A model unit refers to a representative product, such as a home, apartment, or office space, used as part of a sales campaign. It demonstrates the design, structure, and appearance of units in a development to potential buyers.
Modular housing refers to dwelling units constructed from components prefabricated in a factory and subsequently assembled on-site. This method is distinct from traditional on-site construction and offers various benefits including reduced construction time, cost savings, and minimized environmental impact.
A month-to-month tenancy is a lease agreement that allows tenants to reside in a property on a month-by-month basis, with the option to extend or cancel the agreement at the end of each month.
A fixed object and point established by surveyors to determine land locations.
A mortgage is a legal agreement by which a sum of money is lent to a borrower for purchasing property, with the property serving as collateral. The borrower is the mortgagor, and the lender is the mortgagee.
A Mortgage Broker is an intermediary who brings mortgage borrowers and mortgage lenders together but does not use their own funds to originate mortgages. A mortgage broker helps potential borrowers find a lender with the best terms and rates to meet their financial needs. In return for this service, the mortgage broker receives a commission which can be paid by either the borrower, the lender, or both.
A detailed understanding of a mortgage commitment helps both borrowers and lenders formalize the loan process and prepare for property transactions.
A Mortgage Correspondent is an entity or individual who services loans for a fee and plays an intermediary role between borrowers and lenders. This entity may also include underwriting and originating loans.
Insurance typically required by lenders for borrowers with a down payment less than 20%, indemnifying the lender in the case of foreclosure.
Mortgage Insurance Premium (MIP) is the fee paid by a mortgagor to obtain mortgage insurance on a mortgage loan. This fee can be collected as a lump sum at loan closing, as part of the monthly payment, or both.
The mortgage interest deduction is a tax incentive provided to homeowners, allowing them to reduce their taxable income by the amount of interest paid on a qualified home loan. This deduction is a substantial financial benefit for many taxpayers, promoting homeownership.
Mortgage relief refers to the reduction or elimination of mortgage debt on a property, frequently through the assumption of mortgage by another party or debt retirement. In specific transactions like tax-free exchanges, mortgage relief can trigger taxable gains.
A Mortgage-Backed Security (MBS) is a type of asset-backed security that is secured by a collection of mortgages. These securities enable banks to lend more aggressively while transferring the associated risk to investors.
A mortgagee is an entity or individual that holds a lien on or title to a property as security for a debt, typically a lender.
A mortgagor is an individual or entity that borrows money through a mortgage by pledging property as security for the loan.
Multifamily housing refers to a type of residential structure that contains multiple housing units within the same building, suitable for families or individuals.
A multiple listing arrangement among a group of real estate brokers who agree in advance to provide information about some or all of their listings to the others and also to split commissions on sales of such listings between listing and selling brokers.
An association of real estate brokers who agree to share listings with each other, facilitating a broader array of choices for prospective buyers and enabling brokers to share commission from sales.
An organization of REALTORS® dedicated to promoting professionalism in real estate activities. With over 1 million members, 50 state associations, and several affiliates, NAR members must adhere to the NAR Code of Ethics.
A net lease is a real estate lease agreement in which, in addition to the stipulated rent, the lessee (tenant) agrees to cover other expenses such as taxes, insurance, and maintenance. This arrangement results in the landlord receiving rent net of these expenses.
A listing agreement in which the real estate broker's commission is based on the amount by which the selling price of the property exceeds a specified (net) price set by the seller. This type of listing arrangement can be considered unethical or illegal in some states due to the potential for conflicts of interest.
Net proceeds refer to the amount received from the sale or disposition of property, from a loan, or the sale or issuance of securities after the deduction of all costs incurred in the transaction.
Nonconforming use refers to the utilization of land that lawfully existed prior to the enactment of a new zoning ordinance and can be maintained even after the ordinance's effective date, even though it no longer complies with the new use restrictions applicable to the area.
A nonexclusive listing is a type of real estate agreement in which a property owner allows multiple brokers to market the property. This arrangement contrasts with an exclusive listing where one broker is given the sole right to market and sell the property.
A Nonmerchantable Title, also known as a dysfunctional or defective title, refers to a property title with significant defects or encumbrances that prevent its clear transfer from one owner to another. These defects can significantly lower the property's market value and complicate transactions.
Normal wear and tear refer to the physical depreciation arising from the age and ordinary use of a property. Understanding this concept is critical in fields such as accounting, real estate, and property management.
Occupancy level is a crucial metric in real estate and hospitality industries, indicating the percentage of currently rented units in a building, city, neighborhood, or complex.
Understanding the concepts of occupancy and occupants is essential for various fields, including real estate, property management, and law.
An offering circular is a document used to provide details about a property or security offering when a prospectus is not required.
A division of the Department of Housing and Urban Development (HUD) that oversees the sale of building lots or recreational lots across state borders to protect consumers from fraud and provide transparency.
The OFHEO Price Index, also known as the FHFA House Price Index, is a home price index compiled by the Office of Federal Housing Finance Agency, based on data from loans held by government-sponsored enterprises (GSEs).
An open house is a method of showing a home for sale whereby the home is left open for inspection by interested parties. It frequently occurs on weekends, with banners placed on the lot to attract attention.
An open listing is a non-exclusive property listing given to multiple real estate brokers. The seller agrees to pay the commission only to the broker who introduces a ready, willing, and able buyer that meets the terms of the listing.
OMV refers to the value of an asset or property in the open market, where a willing buyer and a willing seller, both knowledgeable about the item, complete a transaction without undue pressure.
An open mortgage is a mortgage that has matured or is overdue, making the property susceptible to foreclosure at any time. It is a financial situation where the borrower has failed to make timely payments, removing any safeguards against lender actions to reclaim the property.
An Open-End Mortgage refers to a type of mortgage under which the borrower can borrow additional funds from the lender, typically up to a specified ceiling.
An Opinion of Title is a certificate, generally from an attorney, which provides an assessment of the validity of the title to property being sold. It serves as a basis upon which title insurance companies decide to insure the title.
An Option to Purchase is a contract that grants one the right (but not the obligation) to buy a property within a set timeframe, for a specified price, and subject to certain conditions.
An irrevocable election made by a landlord to charge value added tax on exempt supplies of buildings (rents). This enables the otherwise irrecoverable input VAT on costs relating to the property to be reclaimed by the landlord against the output tax charged on the rents.
Other Real Estate (ORE) and Other Real Estate Owned (OREO) refer to foreclosed properties held by lending institutions, not including properties used for bank operations.
The Overall Rate of Return (OAR) is a percentage relationship of net operating income (NOI) divided by the purchase price of a property. It is a metric used to assess the profitability of an investment.
**Owner Financing**, also known as **Seller Financing**, is a real estate financing method where the property seller directly finances the purchase for the buyer, bypassing traditional lending institutions. In this arrangement, the seller extends credit to the buyer, who agrees to make regular payments, including interest, until the loan is paid off or the property is refinanced.
The term 'Owner of Record' refers to the person(s) or entity that is officially recognized as the owner of a property based on public records.
Ownership refers to the exclusive right of possessing, enjoying, and disposing of a thing. It encompasses both the concepts of possession and title, making it broader in scope than either.
A method of owning real estate, which affects income tax, estate tax, continuity, liability, survivorship, transferability, disposition at death and at bankruptcy. Ownership forms include various structures with different legal and financial implications.
A package mortgage is an arrangement whereby the principal amount loaned is increased because personalty, such as appliances, as well as realty, serve as collateral.
A 'Parcel' can refer to a piece of property under one ownership, a package sent through a common carrier, or the act of distributing items.
Partial eviction occurs when a tenant is deprived of a portion of the property they are leasing, resulting in adjustments to rental agreements.
Partial interest refers to the ownership of a portion of the ownership rights to a parcel of real estate. This can include rights such as mineral rights, easements on another's property, or leasehold rights.
A provision in a mortgage that allows some of the property pledged to be freed from serving as collateral when certain conditions are met.
Partial taking refers to the acquisition by condemnation of only part of the property or some property rights. It requires just compensation to the property owner for the loss incurred.
Partition refers to the concept of dividing a whole into multiple segments, which can apply to various fields such as real estate, office management, and computer storage.
Pass-throughs refer to operating expenses that can be charged to a tenant along with the usual rent, as defined in the lease. Additionally, the term also relates to pass-through certificates in the context of mortgage-backed securities.
An investment or activity that generates passive income, typically seen in income-oriented real estate limited partnerships. This income can offset passive activity losses (PALs) for tax purposes.
A penthouse is a luxury housing unit generally located on the top floor of a high-rise building. It commands a premium rental or sales price due to its exclusive features and expansive views.
Permanent financing refers to long-term financing options available in both corporate finance and real estate, ensuring sustained capital over extended periods through debt or equity instruments.
Physical depreciation or deterioration refers to the loss of value from all causes of age and action of the elements. It encompasses breakage, deferred maintenance, effects of aging on construction materials, and normal wear and tear.
Physical life refers to the expected duration an asset, such as real estate improvements, can exist physically. It contrasts with useful life, which considers the period the asset remains functional and economically viable in its usage.
PITI is an acronym representing the four primary components that make up a borrower's monthly mortgage payments: Principal, Interest, Taxes, and Insurance. Understanding PITI is crucial for both lenders and borrowers to ensure accurate financial planning and loan repayment.
A zoning classification that allows flexibility in the design of a subdivision. PUD zones generally set an overall density limit for the entire subdivision, allowing the dwelling units to be clustered to provide for common open space.
A Planned Unit Development (PUD) is a type of building development and a regulatory process. It is a designed grouping of both varied and compatible land uses, such as housing, recreational, and commercial centers, all within one contained development.
A plat is a map or drawing that outlines legal subdivisions of land. Maps include boundaries, easements, and parcels' size and layout.
A public record containing maps of land that have been subdivided, showing the division of the land into streets, blocks, and lots, and indicating the measurements of the individual parcels, utility lines.
A plot plan is a diagram showing the proposed or existing use of a specific parcel of land. It includes information about the layout, surroundings, and spatial characteristics of the property.
In finance, a point has different implications depending on whether it is used in relation to bonds, real estate, commercial lending, or stocks. Understanding these distinctions is crucial for comprehending various financial metrics and transactions.
The term 'pool' has various definitions across different industries including corporate finance, industry, insurance, investments, and real estate. It generally refers to a combination of resources or funds for a specific purpose.
An investment strategy involving the use of borrowed funds to increase the return on an investment.
Potential Gross Income (PGI) represents the maximum rent a property could generate if it were fully leased at all times throughout the year, without any deductions for vacancies or uncollected rents.
A Power of Sale is a clause included in mortgages or deeds of trust that grants the lender (or trustee) the authority to sell the property in the event of certain defaults, typically without court intervention.
Preclosing is a rehearsal of the closing process in real estate transactions where instruments are prepared and signed by some or all parties to the contract. It is especially useful when closings are expected to be complicated.
Premises are commonly understood as land and its appurtenances, including structures thereon. The term also refers to any place where an employee may go in the course of his employment for purposes of Workers' Compensation.
A preliminary process used to estimate the most expensive home a buyer can afford based on their income and available liquid assets. This exercise outlines potential pricing but does not guarantee specific financing nor obligate the buyer to accept it.
A primary lease refers to the initial lease agreement established between an owner (landlord) and a tenant, which may then be sublet by the tenant to another party.
A primary residence refers to the main home a person inhabits most of the year, also known as a principal residence. It contrasts with second homes and vacation homes.
A prime tenant in a shopping center or office building is the lessee who occupies the most space. Prime tenants are typically credit-worthy and attract significant traffic to the venue.
Formerly referred to as the primary residence, a principal residence is the main home where an individual lives and spends the majority of their time. Certain tax benefits and legal protections can be tied to the designation of a property as a principal residence.
Private Mortgage Insurance (PMI) is a type of insurance required primarily for homebuyers who obtain conventional loans with a down payment of less than 20% of the home's purchase price. It protects the lender in case the borrower defaults.
Insurance on conventional loans, provided by private insurance companies to protect lenders against loss if a borrower defaults on their loan.
The Projection Period refers to the time duration used for estimating future cash flows and the resale proceeds from a proposed investment. Commonly used in financial analyses, it helps in forecasting and valuing investments, especially in real estate.
Property refers to every valuable right or interest that is subject to ownership, has an exchangeable value, or adds to one's wealth or estate. It includes both physical objects and intangible rights, covering a broad range of items and interests that can be owned, used, and transferred.
Property insurance is a type of insurance policy that provides financial reimbursement to the owner or renter of a structure and its contents in case of damage or theft. It also provides liability coverage against accidents that may occur on the property.
A property line represents the officially recorded boundary of a plot of land, which legally defines the perimeter of an individual's or entity's ownership.
Property management involves the operation of real estate as a business, including activities such as rental, rent collection, maintenance, and numerous other tasks related to the ownership and oversight of properties.
A proprietary lease is a type of lease agreement used in cooperative housing that grants a shareholder the right to occupy a specific apartment unit within the cooperative building.
Protective covenants are conditions written into real estate deeds or leases to protect the property owner's interests by regulating use, controls, and restrictions.
Puffing refers to the practice of overstating the qualities or characteristics of a property, often utilized by salespersons to enhance a property's attractiveness. While puffing is commonplace in advertising, it can sometimes lead to legal issues if deemed misrepresentation.
A punch list is an enumeration of items that need to be corrected, including repairs, adjustments, or other modifications, which are often identified prior to or after the sale of a machine or building.
A Purchase Contract, also known as a Contract of Sale or Purchase Agreement, is a legal document that outlines the terms and conditions under which a buyer agrees to purchase, and a seller agrees to sell, a particular property, item, or service.
A purchase money mortgage is a loan provided by the seller of a property to the buyer as an alternative to traditional mortgage financing. This option facilitates property sales in scenarios where obtaining a conventional loan is challenging.
Qualified Replacement Property refers to property acquired in a like-kind exchange or due to an involuntary conversion, provided that the new property has the same qualified use as the property it replaces.
Quiet Enjoyment refers to the right of a tenant or property owner to use and enjoy their premises without significant disruption or interference. It is usually guaranteed by a covenant whether explicitly stated in a lease or implied by law.
A Quitclaim Deed is a legal instrument that conveys only the right, title, or interest that the grantor currently has in a property, without guaranteeing that the grantor actually has any specific title or interest in the property. The grantor, under a Quitclaim Deed, releases whatever interest they may have to the grantee.
Acreage with no added improvements such as landscaping, drainage, streets, utilities, and structures.
In real estate, 'ready, willing, and able' refers to a person who is capable of an action and disposed to act, particularly in terms of buying property under the terms of a listing agreement. If a broker finds such a person, they have earned their commission because they have fulfilled the requirements of the listing.
In the USA, immovable property, especially land and buildings.
In the USA, immovable property, especially land and buildings.
A real estate agent is a licensed professional who represents buyers and sellers in real estate transactions.
A Real Estate Investment Trust (REIT) is a company resident in the UK that owns at least three properties let to third parties and distributes at least 90% of its profits to shareholders. REITs are exempt from UK corporation tax, and distributions are taxed as rental income to shareholders.
A Real Estate Mortgage Investment Conduit (REMIC) is a pass-through entity designed to issue multiclass mortgage-backed securities, adhering to qualifications established under the Tax Reform Act of 1986 to avoid double taxation.
Real Estate Owned (REO) refers to property acquired by a lender, typically a bank or other financial institution, through foreclosure. This property is then held in the lender's inventory and goes through an asset management process to either sell it off or put it into productive use. REOs are common outcomes of non-performing loans which lead to foreclosure actions.
