«GLOSSARY OF TERMS The following Glossary of Terms is not intended to be legal definitions, but rather a lay expression or explanation of how the ...»
The note may also contain some of the same provisions as in the mortgage or trust deed document, such as prepayment or acceleration.
NOTICE: Information about or warning of something. Notice may be by personal observation or by written or oral message from another person.
NOTICE OF CESSATION: A notice that gives subcontractors thirty days and prime contractors sixty days to file liens from the date of cessation of work.
NOTICE OF COMPLETION: A document recorded to give constructive notice that a building job has been completed.
NOTICE OF DEFAULT: A notice to a defaulting party announcing that a default has occurred.
The defaulting party is usually provided a grace period during which to cure the default. Notices of default are frequently provided for in contracts for deed and mortgages and are sometimes required by operation of law.
NOTICE OF NON-RESPONSIBILITY: A legal notice designed to relieve a property owner of responsibility for the cost of improvements ordered by another person (such as a tenant). The owner usually gives notice that he or she will not be responsible for the work done by posting notice in some conspicuous place on the property, and by recording a verified copy in the public records.
NOTICE TO PAY RENT OR QUIT: A 3-day notice required by law before a tenant, delinquent in rental payments, may be evicted by an unlawful detainer court action.
NOVATION: The substitution by agreement of a new obligation for an existing one or substituting new parties to an existing obligation.
NUISANCE: That which annoys and disturbs one in possession of his or her property, rendering its ordinary use physically uncomfortable.
NUNCUPATIVE WILL: An oral will declared by the testator in his or her final illness, made before witnesses and afterward reduced to writing.
OBEDIENCE: The fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. Because illegal acts do not serve the principal's best interests, obeying such instructions violates the broker's duty of loyalty. On the other hand, an agent who exceeds the authority assigned in the contract will be liable for any losses that the principal suffers as a result.
OBSOLESCENCE: Lessening of value due to being out of date (obsolete) as a result of changes in design and use; an element of depreciation. Obsolescence may be functional or economic.
OCCUPANCY PERMIT: A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
OFFER: A promise made by one party requesting something in exchange for that promise. The offer is made with the intention that the offeror will be bound to the terms if the offer is accepted.
The terms of the offer must be definite and specific and must be communicated to the offeree.
OFFEREE: The party receiving an offer.
OFFEROR: The party making an offer.
OFFSET CORE: A building in which the core is located midway between each side and center.
OFF-SITE IMPROVEMENTS: Improvements, which add to the usefulness (utility) of the site but are not located directly on it. Examples: streets, curbs, drainage, sidewalks, lighting, etc.
OFF SET STATEMENT: Buyer's request for written verification (1) from tenant of terms and conditions of tenancy (amount of rent, terms of lease, if any, security deposit, if any, etc.) (2) from borrower and lender on condition of existing loan as to unpaid balance, interest, maturity date, etc.
OFF THE FLOOR TOILET: A modern toilet that allows easier floor cleaning and installation in renovations.
OPEN END MORTGAGE: One which provides for an increase in the unpaid balance in order to advance additional loan funds to the borrower up to a maximum dollar amount, the full loan being secured by the same original mortgage.
OPEN HOUSE: The common real estate practice of showing listed properties to the brokerage community during established hours.
OPEN LISTING: A listing given to any number of brokers who can work simultaneously to sell or lease the owner's property. The first broker to secure a buyer or tenant who is ready, willing and able to purchase or lease at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold. Unlike an exclusive listing, an open listing need not contain a definite termination date. The listing terminates after a reasonable time, usually whatever is customary in the community. Either party can, in good faith, terminate the agency at will.
OPERATING COVENANT: An agreement between an owner/operator of specified realty improvements and a developer, lender or other interested party that the owner/operator will operate his business in a particular location for a specified period of time. Often an operating covenant will be structured in a manner such that the operator is required to operate as a specific company for a certain minimum period, followed by another minimum period in which the operator agrees to operate a similar business within the same premises but is not required to use the same name as in the initial time period. An example of an operating covenant can be seen in most regional shopping centers where the major tenants own their own pads and execute operating covenants, agreeing to operate for a certain minimum number of years, to enable the developer to gain the financing necessary to build the satellite stores, common areas and other realty improvements required for the successful operation of the shopping center.
OPERATING EXPENSES: Those recurring expenses that are essential to the continuous operation and maintenance of a property. Operating expenses are generally divided into the following categories: fixed expenses such as real property taxes and building insurance; variable costs such as utilities, payroll, administration and property management fees; and reserves for replacement. Included can also be amortization of capital improvements, which are necessary or required for the most efficient operation of the building or to meet certain code costs. Operating expenses do not include items such as mortgage payments, capital expenditures and depreciation.
OPINION OF TITLE: An opinion of the marketability of a title given by an attorney based on the abstract of title.
OPPORTUNITY COST: Earnings that may be available on alternative investments.
OPTION: A contractual agreement giving one party the privilege of demanding, within a specified time, the carrying out of a transaction upon stipulated terms. Examples: option to renew, to expand, to purchase or to cancel.
OPTION TERM: The stipulated time, in accordance with the option agreement, in which the optionee can exercise his rights under the agreement.
ORDINANCE: A stature enacted by the legislative department of a city government.
OSTENSIBLE AGENCY: A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.
OTHER INCOME: Refers to income other than rent, such as vending machines, storage or parking space income, etc.
OWNER OCCUPIED: A property where the owner physically occupies the property.
OWNERSHIP: The right to use, possess, enjoy, transfer and dispose of a thing to the exclusion of all others.
OWNERSHIP COST: The cost to the owner to own the building, service existing debt, or receive a return on his equity. Also included would be costs of capital improvements, repair and upkeep, which would not be considered standard operating costs.
PACKAGE AIR CONDITIONING UNIT: A complete heating/cooling or cooling only system factory assembled in one housing designed for rooftop installation. Cooling is electric; heating may be gas or electric. Most acceptable use of electric heating is a heat pump; electric resistance heat in any form seldom satisfies Title 24 requirements in the State of California.
PACKAGE LOAN: A loan on real property that can be secured by land, structure, fixtures and other personal property.
PALLET: A wooden, plastic or metal movable platform that supports goods while they are being transported by a lift truck.
PAR: The face value of a bond or security.
PARCEL: Any area of land contained with one description.
PAROLE EVIDENCE: Oral or written negotiations made prior to a dispute about an executed contract.
PAROLE EVIDENCE RULE: A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be modified by oral or written negotiations.
Allard Commercial Brokerage –Glossary of Terms Page 59 of 59 PARTIALLY AMORTIZED INSTALLMENT NOTE: A promissory note with a repayment schedule that is not sufficient to amortize the loan over its term.
PARTIAL RECONVEYANCE DEED: A deed used to reconvey a portion of land encumbered by a blanket mortgage or trust deed.
PARTIAL RELEASE CLAUSE: A clause in a mortgage or trust deed which provides for release of part of the property from the mortgage or trust deed upon part payment of all or part of the debt.
PARTIAL ZONING: Zoning that does not consider its effect on other areas.
PARTICIPATION LOAN: As a concession for making the loan on a commercial property the lender is given some portion of the ownership which allows him to participate in the profits.
PARTITION: Co-tenants who wish to terminate their co-ownership may file an action in court to partition the property. Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination. If the court determines that the land cannot be divided physically into separate parcels without destroying its value, the court will order the real estate sold. The proceeds of the sale will then be divided among the co-owners according to their fractional interests.
PARTITIONING: The divisions between offices, separate office suites, tenant areas and corridors.
PARTNERSHIP: An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a partnership is regarded as a group of individuals rather than as a single entity.
PARTY WALL: A wall that is located on or at a boundary line between two adjoining parcels of land and is used or is intended to be used by the owners of both properties.
PARTY WALL EASEMENT: A party wall can be an exterior wall of a building that straddles the boundary line between two lots, or it can be a commonly shared partition wall between two connected properties. Each lot owner owns the half of the wall on his or her lot, and each has an appurtenant easement in the other half of the wall. A written party wall agreement must be used to create the easement rights. Expenses to build and maintain the wall are usually shared. A party driveway shared by and partly on the land of adjoining owners must also be created by written agreement, specifying responsibility for expenses.
PASSIVE INCOME: Income generated when a person is not active in a business or occupation.
Examples of situations where passive income is generated include limited partnerships, or rental income remaining after allowable deductions.
PASSIVE LOSSES: Losses left over when deductions for annual operating expenses, loan interest, and depreciation exceed annual rents. For tax purposes, passive losses can only be used to offset passive income.
PATENT DEED: A deed given by the government to a private individual as evidence of title transfer from the government to the private person.
PATENT DEFECT: A defect that is obvious from a reasonable inspection of a property.
PAYMENT CAP: The limit on the amount the monthly payment can be increased on an adjustable rate mortgage when the interest rate is adjusted.
PAYOR: The debtor on a promissory note or the party who makes payment to another.
PENSION FUNDS: Pension funds usually have large amounts of money available for investment.
Because of the comparatively high yields and low risks offered by mortgages, pension funds have begun to participate actively in financing real estate projects. Most real estate activity for pension funds is handled through mortgage bankers and mortgage brokers.
PERMANENT LOAN CLOSING: The execution of final loan documents by the borrowers, followed by the distribution of loan proceeds to the interim lender, tax authorities, any lien holder, and the borrower upon approval by the lender and the title insurance company of all loan documents and the recording of the Deed of Trust and other recordable security documents in the office of the County Recorder of the county in which the property to be taken as security is located.
PHYSICAL INDICATION OF VALUE: A method in which a value estimate is derived by estimating the replacement cost of the improvements, deducting there from the estimated depreciation, then adding the value of the land. (Also called the Cost Approach).
PIGGYBACK LOANS: A loan divided into two parts with one lender taking a secondary security position.
PLANNING COMMISSION: A local government agency that plans proper physical growth of a community and recommends zoning ordinances and other laws for that purpose.
PLANS AND SPECIFICATIONS: The plans include all drawings pertaining to the property under consideration, such as building drawings, mechanical drawings, electrical drawings, etc. The specifications are written instructions to the builder containing all the information pertaining to the dimensions, materials, workmanship, style, fabrication, colors, and finishes which supplement the details appearing on the working drawing.
PLEDGE: The depositing of personal property (i.e. stock bonds) by a debtor with a creditor as security for a debt.
PLOT PLAN: A plan showing the layout of the improvements on the site, including their location, dimensions, parking areas, landscaping, etc.