Real Estate Glossary
Lansing Area Real Estate
REAL ESTATE
 
A B C D E F G H I J L M N O P Q R S T U V W XYZ
 
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earnest money
Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction; called bargain money, caution money, hand money, or a binder in some states.

easement
The right to a specific use of or right to travel over land owned by another. The land being used or traveled over is the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest belonging to the owner of dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner.

easement by condemnation
An easement created by the government or government agency that has exercised its right under eminent domain.

easement by estoppel
An easement created when a person's words or actions lead another to believe that an easement exists. If, in relying on those words or actions, the easement user acts to his or her detriment, they may not deny the existence of the easement.

easement by necessity
An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.

easement in gross
An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For exam ple, a right granted by Eleanor Franks to Joe Fish to use a portion of her property for the rest of his life would be an easement in gross.

easement by prescription
An easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law.

economic life
1. The estimated period over which an improved property may be profitably used so that it will yield a return over and above the economic rent attributable to the land itself; the period during which an improvement has value in excess of its salvage value. In the case of an older structure or improvement, economic life refers to the remaining period during which the improvements to the real property (not land) are depreciated for tax purposes. The economic lives of such improvements are normally shorter than their actual physical lives. Also called service life. 2. As applied to a structure, the years or age indicated by the condition and utility of the structure, as opposed to its actual or chronological age.

effective interest rate
The actual rate or yield of a loan, regardless of the amount stated on the debt instrument.

egress
A way to exit from a property.

elevations
Just as surface rights must be identified, surveyed and described, so must rights to the property above the earth's surface. In the same way land may be measured and divided into parcels, the air itself may be divided. An owner may subdivide the air above his or her land into air lots. Air lots are composed of the airspace within specific boundaries located over a parcel of land.

eminent domain
The right of the government to acquire title to property for public use by condemnation; the property owner receives compensation which is generally fair market value.

emblements
1. Growing crops producted by the labor of the cultivator. 2. The right to the profits from such crops.

encapsulation
A method of controlling environmental contamination by sealing off a dangerous substance (such as asbestos). The treatment of asbestos containing material with a liquid that covers the surface with a protective coating or embeds fibers in an adhesive matrix to prevent the release of asbestos fibers into the air.

encroachment
An unauthorized invasion or intrusion of an improvement or other real property onto another's property, thus reducing the size and value of the invaded property. Common examples of encroachments are the roof of a building that extends over the property line or the front of a building that extends over the building setback line or extends onto a neighbor's property.

encumbrance
Any claim, lien, charge or liability attached to and binding on real property that may lessen its value or burden, obstruct or impair the use of a property but not necessarily prevent transfer of title; a right or interest in a property held by one who is not the legal owner of the property.
There are two general classifications of encumbrances: those that affect the title, such as judgments, mortgages, mechanics' liens and other liens, which are charges on property used to secure a debt or obligation; and those that affect the physical condition of the property, such as restrictions, encroachments and easements.

endorsement
A method of transferring title to a negotiable instrument, such as a check or promissory note, by signing the owner's name on the reverse side of such instrument. A blank endorsement guarantees payment to subsequent holders. An endorsement that states that it is without recourse does not guarantee payment to subsequent holders. A special endorsement specifies the person to whom or to whose order the instrument is payable.

energy efficient mortgage (EEM)
A home mortgage in which the qualifying debt-to-income and housing expense-to-income ratios have been increased by 2% because the home meets or exceeds model standards for energy efficiency.

energy improvement mortgage (EIM)

A loan secured by real property that is made to an owner for the specific purpose of making energy efficient improvements to a home or building.

Energy Star® Home
A home that has been certified and labeled by the U.S. Environmental Protection Agency as having a 30% higher energy efficiency rating than the national residential standards for energy efficiency. Energy Star® is a registered trademark of the U.S. EPA.

enjoin
1. to direct or order (someone) to do something. 2. to prescribe (a course of action) with authority or emphasis. 3. to prohibit or restrain by an injunction.

entitlement
1. to be owed something under the law. 2. The portion of a VA-guaranteed loan that protects a lender from defaults.

entity rule
Three entities can hold property: individuals, partnerships and corporations. In the case of a property exchange, the way an exchanger holds property going into an exchange is the way they must hold the property coming out of the exchange.

equalization
In some jurisdictions, when it is necessary to correct inequalities in state wide tax assessments, an equalization factor is used to achieve uniformity. An equalization factor may be applied to raise or lower assessments in a particular district or county. The assessed value of each property in the area is multiplied by the equalization factor, and the tax rate is then applied to the equalized assessment.

equitable redemption
A defaulted property owner recovering his or her property prior to its sale by curing the default.

equitable right of redemption
The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.

equitable title
The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.

equity
The interest or value that an owner has in property over and above any indebtedness

equity loans
A loan based on a percentage of the equity a borrower holds in a collateral property.

erosion
The gradual loss of soil due to the operation of currents, tides or winds.

escape clause
1. A contract provision relieving a party of liability for failure to perform, as where a stated contingency does not occur. If such a clause allows the party to cancel the contract for no reason whatsoever, there really is no enforceable contract, for mutuality of obligation is lacking. 2. A clause in a proprietary lease of a tenant-stockholder that permits the tenant to surrender the stock and lease back to the cooperative association and thereby terminate continuing liability for payments due under the lease.

 essential elements of a valid contract:
  • Offer and acceptance
  • Consideration
  • Legally competent parties
  • Consent

escheat
The reversion of property to the state or county, as provided by state law, in cases where a decedent dies intestate and there are no heirs capable of inheriting or when the property is abandoned. In some states, bank accounts that are unused for more than seven years will escheat to the government.

escrow
The process by which money and/or documents are held by a disinterested third person (a stakeholder) until satisfaction of the terms and conditions of the escrow instructions (as prepared by the parties to the escrow) have been achieved. Once these terms have been satisfied, delivery and transfer of the escrowed funds and documents takes place. Although is some states a real estate broker is authorized to handle escrow functions, the common practice is to employ the services of a licensed escrow company, title company or lending institution.

escrow instructions
In a sales transaction, a writing signed by buyer and seller that details the procedures necessary to close a transaction and directs the escrow agent how to proceed. Sometimes the buyer and seller execute separate instructions and sometimes the contract of sale itself serves as the escrow instructions.

essentials of a valid lease
:

A lease is a form of contract. To be valid, a lease must meet essentially the same requirements as any other contract:

  • Offer and acceptance—The parties must reach a mutual agreement on all the terms of the contract.
     
  • Consideration—The lease must be supported by valid consideration. Rent is the normal consideration given for the right to occupy the leased premises. However, the payment of rent is not essential as long as consideration was granted in creating the lease itself, sometimes, for instance, this consideration is labor performed on the property. Because a lease is a contract, it is not subject to subsequent changes in the rent or other terms unless these changes are in writing and executed in the same manner as the original lease.
     
  • Capacity to contract—The parties must have the legal capacity to contract.
     
  • Legal objectives—The objectives of the lease must be legal.

estate (tenancy) at sufferance
The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.

estate (tenancy) at will
An estate (or tenancy ) in which a person holds or occupies real estate with the permission of the owner, for a term of unspecified or uncertain duration; i.e., there is no fixed term to the tenancy.

estate (tenancy) for years
An interest for a certain, exact period of time in property leased for a specified consideration.

estate (tenancy) from period to period
An interest in leased property that continues from period to period--week to week, month to month or year to year.

estate in land
The degree, quantity, nature and extent of interest a person has in real property.

estate taxes
Federal estate taxes and state inheritance taxes (as well as the debts of decedents) are general, statutory, involuntary liens that encumber a deceased person's real and personal property. These are normally paid or cleared in probate court proceedings.

estimated seller's proceeds
An estimate of the net amount an owner will receive from the sale of his or her property. An "Estimated Seller's Proceeds" form is filled out by the listing broker and calculates the proceeds based on the listing price and seller's costs.

estoppel
Method of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation.

eviction
1. The legal process of removing a tenant from the premises as a result of a breach of a lease. 2. The disturbance of a tenant's enjoyment of any material part of a leased premises by an act of the landlord, or by a claim of superior title by a third party.

exchange
A transaction in which all or part of the consideration for the purchase of real property is the transfer of property of "like kind" (i.e., real estate for real estate).

exchange period
The period during which the exchanger must acquire replacement property in the exchange. The exchange period starts on the date the exchanger transfers the first relinquished property and ends on the earlier of the 180th day thereafter or the due date (including extensions) of the exchanger's tax return for the year of the transfer of the relinquished property.

exclusive agency listing
A written listing agreement giving a sole agent the right to sell a property for a specified time, but reserving to the owner the right to sell the property himself without owing a commission. The exclusive agent is entitled to a commission if he or she personally sells the property or if it is sold by anyone other than the seller. It is exclusive in the sense that the property is listed with only one broker. The multiple-listing service must accept exclusive-agency listings submitted by participating brokers.

exclusive buyer agency agreement
This is a completely exclusive agency agreement where Buyer agrees to conduct all real estate inquiries and transactions through a specific broker. This agreement releases the Realtor from the obligation of working as a subagent of the seller.

execute
The act of making a document legally valid, such as formalizing a contract by signing or acknowledging and delivering a deed. In some cases, execution of a document may refer solely to the act of signing, in other cases it may refer to complete performance of the document's terms.

executor
A male person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."

executrix
A female person appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent."

express agency
A stated (written or verbal) agency agreement.

express authority
The stated (written or verbal) authority of an agent.

extended coverage policy
A title insurance policy that covers risks normally excluded by most standard coverage policies. The standard policy normally insures the title only as shown by the public records. It does not cover unrecorded matters that might be discovered during an inspection of the premises. Most lenders require extended coverage mortgage title insurance policies. Extended coverage indemnifies the insured against such things as mechanic's liens, tax liens, miscellaneous liens, encumbrances, easements, rights of parties in possession and encroachments, which may not be disclosed by the public records.

external depreciation
Reduction in a property's value caused by outside factors (those that are off the property).

external obsolescence
A type of incurable depreciation caused by negative factors not on the subject property, such as environmental, social or economic forces. The loss in value can not be reversed by spending money on the property.

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