Real Estate Glossary "A"

abstract of title - A summary of all legal instruments affecting title to a property from the original source of the title to the present. If the buyer's lawyer examines the abstract and writes a report of the title's conditions, it is called an abstract and lawyer's opinion. accelerated cost recovery system (ACRS) - An alternative method of calculating depreciation in which more depreciation is taken in earlier years and less in later years.

acceleration clause - A clause in the mortgage that allows the lender to demand immediate payment of the loan balance if the borrower breaks the terms of the note or mortgage.

accession - Acquiring additions to real estate as a result of adding a fixture or of accretion.

accretion - The addition of land through natural forces.

accrued expense - An expense that has occurred but not been paid.

acknowledgement - A voluntary statement before a notary or officer of the court by a person who signed a document that indicates that the signature is genuine and made by the signer's free will.

acquisition debt - An income tax term used to describe money borrowed to purchase, construct or improve a residence.

acre - A measure of land equal to 43,560 square fee.

actual cash value - A method of settling an insurance claim in which depreciation is subtracted from the original cost of the property.

actual notice - Information a person has gained by actually reading, hearing or seeing.

actual number of days in the month method - A variation of the statutory month method for prorating expenses at closing. It takes into account the actual number of days in the month of closing.

actual number of days in the year method - A method of proration using the actual number of days in the proration period.

adjustable rate mortgage (ARM) - A mortgage in which the interest rate changes at predetermined intervals according to a predetermined financial market index. There are usually ceilings (caps) that limit the amount the rate can change every year and over the life of the loan.

adjusted cost basis - The original cost of an asset plus capital improvements less certain deductions. Used to determine the amount of gain or loss realized when the asset is sold.

administrative law judge - Judges who operate under HUD in resolving discrimination complaints.

ad valorem tax - A Latin term meaning according to value. It is a real estate tax based on the value of the property.

adverse possession - A method of acquiring title to real property by using the property without the owner's consent and following statutory requirements.

agency - The relationship between an agent and a principal.

agency by estoppel - An agency created when a third person relies on the statements of the principal regarding a purported agent.

agency by necessity - An agency created because of an emergency situation.

agency coupled with an interest - A agency in which the agent is given an estate or interest in the property by the principal.

agent - The party who acts on behalf of a principal.

air rights - Rights a property owner has in the space above the surface of the property.

alienation clause - The clause in a mortgage that allows the lender to make the entire loan balance due if title to the property is transferred. Also referred to as a due-on-sale clause.

allodial system - A legal system that recognizes private ownership of land.

alluvion - New deposits of land as the result of accretion.

Americans with Disabilities Act (ADA) - A law that requires that property that is open to the public includes features that facilitate access to the building. The ADA is designed to eliminate discrimination against individuals with disabilities by providing equal access to jobs, public accommodations, government services, public transportation and telecommunications.

amortization - Systematic repayment of a debt through periodic installments. Loans can be fully amortized (the entire balance is extinguished), partially amortized (only part of the balance is paid) or negatively amortized (the balance increases).

annual percentage rate (APR) - A term used in the Truth-in-Lending Act to represent the true yearly cost of a loan. The APR is a yearly rate and includes the loan's interest rate plus other loan fees.

anticipation - A principle of value used in appraisal. The value of property may increase or decrease based on some future event that is expected to occur.

antitrust laws - Laws designed to protect free competition.

appraisal - The process of estimating and supporting an opinion of value.

Appraisal Foundation - A private nonprofit group that establishes uniform appraisal standards.

Appraisal Qualifications Board - A board of The Appraisal Foundation. Sets minimum criteria for state-certified appraisers and endorses uniform examinations for certification.

appreciation - The increase in a property's value over a period of time, which can be caused by inflation or by the characteristics of the property.

appurtenant easements - Easement rights belonging to properties that are adjacent to one another and pass with the property to new owners. Include water rights and rights-of-way.

ARELLO - The Association of Real Estate License Law Officials. A federation of real estate law officials to assist each other in the administration and enforce­ment of license laws.

as is - A contract clause indicating the seller will not fix any problems with the property.

assemblage - The process of merging adjoining lots together. It is used to take advantage of the principle of value called plottage.

assessed value - A value put on real and personal property by a taxing authority as a basis to calculate the amount of real estate tax.

assignment - Transferring contract rights or obligations. In a lease situation, transferring all of the remaining terms of the lease to someone else.

associate broker - A license category. A person holding this type of license has passed the requirements for a broker license but is employed by another broker.

assumption - See loan assumption.

attachment - The process of changing personal property to real property.

attorney-at-law - A person licensed by the state to practice law.

attorney-in-fact - A person appointed to act for another under a power of attorney.

avulsion - The sudden removal of land by natural forces.

Top of Page

Previous Page