Simultaneous conveyance of purchase price and title as
well as all loan papers at a closing.
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
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.
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
A property owner's tax bill is computed by applying the
tax rate to the assessed valuation of the property.
An amount by which tax owed is reduced directly.
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.
Gifts that are free from federal gift taxes.
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.
A charge against property, created by operation of law.
Tax liens and assessments take priority over all other
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
A court-ordered sale of real property to raise money to
cover delinquent taxes.
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
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.
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.
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
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.
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
A short-term loan requiring interest-only payments until
maturity, at which time the entire principal is due and
A trust established by will.
Having made and left a valid will.
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.
Notice to vacate a premises under a periodic tenancy.
Notice must be for the rent period, but not more than 30
Notice to quit, quit or cure, or quit or pay rent.
Three-day notice must be given before an unlawful
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.
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.
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.
1. The right to or ownership of land. 2. The evidence of
ownership of land.
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
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
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.
The examination of public records relating to real
estate to determine the current state of the ownership.
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.
Accepted method of registering title to land with
A wrongful act; a violation of a legal right.
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.
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.
Lines running east and west, parallel to the base line
and six miles apart.
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 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
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
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.
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
Unlawful entry or injury to the property of another.
Terms in an advertisement which trigger additional
disclosure of all credit terms.
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.
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.
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
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
A deed executed by a trustee conveying land held in a
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
Ledger where a property manager records monies paid out
on behalf of an owner.
The person who creates a trust and gives the
instructions to the trustee.
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.
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