sea. These rights include definition of(and limitations on) access to and use of the water, ownership of streambed, navigable water and uninterrupted flow and drainage. (See also accretion. )

Sales price. The actual price that a buyer pays for a property.

Second mortgage. A mortgage loan secured by real estate that has previously been made security for an existing mortgage loan. Also called a junior mortgage or junior lien.

Selling price. The actual price that a buyer pays for a property.

Settlement. The process of closing a real estate transaction by adjusting and prorating the required credits and charges.

Shared appreciation mortgage (SAM). A loan designed for borrowers whose current income is too low to qualify for another type of mortgage. The SAM loan makes the lender and the borrower partners by permitting the lender to share in property appreciation. In return, the borrower receives a lower interest rate.

Site. Land suitable for building purposes, usually improved by the addition of utilities or other services.

Special assessment. A charge against real estate made by a unit of government to cover the proportional cost of an improvement, such as a street or sewer.

Special-purpose property. Property that has unique usage requirements, such as a church or a museum, making it difficult to convert to other uses.

Square-foot method. A method for finding the reproduction cost of a building in which the cost per square foot of a recently built comparable structure is multiplied by the number of square feet in the subject property.

Subdivision. A tract of land divided by the owner into blocks, building lots and streets by a re- corded subdivision plat. Compliance with local regulations is required.

Subdivision development method. A method of valuing land to be used for subdivision development. It relies on accurate forecasting of market demand, including both forecast absorption (the rate at which properties will sell) and projected gross sales (total income that the project will produce); also called the land development method.

Substitution, principle of. The basic appraisal premise that the market value of real estate is influenced by the cost of acquiring a substitute or comparable property.

Summation method. Another name for the cost approach to appraising.

Survey. The process of measuring land to deter- mine its size, location and physical description; also, the map or plat showing the results of a survey.

Tax deed. The instrument used to convey legal title to property sold by a governmental unit for nonpayment of taxes.

Tenant. One who has possession of real estate; an occupant, not necessarily a renter; the lessee under a lease. The estate or interest held is called a tenancy.

Title. The evidence of a person's right to the ownership and possession of land.

Topography. Surface features of land; elevation, ridges, slope, contour.

Trust. A fiduciary arrangement whereby property is conveyed to a person or an institution, called a trustee, to be held and administered on behalf of another person or entity, called a beneficiary. The one who conveys the trust is called the truster.

Trust deed. An instrument used to create a mortgage gage lien by which the borrower conveys title to a trustee, who holds it as security for the benefit of the note holder (the lender); also called a deed of trust.

Trustee. The holder of bare legal title in a deed of trust loan transaction.

Truster. The borrower in a deed of trust loan transaction.

Truth-in-Lending Act.A federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the APR and other charges.

Uniform Standards Of Professional Appraisal Practice (USPAP). Minimal criteria for appraisal competency promulgated by the Appraisal Foundation at the direction of Congress, to be applied to appraisals that require the services of a state-licensed or certified appraiser.

Value. 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.

Value in exchange. The value of goods and services ices in exchange for other goods and services, or money, in the marketplace; an economic concept of market value.

VA mortgage. A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit possible loss by the lender.

Variate. In statistics, an individual thing, person or other entity.

Vendee. Buyer.

Vendor. Seller.

Walk-through.A final inspection of a home before settlement to search for problems that need to be corrected before ownership changes hands.

Warranty deed. A deed in which the grantor fully warrants good clear title to the property.

Zoning. Municipal or county regulation of land use within designated districts or zones. Zoning is an application of a state's police power to regulate private activity by enacting laws that benefit the public health, safety and general welfare. Zoning may affect use of the land, lot sizes, type of structure permitted, building heights, setbacks and density.

Zoning ordinance. Regulation of the character and use of property by a municipality or other government entity through the exercise of its police power.

Zoning variance. An exemption from a zoning ordinance or regulation permitting a structure or use that would not otherwise be allowed.

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