Safe Drinking Water Act
Enacted by Congress in 1974, this federal law
administered by the EPA and equivalent state regulators
to establish and enforce drinking water standards.
Safe Drinking Water Act
A safety clause may be contained in a listing. It
provides that a broker is still entitled to a commission
for a set period of time after the listing has expired
if the property is sold to a prospect, who was
introduced to the property by the broker, during the
period of the listing.
A transaction in which an owner sells his or her
improved property and, as part of the same transaction,
signs a long term lease to remain in possession of the
sales comparison approach
The process of estimating the value of a property by
examining and comparing actual sales of comparable
A real estate sales contract contains the complete
agreement between a buyer of a parcel of real estate and
the seller. Depending on the area, this agreement may be
known as an offer to purchase, a contract of purchase
and sale, a purchase agreement, an earnest money
agreement or a deposit receipt.
A person employed directly or indirectly by a licensed
real estate broker to perform various tasks and
responsibilities. These may include selling and/or
buying real estate; negotiating purchase, sale or
exchange of real estate; negotiating leases, rents
The expected worth of a piece of property at the end of
its economic life.
Another term used is "sublease." This is when a tenant
has a current lease with the owner of a property and
then "sublets" the property to a third party. The tenant
is then "sandwiched" between the owner and the end user,
acting as lessee and lessor at the same time.
satisfaction of mortgage
When all mortgage loan payments have been made and the
note has been paid in full, a satisfaction of mortgage
(also known as a release of mortgage or mortgage
discharge) returns to the mortgagor all interest in the
real estate, which was conveyed to the mortgagee by the
original recorded mortgage document.
savings and loan association (S&L)
A financial institution whose principal function is to
promote thrift and home ownership. Depositors earn
interest on their deposits, often at a higher rate than
is offered at commercial banks. The S&L invests some of
these deposits in residential mortgage loans, enabling
more people to purchase and/or repair their homes.
Savings and loan associations are active participants in
the home loan mortgage market.
A mortgage (or trust deed) that is junior or subordinate
to a first mortgage; typically, an additional loan
imposed on top of the first mortgage, taken out when the
borrower needs more money. Because the risk involved to
the lender is greater with the second mortgage, the
lender's conditions are usually more stringent, the term
is shorter and the interest rate is higher than for the
A loan taken out in addition to a first loan, usually
obtained from an individual lender.
secondary mortgage market
A market for the purchase and sale of existing
mortgages, designed to provide greater liquidity for
selling mortgages; also called secondary money market,
not to be confused with secondary financing.
Refers to a broker making an undisclosed profit at the
seller's expense; for example, when the broker has an
undisclosed relative buy the listed property and then
resell it to a buyer whose earlier offer was never
presented to the seller.
As used in the government survey method, a land area of
one square mile, or 640 acres. A section is 1/36 of a
township, or each township contains 36 sections.
Sections are numbered 1 through 36. Section 1 is always
in the northeast, or upper right-hand, corner. The
numbering proceeds right to left to the upper left-hand
corner. From there, the numbers drop down to the next
tier and continue from left to right, then back from
right to left.
The pooling of real estate mortgages and trust deeds to
act as collateral for the sale of securities to public
and private investors.
Evidence of obligations to pay money or of rights to
participate in earnings and distribution of corporate,
trust or other property. A security is usually found
where an investor subjects his or her money to the risks
of an enterprise over which he or she exercises no
Security interests in chattels (personal property) are
created by an instrument known as a security agreement.
To give notice of a security interest, a financing
statement must be recorded.
Money deposited by or for the tenant with the landlord,
to be held by the landlord for the following purposes:
1. to remedy tenant defaults for damage to the premises
(be it accidental or intentional), for failure to pay
rent due or for failure to return keys at the end of the
tenancy; 2. to clean the dwelling so as to place it in
as fit a condition as when the tenant commenced
possession, considering normal wear and tear; and 3. to
compensate for damages caused by a tenant who wrongfully
quits the dwelling unit.
seller carry-back financing
A sale of real property where the seller receives a
portion of the sales price in the form of a promissory
note secured by the real property purchased. An
extension of credit by the seller.
seller financing disclosure statement
There are specific additional duties imposed upon the
licensee who negotiates a sale of real property when the
seller receives a portion of the sales price in the form
of a promissory note secured by the real property
purchased. This seller financing disclosure statement is
required in a transaction for the purchase of a dwelling
for not more than four families where the purchase
includes an extension of credit by the seller and where
the licensee is acting as an "arranger of credit."
An agent who represents the seller of real property.
An economic condition that occurs when there are more
buyers available than properties.
A real estate loan in the first priority position.
A system for collecting, treating and eliminating waste
from a home waste drainage system.
The amount of space local zoning regulations require
between a lot line and a building line.
Also know as an "Annual Property Cash Flow Statement."
Includes cash flow information about a listed rental
property that is passed out to other real estate
companies and/or given to prospective buyers.
Signed documentation as to who will service the loan.
Land on which an easement exists in favor of an adjacent
property (called a dominant tenement or estate); also
called a servient estate. If property A has a
right-of-way across property B, property B is the
servient tenement. The servient owner may not use the
property in such a way as to interfere with the
reasonable use of the dominant owner.
Sole ownership of real property.
Changing an item of real estate to personal property by
detaching it from the land; for example, cutting down a
The deed given after a sheriff's sale.
A public sale of property conducted by a sheriff as
ordered by a court to satisfy a judgement.
"sick building" syndrome
The term "sick building syndrome" (SBS) is used to
describe situations in which building occupants
experience discomforting health conditions that appear
to be linked to time spent in a building, but no
specific illness or cause can be identified.
EPA Sick Building Syndrome Factsheet
Interest computed on the principal balance, and
disregards previously accumulated (upaid) interest.
1. having signed or joined in signing a document. 2. a
signer, or one of the signers, of a document.
The practice of representing either the buyer or the
seller but never both in the same transaction. The
single-agency broker may be compensated indirectly
through an authorized commission split or directly by
the principal who employed the agent to represent him or
single-family, owner-occupied dwellings
A dwelling which will be owned and occupied by a
signatory to the mortgage or deed of trust secured by
such dwelling within 90 days of the execution of the
mortgage or deed of trust.
The personal preference of people for one area over
another, not necessarily based on objective facts and
A flat piece of concrete, typically used as a walking
surface, but may also serve as a load bearing device as
in slab homes.
soft money loan
A loan where credit not cash is extended, usually by the
seller carrying all or part of the financing.
Soldiers and Sailors Civil Relief Act
A law prohibiting foreclosures while a person is serving
in the military and within three months thereafter
except by court order.
A method of owning a business in which one person owns
the entire business and reports all profits and losses
directly on his or her personal income tax return, as
contrasted with corporate, joint or partnership
ownership. A sole or individual proprietorship is easy
to organize and flexible to operate. It is frequently
used in real estate brokerage. An individual proprietor
may run a brokerage company if he or she has a valid
broker's license. The proprietor may use his or her own
name or a fictitious name previously registered as
required by state law. There is a growing tendency for
sole proprietors to incorporate and thus take advantage
of certain tax and fringe benefits, such as those
provided by pension and profit-sharing plans.
As defined under Resource Conservation and Recovery Act,
any solid, semi-solid, liquid, or contained gaseous
materials discarded from industrial, commercial, mining,
or agricultural operations, and from community
activities. Solid waste includes garbage, construction
debris, commercial refuse, sludge from water supply or
waste treatment plants or air pollution control
facilities, and other discarded materials.
The design, manufacture, purchase, or use of materials
(such as packaging) that reduce the amount or toxicity
of garbage. Source reduction can reduce waste disposal
and handling costs because the expense of recycling,
composting, combustion and landfill are avoided. Source
reduction conserves resources and reduces pollution.
One authorized by a principal to perform a particular
act or transaction without contemplation of continuity
of service as with a general agent. The real estate
broker is ordinarily a special agent appointed by the
seller to find a ready, willing and able buyer for a
particular property. An attorney-in-fact under a limited
power of attorney is a special agent.
A tax or levy customarily imposed against only those
specific parcels of realty that will benefit from a
proposed public improvement, as opposed to a general tax
on the entire community. Because the proposed
improvement will enhance the value of the affected
homes, only those affected owners must pay this special
lien. Common examples of special assessments are water,
sidewalk and sewer assessments, or other special
improvements such as parks and recreational facilities.
A fee simple estate may also be qualified by a special
limitation. The estate ends automatically upon the
current owner's failure to comply with the limitation.
The former owner retains a possibility of reverter. If
the limitation is violated, the former owner (or his or
her heirs or successors) reacquires full ownership, with
no need to reenter the land or go to court. A fee simple
with a special limitation is also called a fee simple
determinable because it may end automatically. The
language used to distinguish a special limitation-the
words "so long as" or "while" or "during"-is the key to
creating this estate.
Hotels, resorts, nursing homes, theaters, schools,
places of worship and other organizations whose
specialized needs dictate the design and operation of
special warranty deed
A deed in which the grantor warrants or guarantees the
title only against defects arising during the period of
his or her tenure and ownership of the property and not
against defects existing before that time. Such a deed
is usually identified by the language "by, through, or
under the grantor, but not otherwise." A special
warranty deed is often used when a fiduciary such as an
executor or trustee conveys the property of his or her
principal, because the fiduciary usually has no
authority to warrant against acts of his or her
predecessors in title.
A lien affecting or attaching only to a certain,
specific parcel of land or piece of property.
An action brought in a court of equity in special cases
to compel a party to carry out the terms of a contract.
The basis for an equity court's jurisdiction in breach
of a real estate contract is the fact that land is
unique and mere legal damages would not adequately
compensate the buyer for the seller's breach.
A home that has been built without a buyer. Also called
a "spec home".
A form of joint venture participation where the lender
purchases the fee land under the proposed development
project and leases it to the developer. The lender also
finances the improvements to be constructed on this
Zoning of parcels not in conformance with the general
zoning of an area.
A method of estimating a building's construction,
reproduction or replacement costs; whereby the
structure's square-foot floor area is multiplied by an
appropriate construction cost per square foot.
An economic condition when the number of homes on the
market is equal to the number of buyers.
standard coverage policy
A standard coverage policy normally insures the title as
it is known from the public records. In addition, the
standard policy insures against such hidden defects as
forged documents, conveyances by incompetent grantors,
incorrect marital statements and improperly delivered
The reliance of courts on previous decisions when
A home that is within the lower price range of a typical
statute of frauds
State law that requires certain contracts to be in
writing and signed by the party to be charged (or held)
to the agreement in order to be legally enforceable.
statute of limitations
That law pertaining to the period of time within which
certain actions must be brought to court. The law is
intended to protect the vigilant against stale claims by
requiring the prompt assertion of claims; thus an action
must be brought (i.e., the complaint filed) within a
specified time of the occurrence of the cause of action.
After the time period expires, the claim is said to be
"outlawed" and may not be enforced in court. The theory
behind the statute of limitations is that there must be
some end to the possibility of litigation. It is said
that stale witnesses and stale records produce little
truth and result in accidental justice, if any.
The laws, rules and regulations enacted by legislatures
and other governing bodies.
A lien imposed on property by statute—a tax lien, for
example—in contrast to an equitable lien, which arises
out of common law.
The right of a defaulted property owner to recover the
property after its sale by paying the appropriate fees
The illegal practice of channeling home seekers
interested in equivalent properties to particular areas,
either to maintain the homogeneity of an area or to
change the character of an area to create a speculative
situation. This practice makes certain homes unavailable
to home seekers on the basis of race or national origin,
and on these grounds it is prohibited by the provisions
of the federal fair housing act. Steering is often
difficult to detect, however, because the steering
tactics can be so subtle that the home seeker is unaware
that his or her choice has been limited. Steering could
be a licensee's use of a word, phrase or act that is
intended to influence the choice of a prospective
property buyer on a discriminatory basis.
A property that has acquired an undesirable reputation
due to an event that occurred on or near it, such as
violent crime, gang-related activity, illness or
personal tragedy. Because of the potential liability to
a licensee for inadequately researching and disclosing
material facts concerning a property's condition,
licensees should seek competent counsel when dealing
with a stigmatized property. Some states restrict the
disclosure of information about stigmatized properties.
In other states, the licensee's responsibility may be
difficult to define because the issue is not a physical
defect, but merely a perception that a property is
Ownership of real property by a corporation where each
stockholder is entitled to occupancy of a unit under a
Date on a term loan when the balloon payment is due.
A notice given to a lender that a subcontractor has not
been paid. Unless bond is posted, the lender must
withhold moneys due a prime contractor.
A method of depreciation, also called the age-life
method, that is computed by dividing the adjusted basis
of a property by the number of years of estimated
remaining useful life. The cost of the property is thus
deducted in equal annual installments. For example, if
the depreciable basis is $ 100,000 and the estimated
useful life is 25 years, the annual depreciation
deduction is $4,000 for each year during the useful life
of the asset. Prior to 1986, taxpayers sometimes used a
form of accelerated depreciation such as 175 percent of
straight line. The IRS had rules to recapture the amount
of depreciation that was in excess of the straight-line
straight (term) loan
A loan in which only interest is paid during the term of
the loan, with the entire principal amount due with the
final interest payment.
A promissory note evidencing a loan in which payments of
interest only are made periodically during the term of
the note, with the principal payment due in one lump sum
upon maturity. A straight note is usually a non
amortized note made for a short term, such as three to
five years, and is renewable at the end of the term.
The real estate market is a marketplace that is
stratified based on price.
In a strict foreclosure procedure, after a delinquent
borrower has been notified and the proper papers have
been filed, the court designates a specific period
during which the balance of the default must be paid in
full. If the payment is not made, the borrower's
equitable and statutory redemption rights are waived and
the court awards full legal title to the lender. There
is no deficiency judgement in strict foreclosure cases.
An owner of a property is responsible to an injured
party without excuse.
An agent of a person who is already acting as an agent
for a principal. The original agent can delegate
authority to a subagent where such delegation is either
expressly authorized or customary in the trade. For
example, it is customary for listing brokers to delegate
certain functions of a ministerial nature to subagents,
such as to show property and solicit buyers.
Subdivided Land Law
A disclosure law enacted to protect buyers of subdivided
parcels. A public report is required for subdivisions of
five or more parcels.
One who buys undeveloped land, divides it into smaller,
usable lots and sells the lots to potential users.
Any land that is divided or is proposed to be divided
for the purpose of disposition into two or more lots,
parcels, units or interests. Subdivision refers to any
land, whether contiguous or not, if two or more lots,
parcels, units or interests are offered as part of a
common promotional plan of advertising and sale.
subdivision and development ordinances
Municipal ordinances that establish requirements for
subdivisions and development.
A reference to the real property under discussion, or
the real property under appraisal.
The recognition by a buyer of conditions (such as a
prior loan), which are not the buyer's legal
A lease given by a lessee for a portion of the leasehold
interest, while the lessee retains some reversionary
interest. The sublease may be for all or part of the
premises, for the whole term or part of it, as long as
the lessor retains some interest in the property. Leases
normally contain a clause prohibiting subletting without
prior consent of the lessor. The lessee remains directly
liable to the lessor for the rent, which is usually paid
by the sublessee to the lessee and then from the lessee
to the lessor. The sub lessee does not have a
contractual obligation to pay rent to the original
The partial transfer of a tenant's right in a rental
property to a third party.
A written agreement between lien holders to change the
priority of mortgage, judgment and other liens. Under a
subordination agreement, the holder of a superior or
prior lien agrees to permit a junior lien holder's
interest to move ahead of his or her lien.
A clause in which the holder of a mortgage permits a
subsequent mortgage to take priority. Subordination is
the act of yielding priority. This clause provides that
if a prior mortgage is paid off or renewed, the junior
mortgage will continue in its subordinate position and
will not automatically become a higher or first
mortgage. A subordination clause is usually standard in
a junior mortgage, because the junior mortgagee gets a
higher interest rate and is often not concerned about
the inferior mortgage position.
Lenders who specialize in B, C, or D mortgages.
The substitution of one creditor for another, with the
substituted person succeeding to the legal rights and
claims of the original claimant. Subrogation is used by
title insurers to acquire from the injured party rights
to sue in order to recover any claims they have paid.
1) to give, pay, or pledge (a sum of money) as a
contribution, investment, etc. 2) to append one's
signature or mark to (a document), as in approval or
attestation of its contents.
An appraisal principle that states that the maximum
value of a property tends to be set by the cost of
purchasing an equally desirable and valuable substitute
property, assuming that no costly delay is encountered
in making the substitution.
substitution of entitlement
Replaces one eligible veteran with another on an
existing Veterans Administration loan. The entitlement
is restored to the original veteran.
Ownership rights in a parcel of real estate to the
water, minerals, gas, oil and so forth that lie beneath
the surface of the property.
A type of termite that nests underground.
A clever trick or strategy used to evade a rule, escape
a consequence, hide something, etc.
Those who succeed to or to whom the corporation's rights
in the property are transferred.
suit for possession
A court suit initiated by a landlord to evict a tenant
from leased premises after the tenant has breached one
of the terms of the lease or has held possession of the
property after the lease's expiration.
suit for specific performance
If a seller breaches a real estate contract, the buyer
may sue for specific performance. The buyer asks the
court to force the seller to go through with the sale
and convey the property as previously agreed. The buyer
may choose to sue for damages, in which case the buyer
asks that the seller pay for costs and hardships
suffered as a result of the seller's breach.
suit to quiet title
A court action intended to establish or settle the title
to a particular property, especially when there is a
cloud on the title.
Popular name of the hazardous waste cleanup fund
established by the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) as amended by
the Superfund Amendment and Reauthorization Act of 1986
(SARA). Superfund focuses on the cleanup of releases of
hazardous substances on property. It creates significant
legal exposure based on strict liability for owners,
landlords and, sometimes lenders.
The amount of goods available in the market to be sold
at a given price. The term is often coupled with supply
and demand The appraisal principle that follows the
interrelationship of the supply of and demand for real
estate. As appraising is based on economic concepts,
this principle recognizes that real property is subject
to the influences of the marketplace just as is any
An agreement by an insurance or bonding company to be
responsible for certain possible defaults, debts or
obligations contracted for by an insured party; in
essence, a policy insuring one's personal and/or
financial integrity. In the real estate business a
surety bond is generally used to ensure that a
particular project will be completed at a certain date
or that a contract will be performed as stated.
Ownership rights in a parcel of real estate that are
limited to the surface of the property and do not
include the air above it (air rights) or the minerals
below the surface.
Giving up leasehold rights by a tenant in exchange for a
release from future obligations under a lease.
The process by which boundaries are measured and land
areas are determined; the on-site measurement of lot
lines, dimensions and position of a house on a lot,
including the determination of any existing
encroachments or easements.
The right of surviving joint tenants to the ownership
interest of another joint tenant upon the latter's
A combination of people or firms formed to accomplish a
business venture of mutual interest by pooling
resources. In a real estate investment syndicate the
parties own and/or develop property, with the main
profit generally arising from the sale of the property.
A descriptive term for a group of two or more people
united for the purpose of making and operating an
investment. A syndication may operate in the form of a
REIT, corporation, general partnership, limited
partnership or even as tenancy in common.