Whats a real estate
Real Estate Terms
Abstract of title: A ummary or condensation of the essential parts of all recorded instruments which affect a particular piece of real estate, arranged in the order in which they were recorded.
Acceleration clause: A clause in a contract by which the time for payment of a debt is advanced, usually making the obligation immediately due and payable, because of the breach of some condition, such as failure to pay an installment when due.
Acceptance: An indication by an offeree of willingness to be bound by the terms of the offer.
Acknowledgment: A declaration made by a person to a notary public, or other public official authorized to take acknowledgments, that the instrument was executed by the person and that it is a free and voluntary act.
Acre foot: A term used in measuring the volume of water, equal to the quantity of water required to cover one acre one foot deep, or 43,560 cu. ft.
Administrator: A person appointed by the court to administer the estate of a deceased person who died intestate (without leaving a will).
ADU. Accessory Dwelling Unit
Adverse possession: The right of an occupant of land to acquire a superior title to the real estate against the record owner, where such possession has been actual, notorious, hostile, visible and continuous for the required statutory period (18 years in Colorado). Adverse possession promotes the productive use of land by giving title to the one putting the land to use.
Agency: A legal relationship resulting from an agreement or contract, either expressed or implied, written or oral, whereby one person, the agent, is employed by another, called the principal, to do certain acts in dealing with a third party.
Agent: Any person, partnership, association, or corporation authorized or employed by another, called the principal, to act for, on behalf of, and subject to the control of the principal.
Amenities: In real estate, amenities are features such as location, outlook, or access to a park, lake, highway, view or the like which enhance the desirability of real estate and which contribute to the pleasure and enjoyment of the occupants.
Amortization: Liquidation or gradual retirement of a financial obligation by periodic installments.
Appropriation: The act(s) involved in the taking and reducing to personal possession of water occurring in a stream or other body of water, and of applying such water to beneficial use.
Appropriator: One who diverts and puts to beneficial use the water of a stream or other body of water, under a water right obtained through appropriation.
Appurtenance: That which belongs to something else; something adapted to the use of the real property to which it is connected or belongs intended to be a permanent addition to the land. Appurtenances pass with the title to the land, e.g. a house, barn, garage, right-of-way, etc..
Assessed valuation: An estimate of value by a unit of government for taxation purposes.
Assignee: The party to whom a legal right has been assigned or transferred.
Assignment: Transfer to another of a legal right.
assignor: The party who assigns or transfers a legal right.
Attorney’s opinion: In real estate, the written opinion of an attorney-at-law regarding the marketability of title to real property based upon an examination of the abstract of title or the records in the county clerk and recorder’s office.
Balloon payment: A final lump-sum payment of an installment debt, much larger than all previous installments, and which pays the debt in full prior to its full amortization.
Bargain and sale deed: Any deed that recites consideration and purports to convey the real estate. A bargain and sale deed with a covenant against the grantor’s acts warrants only that he or she has done nothing to harm or cloud the title.
Beneficiary: The person who benefits from certain acts, e.g. a will; one receiving benefits, profits or advantage; one for whose benefit a trust is created.
Broker: A duly licensed person, firm, partnership, limited liability company, association, or corporation who, in consideration of compensation or with the intent of receiving such compensation, facilitates a real property transaction for another party. (See 12-61-101 C.R.S. for Colorado statutory definition – chapter 1 of this manual.)
Building code: Local government regulations specifying structural requirements of buildings.
Capitalization rate: A percentage rate of change applied in the income approach to value.
Cash basis accounting: Recognizing revenue and expense when cash is received or disbursed rather than when earned or incurred. A service business not dealing in inventory has the option of using the cash or accrual basis of accounting. Individual taxpayers must use the accrual basis.
CCR’s. Conditions, Covenants and Restrictions
CDU. Caretakers’s Dwelling Unit
Certificate of taxes: A written guaranty of the condition of the taxes on a certain property made by the county treasurer wherein the property is located. Any loss resulting from an error in a tax certificate shall be paid by the county that such treasurer represents.
Chapter 7: Provision of the 1978 Bankruptcy Reform Act that covers liquidations under a court appointed trustee.
Check: Synonym for quadrangle, a 24 mile square tract of land in the Governmental Survey System.
Cognovit note: One containing a confession of judgment (waiver of due process)by the borrower.
Collateral security: Some security additional to the personal obligation of the borrower, as a chattel mortgage or trust deed.
Colorado Association of REALTORS® – (CAR): The state organization of real estate licensees whose goal is the professional advancement of the real estate industry and whose membership is comprised of local real estate associations or boards.
Commingling: Mixing money belonging to others with personal or business funds. Illegal commingling is using the money of one beneficiary for the benefit of another or failing to maintain such money in identified escrow accounts.
Common interest community: real estate described in a declaration which obligates an individual unit owner to pay property tax, insurance premiums, maintenance or improvement on some declared real property owned in common. Ownership does not include a leasehold interest of less than forty years, measured from the date the initial term commences, including renewal options.
Community property: Property acquired by a husband and wife, or either, during marriage, by their industry and not by gift, belonging equally to husband and wife. Community property laws exist in only nine states: AZ, CA, ID, LA, NV, NM, OK, TX and WA.
Condominium: A common interest community in which portions of the real estate are designated for separate ownership and the remainder of which is distributed for common ownership solely among separate owners. A common interest community is not a condominium unless the undivided interests in the common elements are vested in the unit owners.
Consideration: A promise or an act of legal value bargained for and received in return for a promise; one of the essential elements of a contract.
Constructive (or legal) notice: The conclusive presumption that all persons have knowledge of the contents of a recorded instrument.
Controller: The chief accounting executive of an organization responsible for (1) financial reporting, (2) tax administration, (3) management audits, (4) planning controls and (5) developing accounting systems and procedures.
Conversion: Unauthorized appropriation of ownership rights over goods or property belonging to another; also altering one form of property to another such as changing a leasehold apartment building to freehold condominium ownership.
Cubage: The product of multiplying width x height x depth (or length) of an object.
Cubic foot per second: A unit of discharge for measurement of flowing liquid, equal to a flow of one cubic foot per second past a given section. Also called “second-foot”.
Cul-de-sac: A street which dead-ends in a semi-circle.
Debenture: Bonds issued without specific security and are secured only by the overall equity of the issuer.
Declaration: A recorded instrument that defines boundaries and common elements of a condominium and establishes the basic rights and obligations of the owners. It also provides for the creation of an owners’ association including a board of directors with authority to collect common expenses and otherwise act for the benefit of all owners.
Deed restriction: A provision in a deed controlling or limiting the use of the land.
Default: Omission or failure to perform a legal duty; failure to meet an obligation when due.
Defeasible fee (base- or qualified fee): A fee interest in land that is capable of being defeated or terminated upon the happening of a specified event .
Depreciation: Loss in value due to deterioration from ordinary wear and tear, action of the elements, functional or economic obsolescence.
Designated broker: An employing or employed broker designated in writing by an employing broker to serve as a single agent or transaction-broker for a seller, landlord, buyer or tenant in a real estate transaction; does not include a real estate brokerage firm that consists of only one licensed natural person.
Diversion: Illegal or unauthorized use of entrusted funds.
Documentary fee: A statutory Colorado tax of one cent per one hundred dollars (sale price x .0001) of consideration paid by a person recording an instrument of conveyance with a county clerk and recorder.
Donee: Receiver of a gift.
Donor: Giver of a gift.
Due-on-sale clause: A provision in a mortgage or trust deed which allows the lender to call a promissory note due and payable in full immediately upon the sale or transfer of a secured property; allows a lender to raise the interest rate or force other changes in terms upon assumption of the loan.
Duress: Forcing action or inaction against a person’s will.
Economic life: The period of time over which improved property may be profitably used.
Employing broker: A license level qualifying a broker to employ other licensees, requiring two years of active licensed experience, a 24-hour “brokerage administration” course if licensed after December 31, 1996 and passage of the Colorado part of the broker licensing exam if upgrade to broker associate from salesperson was by means of the broker transition course.
Escrow agreement: A written agreement whereby a grantor, promissor or obligor delivers certain instruments or property to an escrow agent, to be held until the happening of a contingency or performance of a condition, and then to be delivered to the grantee, promisee or obligee.
Estate (tenancy) at sufferance: An estate in land arising when the tenant wrongfully holds over after the expiration of the tenant’s term; the landlord has the choice of evicting the tenant as a trespasser or accepting such tenant for a similar term and under the conditions of the tenant’s previous holding.
Et al. Latin abbreviation for “et allus”, meaning “and others”.
Et ux. Latin abbreviation for “et uxor”, meaning “and wife”.
Exclusive agency listing: A listing whereby the owner engages a real estate brokerage as sole broker for a specified period of time, while retaining the right to sell the property to a buyer that the owner finds without paying the broker a commission.
Exclusive right-to-sell listing: A listing whereby the owner engages one real estate brokerage as sole broker for a specified period of time, entitling the broker to a commission regardless of who sells the property, including the owner.
Executor: The person named in a will to carry out its provisions.
Fannie mae: The pronunciation of “FNMA” (Federal National Mortgage Association). provides a market for government secured mortgages held by primary lenders and provides them with a ready market so as to permit a greater turnover of money for loans.
FAR: Floor Area Ratio
Fiduciary: Person in a position of trust relative to another party; confidential, as in a fiduciary relationship between an agent and the principal.
G.m.q.s.: Growth Management Quota System – A system designed to regulate the rate and quality of growth. All development in Pitkin County is subject to Growth Management unless exempt. A developer may elect, thru the GMQS process, to apply for additional floor area on a project or a site. They would compete for an annual “allotment” of floor area which is awarded based on categorized scoring criteria.
Grantee: A person to whom real estate is conveyed; the buyer.
Grantor: A person who conveys real estate; the seller.
Grazing district: An administrative subdivision of the range lands under the jurisdiction of the Bureau of Land Management, established pursuant to section 3 of the Taylor Grazing Act to facilitate management of BLM forage resources.
Grazing licenses: A permit for the grazing of a set number and class of livestock on a designated area of grazing district lands for a specified time, usually less than one year.
Grazing permit: A permit to graze a certain number and class of livestock on a designated area of grazing district lands during specified seasons each year for a period of usually 10 years.
Grazing preference: A request to graze certain numbers and classes of livestock upon a national forest for a specified time and subject to rules and regulations adopted by the Forest Service.
Ground water: A pervious formation with sides and bottom of relatively impervious material, in which ground water is held or retained; also called subsurface water basin.
HOA: Home Owners Association
Homestead exemption: Also know as “homestead” or “homestead right”; a fixed, statutory sum exempt from execution by creditors, and intended to protect a family home from foreclosure or sale for debts.
ILC: Improvement Location Certificate
Indemnify: To insure; to secure against loss.
Independent broker: A license level qualifying a broker to work without the supervision of an employing broker, requiring two years of active licensed experience, and if upgrade to broker associate was by means of the broker transition course, passage of the Colorado part of the broker licensing exam.
installment land contract, (ILC): also land contract, or installment contract; an agreement for the purchase of real estate on an installment basis, whereby the deed is withheld until all or a specified portion of the purchase price is paid .
Inter alia: Latin meaning “among other things”.
Intestate: Dying without leaving a valid will.
Judgment: Final declaration of the rights of the parties by a court.
Land: Real property; all below the surface, the surface and the airspace above it, and that which is affixed to it permanently; synonymous with “real property”, “realty”, and “real estate” often used to mean only the unimproved surface of the earth.
Lease: An agreement under which a tenant receives possession and use of real property for a certain period of time and the landlord receives the payment of rent and/or the performance of other conditions.
Limited agent: An agent whose duties and obligations to a principal are only those set forth in C.R.S. 12-61-804 or 12-61-805, with any additional duties and obligations agreed to pursuant to section 12-61-803 (5).
Marketable (merchantable) title: A title free from reasonable doubt of defect; which can be readily sold or mortgaged to a reasonably prudent person; a title free from material defects or grave doubts and reasonably free from potential litigation.
Market value: The price which a ready and able buyer, not forced to buy, would pay and which a ready and willing seller, not forced to sell, would accept, assuming that both parties are fully informed, act reasonably, and have sufficient time to consider the transaction with due care.
MEC: Mutual Execution of Contract
Metes and bounds: A method of describing or locating real property; metes are measures of length and bounds are boundaries. This method starts from a well-marked point of beginning and follows the boundaries of the land until it returns once more to the point of beginning.
Mill: One-tenth of a cent; a tax rate of one mill on the dollar or one-tenth of one percent of the assessed value of a property. (assessed value x .001)
Mortgage: A conditional conveyance of property as security for the payment of a debt or the fulfillment of some obligation. Upon payment of the debt or performance of the obligation, a mortgage automatically becomes void.
Multiple listing service (MLS): A marketing arrangement among real estate brokers whereby a seller authorizes the listing broker to share information and a pre-determined portion of a commission to any broker cooperating in the sale of the property.
Mutual assent,(meeting of the minds): Agreement of the parties to the contract, mutually consenting to be bound by its exact terms; an essential contract element .
National Association of REALTORS©, (NAR): A national association of real estate personnel whose goal is the professional advancement of the real estate industry and whose membership is comprised of state and local real estate associations or boards.
National forest: A forest or watershed reservation administered by the Forest Service, United States Department of Agriculture.
Negotiable instrument: A written instrument containing a promise of payment, which can be endorsed from one person to another.
Note: A written instrument acknowledging a debt and promising payment.
Obsolescence: Impairment of desirability and usefulness of the property resulting from economic, functional, physical, fashion, or other changes.
Offer: To present for sale; or a proposal presented for acceptance or rejection which, if accepted, will form a binding contract.
Offeree: One to whom an offer is made.
Offeror: One who makes an offer.
Optionee: One who requests, receives or stands to benefit from an option.
Patent: An instrument of conveyance of government-owned land to an individual.
Percolation (perc) test: Determines if soil will take sufficient water seepage for use of a septic tank.
Periodic tenancy: See estate from period-to-period.
Personalty: Synonym for personal property.
Power of attorney: A legal instrument authorizing another person to act in place of the person drawing the instrument.
Principal: A person, partnership, association or corporation who authorizes or employs another, called the agent, to do certain acts on behalf of the principal.
Principal note: A promissory note secured by the mortgage or trust deed.
Property: Anything which may be owned and its bundle of ownership rights; the right to use, possess, enjoy, and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights; generally classified into two groups; personal and real.
Purchase money mortgage: A mortgage given by the purchaser to secure a loan for part or all of the purchase price. Such a mortgage becomes a lien on the property simultaneously with the passing of title, and if immediately recorded becomes prior to any lien against the purchaser.
Quadrangle (check): A square tract of land in the U.S. Governmental Survey System measuring 24 miles on each side.
Real property: Land; the surface of the earth and whatever is erected, growing upon, or affixed to the land; including that which is below it and the airspace above it. synonymous with “land”, “realty”, and “real estate”
Recording: entering an instrument in a book of public record in the office of the county clerk and recorder. recording constitutes “constructive” notice to all persons of the rights or claims contained in the instrument.
Rectangular Survey System: See U.S. Government Survey System.
Redemption: The right of an owner to redeem or reclaim real estate by paying the debt or charge (such as mortgage or tax lien) after default, together with interest and costs. Specifically, equity of redemption is the right to redeem the property after default but before foreclosure. Statutory right-of-redemption refers to the right to redeem the property after foreclosure, or other enforcement action, within a certain time specified by statute. In Colorado, a mortgagor has a statutory right to redeem property any time within 75 days (residential) or six months (agricultural)) after foreclosure or three years after a tax sale.
Restrictive covenant: A clause in a deed limiting the use of a property.
Right of survivorship: A characteristic of joint-tenancy whereupon the death of one tenant triggers an automatic and immediate transfer of the decedent’s property rights equally among the surviving tenant(s).
R/O: Resident Occupied
Special warranty deed: A deed in which the grantor warrants title only against defects arising during the grantor’s ownership.
Specific performance: A remedy compelling a party to perform or carry out the terms of a valid, existing contract.
SQ: Square Feet
State lease: An agreement between the state of Colorado and other parties for the use of lands under the jurisdiction of the State Board of Land Commissioners for grazing, agriculture and other lawful purposes.
Surrender: In leases, the cancellation of a lease by mutual consent of lessor and lessee.
Survey: The measurement of a parcel of land and its characteristics.
Taylor Grazing Act: See grazing district.
T.d.r.. Transferable Development Rights – A system that allows landowners in some zone districts to transfer some or all development potential from one property (a “sending” site) to another property (a designated “receiving” site). TDR’s can be used either to: Increase house size, or obtain development right within a UGB (Urban Growth Boundary). In Pitkin County, each TDR is equal to a maximum of 2,500 square feet of floor area.
TDR. Transferrable Development Rights
Tenancy at sufferance: See estate at sufferance.
Tenancy at will: See estate at will.
Tenancy-in-common: A type of co-ownership of an estate in land entitling each tenant to full possession of the property (unity of possession) regardless of proportionate share owned; tenancy-in-common contains no right of survivorship.
Testate: A condition of death characterized by the decedent having left a valid will.
Time-share: An interval interest in real estate which limits ownership or occupancy rights to specified time periods. Ownership may be either fee simple (deeded) or “right-to-use” (contractual or membership). In Colorado, time-share sales are subject to license law.
Title insurance: Indemnification of a policyholder from loss due to a title defect, provided the loss does not result from a defect excluded by the policy provisions.
Transaction-broker: A broker who assists one or more parties throughout a contemplated real estate transaction with communication, interposition, advisement, negotiation, contract terms, and the closing without being an agent or advocate for the interests of any party.
Treasurer: A county official responsible for property tax administration; a chief executive in a firm responsible for (1) obtaining operating capital, (2) investor relations, (3) short-term financing, (4) banking policies, (5) asset custody, (6) credit and collections, (7) investment analysis, and (8) risk management.
Trust deed: A loan security instrument by which a borrower conveys title to a (usually public) trustee, to be held for the protection of a lender as security for the repayment of the debt. Upon payment of the debt a trust deed must be specifically released by the trustee.
United States Government(or Rectangular) Survey System (GSS): A land description method based on reference to governmental surveys.
Vicarious liability: A principal’s liability for an agent’s acts performed within the scope of the agency; specifically excluded by Colorado statute from a principal’s liability unless the act or omission was approved, directed or ratified.
Waiver: Abandonment of some claim or right.
Warranty deed, (general warranty deed): A deed in which the grantor warrants or guarantees the title to real property against defects during the grantor’s ownership and as far back as a chain-of-title can be established.
Writ of execution: A court order directing an officer of the court, usually the sheriff, to carry out the judgment or decree of the court.