EARNEST MONEY
A sum of money deposited by a buyer under the terms of a contract, if he or she is serious about purchasing a home or property. Earnest money is forfeited by the donor if he or she fails to carry out the terms of the contract or agreement.
EASEMENT A right to make limited use of another's real property for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land. An easement is granted by the owner of the property for the convenience, or ease, of the person using the property. Common easements include the right maintain a roadway across the property, the right to construct a pipeline under the land, or a power line over the land etc.
EASEMENT BY CONDEMNATION An easement created by the government or government agency that has exercised its right under eminent domain.
EASEMENT BY NECESSITY An easement allowed by law to a land owner to make use of a parcel of real estate of another for a specific purpose; for example, a right of entrance and way out over a grantor's land. Such an easement allow the land owner to enjoy his own land.
EASEMENT BY PRESCRIPTION An easement acquired by continuous, unchallenged use of all or part of a property by the owner of a neighboring or nearby property for a special purpose for the period of time prescribed by state law. It can develop into permanent use if certain conditions are met giving the using owner a legal right to continue that use.
EASEMENT IN GROSS An easement for benefit of an individual apart from ownership of land. An easement that does not benefit a particular tract of land. There is no dominant estate, as the easement attaches personally to the owner, not to the land. For example public utility easements that runs through all parcels of land in an area.
ECONOMIC LIFE The number of years during which an asset will have economic value than its operating or upkeep costs. At the end of this period, the improvements are normally demolished and replaced. Also referred to, seen as Economic Years.
EMBLEMENTS Growing crops such as corn, wheat, rye, potatoes, garden vegetables and other crops that are produced annually, not spontaneously through labor and industry; also called fructus industriales. Even if the lease expires before the crop has matured, the tenant has the right to them. They are deemed to be personal property.
EMINENT DOMAIN The authority of a government or municipal quasi-public body to take property for public use with just compensation to be paid to the owner through a court action called condemnation. A public use is virtually anything that is sanctioned by a federal or state legislative body. Such uses may include roads, parks, reservoirs, schools, hospitals or other public buildings.
EMPLOYEE A person who works for another and receives remuneration in wages, salary, commission, tips, piece-rates or pay-in-kind. S/he works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and social security taxes from the compensation of employees.
EMPLOYMENT CONTRACT An agreement evidencing formal employment between employer and employee or between principal and agent at the commencement of the period of employment. It ascertains the exact nature of their business relationship. In the real estate business this generally takes the form of a listing agreement or management agreement.
ENABLING ACTS State legislation that confers zoning powers on municipal governments.
ENCROACHMENT A building--or some portion of it--a wall or fence for instance, that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
ENCUMBRANCE Anything, such as a mortgage, tax, or judgment lien, an easement, a restriction or liability attached to and binding real property held by someone other than the real estate owner that may diminish the value or use and enjoyment of a property.
EQUAL CREDIT OPPORTUNITY ACT (ECOA) The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status.
EQUALIZATION The process for making adjustments to assessed values after considering the fair cash values, for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.
EQUALIZATION FACTOR A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The multiplication either increases or decreases the locally-assessed value of each parcel. This new value is the equalized assessed value. It adjusts average assessment levels in various counties to the same percentage of full value. The ad valorem tax would be based on this adjusted value.
EQUITABLE RIGHT OF REDEMPTION The right under state law of a defaulted borrower that allows a certain amount of time before the foreclosure sale to pay the outstanding mortgage debt and recover the property.
EQUITABLE TITLE The interest held by a vendee under a contract for deed or an installment contract; to acquire legal title for which she has entered an Agreement to Purchase prior to the completion of the transaction.
EQUITY The difference between the market value of a property and the claims held against it. Equity is computed by subtracting from the property's fair market value the total of the unpaid mortgage balance and any outstanding liens or other debts against the property.
EROSION The gradual wearing away of land or soil by water, wind and general weather conditions; intensified by land-clearing practices related to farming, residential or industrial development, road building, or logging.
ESCHEAT The reversion of property to the state or county, in the event the owner thereof dies without leaving a will (intestate) indicating who is to inherit his or her property, and without relatives to whom the property may pass by lawful descent.
ESCROW The closing of a transaction through a neutral third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions. When the transaction is completed, the escrow agent releases the entrusted property.
ESCROW ACCOUNT The trust account established by a broker under the provisions of the license law for the purpose of holding money safely while a sale is in progress. It is often used by lenders to save for property taxes, hazard insurance, mortgage insurance, homeowner's dues, etc. The funds are held until the consummation or termination of a transaction. Each month a certain portion, called the escrow payment, of your monthly mortgage payment goes into this account. When the taxes and insurance bills are due on your home, the lender pays the bills with funds from this account.
ESCROW INSTRUCTIONS A document that outlines the duties of the escrow agent. These are the instructions signed by both buyer and seller, and which enable an escrow agent to proceed with the payoff of existing liens, title clearance, determining whether the terms and conditions of the Purchase and Sale Agreement have been met, and other functions as required to close the transaction by a specified date.
ESTATE (TENANCY) AT SUFFERANCE The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.
ESTATE (TENANCY) AT WILL An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.
ESTATE (TENANCY) FOR YEARS An interest for certain, exact period of time in property leased for a specified consideration.
ESTATE (TENANCY) FROM PERIOD TO PERIOD An interest in leased property that continues from period to period, week to week, month to month or year to year.
ESTATE IN LAND The degree, quantity, nature and extent of interest a person has in real property. It has four basic categories; Freehold estates: rights of ownership; Leasehold estates: rights of possession and use but not ownership; Statutory estates: created by law; Equitable Estates: neither ownership nor possession.
ESTATE TAXES Federal taxes on a decedent's real and personal property. It is assessed on the net value of a decedent's estate before distribution to the heirs. The estate tax is mostly imposed on assets left to heirs if the estate exceeds the exclusion limit. Because the estate tax can be quite high, it requires careful estate planning.
ESTOPPEL Method of creating a legal doctrine blocks a person from taking a position on any fact, which is contrary to a position that same person previously took on that same fact. It prevents a party from denying or alleging a certain fact. The underlying principle behind estoppel is to prevent injustice owing to inconsistency or fraud.
ESTOPPEL CERTIFICATE A signed document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest. It also certifies that certain statements of fact are correct as of the date of the statement and can be relied upon by a third party, a prospective lender or purchaser. Its purpose is to stop a future claim that the amount owed is different from the actual unpaid balance, or that the interest rate is other than the contracted rate.
ETHICS The system of moral principles and rules that becomes standards for professional conduct.
EVICTION A legal process to oust a person from possession of real estate.
EVIDENCE OF TITLE Proof of property ownership; commonly a document such as deed, certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.
EXCHANGE A transaction in which all or part of the consideration is the reciprocal transfer of like-kind property (such as real estate for real estate) which has certain tax advantages over a sale.
EXCLUSIVE-AGENCY LISTING A listing contract under which the owner appoints a real estate broker for a designated period of time to sell the property, on the owner's stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission to a prospect who has not been introduced by the broker.
EXCLUSIVE RIGHT-TO-SELL LISTING A listing contract between the owner and the real estate broker in which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, and gives rights to sell the property on the owner's stated terms, and agrees to pay the broker a commission when the property is sold; even if the owner makes the sale himself or even if the property is sold by anyone during the term of the agreement the broker is paid a commission.
EXECUTED CONTRACT A contract in which all parties have fulfilled their promises and thus performed the contract.
EXECUTION A legal order directing an official to enforce a judgment against the property of a debtor, usually carried out by the seizing and selling of the judgment debtor’s property. Also, an act of signing a legal document.
EXECUTORY CONTRACT A contract in which some or all of the obligations have not yet been completed and something remains to be done by one or more of the parties. For example an unexpired lease.
EXPRESS AGREEMENT An oral or written contract, which state the contract's terms and intentions of the involved parties in words.
EXTERNAL DEPRECIATION Reduction in a property's value caused by outside factors (those that are off the property).
EASEMENT A right to make limited use of another's real property for a specific purpose, such as for a right-of-way or utilities; an incorporeal interest in land. An easement is granted by the owner of the property for the convenience, or ease, of the person using the property. Common easements include the right maintain a roadway across the property, the right to construct a pipeline under the land, or a power line over the land etc.
EASEMENT BY CONDEMNATION An easement created by the government or government agency that has exercised its right under eminent domain.
EASEMENT BY NECESSITY An easement allowed by law to a land owner to make use of a parcel of real estate of another for a specific purpose; for example, a right of entrance and way out over a grantor's land. Such an easement allow the land owner to enjoy his own land.
EASEMENT BY PRESCRIPTION An easement acquired by continuous, unchallenged use of all or part of a property by the owner of a neighboring or nearby property for a special purpose for the period of time prescribed by state law. It can develop into permanent use if certain conditions are met giving the using owner a legal right to continue that use.
EASEMENT IN GROSS An easement for benefit of an individual apart from ownership of land. An easement that does not benefit a particular tract of land. There is no dominant estate, as the easement attaches personally to the owner, not to the land. For example public utility easements that runs through all parcels of land in an area.
ECONOMIC LIFE The number of years during which an asset will have economic value than its operating or upkeep costs. At the end of this period, the improvements are normally demolished and replaced. Also referred to, seen as Economic Years.
EMBLEMENTS Growing crops such as corn, wheat, rye, potatoes, garden vegetables and other crops that are produced annually, not spontaneously through labor and industry; also called fructus industriales. Even if the lease expires before the crop has matured, the tenant has the right to them. They are deemed to be personal property.
EMINENT DOMAIN The authority of a government or municipal quasi-public body to take property for public use with just compensation to be paid to the owner through a court action called condemnation. A public use is virtually anything that is sanctioned by a federal or state legislative body. Such uses may include roads, parks, reservoirs, schools, hospitals or other public buildings.
EMPLOYEE A person who works for another and receives remuneration in wages, salary, commission, tips, piece-rates or pay-in-kind. S/he works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and social security taxes from the compensation of employees.
EMPLOYMENT CONTRACT An agreement evidencing formal employment between employer and employee or between principal and agent at the commencement of the period of employment. It ascertains the exact nature of their business relationship. In the real estate business this generally takes the form of a listing agreement or management agreement.
ENABLING ACTS State legislation that confers zoning powers on municipal governments.
ENCROACHMENT A building--or some portion of it--a wall or fence for instance, that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
ENCUMBRANCE Anything, such as a mortgage, tax, or judgment lien, an easement, a restriction or liability attached to and binding real property held by someone other than the real estate owner that may diminish the value or use and enjoyment of a property.
EQUAL CREDIT OPPORTUNITY ACT (ECOA) The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age or marital status.
EQUALIZATION The process for making adjustments to assessed values after considering the fair cash values, for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.
EQUALIZATION FACTOR A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The multiplication either increases or decreases the locally-assessed value of each parcel. This new value is the equalized assessed value. It adjusts average assessment levels in various counties to the same percentage of full value. The ad valorem tax would be based on this adjusted value.
EQUITABLE RIGHT OF REDEMPTION The right under state law of a defaulted borrower that allows a certain amount of time before the foreclosure sale to pay the outstanding mortgage debt and recover the property.
EQUITABLE TITLE The interest held by a vendee under a contract for deed or an installment contract; to acquire legal title for which she has entered an Agreement to Purchase prior to the completion of the transaction.
EQUITY The difference between the market value of a property and the claims held against it. Equity is computed by subtracting from the property's fair market value the total of the unpaid mortgage balance and any outstanding liens or other debts against the property.
EROSION The gradual wearing away of land or soil by water, wind and general weather conditions; intensified by land-clearing practices related to farming, residential or industrial development, road building, or logging.
ESCHEAT The reversion of property to the state or county, in the event the owner thereof dies without leaving a will (intestate) indicating who is to inherit his or her property, and without relatives to whom the property may pass by lawful descent.
ESCROW The closing of a transaction through a neutral third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered upon the performance of certain conditions outlined in the escrow instructions. When the transaction is completed, the escrow agent releases the entrusted property.
ESCROW ACCOUNT The trust account established by a broker under the provisions of the license law for the purpose of holding money safely while a sale is in progress. It is often used by lenders to save for property taxes, hazard insurance, mortgage insurance, homeowner's dues, etc. The funds are held until the consummation or termination of a transaction. Each month a certain portion, called the escrow payment, of your monthly mortgage payment goes into this account. When the taxes and insurance bills are due on your home, the lender pays the bills with funds from this account.
ESCROW INSTRUCTIONS A document that outlines the duties of the escrow agent. These are the instructions signed by both buyer and seller, and which enable an escrow agent to proceed with the payoff of existing liens, title clearance, determining whether the terms and conditions of the Purchase and Sale Agreement have been met, and other functions as required to close the transaction by a specified date.
ESTATE (TENANCY) AT SUFFERANCE The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.
ESTATE (TENANCY) AT WILL An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.
ESTATE (TENANCY) FOR YEARS An interest for certain, exact period of time in property leased for a specified consideration.
ESTATE (TENANCY) FROM PERIOD TO PERIOD An interest in leased property that continues from period to period, week to week, month to month or year to year.
ESTATE IN LAND The degree, quantity, nature and extent of interest a person has in real property. It has four basic categories; Freehold estates: rights of ownership; Leasehold estates: rights of possession and use but not ownership; Statutory estates: created by law; Equitable Estates: neither ownership nor possession.
ESTATE TAXES Federal taxes on a decedent's real and personal property. It is assessed on the net value of a decedent's estate before distribution to the heirs. The estate tax is mostly imposed on assets left to heirs if the estate exceeds the exclusion limit. Because the estate tax can be quite high, it requires careful estate planning.
ESTOPPEL Method of creating a legal doctrine blocks a person from taking a position on any fact, which is contrary to a position that same person previously took on that same fact. It prevents a party from denying or alleging a certain fact. The underlying principle behind estoppel is to prevent injustice owing to inconsistency or fraud.
ESTOPPEL CERTIFICATE A signed document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest. It also certifies that certain statements of fact are correct as of the date of the statement and can be relied upon by a third party, a prospective lender or purchaser. Its purpose is to stop a future claim that the amount owed is different from the actual unpaid balance, or that the interest rate is other than the contracted rate.
ETHICS The system of moral principles and rules that becomes standards for professional conduct.
EVICTION A legal process to oust a person from possession of real estate.
EVIDENCE OF TITLE Proof of property ownership; commonly a document such as deed, certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.
EXCHANGE A transaction in which all or part of the consideration is the reciprocal transfer of like-kind property (such as real estate for real estate) which has certain tax advantages over a sale.
EXCLUSIVE-AGENCY LISTING A listing contract under which the owner appoints a real estate broker for a designated period of time to sell the property, on the owner's stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission to a prospect who has not been introduced by the broker.
EXCLUSIVE RIGHT-TO-SELL LISTING A listing contract between the owner and the real estate broker in which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time, and gives rights to sell the property on the owner's stated terms, and agrees to pay the broker a commission when the property is sold; even if the owner makes the sale himself or even if the property is sold by anyone during the term of the agreement the broker is paid a commission.
EXECUTED CONTRACT A contract in which all parties have fulfilled their promises and thus performed the contract.
EXECUTION A legal order directing an official to enforce a judgment against the property of a debtor, usually carried out by the seizing and selling of the judgment debtor’s property. Also, an act of signing a legal document.
EXECUTORY CONTRACT A contract in which some or all of the obligations have not yet been completed and something remains to be done by one or more of the parties. For example an unexpired lease.
EXPRESS AGREEMENT An oral or written contract, which state the contract's terms and intentions of the involved parties in words.
EXTERNAL DEPRECIATION Reduction in a property's value caused by outside factors (those that are off the property).