Real Estate
Glossary
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DAMAGES:
The estimated monetary value of the injury a person
suffers as a result of an unlawful act or negligent act of another person.
Once proven, damages may be awarded by a Court.
DATE OF APPRAISAL:
The precise day, month and year upon which
an assessment of the value of a property has been given.
DATE OF INSTRUMENT:
The specific day, month and year a legal
document was signed or prepared.
DATE OF REGISTRATION:
The specific day, month and year upon
which an instrument was registered on title to the property.
DEAD-END STREET:
Also known as "Cul de Sac". A street which is
closed at one end so that traffic cannot flow through it.
DEALER:
Similar to a car dealer, a person who offers a
collection of properties for sale to the public.
DEBIT:
An entry on a financial statement which reflects
payments or disbursements made on behalf of a party for which the party is
responsible (opposite of "Credit").
DEBT:
1. An obligation to another person.
2. That
obligation which is created by borrowing.
3. The total of all
financial obligations of a person or corporation.
DEBT COVERAGE RATIO (DCR):
A comparison of the net income of
a property with the cost of payments (principal and interest) on the
mortgage on the property, used to assess the ability of the property to
generate enough income to pay for itself.
DEBT EQUITY RATIO:
A comparison of the amount owing on a
property with the equity (value of property minus amount owing).
DEBT FINANCING:
Paying for the purchase of a property with
credit.
DEBT RATIO:
Also known as Debt-to-Income ratio. A comparison
of the total monthly payments of all of the borrower's debts (including
the mortgage) with the gross monthly income of the borrower, used to
assess borrower's ability to pay mortgage.
DEBT SERVICE:
The mortgage payment for a given period of
time.
DEBTOR:
A person who has borrowed and therefore owes
(opposite of Creditor).
DECLARATION OF RESTRICTIONS:
A Statement made by a developer
of a new subdivision which sets out the restrictions of general
application throughout the new development.
DECLARATION OF TRUST:
A signed statement by a trustee
acknowledging that she holds legal title to property on behalf of someone
else (the beneficiary of the trust).
DECREE OF FORECLOSURE:
An order of the Court setting out the
amount outstanding on a delinquent mortgage and ordering the sale of the
property to pay the mortgagee.
DEDICATION: Often required under subdivision or development
agreements, the donation of parcels of land to the municipality for a
public use, such as a street, a park or a school.
DEED:
The instrument by which title to property is conveyed
from one person to another.
DEED BOOKS:
The permanent record of deeds registered in a
particular jurisdiction. Also known as "libers".
DEED IN LIEU OF FORECLOSURE:
A legal instrument in which a
borrower conveys property to a lender under a mortgage to save the expense
of foreclosure. See also quit-claim deed.
DEED IN TRUST:
A legal instrument conveying legal title to a
property to a trustee, may contain statements as to powers of trustee,
duties of trustee etc.
DEED OF RECONVEYANCE:
A legal instrument which conveys title
from a trustee back to the borrower under a mortgage once the mortgage has
been paid out.
DEED OF RELEASE:
A legal instrument signed by lien claimants
or mortgagees which gives up their claim to the property. See Discharge
and Quit Claim Deed.
DEED OF SURRENDER:
A legal instrument in which a person with
a life interest gives up that interest to the person with underlying
title.
DEED OF TRUST:
A legal instrument which secures the payment
of a loan or mortgage, used in some states instead of mortgages.
DEED POLL:
A legal instrument which conveys title and is made
by only one party.
DEED RESTRICTION:
A clause in a deed which limits the use of
the property in certain respects.
DEFAULT:
Failure. In mortgages, the failure to make payments
in full, on time or at all or to live up to any other obligations placed
on the borrower by the loan agreement.
DEFAULT JUDGMENT:
A decision rendered by a Court when the
defendant has failed to respond to the claim.
DEFEASANCE CLAUSE:
A clause in a mortgage which ensures that,
once the borrower has met all of her obligations under the terms of the
mortgage and paid out the entire principle and interest borrowed, the
lender's legal interest in the property is extinguished.
DEFEASIBLE:
Able to be revoked in the case of the occurrence
(or non-occurrence) of a certain event or the performance (or failure) of
a condition.
DEFECT OF RECORD:
A registered claim on title which serves to
interfere with the marketability of the owner's title to the property.
DEFECTIVE TITLE:
Ownership of property which is subject to
some competing claim.
DEFENDANT:
The person against whom a claim is asserted in a
Court action.
DEFERRED INTEREST:
Interest which is not paid as it
accumulates but which is added, instead, to the loan principle.
DEFERRED INTEREST MORTGAGE:
A technique for reducing the
amount of each periodic payment on a mortgage monthly by postponing the
payment of a portion of the interest until a certain date in the future
(or to when the property is sold), at which time the interest postponed is
added to the principle owing.
DEFERRED MAINTENANCE:
A nice way to say that the property has
not been kept up and is depreciating both physically and in value.
DEFICIENCY JUDGMENT:
A Court order against a borrower under a
mortgage to pay to the lender an amount sufficient to make up for the
difference between what the borrower owes under the mortgage and the
amount the lender sold the property for under a mortgage remedy action.
DEGREE:
One 360th of a circle. One 90th of a right angle.
Used in astronomic bearings in metes and bounds descriptions of land.
DELINQUENCY:
The condition of being late on a payment but not
yet in default.
DELIVERY:
The act of turning over any legal document
(including a Deed) to another party so as to make it legally operative and
no longer revocable.
DEMAND LOAN:
A type of loan where the lender may require
payment in full of the principal (and accumulated interest) at any time.
DEMISE:
A conveyance of an interest in property for a set
period of time (such as in a lease).
DEMISED PREMISES:
The portion of the entire property which is
leased to a particular tenant.
DENSITY:
A measure of the number of a certain thing within a
defined space. Population density, for example, measures the number of
people in a given area (a square-mile, an acre etc.)
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD):
A federal
agency focusing on programs regarding housing and renewal of city
communities.
DEPARTMENT OF VETERANS AFFAIRS
(VA):
An independent federal agency which oversees programs for
military veterans, including loan and mortgage programs.
DEPOSIT:
1. The money paid up-front by a purchaser as
security for her completing the transaction. Also known as "good faith
money" or "earnest money".
2. An instrument which is not registered on
title but placed in the records for a given piece of land for information
purposes.
DEPOSIT OF TITLE DEEDS:
When a lender requires ownership
documents to be left with it as further security for a loan.
DEPRECIABLE BASIS:
The initial acquisition cost of an
improvement on land, used for income tax purposes. Land may not be
depreciated but the improvements (buildings, etc.) may be.
DEPRECIABLE LIFE:
An estimation of the useful, valuable life
of certain assets (such as buildings or production machinery).
DEPRECIATION:
1. The lessening of the value of a property
over time.
2. A tax adjustment accounting for the reduction in value
of an asset (a building or a piece of machinery) over time.
DERELICTION:
The gradual receding of water, leaving more land
than was there previously.
DERIVATIVE CONVEYANCE:
A transfer of property made to correct
or confirm an earlier conveyance.
DESCENT:
The conveyance of property to those heirs of a
deceased person as dictated by the laws of the jurisdiction when no will
is left behind.
DESCRIPTION:
Also known as "Legal Description". The manner in
which a piece of land is identified. May involve metes and bounds
measurements using astronomic bearings or may simply set out Lot and Plan
numbers in a specific municipality. Most jurisdictions require description
of land to be included in all instruments to be registered on title to
that property.
DESIGNATED REAL ESTATE BROKER:
Person designated by a
corporation to oversee all real estate activities of that corporation.
Must meet requirements for real estate broker's license.
DESIGNATED REAL ESTATE INSTRUCTOR (DREI):
Any person who has
met the requirements of the Real Estate Educators Association for this
designation.
DETACHED SINGLE-FAMILY HOME:
A free-standing dwelling that is
designed to house one family unit.
DETERIORATION:
The impact of time and wear and tear on a
dwelling or other building which results in a decrease in its value if
nothing is done to counteract it.
DEVELOPER:
A person or company who makes a business of
turning vacant or underused parcels of land into new housing (or business,
commercial or industrial) surveys.
DEVELOPMENT LOAN:
A loan specifically designed to finance the
transformation of a vacant tract into a new survey. May provide for money
to be advanced as the stages of the development are completed.
DEVELOPMENT RIGHTS:
The legal ability to develop a parcel of
land, usually purchased from the owner of a vacant tract of land by the
developer. Title to the property does not change hands until the new
survey of properties is sold to third-party purchasers.
DEVISE:
The act of leaving a piece of
land to another person in a will.
DEVISEE:
The beneficiary under a will who receives a gift of
real estate under the will.
DEVISOR:
The deceased person under whose will the beneficiary
receives real estate. More commonly called the "testator".
DINK:
Short form for "Double Income, No Kids". A description
of a type of Purchaser in the real estate market.
DIRECT COSTS:
Those expenses in the improvement of property
which can be directly attributed to the improvement itself (i.e. labor,
material, taxes, etc.). Also known as "hard costs".
DIRECT REDUCTION MORTGAGE:
A kind of mortgage where the
principal and interest to be paid are based on the principal remaining. An
amortized mortgage.
DIRECTION:
1. A document containing written instructions to a
person to do a certain thing in a certain way.
2. A point on a
compass, used in legal descriptions.
DIRECTION REGARDING FUNDS:
A direction made by a party who is
entitled to money to the party who is obligated to pay the money which
sets out how the receiving party wishes the money paid.
DIRECTION REGARDING TITLE:
Also known as "Title Direction". A
direction made by the Purchaser to the Vendor of property setting out how
the Purchaser wishes to take title. May include the full legal name, the
birthdate (if necessary), the address for service of the Purchaser and, if
there are more than one Purchaser, the capacity in which they wish to
share title ( i.e. as Joint Tenants or Tenants in Common).
DIRECTIONAL GROWTH:
A factor in the value of undeveloped
land, the direction in which an urban center tends to expand.
DISAFFIRM:
To refuse to accept a decision already made, to
revoke consent, assent or agreement already given.
DISBURSEMENT:
An expenditure of money.
DISCHARGE:
1. A document registered to remove a mortgage from
title to a property.
2. To payout out a debt.
3. To meet one's
obligations.
DISCLAIMER:
A statement of refusal of responsibility of a
legal right etc.
DISCLOSED PRINCIPAL:
The person on whose behalf an agent is
acting when that person's identity is made know to the person with whom
the agent is dealing.
DISCLOSURE:
Sometimes known as "Vendor's Disclosure", a legal
requirement in some jurisdictions in which the Vendor of a property must
provide a written statement to a prospective purchaser setting out defects
in the property known to the Vendor.
DISCLOSURE STATEMENT:
A document issued by a lender to a
borrower in which the lender sets out the terms and conditions of the
loan. Often required under legislation.
DISCOUNT:
A sum of money held back from a mortgage advance as
prepaid interest.
DISCOUNT POINT:
See point. Each point is equal to 1% of the
principal.
DISCOUNT RATE:
A benchmark for interest rates, the rate
charged by the Federal Reserve System on loans to banks.
DISCOUNT REAL ESTATE BROKER:
A licensed real estate broker
who charges a commission at a lower rate.
DISPOSSESS:
To remove a person from occupation of a property
by a legal action.
DISPOSSESS PROCEEDINGS:
The legal action taken to dispossess
a person of property.
DISTRAINT:
A landlord's action for recovering arrears in rent by taking
possession of and selling the tenant's personal property.
DISTRESS:
The right of a party to sell the real or personal
property of another party to pay for arrears in rent or loan
payments.
DISTRESSED PROPERTY:
A property which is to be sold in order
to pay arrears on a mortgage.
DISTRICT:
A terms used to classify neighborhoods according to
their use: residential, commercial, industrial, etc.
DOCUMENT:
1. Noun: a paper which establishes certain facts or
attempts to bring about a certain result.
2. Verb: to set out events,
facts or beliefs in written form.
DOCUMENTARY STAMP:
A levy paid to the local government for
registration of a document (a deed or mortgage) in the public records,
often calculated as a percentage of the purchase price or the value of the
mortgage.
DOG:
A slang term for a property that, as a result of factors
such as poor condition, poor location or poor design, is slow to sell.
DOMICILE:
The place where a person legally resides.
DOMINANT ESTATE:
The property which enjoys the benefit of an
easement over another property (known as the servient estate).
DONEE:
The person who receives a gift, bequest, or who is
named an attorney in a power of attorney.
DONOR:
The person who gives a gift, bequest, gives power of
attorney or who settles property in a trust for another person (the
beneficiary).
DOUBTFUL TITLE:
Ownership of land which is questionable as a
result of a possibly valid competing claim.
DOWER:
The interest enjoyed by a wife in real property her
husband acquired during his life time. The right becomes exercisable upon
the death of the husband. Dower still exists in some jurisdictions but has
been abandoned in most.
DOWN PAYMENT:
The amount of money provided by the Purchaser
toward the total price of the property (not including legal fees or other
acquisition costs). In general, downpayment plus mortgage equals purchase
price.
DOWNZONING:
The reduction of the density allowed for a
certain property under zoning by-laws, such as from high density (high
rise apartment) to medium density (low rise or individual homes).
DRAGNET CLAUSE:
A term of a mortgage which establishes the
subject property as security for the present and for all future debts of
the owner to the lender.
DRAIN:
A means, whether natural or otherwise, by which water
is allowed to flow off a property.
DRY MORTGAGE:
Also known as "non-recourse loan" because the
lender has no personal right of action against the property owner in the
event of default. The lender may only sell the property to enforce the
loan obligation.
DUAL AGENCY:
A breach of agency rules which must be disclosed
to the parties. Where one agent (often a real estate broker or agent)
represents both sides in a contract (i.e. the Vendor and the Purchaser)
such that the agent has a conflict of interest.
DUE DATE:
The date established in the loan agreement upon
which all moneys then outstanding on the loan become due and payable in
full.
DUE ON SALE CLAUSE:
A clause in a mortgage which requires
that the mortgage be paid out in full upon the sale of the property
against which it is secured. A mortgage with this clause may not be
assumed by a purchaser.
DUMMY:
Slang term for the trustee in an undisclosed trust
situation where a nominee holds legal title of property for an unnamed
principal.
DUPLEX:
A building which houses two separate dwelling units.
DURESS:
A state in which the improper, threatening or
coercive actions of another place a person in a disadvantage psychological
position. A person is not bound by a contract she enters while under
duress.
DWELLING:
A house, home, living unit. Generally refers to a
building designed for use as a living space.