Providing A Measurable Difference

Abstract of Title:  A historical summary of all the recorded instruments and proceedings that affect the title to the property.

Accepted Offer:  An offer where all terms and conditions have been voluntarily accepted by both the buyer and the seller.

Acre:  A measurement of land, 43,500 sq. ft. in any shape.

Addendum:  An addition to a contract which may add or change the terms and conditions of a contract.

Agency:  The legal relationship between a client and his agent.

Agent:  One who is authorized or to act for another. (Not necessarily a Realtor®) In Nevada real estate, all agents work under the jurisdiction of a broker licensed by the State.

Annual Percentage Rate (APR):  The effective rate of interest for a loan per year. Disclosure of which is required by the Truth-In-Lending Law.

Appraisal:  An opinion of value of property based on factual analysis. In real estate, usually prepared by a trained & licensed appraiser.

Appraised Value:  Property value as determined by a trained licensed appraiser.

Arm’s Length Transaction:  A transaction where no special or undisclosed relationship exists between the parties involved in any manner which would taint the outcome of the transaction.

Assessed Value:  An opinion of property value determined by the County Assessor for the purpose of calculating property taxes.

Assessor:  In Nevada, an elected county official whose office is responsible for establishing a value on all property for tax purposes.

Bank Owned:  Also known as REO. A property that has been foreclosed on and is now owned by a bank or lender.

BPO (Brokers Price Opinion):  An estimate of property value usually determined by a real estate agent or broker. Commonly used in short sale transactions.

Broker, Real Estate:  A person who is licensed by the State to own, operate or manage a real estate brokerage. Real estate agents must work under the jurisdiction of a licensed Broker.

Buyer’s Broker:  An agent hired by a prospective purchaser to find an acceptable property for purchase. The Buyer’s Broker then represents the buyer and negotiates with the seller in the purchaser’s best interest.

CDPE- Certified Distressed Property Expert:  A designation earned by real estate licensees by successfully completing a course of study in, foreclosure, short sales and distressed property sales.

CC&R’s (Covenants, Conditions & Restrictions):  Restrictive limitations which may be placed on a property by the developer or homeowners association. CC&R’s are enforced by homeowners associations or civil action. Normally, CC&R’s are not enforced by government agencies.

Chain of Title:  A history of conveyances and encumbrances affecting a title from the time that the original patent was granted or as far back as records are available.

Certificate of Occupancy:  A document issued by local government permitting a structure to be occupied. Issuance of the certificate generally indicates the structure is in compliance with all public health and applicable building codes.

Closing: The final process in a real estate transaction where documents are recorded and the sale is completed. Also known as COE or Close of escrow.

Closing Costs:  Expenses incidental to a sale of real estate, such a loan fees, title insurance, transfer taxes, escrow fees, inspection fees, appraisal fee, etc. Note: Closing costs can be substantial.

Commission:  An amount, usually as a percentage, earned by a real estate broker for services rendered in the sale or purchase of property. In Nevada, all commissions are negotiable.

Commitment Letter:  Also known as Commitment. Title insurance term for the preliminary report before issuance of the policy of title insurance.

Common Area:  The area owned in common by the owners of a condominium, planned unit development or home owners association.

Comparables:  Properties used as comparisons to determine the value of a specific property.

Comparable Market Analysis, (CMA):  A comparison of the prices of similar properties in the same general geographic area. Usually compiled by a real estate agent.

Community Property:  A form of vesting title to property owned together by husband and wife. Since all such property is owned equally, both parties must sign all agreement and documents transferring the property or using it as security for a loan. Each owner has the right to disp0ose of his/her half of the property by will.

Condominium:  A structure of two or more units, the interior space of which are individually owned. The balance of the property, both land and building is owned in common by the owners of the individual units. .

Contingent Offer:  An offer contingent upon some event such as the sale of property owned by the buyer, a buyer being approved for a loan, satisfactory inspection reports, etc.

Conversion:  In real estate, the conversion of personal property into real property as in the case of converting mobile homes into real property.

Conventional Loan:  A mortgage or deed of trust not obtained under a government insured program.

Corporation:  A legal entity created under state law consisting of one or more shareholders but regarded as having an existence and personality separate from shareholders.

Covenants: Promises written into deeds and other instruments agreeing to performance or nonperformance of certain acts, or preventing certain uses of the property.

Days On Market (DOM): The total number of days a property has been listed for sale, usually on the Multiple Listing Service (MLS).

Deed: A written document, properly signed and delivered that conveys title to real property.

Deed In Lieu of Foreclosure: A deed given back by an owner/borrower to a lender to prevent the lender from bringing foreclosure proceedings. A Deed in Lieu may or may not forgive debt.

Deed of Trust: An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower in favor of the lender and reconveyed upon payment in full.

Deed Restriction: A clause in a deed that limits the use of the property.

Default: In real estate, the failure to make the agreed upon payment on a mortgage or loan secured by property (see Notice of Default).

Deficiency: A term generally used to describe the difference between what a borrower owes and what a property is worth in the current market. Specifically it is the shortage between the balance of the loan and the proceeds received by the lender at foreclosure. Deficiency normally applies only to the first lien holder.

Deficiency Judgment: A court order stating that the borrower still owes money when the proceeds of the sale of a foreclosed property do not satisfy the amount owed. (In NV the lender has 6 months to file for a Deficiency Judgment or the debt is considered forgiven.)

Defect in Title: Any recorded instrument that would prevent transfer of clear title on a property.

Discount Points: Amounts paid to a lender, at the time of origination of a loan to account for the difference between the market interest rate and the lower interest rate of the note. Discount points may be paid either by the buyer or seller as negotiated in an offer.

Distressed Property: Real property that is under foreclosure or impending foreclosure.

Division of Real Estate: A division of state government responsible for the licensing and regulation of persons engaged in the business of real estate. The person heading the department is called the Commissioner.

Down Payment: The amount a buyers pays for property in addition to any financing.

DOM: See Days On Market.

Earnest Money Deposit: A deposit made with an offer by a purchaser of real estate to demonstrate good faith.

Easement: The right privilege or interest that one party has over the property of another. Example; a utility company having an easement for power, water or sewer facilities.

Encroachment: A building, a part of a building, or an obstruction that physically intrudes upon, overlaps or trespasses upon the property of another.

Encumbrance: Any right to or interest in land that affects its value. Includes outstanding mortgage loans, unpaid taxes, easements, deed restrictions.

Escrow: An agreement between 2 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 set of conditions.

Escrow Instructions: A set of instructions which are signed by both the buyer and seller enabling the escrow agent to carry out the procedures necessary to transfer property.

(The instructions are generated from the accepted offer to purchase property.)

Exclusive Right to Sell Listing Agreement: An employment contract giving the real estate broker the right to collect a commission if the property is sold by anyone, including the owner, during the term of the contract.

Exclusive Agency Listing: An employment contract giving only one real estate broker, for a specified time, the right to sell the property and also allowing the owner alone to sell the property without paying a commission.

Fair Market Value: The price that would probably be negotiated between a willing seller and a willing buyer in a reasonable amount of time. Usually determined by comparable sales in the same area.

Fee Simple or Fee Simple Absolute: Absolute ownership of real property; owner is entitled to the entire property with unconditional power of disposition during the owner’s life, and upon his death the property descends to the owner’s designated heirs.

FSBO: Property offered for sale by the owner. Also FSBO.

Fixture: Improvements or personal property attached to the property. ie; Light fixtures, toilets, sinks, ceiling fans, built-in stove, refrigerator or dishwasher, built in cabinets or shelves.

Flood Map: A map created by the Federal Emergency Management Agency, (FEMA) that defines areas at risk of potential flooding. Property in FEMA defined flood areas may be required to purchase flood insurance as a requirement of obtaining a loan on the property.

FNMA (Fannie Mae); A private organization dealing in the purchase of mortgages at discounts.

Foreclosure: A defined process and proceeding to extinguish all rights, title and interest, of the owner(s) of property in order to sell the property to satisfy a lien against it. Foreclosure is normally a result of nonpayment of mortgage payments.

Full Disclosure: A requirement to reveal all known facts which may affect the decision of a buyer to purchase real property. Full disclosure includes relationships of all involved in the transaction, physical conditions of all improvements, and known issues in the neighborhood which may materially affect the value of the property.

GNMA (Ginnie Mae): Government National Mortgage Association, A federal association working with FHA which offers special assistance in obtaining mortgages and purchases mortgages in a secondary capacity.

GRI – Graduate of the Real Estate Institute:  A designation earned by Realtors® by taking advanced courses in real estate sponsored the National Association of Realtors® or the local Realtors® Association.

Grant Deed: One of many types of deeds used to transfer real property. Contains warranties against prior conveyances or encumbrances.

Hazard Insurance: Also called Home Owners Insurance. Real estate insurance protecting against loss by fire some natural causes, vandalism etc. depending on the terms of the policy.

Homeowners Association (HOA): An organization of the homeowners of a particular subdivision, planned unit development, or condominium, generally for the purpose of enforcing deed restrictions, association rules and regulations and managing common elements. HOAs may have the power to charge dues and levy fines.

Impound Account: In real estate, usually a reserve account used to pay property taxes and homeowners insurance. The account is held by the mortgage holder who pays the taxes and insurance when due.

Incumbrance (Encumbrance): A claim, lien, charge or liability attached to and binding real property.

Joint Tenancy: Ownership of real estate by 2 or more persons, each of whom has an undivided interest with the right of survivorship. Typically used by related persons.

Junior Mortgage or Junior Lien: Any mortgage or lien of lesser priority than the first.

Lease: A contract in which, for a payment called rent, the one entitled to possession of real property transfers those rights to another for a specified period of time.

Licensee: In Nevada, a real estate agent licensed by the state. A licensee can be a salesperson or broker.

Lien: An encumbrance against a property for money either voluntary or involuntary.

Limited Liability Company (LLC): A legal entity similar to both a corporation and a partnership. The operating agreement determines how the LLC functions and is taxed. Its existence is separate from its owners.

Lis Pendens: A legal notice recorded to show pending litigation relating to real property, and giving notice that anyone acquiring an interest of said property subsequent to the date of the notice may be subject to the outcome of the litigation.

Loan Modification: A mutually agreed upon change in the terms and conditions of an existing mortgage or deed of trust. Most commonly used in situations of default to allow the borrower affordable payments. Modifications are often temporary and usually are limited to changes in the interest rate and term of the loan. Rarely will a modification change the principal of the loan.

Market Value: The theoretical highest price a willing buyer will pay and a willing seller will accept. Market value may be different that the actual sale price.

Mechanic’s Lien: A lien created for the purpose of securing priority of payment for the price or value of work performed and materials furnished in construction or repair of improvements to land.

Mineral Rights: Ownership of the minerals, (gold, coal, iron etc.),under the ground, with or without ownership of the surface land.

Mortgage: A written instrument that creates a lien on real estate as security for the payment of a specific debt.

Mortgage Insurance: Insurance protecting the mortgage lender against loss incurred by a borrower’s mortgage default.

National Association of REALTORS® (NAR): An association of real estate professionals devoted to the betterment of the real estate industry through education, legislation and high ethical standards. The NAR code of ethics is typically stricter than law. NAR is the major organization protecting private property rights nationwide.

Nonjudicial Foreclosure: Sale by a trustee under a deed of trust or mortgagee under a power of sale of a mortgage. There is no court (judicial) proceeding. Foreclosures in Nevada are nonjudicial.

Notice of Default: A notice, filed and recorded that the borrower under a deed of trust or mortgage is in default (Behind on their payments).

Offer & Acceptance: The necessary elements of a contract to sell real estate. The form on which an offer to purchase is written is often called the Offer & Acceptance. Also see Purchase Agreement.

Open Listing: A listing given to any number of real estate brokers without liability to compensate any except the one who first secures a buyer who is ready, willing and able to meet the terms of the listing or secures the seller’s acceptance of another offer.

Origination Fees: Charges to a borrower to cover costs of a loan. They may include credit check, appraisal, discount points and appraisal.

Percolation (Perk) Test: A test to determine the capacity of the soil to absorb liquid. Normally required to obtain a permit to install a septic system.

Personal Property: Property which is not real property. Property that is moveable and not permanently fixed to the house or the land. ie: furniture, personal items.

PITI: Principal, Interest, Taxes & Insurance. Term used to describe what is included in a monthly payment of real property.

PMI: Private Mortgage Insurance.

Power of Attorney: A legal instrument authorizing a person to act as the agent of the person granting it.

Planned Unit Development (PUD): A zoning classification that allows flexibility in the design of a subdivision. PUDs generally set an overall density limit for the entire subdivision, allowing the dwelling units to be clustered to provide for common open space.

Plat: A plan or map of a specific land area.

Plot Plan:  A diagram showing the proposed or exisiting use of a specific parcel of land.

Points:  A fee paid to induce lenders to make a mortgage loan. Each point equals 1% of the loan principal. Points have the effect of reducing the amount of money advanced by the lender. Same as discount points.

Power of Attorney: An instrument authorizing a person to act as the agent of the person granting it.

Prepayment Clause: A clause in a mortgage that gives a borrower the privilege of paying the mortgage indebtedness before it becomes due. On occasion there is a penalty for prepayment.

Prepayment Penalty: Fees paid by a borrower for the privilege of retiring a loan early.

Private Mortgage Insurance, (PMI): Insurance required on conventional loans provided by private insurance companies.

Procuring Cause: A legal term that means the cause resulting in accomplishing a goal. Used in real estate to determine whether a broker is entitled to a commission.

Promissory Note: A promise to pay a specified sum to a specific person under specified terms.

Puffing: Overstating the qualities of a property. Puffing is illegal and unethical.

Quiet Title (Action): A suit in court to remove a defect or suspicion regarding legal rights of an owner to a certain parcel of real property.

Quitclaim Deed: A deed that conveys only the grantor’s rights or interest in real estate without stating the nature of the rights and with no warranties of ownership. Often used to remove a possible cloud on the title.

Real Estate: In law, land and everything more or less attached to it. In business, the activities concerned with ownership and use transfers of the physical property.

Real Estate Commission: A division of state government that enforces real estate license laws and regulations subject to judicial authority.

Real Estate Owned, (REO): Property acquired by a lender through foreclosure and held in inventory.

Real Estate Settlement Procedures Act, (RESPA): Federal law that states how mortgage lenders must treat those who apply for federally related real estate loans on property with 1 – 4 dwelling units. Intended to provide borrowers with more knowledge when they comparison shop for mortgage money.

REALTOR® : A professional in real estate who subscribes to a strict code of ethics as a member of the local, and state boards and of the National Association of Realtors®.

Redemption Period: The period of time during which a former owner can reclaim foreclosed property. Usually by paying the debt owed plus legal and other fees.

Rescind: To withdraw an offer or contract.

Rescission: The act of cancelling or terminating a contract. Rescission is

allowed when the contract was induced by fraud, duress, misrepresentation, or mistake.

Recording: The act of filing documents affecting real property as a matter of public record, giving notice to future purchasers, creditors or other interested parties.

Restriction: A limitation placed on the use of property contained in the deed or other written instrument in the chain of title or in local ordinances pertaining to land use.

Run With the Land: An expression indicating a right or restriction that affects all current and future owners of a property.

Set Back: A zoning regulation identifying the distance from the property line to a point where improvements may be constructed.

Severalty: The ownership of real property by an individual as an individual.

Short Sale: The sale of real estate for less than is owed to lien holders. Short sales must be approved by lien holders A short sale may or may not allow forgiveness of the debt. Short sales can result in significant tax liabilities. The short sale process is time consuming with unpredictable outcomes.

Special Use Permit: A right granted by a local zoning authority to conduct certain activities within a zoning area or district. Such activities are considered conditional uses, which are permitted within the zone only upon special approval of the zoning authority.

Specific Performance: An action, usually through court, to compel the performance of a contract.

Statute: A law established by an act of legislature.

Statute of Frauds: A state law that provides that certain contracts must be in writing in order to be enforceable.

Statute of Limitations: A specified statutory period after which a claimant is barred from enforcing his claim by suit.

Steering: An illegal and unethical practice of limiting the housing shown to a certain ethnic group.

Straw Man: One who purchases property that is, in turn, conveyed to another for the purpose of concealing the identity of the eventual purchaser.

Sub Chapter S Corp: An entity receiving the protection of the corporate form, but being taxed as an individual.

Subdivision: A tract of land divided into lots suitable for homebuilding purposes. Subdivisions usually must approved by various governmental agencies.

Subordination Agreement: An agreement by which an encumbrance is made subject to a junior encumbrance.

Subrogation: The substitution of one person for another so that the former may exercise certain rights or claims of another.

Surety: One who guarantees the performance of another.

Survey: The process by which a parcel of land is measured and its area ascertained.

Tax Base: The collective value of property, income or other taxable activity of assets subject to tax within a given area.

Tax Deed: A type of instrument given to a grantee by a government that had previously claimed the property for unpaid taxes.

Tax Lien: A debt attached against property for failing to pay taxes.

Tax Sale: The sale of property after a period of nonpayment of taxes.

Tenancy: The right of possession of real property.

Tenancy at Will: A license to use or occupy lands and buildings at the will of the

owner.

Tenancy by the Entirety: A form of ownership by husband and wife whereby each owns the entire property. In the event of the death of one the survivor owns the property without probate.

Tenancy for Years: A tenancy created by a lease for a fixed term.

Tenancy in Common: An undivided ownership in real estate by two or more persons. The interest need not be equal, and in the event of the death of one of the owners, no right of survivorship in the other owners exists.

Tenancy in Severalty: Ownership of property by one person or one legal entity.

“Time is of Essence”: A phrase that, when inserted in a contract, requires that all references to specific dates and times of day noted in the contract be interpreted exactly. In its absence extreme delays might be acceptable.

Time-Sharing: A form of property ownership under which a property is held by a number of people, each with the right of possession for a specified time interval.

Title: Evidence that the owner of land is in lawful possession thereof: evidence of ownership.

Title Company: A company in the business of examining title to real estate and/or issuing title insurance.

Title Defect: An unresolved claim against the ownership of property which prevents presentation of a marketable title.

Title Insurance: An insurance policy that protects the holder from loss sustained by defects in the title.

Title Report: A document indicating the current state of the title such as easements, covenants, liens and any defects. The title report does not describe the chain of title.

Title Search: An examination of the public records to determine the ownership and encumbrances affecting real property.

Transfer Tax: A tax paid upon the passing of title of property. In Douglas County, NV the tax is $3.90 per $1000 of sale price.

Triple Net Lease: A lease in which he tenant is to pay all operating expenses of the property. The landlord receives a net rent.

Trust: A fiduciary relationship under which one holds property for the benefit of another.

Trust Deed: A conveyance of real estate to a third party to be held for the benefit of another. Same as Deed of Trust.

Trustee: One who holds property in trust for another to secure performance of an obligation: the neutral party in a trust deed transaction.

Trustee Sale: A sale of property at auction by a trustee, usually as a result of a foreclosure action on the property.

Trustor: The borrower under a deed of trust. One who deeds his property to a trustee as security for repayment of a loan.

Variance: A change in a portion of zoning requirements without changing the zoning.

Vest: To create an entitlement to a privilege or right.

Voidable: Capable of being voided, but not void unless action is taken to void it.

Voluntary Lien: A debt that the property owner agrees to have recorded.

Warranty: A legal binding promise, given at time of a sale, whereby the seller gives the buyer certain assurances as to the condition of the property being sold.

Warranty Deed: A deed that contains a covenant that the grantor will protect the grantee against any and all claims.

Without Recourse: A finance term. A mortgage or deed of trust securing a note without recourse allows the lender to look only to the security, (Property) for repayment in the event of default and not personally to the borrower.

Witness:  To sign a deed, note or other document, to attest to its authenticity or to prove its execution.

Zoning Map: A map of a community showing the zones of permitted use.

Zoning Ordinance: A law controlling the use of land and construction of improvements in a given area.