Real Estate Dictionary D-H DAMAGES — The indemnity recoverable by a person who has sustained an injury, either in his or her person, property, or relative rights, through the act or default of another. Loss sustained or harm done to a person or property. DATA PLANT — An appraiser’s file of information on real estate. DEBENTURE — Bonds issued without security, an obligation not secured by a specific lien on property. DEBIT — A bookkeeping entry on the left side of an account, recording the creation of or addition to an asset or an expense, or the reduction or elimination of a liability or item of equity or revenue. DEBT — That which is due from one person or another; obligation, liability.DEBTOR — A person who is in debt; the one owing money to another. DECLINING BALANCE DEPRECIATION — A method of accelerated depreciation allowed by the IRS in certain circumstances. Double Declining Balance Depreciation is its most common form and is computed by using double the rate used for straight line depreciation. DECREE OF FORECLOSURE — Decree by a court ordering the sale of mortgaged property and the payment of the debt owing to the lender out of the proceeds. DEDICATION — The giving of land by its owner to a public use and the acceptance for such use by authorized officials on behalf of the public. DEED — Written instrument which when properly executed and delivered conveys title to real property from one person (grantor) to another (grantee). DEED IN LIEU OF FORECLOSURE — A deed to real property accepted by a lender from a defaulting borrower to avoid the necessity of foreclosure proceedings by the lender. DEED OF TRUST — (See Trust Deed.) DEED RESTRICTIONS — Limitations in the deed to a property that dictate certain uses that may or may not be made of the property. DEFAULT — Failure to fulfill a duty or promise or to discharge an obligation; omission or failure to perform any act. DEFEASANCE CLAUSE — The clause in a mortgage that gives the mortgagor the right to redeem mortgagor’s property upon the payment of mortgagor’s obligations to the mortgagee. DEFEASIBLE FEE — Sometimes called a base fee or qualified fee; a fee simple absolute interest in land that is capable of being defeated or terminated upon the happening of a specified event. DEFENDANT — A person against whom legal action is initiated for the purpose of obtaining criminal sanctions (criminal defendant) or damages or other appropriate judicial relief (civil defendant) . DEFERRED MAINTENANCE — Existing but unfulfilled requirements for repairs and rehabilitation. Postponed or delayed maintenance causing decline in a building’s physical condition. DEFERRED PAYMENT OPTIONS — The privilege of deferring income payments to take advantage of statutes affording tax benefits. DEFICIENCY JUDGMENT — A judgment given by a court when the value of security pledged for a loan is insufficient to pay off the debt of the defaulting borrower. DELEGATION OF POWERS — The conferring by an agent upon another of all or certain of the powers that have been conferred upon the agent by the principal. DEPOSIT RECEIPT — A term used by the real estate industry to describe the written offer to purchase real property upon stated term and conditions, accompanied by a deposit toward the purchase price, which becomes the contract for the sale of the property upon acceptance by the owner. DEPRECIATION — Loss of value of property brought about by age, physical deterioration or functional or economic obsolescence. The term is also used in accounting to identify the amount of the decrease in value of an asset that is allowed in computing the value of the property for tax purposes. DEPTH TABLE — A statistical table that may be used to estimate the value of the added depth of a lot. DESIST AND REFRAIN ORDER — An order directing a person to stop from committing an act in violation of the Real Estate Law. DETERMINABLE FEE — An estate which may end on the happening of an event that may or may not occur. DEVISE — A gift or disposal of real property by last will and testament. DEVISEE — One who receives a gift of real property by will. DEVISOR — One who disposes of real property by will. DIRECTIONAL GROWTH — The location or direction toward which the residential sections of a city are destined or determined to grow. DISCOUNT — To sell a promissory note before maturity at a price less than the outstanding principal balance of the note at the time of sale. Also an amount deducted in advance by the lender from the nominal principal of a loan as part of the cost to the borrower of obtaining the loan. DISCOUNT POINTS — The amount of money the borrower or seller must pay the lender to get a mortgage at a stated interest rate. This amount is equal to the difference between the principal balance on the note and the lesser amount which a purchaser of the note would pay the original lender for it under market conditions. A point equals one percent of the loan. DISCRETIONARY POWERS OF AGENCY — Those powers conferred upon an agent by the principal which empower the agent in certain circumstances to make decisions based on the agent’s own judgment. DISINTERMEDIATION — The relatively sudden withdrawal of substantial sums of money savers have deposited with savings and loan associations, commercial banks, and mutual savings banks. This term can also be considered to include life insurance policy purchasers borrowing against the value of their policies. The essence of this phenomenon is financial intermediaries losing within a short period of time billions of dollars as owners of funds held by those institutional lenders exercise their prerogative of taking them out of the hands of these financial institutions. DISPOSABLE INCOME — The after-tax income a household receives to spend on personal consumption. DISPOSSESS — To deprive one of the use of real estate. DOCUMENTARY TRANSFER TAX — A state enabling act allows a county to adopt a documentary transfer tax to apply on all transfers of real property located in the county. Notice of payment is entered on face of the deed or on a separate paper filed with the deed. DOCUMENTS — Legal instruments such as mortgages, contracts, deeds, options, wills, bills of sale, etc. DONEE — A person who receives a gift. DONOR — A person who makes a gift. DOUBLE DECLINING BALANCE DEPRECIATION — (See DECLINING BALANCE DEPRECIATION.) DRAW — Usually applies to construction loans when disbursement of a portion of the mortgage is made in advance, as improvements to the property are made. DUAL AGENCY — An agency relationship in which the agent acts concurrently for both of the principals in a transaction. DUE ON SALE CLAUSE — An acceleration clause granting the lender the right to demand full payment of the mortgage upon a sale of the property. DURESS — Unlawful constraint exercised upon a person whereby he or she is forced to do some act against his or her will. EARNEST MONEY — Down payment made by a purchaser of real estate as evidence of good faith. A deposit or partial payment. EASEMENT — A right, privilege or interest limited to a specific purpose which one party has in the land of another. ECONOMIC LIFE — The period over which a property will yield a return on the investment over and above the economic or ground rent due to land. ECONOMIC OBSOLESCENCE — A loss in value due to factors away from the subject property but adversely affecting the value of the subject property. ECONOMIC RENT — The reasonable rental expectancy if the property were available for renting at the time of its valuation. EFFECTIVE AGE OF IMPROVEMENT — The number of years of age that is indicated by the condition of the structure, distinct from chronological age. EFFECTIVE DATE OF VALUE — The specific day the conclusion of value applies. EFFECTIVE INTEREST RATE — The percentage of interest that is actually being paid by the borrower for the use of the money, distinct from nominal interest. EMINENT DOMAIN — The right of the government to acquire property for necessary public or quasi-public use by condition; the owner must be fairly compensated and the right of the private citizen to get paid is spelled out in the 5th Amendment to the United States Constitution. ENCROACHMENT — An unlawful intrusion onto another’s adjacent property by improvements to real property, e.g. a swimming pool built across a property line. ENCUMBRANCE — Anything which affects or limits the fee simple title to or value of property, e.g., mortgages or easements. EQUITY — The interest or value which an owner has in real estate over and above the liens against it. Branch of remedial justice by and through which relief is afforded to suitors in courts of equity. EQUITY BUILD-UP — The increase of owner’s equity in property due to mortgage principal reduction and value appreciation. EQUITY OF REDEMPTION — The right to redeem property during the foreclosure period, such as a mortgagor’s right to redeem within either 3 months or 1 year as may be permitted after foreclosure sale. EQUITY PARTICIPATION — A mortgage transaction in which the lender, in addition to receiving a fixed rate of interest on the loan acquires an interest in the borrower’s real property, and shares in the profits derived from the real property. EROSION — The wearing away of land by the act of water, wind or glacial ice. ESCALATION — The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event. ESCALATOR CLAUSE — A clause in a contract providing for the upward or downward adjustment of certain items to cover specified contingencies, usually tied to some index or event. Often used in long term leases to provide for rent adjustments, to cover tax and maintenance increases. ESCHEAT — The reverting of property to the State when heirs capable of inheriting are lacking. ESCROW — The deposit of instruments and/or funds with instructions with a third neutral party to carry out the provisions of an agreement or contract. ESCROW AGENT — The neutral third party holding funds or something of value in trust for another or others. ESTATE — As applied to real estate, the term signifies the quantity of interest, share, right, equity, of which riches or fortune may consist in real property. The degree, quantity, nature and extent of interest which a person has in real property. ESTATE AT SUFFERANCE — An estate arising when the tenant wrongfully holds over after the expiration of the term. The landlord has the choice of evicting the tenant as a trespasser or accepting such tenant for a similar term and under the conditions of the tenant’s previous holding. Also called a tenancy at sufferance. ESTATE AT WILL — The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties. ESTATE FOR LIFE — A possessory, freehold estate in land held by a person only for the duration of his or her life or the life or lives of another. ESTATE FOR YEARS — An interest in lands by virtue of a contract for the possession of them for a definite and limited period of time. May be for a year or less. A lease may be said to be an estate for years. ESTATE FROM PERIOD TO PERIOD — An interest in land where there is no definite termination date but the rental period is fixed at a certain sum per week, month, or year. Also called a periodic tenancy. ESTATE OF INHERITANCE — An estate which may descend to heirs. All freehold estates are estates of inheritance, except estates for life. ESTIMATE — A preliminary opinion of value. Appraise, set a value. ESTIMATED REMAINING LIFE — The period of time (years) it takes for the improvements to become valueless. ESTOPPEL — A legal theory under which a person is barred from asserting or denying a fact because of the person’s previous acts or words. ET UX — Abbreviation for “et uxor.” Means “and wife.” ETHICS — That branch of moral science, idealism, justness, and fairness, which treats of the duties which a member of a profession or craft owes to the public, client or partner, and to professional brethren or members. Accepted standards of right and wrong. Moral conduct, behavior or duty. EVICTION — Dispossession by process of law. The act of depriving a person of the possession of lands in pursuance of the judgment of a court. EXCEPTIONS — Matters affecting title to a particular parcel of real property which are included from coverage of a title insurance policy. EXCHANGE — A means of trading equities in two or more real properties, treated as a single transaction through a single escrow. EXCLUSION — General matters affecting title to real property excluded from coverage of a title insurance policy. EXCLUSIVE AGENCY LISTING — A listing agreement employing a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent. EXCLUSIVE RIGHT TO SELL LISTING — A listing agreement employing a broker to act as agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold during the duration of the listing through another broker or by the owner without the services of an agent. EXECUTE — To complete, to make, to perform, to do, to follow out; to execute a deed, to make a deed, including especially signing, sealing and delivery; to execute a contract is to perform the contract, to follow out to the end, to complete. EXECUTOR — A man named in a will to carry out its provisions as to the disposition of the estate of a deceased person. (A woman is executrix.) EXECUTORY CONTRACT — A contract in which something remains to be done by one or both of the parties. EXPENSES — Certain items which appear on a closing statement in connection with a real estate sale. FACADE — The front of a building, often used to refer to a false front and as a metaphor. FAIR MARKET VALUE. This is the amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under pressure to buy or sell. FANNIE MAE — An acronymic nickname for Federal National Mortgage Association (FNMA). FARMERS HOME ADMINISTRATION — An agency of the Department of Agriculture. Primary responsibility is to provide financial assistance for farmers and others living in rural areas where financing is not available on reasonable terms from private sources. FEDERAL DEPOSIT INSURANCE CORPORATION — (FDIC) Agency of the federal government which insures deposits at commercial banks, savings banks and savings and loans. FEDERAL HOME LOAN MORTGAGE CORPORATION — An independent stock company which creates a secondary market in conventional residential loans and in FHA and VA loans by purchasing mortgages. FEDERAL HOUSING ADMINISTRATION — (FHA) An agency of the federal government that insures private mortgage loans for financing of new and existing homes and home repairs. FEDERAL LAND BANK SYSTEM — Federal government agency making long term loans to farmers. FEDERAL NATIONAL MORTGAGE ASSOCIATION — (FNMA) “Fannie Mae” a quasipublic agency converted into a private corporation whose primary function is to buy and sell FHA and VA mortgages in the secondary market. FEDERAL RESERVE SYSTEM — The federal banking system of the United States under the control of central board of governors (Federal Reserve Board) involving a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation. FEE — An estate of inheritance in real property. FEE SIMPLE DEFEASIBLE — An estate in fee subject to the occurrence of a condition subsequent whereby the estate may be terminated. FEE SIMPLE ESTATE — The greatest interest that one can have in real property. An estate that is unqualified, of indefinite duration, freely transferable and inheritable. FEUDAL TENURE — A real property ownership system in which ownership rests with a sovereign who may grant lesser interests in return for service or loyalty. This is in contrast to allodial tenure. FHLMC — See FEDERAL HOME LOAN MORTGAGE CORPORATION. FIDELITY BOND — A security posted for the discharge of an obligation of personal services. FIDUCIARY — A person in a position of trust and confidence, as between principal and broker; broker as fiduciary owes certain loyalty which cannot be breached under the rules of agency. FIDUCIARY DUTY — That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure. FILTERING — The process whereby higher-priced properties become available to lower income buyers. FINANCIAL INTERMEDIARY — Financial institutions such as commercial banks, savings and loan associations, mutual savings banks and life insurance companies which receive relatively small sums of money from the public and invest them in the form of large sums. A considerable portion of these funds are loaned on real estate. FINANCING PROCESS — The systematic 5 step procedure followed by major institutional lenders in analyzing a proposed loan, which includes — filing of application by a borrower; lender’s analysis of borrower and property; processing of loan documentation; closing (paying) the loan; and servicing (collection and record keeping). FINANCING STATEMENT — The instrument which is filed in order to give public notice of the security interest and thereby protect the interest of the secured parties in the collateral. (See definition of Security Interest and Secured Party.) FIRST MORTGAGE — A legal document pledging collateral for a loan (See “mortgage”) that has first priority over all other claims against the property except taxes and bonded indebtedness. That mortgage superior to any other. FIRST TRUST DEED — A legal document pledging collateral for a loan (See “trust deed”) that has first priority over all other claims against the property except taxes and bonded indebtedness. That trust deed superior to any other. FISCAL CONTROLS — Federal tax revenue and expenditure policies used to control the level of economic activity. FISCAL YEAR — A business or accounting year as distinguished from a calendar year. FIXITY OF LOCATION — The physical characteristic of real estate that subjects it to the influence of its surroundings. FIXTURES — Appurtenances attached to the land or improvements, which usually cannot be removed without agreement as they become real property; examples — plumbing fixtures, store fixtures built into the property, etc. FORECLOSURE — Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms. FORFEITURE — Loss of money or anything of value, due to failure to perform. FRANCHISE — A specified privilege awarded by a government or business firm which awards an exclusive dealership. FRAUD — The intentional and successful employment of any cunning, deception, collusion, or artifice, used to circumvent, cheat or deceive another person whereby that person acts upon it to the loss of property and to legal injury. (Actual Fraud — A deliberate misrepresentation or representation made in reckless disregard of its truth or its falsity, the suppression of truth, a promise made without the intention to perform it, or any other act intended to deceive.) FRAUDS, STATUTE OF — (See Statute of Frauds.) FREDDIE MAC — (See FEDERAL HOME LOAN MORTGAGE CORPORATION.) FREEHOLD ESTATE — An estate of indeterminable duration, e.g., fee simple or life estate. FRONT FOOT — Property measurement for sale or valuation purposes; the property measured by the front linear foot on its street line—each front foot extending the depth of the lot. FRONT MONEY — The minimum amount of money necessary to initiate a real estate venture, to get the transaction underway. FRONTAGE — A term used to describe or identify that part of a parcel of land or an improvement on the land which faces a street. The term is also used to refer to the lineal extent of the land or improvement that is parallel to and facing the street, e.g., a 75-foot frontage. FROSTLINE — The depth of frost penetration in the soil. Varies in different parts of the country. Footings should be placed below this depth to prevent movement. FULLY INDEXED NOTE RATE — As related to adjustable rate mortgages, the index value at the time of application plus the gross margin stated in the note. FUNCTIONAL OBSOLESCENCE — A loss of value due to adverse factors from within the structure which affect the utility of the structure, value and marketability. FUTURE BENEFITS — The anticipated benefits the present owner will receive from the property in the future. GABLE ROOF — A pitched roof with sloping sides. GAIN — A profit, benefit, or value increase. GAMBREL ROOF — A curb roof, having a steep lower slope with a flatter upper slope above. GENERAL LIEN — A lien on all the property of a debtor. GIFT DEED — A deed for which there is no consideration. GOODWILL — An intangible but salable asset of a business derived from the expectation of continued public patronage. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION — An agency of HUD, which functions in the secondary mortgage market, primarily in social housing programs. Commonly called by the acronymic nickname “Ginnie Mae” (GNMA). GOVERNMENT SURVEY — A method of specifying the location of parcel of land using prime meridians, base lines, standard parallels, guide meridians, townships and sections. GRADE — Ground level at the foundation. GRADUATED LEASE — Lease which provides for a varying rental rate, often based upon future determination; sometimes rent is based upon result of periodical appraisals; used largely in long-term leases. GRADUATED PAYMENT MORTGAGE — Providing for partially deferred payments of principal at start of loan. (There are a variety of plans.) Usually after the first five years of the loan term the principal and interest payment are substantially higher, to make up principal portion of payments lost at the beginning of the loan. (See Variable Interest Rate.) GRANT — A technical legal term in a deed of conveyance bestowing an interest in real property on another. The words “convey” and “transfer” have the same effect. GRANT DEED — A limited warranty deed using the word “grant” or like words that assures a grantee that the grantor has not already conveyed the land to another and that the estate is free from encumbrances placed by the grantor. GRANTEE — A person to whom a grant is made. GRANTOR — A person who transfers his or her interest in property to another by grant. GRATUITOUS AGENT — A person not paid by the principal for services on behalf of the principal, who cannot be forced to act as an agent, but who becomes bound to act in good faith and obey a principal’s instructions once he or she undertakes to act as an agent. GRID — A chart used in rating the borrower risk, property and the neighborhood. GROSS INCOME — Total income from property before any expenses are deducted. GROSS MARGIN — With regard to an adjustable rate mortgage, an amount expressed as percentage points, stated in the note which is added to the current index value on the rate adjustment date to establish the new note rate. GROSS NATIONAL PRODUCT (GNP) — The total value of all goods and services produced in an economy during a given period of time. GROSS RATE — A method of collecting interest by adding total interest to the principal of the loan at the outset of the term. GROSS RENT MULTIPLIER — A number which, times the gross income of a property, produces an estimate of value of the property. Example — The gross income from an unfurnished apartment building is $200,000 per annum. If an appraiser uses a gross multiplier of 7%, then it is said that based on the gross multiplier the value of the building is $1,400,000. GROUND LEASE — An agreement for the use of the land only, sometimes secured by improvements placed on the land by the user. GROUND RENT — Earnings of improved property credited to earnings of the ground itself after allowance is made for earnings of improvements; often termed economic rent. HABENDUM CLAUSE — The “to have and to hold” clause which may be found in a deed. HEIR — One who inherits property at the death of the owner of the land, if the owner has died without a will. HIGHEST AND BEST USE — An appraisal phrase meaning that use which at the time of an appraisal is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest amount of amenities or profit. This is the starting point for appraisal. HIP ROOF — A pitched roof with sloping sides and ends. HOLDER IN DUE COURSE — One who has taken a note, check or bill of exchange in due course: 1. before it was overdue; 2. in good faith and for value; and 3. without knowledge that it has been previously dishonored and without notice of any defect at the time it was negotiated to him or her. HOLDOVER TENANT — Tenant who remains in possession of leased property after the expiration of the lease term. HOMESTEAD — (exemption) — A statutory protection of real property used as a home from the claims of certain creditors and judgments up to a specified amount. HOUSING FINANCIAL DISCRIMINATION ACT OF 1977 (Holden Act) — California Health and Safety Code Section 35800, et seq., designed primarily to eliminate discrimination in lending practices based upon the character of the neighborhood in which real property is located. (See Redlining.) HUD — The Department of Housing and Urban Development which is responsible for the implementation and administration of U.S. government housing and urban development programs. HUNDRED PERCENT LOCATION — A city retail business location which is considered the best available for attracting business. HYPOTHECATE — To pledge a thing as security without the necessity of giving up possession of it. | 
