Real Estate

Installment Land contract

an agreement between a buyer and seller whereby the seller finances the sale price of the property on an installment method and retains legal title until the obligation is paid in full or until some prearranged timetable of payments is met

Purchase money mortgage

a mortgage given to the seller, with the mortgage constituting all or part of the compensation received for the sale of property

Reverse Annuity Mortgage (RAM)

a type of home equity loan that allows you to convert some of the equity in your home into cash while you retain home ownership. — works much like traditional mortgages, only in reverse. Rather than making a payment to your lender each month, the lender pays you. Unlike conventional home equity loans, most — do not require any repayment of principal, interest, or servicing fees for as long as you live in your home. Funds obtained from an RM may be used for any purpose, including meeting housing expenses such as taxes, insurance, fuel, and maintenance costs. (elderly)

Open-end mortgage

This is a mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional finance charges. — provisions often limit such borrowing to no more than the original loan amount.

Straight term mortgage

This type of loan includes only interest payments and no principal

Bridge loan

a short-term loan used until a person or company secures permanent financing or removes an existing obligation. It allows the user to meet current obligations by providing immediate cash flow. — are short term, up to one year, have relatively high interest rates and are usually backed by some form of collateral, such as real estate or inventory.

Defeasance clause

This is a provision in a mortgage contract that ends the mortgage when all payments are made, transferring title to the property back to the mortgagor or terminating the lender's interest in the property

Acceleration clause

This is a clause in the mortgage contract allowing the mortgagee to accelerate the mortgagor’s payments by requiring the full amount of the unpaid balance to be paid at once

Fee simple absolute

the highest degree of ownership recognized by this country. The word “Fee” indicates that the estate can be inherited and the word “Simple” indicates that the estate is not complicated or without restrictions. 

Ordinary life estate

This form of life estate is granted to the life tenant for as long as the life tenant is alive. Upon the death of the life tenant, title will pass back to the grantor, grantor heirs or some other third named party in the estate. 

Estate pur autre vie

This form of life estate is granted to the life tenant for as long as some other party is still alive. Upon the death of the other named party, title will pass back to the grantor, grantor heirs or some other third named party in the estate.

Defeasible fee

restrictions or limitations

Suit for damages

Where the damaged parties are compensated for the exact amount of monetary losses. 

Suit for rescission

Cancellation of a contract putting all parties back in the position they were in prior to entering into the contract.

Specific performance

Requires the party in default to perform as agreed in the contract.

Liquidated damages

Damages charged to the party in default in the case where no actual damage may exist. Liquidated damages will commonly be the earnest money put up by the buyer as a show of good faith to perform. 

Plottage

The increase in value or utility resulting from the consolidation (assemblage) of two or more adjacent lots into one larger lot.

Substitution

A property’s value is typically based on the value of an equally desirable substitute property

Contribution

The principle of — states that the value of a component of property depends upon its contribution to the whole. In other words, the cost of the component does not necessarily equal the value that the component adds to the property. For example, installing a gold faucet in a low quality house will not add as much value to the property as the cost incurred.

Percentage lease

typically used in commercial retail establishments. Provides that a percentage of the gross income will be charged as the rental amount.

Net lease

requires the tenant to pay part or all of the operational and maintenance costs of the property. Sometimes referred to as a triple-net lease. 

Index lease

ensures rents are reflective of market conditions. Provides for periodic rent increases or decreases which is based on some index, such as the consumer price index (CPI).

Graduated lease

this form of lease allows for automatic increase or decrease in rent. There will be an escalator clause requiring the lease amount to increase or decrease over some prescribed amount of time

Novation

The substitution of a new contract for an old one; or the substitution of one party in a contract with another party

Accord and satisfaction

Release of agreement by the parties as a result of one of the parties not performing all obligations previously agreed to

Assignment

Assignment of rights under a contract is the complete transfer of the rights to receive the benefits accruing to one of the parties to that contract

Easement appurtenant

grants rights of one to use or cross the property of another. The dominant tenement is the estate with the right to use or cross the property of another estate known as the servient tenement. The servient tenement will bear the burden of the easement which must allow the dominant tenement to use. The — will convey from the seller to a new buyer because the — is in the deed.

Easement in gross

will have a servient tenement but not a dominate tenement. An example of an — would be for a property owner to grant permission to another, for as long as they live, to use the owner’s property, such as permission to use the owners well.

Personal easement in gross

— are granted to a grantee and terminate upon the death of the grantee

Commercial easement in gross

are granted to businesses

Market value

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus

Value-in-use

The net present value (NPV) of a cash flow that an asset generates for a specific owner under a specific use. — is the value to one particular user, which may be above or below the fair market value of a property.

Upon Alienation

The clause is often referred to as the due-on-sale. This clause prohibits the mortgagor from transferring title to a property to another party without the consent of the mortgagee