General Real Estate Terms

Principle of progression

A valuation principle that says having nicer, more expensive homes nearby can increase the value of a property

Federal National Mortgage Association (FNMA)

“Fannie Mae” is the popular name for this federally chartered corporation, which creates a secondary market for existing mortgages. FNMA does not loan money directly, but rather buys DVA, FHA, and conventional loans

Functional obsolescence

Loss in value resulting from functional problems caused by age or poor design

Subject to

Situation in which a buyer takes title to property but the existing loan stays in the name of the seller, so the seller is primarily liable for the loan

Material fact

Fact that a reasonable person would think was relevant to a decision being made for example: un repaired water damage in the attic of a home for sale. If knowing something could cause a person to change their mind about a transaction, legally it’s a material fact

Special warranty deed

A deed in which the grantor warrants only against defects that occurred during their ownership (the grantor of a special warranty deed does not provide a warranty or guarantee against any defects in clear title that existed before their ownership)

Bundle of rights

Legal rights of the real estate title holder. Includes the right of possession, the right of control, the right of exclusion, the right of enjoyment and the right of disposition

Lawful object

A contract must be legal. If a contract has an illegal purpose, it is void

Contract for deed

A contract for the sale of real estate under which the sale price is paid in periodic installments by the purchaser, who is in possession and holds equitable title, although actual title is retained by the seller until final payment

CC&Rs

Covenants, conditions, and restrictions. Condominium documents that serve as the operational procedures describing the rights and prohibitions of the co owners in a condominium association

Balloon loan

Also known as a partially amortized loan, it has a fixed rate of interest over a period of time. At the end of the balloon period, the borrower must refinance or pay off the remaining balance. In other words, the rest of the loan becomes due

Impounds

Account maintained by the mortgage company to collect recurring costs such as insurance and tax payments that are necessary for you to keep your home, but are not technically part of the mortgage

Leasehold estate

A tenants right to occupy real estate during the term of a lease, generally considered to be a personal property interest

Capitalization rate

The rate of return a property will produce in the owners investment

Township

The principle unit of the rectangular survey system. A township is a square with six mile sides and an area of 36 square miles