Real Estate Glossary
Lansing Area Real Estate
REAL ESTATE
 
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T

table funding
Simultaneous conveyance of purchase price and title as well as all loan papers at a closing.

take-out financing
Long-term permanent financing. In the usual large construction project, the developer obtains two types of financing. The first is the interim loan, a short-term loan to cover construction costs. Before lending any money, however, the interim lender normally requires a commitment by a permanent lender to agree to "take out" the interim lender in which the lender pays off the construction loan and leaves the developer with a permanent long-term loan when the building has been completed.

taking
The concept of taking comes from the Takings clause of the fifth amendment of the United States Constitution. The clause reads, "nor shall private property be taken for public use, without just compensation." This means that when land is taken for public use through the government's power of eminent domain or condemnation, the owner must be compensated.

taxation
1. The process by which a government or municipal quasi-public body raises monies to fund its operation. 2. The impact an investment has on the investor's liability for the payment of federal, state, and local taxes.

tax bill
A property owner's tax bill is computed by applying the tax rate to the assessed valuation of the property.

tax credit
An amount by which tax owed is reduced directly.

tax deed
An instrument, similar to a certificate of sale, given to a purchaser at a tax sale.

tax deferred exchange (1031 exchange)
Under Section 1031 of the Internal Revenue Code, some or all of the realized gain from the exchange of property may not need to be immediately recognized for tax purposes. Both properties in an exchange must be held for productive use in trade or business or for investment and must be of a like-kind.

tax-free gifts
Gifts that are free from federal gift taxes.

tax levy
The amount to be raised from the general real estate tax is then imposed on property owners through a tax levy. A tax levy is the formal action taken to impose the tax, usually a vote of the taxing district's governing body.

tax lien
A charge against property, created by operation of law. Tax liens and assessments take priority over all other liens.

tax rate
The tax rate for each taxing body is computed separately. To arrive at a tax rate, the total monies needed for the coming fiscal year are divided by the total assessments of all real estate located within the taxing body's jurisdiction.

Taxpayer Relief Act of 1997 (TRA 97)
Enacted by the United State Congress and effective May 7, 1997, TRA '97 provides for broader exemption from capital gains taxes on the profits on the sale of a personal residence. Replaces the old provision for a "one-time" exemption of $125,000 for sellers over age 55.

tax sale
A court-ordered sale of real property to raise money to cover delinquent taxes.

tax shelter
A phrase often used to describe some of the tax advantages of real estate or other investments, such as non cash deductions for cost recovery (depreciation), interest, taxes and postponement or even elimination of certain taxes. The tax shelter not only may offset the investor's tax liability relevant to the real estate investment but also may reduce the investor's other ordinary income, which reduces overall tax liability.

tenancy at sufferance
A tenancy (or estate) in which a person wrongfully holds or occupies a property after the expiration of a lease without the consent of the landlord. No notice of termination is required for the landlord to evict the tenant.

tenancy at will
A tenancy (or estate) 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.

tenancy by the entirety
Some states allow husbands and wives to use a special form of co-ownership called tenancy by the entirety. In this form of ownership, each spouse has an equal, undivided interest in the property. (The term entirety refers to the fact that the owners are considered one indivisible unit because early common law viewed a married couple as one legal person).

tenancy for years
A tenancy for a definite period of time. The tenant must vacate the property at the end of the lease unless an extension or new lease has been agreed upon.

tenancy in severalty
Ownership of a property by one person, rather than held jointly with others. Also called sole tenancy.

tenant
In general, one who exclusively holds or possesses property, such as a life tenant or a tenant for years; commonly used to refer to a lessee under a lease. A tenant's occupancy, although exclusive, is always subordinate to the rights of the owner. Tenant refers to an occupant, not necessarily a renter.
Landlord-Tenant Law Overview

tenants in common
A form of concurrent ownership of property between two or more persons, in which each has an undivided interest in the whole property. This form is frequently found when the parties acquire title by descent or by will. Each cotenant is entitled to the undivided possession of the property, according to his or her proportionate share and subject to the rights of possession of the other tenants. No cotenant can exclude another cotenant, or claim ownership of a specific portion of the property. Each cotenant holds an estate in land by separate and distinct titles, but with unity of possession. Their interests may be equal, as in joint tenancy, or unequal. Where the conveyance document does not specify the extent of interest of each cotenant, there is a rebuttable presumption that the shares are equal. Unlike a joint tenancy, there is no right of survivorship in a tenancy in common. Therefore when one of the cotenants dies, the interest passes to his or her heirs or beneficiaries and not to the surviving tenants in common. The property interest of a tenant in common is thus subject to probate. Also, unlike joint tenancy, dower rights may exist in property held in common.

tenant improvements
A commercial or an industrial property manager often is called on to make tenant improvements. These are alterations to the interior of the building to meet a tenant's particular space needs. Such construction alterations range from simply repainting or re-carpeting to completely gutting the interior and redesigning the space by erecting new walls, partitions and electrical systems.

tenement
A common law real estate term that describes those real property rights of a permanent nature. These rights relate to the land and pass with conveyance of the land, such as buildings and improvements.

termite inspection
A visible check of a property for the presence of termites. Usually performed by a licensed exterminator. Buyers often make a termite inspection a condition of a sales contract, and require a pest control report or a clearance letter showing the property to be clear of any live, visible infestation. The VA, FHA and Fannie Mae all require a termite inspection as a condition of a loan.

term loan
A short-term loan requiring interest-only payments until maturity, at which time the entire principal is due and payable.

testamentary trust
A trust established by will.

testate
Having made and left a valid will.

testator
A person who has made a valid will. A woman often is referred to as a testatrix, although testator can be used for either gender.

third party originator
Third-party originators prepare loan applications for borrowers and submit the applications to lenders.

30-day notice
Notice to vacate a premises under a periodic tenancy. Notice must be for the rent period, but not more than 30 days.

three-day notice
Notice to quit, quit or cure, or quit or pay rent. Three-day notice must be given before an unlawful detainer action.

tier (township strip)
A strip of land six miles wide, extending east and west and numbered north and south according to its distance from the base line in the rectangular (government) survey system of legal description.

timing
Refers to the length of time one must wait to receive cash flow from an investment.

time is of the essence
A contract clause that emphasizes punctual performance as an essential requirement of the contract. Thus, if any party to the instrument does not perform within the specified time period (the drop-dead date), that party is in default, provided the non-defaulting party has made a valid tender of performance. If no tender is made, then the clause may be waived. The clause may also be waived by the subsequent acts of the parties such as accepting tardy payments or signing escrow instructions that allow for extensions of time in which to perform.

time-sharing
A modern approach to communal ownership and use of real estate that permits multiple purchasers to buy undivided interests in real property (usually in a resort condominium or hotel) with a right to use the facility for a fixed or variable time period. Under time-sharing forms of ownership, potential purchasers of property buy fixed or floating time periods for use of a specific apartment within a project.

title
1. The right to or ownership of land. 2. The evidence of ownership of land.

title defects
An unresolved claim against the ownership of property, which prevents presentation of a marketable title. Such claims may arise from failure of the owner's spouse or former partner to sign a deed, current liens against the property or an interruption in the title records to a property.

title insurance
A comprehensive indemnity contract under which a title insurance company warrants to make good a loss arising through defects in title to real estate or any liens or encumbrances thereon. Unlike other types of insurance, which protect a policyholder against loss from some future occurrence (such as a fire or auto accident), title insurance in effect protects a policyholder against loss from some occurrence that has already happened, such as a forged deed somewhere in the chain of title.

Needless to say, a title company will not insure a bad title any more than a fire insurance company would insure a burning building. However, if upon investigation of the public records and all other material facts, the title company feels that it has an insurable title, it will issue a policy.

title insurance fees
The costs involved in purchasing title insurance. May include title insurance policy and search fees.

title search
The examination of public records relating to real estate to determine the current state of the ownership.

title theory
Some states interpret a mortgage to mean that the lender is the owner of mortgaged land. Upon full payment of the mortgage debt the borrower becomes the landowner.

Torrens System
Accepted method of registering title to land with the government.

tort
A wrongful act; a violation of a legal right.

town house
A type of dwelling unit normally having two floors, with the living area and kitchen on the base floor and the bedrooms located on the second floor; a series of individual houses having architectural unity and a common wall between each unit.

township
A division of territory, used in the government (rectangular survey system of land description, which is six miles square, and contains 36 sections, each of which is one mile square and consists of 23,040 acres.

township line
Lines running east and west, parallel to the base line and six miles apart.

township squares
When the horizontal township lines and the vertical range lines intersect, they form squares. These township squares are the basic units of the rectangular survey system. Townships are 6 miles square and contain 36 square miles (23,040 acres).

township tiers
Township lines form strips of land called township tiers. These township tiers are designated by consecutive numbers north or south of the base line.

Toxic Substance Control Act
Enacted by Congress in 1976, the act authorizes EPA to secure information on all new and existing chemical substances and to control any of these substances determined to cause an unreasonable risk to public health or the environment. The act was established to ensure that the human health and environmental effects of chemical substances were identified and properly controlled prior to placing these materials into commerce.

trade fixture
An article of personal property annexed or affixed to leased premises by the tenant as a necessary part of the tenant's trade or business. At the termination of a lease, a tenant must leave most fixtures in the premises; however, trade fixtures are removable by the tenant before expiration of the lease, and the tenant is responsible for any damages caused by their removal. However, a tenant cannot usually remove replacement fixtures, that is, improvements installed to replace worn-out ones. For instance, if a tenant installs a new bar to replace an old bar in a tavern the tenant leases, the tenant cannot remove the bar upon termination of the lease. If the tenant fails to remove trade fixtures within a reasonable time of lease expiration, the fixtures will be considered abandoned and will become the property of the landlord.

trading on the equity
The practice of agreeing to buy real estate and then assigning the purchase agreement to another buyer before closing takes place; thus turning a profit by "selling the paper."

transaction broker
A transaction broker (also referred to as a nonagent, facilitator, coordinator or contract broker) is not an agent of either party. A transactional broker's job is simply to help both the buyer and the seller with the necessary paperwork and formalities involved in transferring ownership of real property. The buyer and the seller negotiate the sale without representation.

transfer tax
A state tax imposed on the transfer or conveyance of realty or any realty interest by means of deed, lease, sublease, assignment, contract for deed or similar instrument. One purpose of the tax is to acquire reliable data on the fair market value of the property to help establish more accurate real property tax assessments.

trespass
Unlawful entry or injury to the property of another.

trigger terms
Terms in an advertisement which trigger additional disclosure of all credit terms.

triple-net lease
A net-net-net lease where, in addition to the stipulated rent, the lessee assumes payment of all expenses associated with the operation of the property. This includes both fixed expenses, such as taxes and insurance, and all operating expenses, including costs of maintenance and repair. In some cases, the triple-net tenant even pays the interest payments on the lessor's mortgage on the property leased.

Strictly speaking, the term triple-net lease is redundant because "net lease" adequately describes the situation. Rather than rely on labels, however, the parties must examine the provisions of the lease to discover the extent of the tenant's responsibilities.

trust
An arrangement whereby legal title to property is transferred by the grantor (or trustor) to a person called a trustee, to be held and managed by that person for the benefit of another, called a beneficiary.

trustee
1) One who holds property in trust for another as a fiduciary and is charged with the duty to protect, preserve and enhance the value and the highest and best use of the trust property. 2) One who holds property in trust for another to secure the performance of an obligation. In those states using trust deeds as security devices, the trustee holds bare legal title to the property pending the borrower/trustor paying off the underlying debt or promissory note. The trustee is usually a lending institution, trust company or title insurance company.

trust deed
Also called a deed of trust. A legal document in which title to property is transferred to a third-party trustee as security for an obligation owed by the trustor (borrower) to the beneficiary (lender). A trust deed is similar to a mortgage—the main difference is that it involves three parties. When a borrower repays the note secured by a trust deed, the trustee must re-convey title back to the borrower by way of a deed of re-conveyance.

trustee's deed
A deed executed by a trustee conveying land held in a trust.

trust funds
Money or other things of value that are received by a broker or salesperson on behalf of a principal or any other person, and which are held for the benefit of others in the performance of any act(s) for which a real estate license is required.

trust fund bank account
An account set up by a broker, attorney or other agent at a bank or other recognized depository, into which the broker deposits all funds entrusted to the agent by the principal or others; also called an earnest money or escrow account.

trust ledger
Ledger where a property manager records monies paid out on behalf of an owner.

trustor
The person who creates a trust and gives the instructions to the trustee.

truth-in-lending law
A body of federal law effective July 1969 as part of the Consumer Credit Protection Act, and implemented by the Federal Reserve Board's Regulation Z. It was amended in 1982 by the Truth-in-Lending Simplification and Reform Act and later amendments. The main purpose of this law is to ensure that borrowers and customers in need of consumer credit are given meaningful information with respect to the cost of credit. In this way consumers can more readily compare the various credit terms available to them and thus avoid the uninformed use of credit. This law creates a disclosure device only, and does not establish any set maximum or minimum interest rates or require any charges for credit.

two-step mortgage
A hybrid loan between a fixed-rate and adjustable-rate loan where a lower rate remains in effect for seven years and is then adjusted once for the balance of the loan period.
 

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