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Real Estate Glossary

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Algonac Real Estate Glossary



Accredited Buyers Representative is a designation of excellence in buyer representation. The Real Estate Buyer Agent Council (REBAC) of the NAR awards this designation to real estate practitioners. Individuals with this designation meet specified educational and practical experience criteria.
Abstract Of Title
A document that traces the history of title or a particular parcel of real estate from the original government grant through the chain of ownership including all conveyances and encumbrances affecting the property.
A general or specific right of ingress and egress to a particular property.
Land accumulated through the gradual motion of water. The gradual building up of land in a watercourse over time by deposits of silt, sand, and gravel.
Acquisition Cost
The cost of acquiring real estate, in addition to purchase price. Acquisition costs include the title insurance and lender's fees. With FHA, acquisition is a set amount based on the appraised value of the property.
A measure of land equaling 43,560 square feet; 4,840 square yards; 160 square rods.
Act Of God
When the forces of nature act in an uncontrolled manner without the influence of man to produce a result that could not have been escaped or prevented. Thereby, causing damage to real estate property.
Ad Valorem
Latin for "according to value". Each property bears a tax burden according to its assessed value.
Adverse Possession
A means of acquiring title to real estate that results from the exclusive, open, notorious, and adverse use of the property for a statutorily-prescribed period of time. Also know as title by prescription.
One who is authorized to represent and to act on behalf of another person (called the principal). A real estate broker is the agent of his client, be it the seller or buyer, to whom he owes a fiduciary obligation. A salesman is the agent of his broker and does not have a direct personal contractual relationship with either the seller or buyer.
Agreement Of Sale
An agreement between the seller and buyer for the purchase of real estate property.
The transfer of title and possession of real estate property from one party to another by any voluntary means.
Allodial System
The type of land ownership existing in the United States whereby individuals may hold title to real property absolutely. Since 1785.
The actual increase in land resulting from the deposit of earth caused by the washing motion of water so as to from firm ground.
A written analysis by a certified appraiser used to determine the estimated value of real estate property.
Association of Real Estate License Law Officials. Founded in 1929, a group of real estate license law officials that regulates more than two million real estate licensees.
Delinquency in meeting an obligation; or, paid at the end of a period (e.g., at the end of the month) for the previous period; payments in arrears include interest for using the money during the previous period.
As Is
Present condition of property being transferred, with no guaranty or warranty provided by the seller.
Asking Price
Price at which the owner wishes to sell a property.
The combining of two or more parcels of real estate, which, together, will generate more than the sum of their individual values.
Assessed Value
The value placed on real estate property by a municipality for purposes of levying taxes. It may differ widely from appraised or market value.
Anything of monetary value owned by an individual.
Associate Broker
A person who has passed his or her broker's licensing exam but chooses to work for another broker, also called a broker/salesperson.
Assumable Mortgage
A mortgage that allows a new owner to take over the previous owners obligations.
Sudden loss or gain of land as a result of water or shift in a bed of a river that has been used as a boundary.



An offer that comes in after an earlier offer is accepted. If both buyer and seller agree, the backup assumes a secondary position, to be acted upon only if the original deal does not go through.
Base Line And Meridian
An imaginary set of lines used by surveyors to locate and describe land under the Rectangular Survey Method of property description used in most mainland states.
A mark affixed to a permanent reference or monument, such as an iron post or a brass marker (usually embedded in a cement sidewalk), used to establish elevations and altitudes over a surveyed area.
Bill Of Sale
A written agreement by which one person sells, assigns or transfers his right to, or interest in, personal property to another.
A report issued by a title insurance company setting forth the condition of title and setting forth conditions, which, if satisfied, will cause a policy of title insurance to be issued.
A term used to describe urban decay in particular neighborhoods.
For profit, to induce or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, religion, sex, or national origin.
Bona Fide Purchaser
A purchaser who pay valuable consideration for property, acts in good faith, and acquired a property interest without notice of any outstanding claims to other defects in the seller's title.
Bottom Land
The land that exists under a lake, river, or stream. Such land may be owned by the riparian owner or be held by the state in trust for the public.
The perimeters or limits of a parcel of land as fixed by legal description which is usually a metes and bounds description.
An act wherein two or more competitors in a common trade refuse to do business with another competitor in order to injure or express disapproval with his business practices. Such act in per se illegal since it restrains trade.
Breach Of Contract
Violation of any of the terms or conditions of a contract without legal excuse; default, non-performance, such as failure to make payment when due.
Bridge Loan
A form of interim loan, generally made between a short term loan and a long term loan, when the borrower needs to have more time before taking on long term financing.
A real estate broker is a properly licensed person who, for a valuable consideration, serves as an agent to others to facilitate the sale or lease of real property.
Buffer Zone
A strip of land separating one parcel from another.
Bundle Of Rights
An ownership concept describing all those legal rights which attach to the ownership of real property, including the right to sell, lease, encumber, use, enjoy, exclude, will, etc.
Buyer's Agent
A real estate agent whose loyalty is to the buyer and not to the seller. Such agents are becoming increasingly common today. A real estate agent who represents and protects the interest of the homebuyer.
Buyer's Market
Situation in which supply of homes for sale exceeds demand.



Caveat Emptor
Latin meaning "let the buyer beware"; applies to "sales talk" and not to statements of material facts.
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.
Personal property which is tangible and moveable.
Civil Rights Act Of 1866
A federal law that prohibits all discrimination on the basis of race.
Clear Title
Title to a property that is "clear" of any liens or other legal issues about ownership.
A person in a real estate transaction that employs another to advise, represent, or provide professional services.
The final stage of consummating a real estate transaction when the seller delivers title to the buyer, in exchange for the purchase price.
Closing Cost
Expenses incurred in the closing of a real estate or mortgage transaction.
Cloud On The Title
Any encumbrance, claim, or lien that may affect title to real estate; usually revealed by a title search. A cloud can be removed through a suit to quiet title or by quitclaim deed.
Code Of Ethics
A written system of standards of ethical conduct. The Code of Ethics of the National Association of REALTORS®, first written in 1913, establishes the high standards of conduct for members of the Realtor community
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.
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.
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.
Community Property
A system of property ownership based on the theory that each spouse has an equal interest in property acquired by the efforts of either spouse during marriage.
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.
Comparative Market Analysis (CMA)
A way to determine a property's value by comparing it to similar; recently sold properties. Method of valuing homes using study or comparables, property that failed to sell, and other property currently on the market.
Competitive Market Analysis
A shorter version of a Comparative Market Analysis (CMA) wherein, typically, a real estate agent compares the subject property only to currently listed properties rather than including references to recently sold and expired properties.
A housing arrangement where the homeowner owns the interior walls of his or her personal living space and a percentage of the common areas.
The duty of agents not to disclose any information about their clients.
Contingency Clause
A clause in a contract that specified either a condition precedent which must first occur to cause the obligations in a contract to become enforceable or a condition subsequent which acts to extinguish already enforceable obligations if it occurs; for example, a financing contingency.
Conventional Mortgage
Any mortgage that is not insured or guaranteed by the federal government.
The transfer of title to real estate property by means of a written instrument such as a deed or an assignment of lease.
Cooling-Off Period
A three-day right of rescission for certain loan transaction.
A form of ownership in which stockholders in a corporation occupy property owned by the corporation under a lease.
Someone with better credit (usually a close relative) who agrees to sign your loan if you do no have good enough credit to qualify for a mortgage. The cosigner is equally responsible for repayment of the loan. (Even if you don't pay it back, the cosigner can be held liable for the entire balance).
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.
Certified Residential Specialist is someone who has undergone a rigorous, specialized course of detailed training aimed at making residential transactions as smooth and worry-free as possible.
Certificate of Reasonable Value. A document issued by the Veterans Administration establishing what the VA feels is the property's maximum value. In some cases, if you may pay more than this amount for the property, you will not qualify for the VA loan.
Cul De Sac
A street which is open at one end only, and which usually has a circular turnaround; a blind alley.
Curable Depreciation
When the cost of repairs do not outweigh the contribution to value resulting from making such repairs.
Curb Appeal
Common term for everything prospective buyers can see from the street that might make them want to take a closer look at a house for sale.
Typically, the buyer, as opposed to the principal (seller).



Days On Market (DOM)
Number of days between the time a house is put on the market and the date of a firm sale contract.
Master deed containing legal description of the condominium facility, a plat of the property, plans and specifications for the building and units, a description of the common areas, and the degree of ownership in the common areas available to each owner.
A legal document that conveys ownership (title) of a real estate property.
Deed In Lieu Of Foreclosure
Conveyance of title in default to avoid a record of foreclosure. Also called friendly foreclosure.
Deed Restrictions
Limitation on land use appearing in deeds.
Deferred Commissions
Commissions which are earned but not yet fully paid.
Property transfer by lease. A property transfer by means of a least.
Sometimes called "earnest money", this is money offered by a prospective homebuyer to indicate his or her good faith in entering into a sales contract.
The loss of value due to any cause (including physical, functional, and economic), a condition that adversely affects the value of an improvement.
Land which is added or gained by the action of water when it recedes below the usual water mark; a form of accretion.
A statement denying legal responsibility, frequently found in the form of, "There are no promises, representations, oral understandings or agreements except as contained herein."
The act of disclosing or making known certain information to a party who may otherwise not be aware of the information. Disclosure of material facts by an agent to a principal is a fundamental duty under agency law.
The act of making a distinction against or in favor of a person on the basis of the group or class to which the person belongs; the failure to treat people equally.
Down Payment
A percentage of the purchase price that the buyer must pay in cash and may not borrow from the lender.
Dual Agent
An agent who represents two opposing principals in one transaction such as a buyer and seller in a purchase agreement.
A situation where one is threatened or forced into entering a contract against his free will. The use of threat or coercion to induce one to do something he might not otherwise do.
Duty Of Disclosure
A responsibility for revealing all information that affects the agency agreement.



Earnest Money
Buyer's "good faith" deposit accompanying purchase offer.
A limited right to use the property of another for specific purpose such as passage. It includes the rights of ingress and egress. An easement does not include the right to possess.
The means by which a property is exited. The right to got out. Contrast with Ingress.
Crops that require annual planting and result directly from the efforts of a tenant. Since they result from his efforts and not that of nature or the landlord, the tenant has the right to remove them upon expiration of the lease; e.g., wheat, corn, and garden vegetables.
Eminent Domain
The power of government to take private property for public use. Proper exercise of the power required the payment of just compensation to the persons whose property is taken. Condemnation is the court process of exercising eminent domain.
Any improvement which extends beyond a property boundary and intrudes upon an adjoining property belonging to another; a trespass. Setback requirements are also capable of being encroached.
A claim, lien, charge, or liability attached to and binding upon real property that has a tendency to diminish its value.
Equitable Title
An interest in real estate such that a court will take notice and protect the owner's rights.
That interest or value remaining in property after payment of all liens or other charges on the property. A owner's equity is normally the monetary interest over and above the mortgage indebtedness.
The gradual wearing away of land by action of wind or water.
The government's right to unclaimed property which is abandoned or which is left by a decedent who leaves no will and no heirs to inherit the property.
The process by which money and/or documents are held by a disinterested third person (a "stakeholder") until the satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow).
The degree or extent of an interest one has in real estate or personal property.
Preventing a person from making a statement contrary to a previous statement.
External Obsolescence
A form of depreciation resulting from factors entirely outside the boundaries of a subject property; e.g., neighborhood decay, proximity to a nuisance, etc. Frequently results from changes in surrounding use patters.



Fair Market Value
The highest price a willing and able buyer would pay and the lowest price a willing seller would accept.
Fannie Mae (FNMA)
The shortened name for the Federal National Mortgage Association (FNMA), a privately owned corporation that purchases FHA, VA, and conventional mortgages.
Federal Housing Administration (FHA)
An agency of the U.S. Department of Housing and Urban Development (HUD). The FHA insures residential loans made by private lenders. The FHA sets standards for construction and underwriting but does not lend money or construct houses.
A person, such as an agent, placed in a position of trust in relation to the person for whose benefit the relationship is created; essentially the same as a trustee.
Personal property that has become real estate property by having been permanently attached to the property.
For Sale By Owner (FSBO)
A home that's offered for sale without the service of a real estate agent.
A legal procedure whereby property used as security for debt is sold to satisfy the debt in the event of default in payment of the mortgage note or default of other terms in the mortgage document.
Any form of deceit, trickery, breach of confidence or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another.
Freddie Mac (FHLMC)
A nickname for Federal Home Loan Mortgage Corporation, (FHLMC), a corporation wholly owned by the Federal Home Loan Bank System that purchases FHA, VA, and conventional mortgages.
Free And Clear Title
Title to real estate property which is absolute and unencumbered by any liens, mortgages, clouds or other encumbrances.
The length of a property abutting a street or body of water; that is, the number of feet that "front" the street or water.
Functional Obsolescence
Loss in value resulting from things such as faulty design, inadequacies, over-adequacies, and equipment being out of date.



General Warranty Deed
A deed denoting an unlimited guarantee of title.
Ginnie Mae (GNMA)
A nickname for Government National Mortgage Association GNMA) a U.S. government agency that purchases FHA and VA mortgages.
Good Consideration
That which is given in exchange for property or a promise and is based on love and affection or a sense of moral duty; i.e., it has no monetary value.
Good Faith
Bona fide. An act is done in good faith if it is in fact done honestly, whether it be done negligently or not.
Good Faith Estimate
Lender's estimate of borrower's settlement costs, required by RESPA to be furnished to borrower at time of loan application.
Good Will
An intangible, salable asset arising from the reputation of a business.
Government Survey
A system of land description in which large blocks of land are divided into tracts bounded by imaginary lines conforming to the true meridian.
Grandfather Clause
The clause in a law permitting the continuation of a use, business, etc., which, when was permissible but, because of a change in the law is now not permissible.
Graduate of the Realtors Institute is someone who has undergone an intensive period of detailed training in general real estate transactions, not just residential housing sales.



Habendum Clause
The part of the deed beginning with the words "To Have and To Hold" following the granting clause and reaffirming the extent of ownership that the grantor is transferring.
Varied, unique, or different in nature. Real estate is said to be heterogeneous in nature since no two parcels are identical in every respect. The opposite of homogeneous.
Highest And Best Use
That use which, at the time of appraising the property, is most likely to produce the greatest net return to the land and/or the building over a given period of time.
Homeowners Association
An organization formed by homeowners in a subdivision or a condominium giving certain homeowners decision-making responsibilities for the welfare of the entire subdivision or condominium.
Head of household’s designated residence. The fixed residence of the head of a household including the surrounding land and outbuildings.
Alike or similar. Although real estate is heterogeneous in nature, some neighborhoods are referred to as homogeneous due to substantial similarities among the houses. The opposite of heterogeneous. Neighborhoods made up of similar and compatible properties.
A federal cabinet department officially known as the Department of Housing and Urban Development



Anything added or modified on real estate property to increase its value.
Income Property
Real estate property purchased primarily for the income to be derived plus certain tax benefits, such as accelerated depreciation. Income property can be commercial, industrial or residential.
To means by which a property is entered. The right to go in. Contrast with Egress.
To dwell in or to occupy a property.
The evaluation of real estate property by a professional.
The outlay of money for income or profit.
Involuntary Alienation
Transfer of title to real estate property as a result of a lien foreclosure sale, adverse possession, filing a petition in bankruptcy, condemnation under power of eminent domain, or, upon the death of the title holder, to the state is no heirs.
Involuntary Lien
Lien without owner consent. Any lien which attaches to real estate property without the consent of the owner. Example, a tax lien or judgment lien.



Joint Venture
The joining of two or more people in a specific business enterprise such as the development of a condominium project or a shopping center.
A record of a broker's trust account showing all receipts and disbursements on a day-to-day basis. This record is required by Michigan license law.
Judgment Lien
A lien binding on all the real estate of a judgment-debtor and giving the holder of the judgment a right to levy (i.e. to seize) the land for satisfaction of the judgment.
Judicial Foreclosure
A method of foreclosing upon real estate property by means of a court supervised sale. After an appraisal, the court determines an upset price below which no bids to purchase will be accepted.
Just Compensation
An amount of compensation to be received by a party for the taking of property under the power of eminent domain.



Key Lot
A lot that has added value because of its strategic location, especially where it is needed for the highest and best use of contiguous property
Return of money in exchange for a referral.



The surface of the earth extending down to the center and upward to the sky, including all natural things thereon such as trees, crops, or water; plus the minerals below the surface and the air rights above.
Land Contract
Another name for an installment purchase contract, by which the buyer obtains equitable title (the right to use the property) while the seller retains legal title (recorded title) as security for payment of the balance of the purchase price.
Parcel of land that is completely surrounded by the land of another in such a way that no ingress or egress can occur without committing a trespass. Generally requires an easement to permit access to roads.
A fixed marker. A stake, stream, cliff, monument or other object or feature which is used to fix or define land boundaries; also a prominent feature of a landscape or property that is the symbol for the place.
Legal Description
A description which is complete enough that an independent surveyor could locate and identify a specific piece of real estate property.
Lis Pendens
Latin meaning " a lawsuit pending".A recorded notice filed to warn potential purchasers that title to certain property is in litigation and the final judgment may adversely affect their title if they purchase.
Formally putting a piece of real estate property on the market such the MLS, a newspaper, radio, or computer ad.
Listing Agreement
A contract between a property seller and a broker wherein the broker is employed as an agent to locate a ready, willing, and able buyer on terms established by the seller. Upon performance, the seller owes the broker a commission.
Littoral Rights
Rights associated with the owners of property who abutt a large body of standing water such as a lake, sea, or ocean as opposed to a river or stream. Such rights are limited to use and enjoyment without altering or depriving another of this rights. Contrast with Riparian Rights.
Location (Situs)
An economic characteristic of land having the greatest effect on value in comparison to any other characteristic.
Locus Sigilli
Latin for "under seal", used in the abbreviated form, "L.S.," at the end of signature line in some formal legal documents; used instead of the actual seal.
A measured parcel of land that has fixed boundaries.
Lot And Block
A method of property description used when property has been subdivided and the plats have been recorded. Individual parcels of property are described by lot and block numbers within the particular subdivision.
To make a very low initial offer to purchase.


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