Real Estate Dictionary S-Z SALE AND LEASEBACK — A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser. The seller receives cash while the buyer is assured a tenant and a fixed return on buyer’s investment. SALE-LEASEBACK-BUY-BACK — A sale and leaseback transaction in which the leaseholder has the option to buy back the original property after a specified period of time. SALES CONTRACT — A contract by which buyer and seller agree to terms of a sale. SALVAGE VALUE — In computing depreciation for tax purposes, the reasonably anticipated fair market value of the property at the end of its useful life and must be considered with all but the declining balance methods of depreciation. SANDWICH LEASE — A leasehold interest which lies between the primary lease and the operating lease. SASH — Wood or metal frames containing one or more window panes. SATISFACTION — Discharge of a mortgage or trust deed from the records upon payment of the debt. SATISFACTION PIECE — An instrument for recording and acknowledging payment of an indebtedness secured by a mortgage. SCRIBING — Fitting woodwork to an irregular surface. SEAL — An impression made to attest the execution of an instrument. SECONDARY FINANCING — A loan secured by a second mortgage or trust deed on real property. These can be third, fourth, fifth, sixth mortgages or trust deeds, on and on ad infinitum. SECTION — Section of land is established by government survey, contains 640 acres and is one mile square. SECURED PARTY — This is the party having the security interest. Thus the mortgagee, the conditional seller, the pledgee, etc., are all now referred to as the secured party. (Uniform Commercial Code.) SECURITY AGREEMENT — An agreement between the secured party and the debtor which creates the security interest. (Uniform Commercial Code.) SECURITY INTEREST — A term designating the interest of the creditor in the property of the debtor in all types of credit transactions. It thus replaces such terms as the following — chattel mortgage; pledge; trust receipt; chattel trust; equipment trust; conditional sale; inventory lien; etc., according to Uniform Commercial Code usage. SEISIN (SEIZIN) — Possession of real estate by one entitled thereto. SELLER’S MARKET — The market condition which exists when a seller is in a more commanding position as to price and terms because demand exceeds supply. SEPARATE PROPERTY — Property owned by a married person in his or her own right outside of the community interest including property acquired by the spouse (1) before marriage, (2) by gift or inheritance, (3) from rents and profits on separate property, and (4) with the proceeds from other separate property. SEPTIC TANK — An underground tank in which sewage from the house is reduced to liquid by bacterial action and drained off. SERVICING LOANS — Supervising and administering a loan after it has been made. This involves such things as — collecting the payments, keeping accounting records, computing the interest and principal, foreclosure of defaulted loans, and so on. SET BACK ORDINANCE — An ordinance requiring improvements built on property to be a specified distance from the property line, street or curb. SEVERALTY OWNERSHIP — Owned by one person only. Sole ownership. SHARED APPRECIATION MORTGAGE — A loan having a fixed rate of interest set below the market rate for the term of the loan which also provides for contingent interest to be paid to the lender on a certain percentage of appreciation in the value of the property against which the loan is secured upon transfer or sale of the property or the repayment of the loan. SHERIFF’S DEED — Deed given by court order in connection with sale of property to satisfy a judgment. SIMPLE INTEREST — Interest computed on the principal amount of a loan only as distinguished from compound interest. SINKING FUND — Fund set aside from the income from property which, with accrued interest, will eventually pay for replacement of the improvements. SLANDER OF TITLE — False and malicious statements disparaging an owner’s title to property and resulting in actual pecuniary damage to the owner. SPECIAL ASSESSMENT — 1) Legal charge against real estate by a public authority to pay cost of public improvements such as street lights, sidewalks, street improvements. 2) In a common interest subdivision, a charge, in addition to the regular assessment, levied by the association against owners in the development, for unanticipated repairs or maintenance on the common area or capital improvement of the common area. SPECIAL POWER OF ATTORNEY — A written instrument whereby a principal confers limited authority upon an agent to perform certain prescribed acts on behalf of the principal. SPECIAL WARRANTY DEED — A deed in which the grantor warrants or guarantees the title only against defects arising during grantor’s ownership of the property and not against defects existing before the time of grantor’s ownership. SPECIFIC PERFORMANCE — An action to compel performance of an agreement, e.g., sale of land as an alternative to damages or rescission. SREA — Society of Real Estate Appraisers. STANDARD DEPTH — Generally the most typical lot depth in the neighborhood. STANDBY COMMITMENT — The mortgage banker frequently protects a builder by a “standby” agreement, under which banker agrees to make mortgage loans at an agreed price for many months into the future. The builder deposits a “standby fee” with the mortgage banker for this service. Frequently, the mortgage broker protects self by securing a “standby” from a long-term investor for the same period of time, paying a fee for this privilege. STATUTE OF FRAUDS — A state law, based on an old English statute, requiring certain contracts to be in writing and signed before they will be enforceable at law, e.g.. contracts for the sale of real property, contracts not be performed within one year. STATUTORY WARRANTY DEED — A short term warranty deed which warrants by inference that the seller is the undisputed owner, has the right to convey the property, and will defend the title if necessary. This type of deed protects the purchaser in that the conveyor covenants to defend all claims against the property. If conveyor fails to do so, the new owner can defend said claims and sue the former owner. STRAIGHT LINE DEPRECIATION — A method of depreciation under which improvements are depreciated at a constant rate throughout the estimated useful life of the improvement. STRAIGHT NOTE — A note in which a borrower repays the principal in a lump sum at maturity while interest is paid in installments or at maturity. (See Interest Only Note.) SUBAGENT — A person upon whom the powers of an agent have been conferred, not by the principal, but by an agent as authorized by the agent’s principal. SUBDIVISION — A legal definition of those divisions of real property for the purpose of sale, lease or financing which are regulated by law. For examples see — California Business and Professions Code Sections 11000, 11000.1, 11004.5; California Government Code Section 66424; United States Code, Title 15, Section 1402(3). SUBJECT TO A MORTGAGE — When a grantee takes title to real property subject to a mortgage, grantee is not responsible to the holder of the promissory note for the payment of any portion of the amount due. The most that grantee can lose in the event of a foreclosure is grantee’s equity in the property. (See also “assumption of mortgage”.) In neither case is the original maker of the note released from primary responsibility. If liability is to be assumed, the agreement must so state. SUBLEASE — A lease given by a lessee. SUBORDINATE — To make subject to, or junior or inferior to. SUBORDINATION AGREEMENT — An agreement by the holder of an encumbrance against real property to permit that claim to take an inferior position to other encumbrances against the property. SUBPOENA — A legal order to cause a witness to appear and give testimony. SUBROGATION — Replacing one person with another in regard to a legal right or obligation. The substitution of another person in place of the creditor, to whose rights he or she succeeds in relation to the debt. The doctrine is used very often where one person agrees to stand surety for the performance of a contract by another person. SUBSIDY BUYDOWN — Funds provided usually by the builder or seller to temporarily reduce the borrower’s monthly principal and interest payment. SUBSTITUTION, PRINCIPLE OF — Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and valuable substitute property, assuming no costly delay is encountered in making the substitution. SUM OF THE YEARS DIGITS — An accelerated depreciation method. SUPPLY AND DEMAND, PRINCIPLE OF — In appraising, a valuation principle starting that market value is affected by intersection of supply and demand forces in the market as of the appraisal date. SURETY — One who guarantees the performance of another — Guarantor. SURPLUS PRODUCTIVITY, PRINCIPLE OF — The net income that remains after the proper costs of labor, organization and capital have been paid, which surplus is imputable to the land and tends to fix the value thereof. SURVEY — The process by which a parcel of land is measured and its area is ascertained. SYNDICATE — A partnership organized for participation in a real estate venture. Partners may be limited or unlimited in their liability. (See real estate syndicate.) TAKE-OUT LOAN — The loan arranged by the owner or builder developer for a buyer. The construction loan made for construction of the improvements is usually paid in full from the proceeds of this more permanent mortgage loan. TAX — Enforced charge exacted of persons, corporations and organizations by the government to be used to support government services and programs. TAX DEED — The deed given to a purchaser at a public sale of land held for nonpayment of taxes. It conveys to the purchaser only such title as the defaulting taxpayer had. TAX SALE — Sale of property after a period of nonpayment of taxes. TAX-FREE EXCHANGE — The trade or exchange of one real property for another without the need to pay income taxes on the gain at the time of trade. TENANCY IN COMMON — Co-ownership of property by two or more persons who each hold an undivided interest, without right of survivorship; interests need not be equal. TENANT — The party who has legal possession and use of real property belonging to another. TENANTS BY THE ENTIRETIES — Under certain state laws, ownership of property acquired by a husband and wife during marriage, which property is jointly and equally owned. Upon depth of one spouse it becomes the property of the survivor. TENTATIVE MAP — The Subdivision Map Act requires subdividers to submit initially a tentative map of their tract to the local planning commission for study. The approval or disapproval of the planning commission is noted on the map. Thereafter, a final map of the tract embodying any changes requested by the planning commission is required to be filed with the planning commission. TENURE IN LAND — The mode or manner by which an estate in lands is held. All rights and title rest with owner. TERMITE SHIELD — A shield, usually of noncorrodible metal, placed on top of the foundation wall or around pipes to prevent passage of termites. TERMITES — Ant-like insects which feed on wood and are highly destructive to wooden structures. TESTATOR — One who makes a will. THIRD PARTY — Persons who are not parties to a contract which affects an interest they have in the object of the contract. THRESHOLD — A strip of wood or metal beveled on each edge and used above the finished floor under outside doors. TIDELANDS — Lands that are covered and uncovered by the ebb and flow of the tide. TIME IS OF THE ESSENCE — A condition of a contract expressing the essential nature of performance of the contract by a party in a specified period of time. TIME-SHARE ESTATE — A right of occupancy in a time-share project (subdivision) which is coupled with an estate in the real property. TIME-SHARE PROJECT — A form of subdivision of real property into rights to the recurrent, exclusive use or occupancy of a lot, parcel, unit, or segment of real property, on an annual or some other periodic basis, for a specified period of time. TIME-SHARE USE — A license or contractual or membership right of occupancy in a timeshare project which is not coupled with an estate in the real property. TITLE — Indicates “fee’’ position of lawful ownership and right to property. “Bundle of Rights” possessed by an owner. Combination of all elements constituting proof of ownership. TITLE INSURANCE — Insurance to protect a real property owner or lender up to a specified amount against certain types of loss, e.g., defective or unmarketable title. TITLE REPORT — A report which discloses condition of the title, made by a title company preliminary to issuance of title insurance policy. TITLE THEORY — Mortgage arrangement whereby title to mortgaged real property vests in the lender. Some states give greater protection to mortgage lenders and assume lenders have title interest. Distinguished from Lien Theory States. TOPOGRAPHY — Nature of the surface of land; topography may be level, rolling, mountainous. Variation in earth’s surface. TORRENS TITLE — System of title records provided by state law (no longer used in California) TORT — Any wrongful act (not involving a breach of contract) for which a civil section will lie for the person wronged. TOWNHOUSE — One of a row of houses usually of the same or similar design with common side walls or with a very narrow space between adjacent side walls. TOWNSHIP — In the survey of public lands of the United States, a territorial subdivision six miles long, six miles wide and containing 36 sections, each one mile square, located between two range lines and two township lines. TRADE FIXTURES — Articles of personal property annexed by a business tenant to real property which are necessary to the carrying on of a trade and are removable by the tenant. TRADE-IN — An increasingly popular method of guaranteeing an owner a minimum amount of cash on sale of owner’s present property to permit owner to purchase another. If the property is not sold within a specified time at the listed price, the broker agrees to arrange financing to personally purchase the property at an agreed upon discount. TRANSFER FEE — A charge made by a lending institution holding or collecting on a real estate mortgage to change its records to reflect a different ownership. TRUST ACCOUNT — An account separate and apart and physically segregated from broker’s own funds, in which broker is required by law to deposit all funds collected for clients. TRUST DEED — Just as with a mortgage this is a legal document by which a borrower pledges certain real property or collateral as guarantee for the repayment of a loan. However, it differs from the mortgage in a number of important respects. For example, instead of there being two parties to the transaction there are three. There is the borrower who signs the trust deed and who is called the trustor. There is the third, neutral party, to whom trustor deeds the property as security for the payment of the debt, who is called the trustee. And, finally, there is the lender who is called the beneficiary, the one who benefits from the pledge agreement in that in the event of a default the trustee can sell the property and transfer the money obtained at the sale to lender as payment of the debt. TRUSTEE — One who holds property in trust for another to secure the performance of an obligation. Third party under a deed of trust. TRUSTOR — One who borrows money from a trust deed lender, then deeds the real property securing the loan to a trustee to be held as security until trustor has performed the obligation to the lender under terms of a deed of trust. TRUTH IN LENDING — The name given to the federal statutes and regulations (Regulation Z) which are designed primarily to insure that prospective borrowers and purchasers on credit receive credit cost information before entering into a transaction. UNDERIMPROVEMENT — An improvement which, because of its deficiency in size or cost, is not the highest and best use of the site. UNDERWRITING — Insuring something against loss; guaranteeing financially. UNDUE INFLUENCE — Use of a fiduciary or confidential relationship to obtain a fraudulent or unfair advantage over another’s weakness of mind, or distress or necessity. UNEARNED INCREMENT — An increase in value of real estate due to no effort on the part of the owner; often due to increase in population. UNIFORM COMMERCIAL CODE — Establishes a unified and comprehensive method for regulation of security transactions in personal property, superseding the existing statutes on chattel mortgages, conditional sales, trust receipts, assignment of accounts receivable and others in this field. UNIT-IN-PLACE METHOD — The cost of erecting a building by estimating the cost of each component part, i.e., foundations, floors, walls, windows, ceilings, roofs, etc., (including labor and overhead). URBAN PROPERTY — City property; closely settled property. USURY — On a loan, claiming a rate of interest greater than that permitted by law. UTILITIES — Refers to services rendered by public utility companies, such as — water, gas, electricity, telephone. UTILITY — The ability to give satisfaction and/or excite desire for possession. An element of value. VA LOAN — A loan made to qualified veterans for the purchase of real property wherein the Department of Veteran’s Affairs guarantees the lender payment of the mortgage. VACANCY FACTOR — The percentage of a building’s space that is not rented over a given period. VALID — Having force, or binding force; legally sufficient and authorized by law. VALLEY — The internal angle formed by the junction of two sloping sides of a roof. VALUATION — Estimated worth or price. Estimation. The act of valuing by appraisal. VALUE — Present worth of future benefits arising out of ownership to typical users/investors. VARIABLE INTEREST RATE — (VlRs or VMRs, Variable Mortgage Rates.) An interest rate in a real estate loan which by the terms of the note varies upward and downward over the term of the loan depending on money market conditions. VENDEE — A purchaser; buyer. VENDOR — A seller. VENEER — Thin sheets of wood. VERIFICATION — Sworn statement before a duly qualified officer to correctness of contents of an instrument. VESTED — Bestowed upon someone; secured by someone, such as title to property. VOID — To have no force or effect; that which is unenforceable. VOIDABLE — That which is capable of being adjudged void, but is not void unless action is taken to make it so. VOLUNTARY LIEN — Any lien placed on property with consent of, or as a result of, the voluntary act of the owner. WAINSCOTING — Wood lining of an interior wall; lower section of a wall when finished differently from the upper part. WAIVE — To relinquish, or abandon; to forego a right to enforce or require anything. WARRANTY DEED — A deed used to convey real property which contains warranties of title and quiet possession, and the grantor thus agrees to defend the premises against the lawful claims of third persons. It is commonly used in many states but in others the grant deed has supplanted it due to the modern practice of securing title insurance policies which have reduced the importance of express and implied warranty in deeds. WARRANTY OF AUTHORITY — A representation by an agent to third persons that the agent has and is acting within the scope of authority conferred by his or her principal. WASTE — The destruction, or material alteration of, or injury to premises by a tenant. WATER TABLE — Distance from surface of ground to a depth at which natural groundwater is found. WEAR AND TEAR — Depreciation of an asset due to ordinary usage. WILL — A written, legal declaration of a person expressing his or her desires for the disposition of that person’s property after his or her death. WRAP AROUND MORTGAGE — A financing device whereby a lender assumes payments on existing trust deeds of a borrower and takes from the borrower a junior trust deed with a face value in an amount equal to the amount outstanding on the old trust deeds and the additional amount of money borrowed. X — An individual who cannot write may execute a legal document by affixing an “X” (his/her mark) where the signature normally goes. Beneath the mark a witness then writes the person’s name and signs his or her own name as witness. YARD — A unit of measurement 3 feet long. YIELD — The interest earned by an investor on an investment (or by a bank on the money it has loaned). Also, called return. YIELD RATE — The yield expressed as a percentage of the total investment. Also, called rate of return. ZONE — The area set off by the proper authorities for specific use; an area subject to certain restrictions or restraints. ZONING — Act of city or county authorities specifying type of use to which property may be put in specific areas. | 
