
A . B . C . D . E . F . G . H . I . J . K . L . M . N . O . P . Q . R . S . T . U . V . W . X . Y .
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A:
Abstract of Title
: A written history of the transactions or conditions bearing on the title to a designated parcel of
land. It covers the period from the original source of title to the present and summarizes all documents of
public record.
Acceleration Clause
: A clause requiring the purchaser to pay the entire principal balance due if certain conditions of the
contract are violated. A few examples of these conditions are failure to make regular installment payments,
non-payment of property taxes, and non-payment of hazard insurance premiums. This clause most often appears
in land contracts under the heading “Enforcement on Default” or “Acceleration Clause.”
Accrued Interest
: Interest that has been earned but not paid.
Add-Back Escrow
: In a land contract that utilizes an Add-Back Escrow, the purchaser includes an extra amount with each
month’s payment in order to cover future tax and/or insurance bills payable by the purchaser. The seller then
pays property and/or insurance premiums and adds back the amounts paid to the current principal balance owed.
Add-Back escrows in contract usually worded as follows: “The purchaser is to pay monthly, in addition to the
monthly payment herin before stipulated, the sum of $___, which is an estimate of the monthly cost of the taxes,
special assessments, and insurance premiums for the land, which shall be credited by the seller on the unpaid
principal balance owed on the contract. If purchaser is not in default under the terms of this contract,
seller shall pay for purchaser’s account the taxes, special assessments, and insurance premiums mentioned above
when due and before any penalty attaches, and submit receipts therefore to purchaser upon demand. The amounts
so paid shall be added to the principal balance of this contract.”
Addendum
: An addition to a written document. Addenda is the plural.
Agent
: One who undertakes to transace business or to manage an affair for another, with the authority of the
latter.
Amendment
: An alteration to a contract.
Amortization
: The length of time it will take to pay off a debt at the mutually agreed upon interest rate and payment
amount.
Amortization Schedule
: Table which shows how much of each payment
will be applied toward principal and how much toward interest over the life of the loan. It also shows the gradual
decrease of the loan balance.
Appraisel
: A written justification of the price paid for
a property, primarily based on an analysis of comparable sales of similar homes nearby.
Appraised
Value : An opinion
of a property’s fair market value, based on an appraiser’s knowledge, experience, and analysis of the property.
Since an appraisal is based primarily on comparable sales, and the most recent sale is the one on the property in
question, the appraisal usually comes out at the purchase price.
Appurtenance
: Something outside the property itself but considered part of the property that adds to its greater
enjoyment, such as the right to cross another’s land.
Assessments
: The amount of tax or special payment due to a municipality or association.
Assignee
: The person or corporation to whom an agreement or contract is assigned; one to whom real property or an
interest in real property is transferred or set over.
Assignment
: A transfer from one party to another.
Assignor
: A party who assigns or transfers an agreement or contract to another.
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B:
Balance Due
: The amount currently owed on a debt; the principal balance due.
Balloon
: The final payment on a mortgage, trust deed or land contract when that payment is greater than the
preceding installment payments and pays the loan in full.
Balloon
Mortgage : A
mortgage loan that requires the remaining principal balance be paid at a specific point in time. For example, a
loan may be amortized as if it would be paid over a thirty year period, but requires that at the end of the tenth
year the entire remaining balance must be paid.
Balloon
Payment : A large,
lump sum payment scheduled at the end of a series of considerably smaller periodic payments, at the end of a
mortgage lease or loan. Many times a benefit is a lower interest rate.
Bankruptcy
: The financial inability to pay one’s debts when due. The debtor seeks relief through court action
that may work out or erase debts.
Breach of Contract
: A violation of the terms of a legal agreement.
Buyer
: One who purchases property; also referred to as “Vendee” or “Purchaser.”
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C:
Cash Flow
Note : A cash
flow note or simply note is an instrument created to hold value over a period of time. A written promise to
repay a specified amount over a specified period of time. Basically it is an IOU. At Money Now for Cash Flows
we deal with cash flow notes that are secured by real estate. Most common notes are secured by a deed of
trust or trust deed, mortgage, or land contract.
Certificate of Title
: A written statement furnished by an abstract or title company or an attorney stating that the title to a
piece of property is legally vested in the present owner.
Certification :
The act of showing evidence of ownership or debt.
Chain of Title
: The history of all the documents transferring title to a parcel of real estate, starting with the earliest
existing document and ending with the most recent.
Chattel
: anything owned and tangible other than real estate, for example: furniture, automobiles, and
jewelry.
Clear Title
: Title not encumbered or burdened with defects such as mortgages, unpaid taxes, or underlying
liens.
Cloud on title
: Any condition revealed by a title search that adversely affects the title to a property. Usually
cloud on title cannot be removed except by a quit claim deed, release or court action.
Collateral
: Property pledged as security for a debt.
Commit Waste
: To neglect property or allow it to be used in a way that lessens its value.
Consideration
: A legal right or promise exchanged for the act, promise or property of another person. For example,
in a contract for the purchase of a piece of property, the property itself and the money paid )or promised to be
paid) are the considerations made by the property seller and the new property owner,
respectively.
Convey
: To deed or transfer title to another.
Conveyance
: The document, such as deed, lease or mortgage, used to effect a transfer of
property.
Covenant
: A legally enforceable promise or restriction in a contract. For example, a purchaser on a mortgage,
rust deed or land contact may covenant to keep the property in good repair and adequately insured against fire and
other casualties. The breach of a covenant usually creates a default and can be the basis for
foreclosure.
Credit Score
: In the United States, a credit score is a
number based on a statistical analysis of a person’s credit files, that in theory represents the creditworthiness
of that person, which is the likelihood that people will pay their bills. A credit score is primarily based on
credit report information, typically from one of the three major credit bureaus: Experian, TransUnion, and Equifax.
Income is not considered by the major credit bureaus when calculating a credit score. Taken From
Wikipedia – Credit Score
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D:
Deed
: A written document that conveys or transfers title from one party to another. There are various types
of deed; however, the two most commonly used are warranty and quit claim.
Deed of Trust
: An instrument used in many states in place of a mortgage. Legal title to the property is vested in
one or more trustees to secure the repayment of the loan.
Deed of Trust or Trust
Deed : Some states,
like California, do not record mortgages. Instead, they record a deed of trust which is essentially the same
thing.
Default
: A failure to perform on one or more of the terms of a note or of the covenants of a mortgage or land
contract.
Delinquent Payment
: A payment not paid on a specified payment date. For example, if a payment is due on the first day of
every month and it is not received until the fith day of the month, that payment is delinquent. If a
mortgage, trust deed or land contract has a 10-day grace period, then a payment would not be considered
“delinquent” until the 11th day after the due
date.
Devise
: A gift of real estate by a will or last testament.
Discounted Cash
Flow : A discount
that is placed upon a current cash flow based on the time value of money. The time value of money is the value of money
figuring in a given amount of interest earned over a given amount of time. For more information about the time
value of money click
here to go to
Wikipedia.
Dispossess
: To obtain physical possession of property from another by due process of law.
Dower
: Under common law, the legal right of a wife or child to a part of a deceased husband’s or father’s estate,
regardless of the provisions in his will.
Down Payment
: The amount of money paid at the execution of a mortgage or a land contract. This lump sum of money is
subtracted directly from the original sales price. The remaining principal balance then begins to accrue
interest at the specified interest rate.
Due-On-Sale Clause
: A clause set forth in some mortgages and land contract whereby the lender or seller has the right to “ call
in” the balance upon the sale or transfer of the property by the borrower or purchaser to a third party.
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E:
Earnest Money
: A deposit made by a purchaser to demonstrate good faith; a down
payment.
Easement
: A right created by grant, reservation, agreement, prescription, or necessary implication, which one has in
the land of another. For example, the right of public utility companies to lay their line across another’s
property is a utility easement.
Encumbrance
: Any right to or interest in land that effects its value, including outstanding mortgage loans, unpaid
taxes, easements, or deed restrictions; a cloud on title.
Equity
: The difference between fair market value and current indebtedness (balance due). For example,
if a person owes $10,000 on his home and the market value is now $50,000, he now has 80% equity in his home
($40,000 out of $50,000).
Escrow
: An agreement between two or more parties providing that certain instruments or property be placed
with a third party for safekeeping, pending the fulfillment or performance of a specified act or condition.
For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is
closed.
Escrow Account
: An account in which a prescribed amount of money is deposited each time a payment is collected to be used
for paying real estate taxes and/or insurance. For example, a mortgage, trust deed or land contract may
require a monthly payment of $260 with an additional $40 to pay taxes and insurance. This $40 goes into an
escrow account which, technically, belongs to the purchase.
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F:
Fee Simple
: The highest and best form of ownership recognized by law. Owner is entitled to the entire property
with unconditional power to sell it.
First Mortgage
:
A real estate loan that creates a primary lien against real property. The lien has first priority against
other claims in the event of foreclosure and over all other mortgages on a specified property.
Fixtures
: Improvements or personal property so
attached to the land as to become part of the real estate. For example, a porch would be considered a
fixture, whereas a ceiling fan may just be personal property.
Foreclosure
: Legal
process in which a property is taken from a defaulting borrower in order to satisfy the mortgage
debt. All mortgagor rights for the property covered by a mortgage, are terminated.
Forfeiture : The loss of money or anything
else of value because of failure to perform under contract. For example, because the prospective purchaser
failed to keep up payments under the land contract, he or she forfeited all of his or her right to the
property.
Free and Clear Title
: Title to a property without encumbrances. It is generally used to refer to a property free of
mortgage debt.
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G:
Grace Period
: The period during which one party may fail to perform without being considered in
default.
Grantee
: The person to whom an interest in property is conveyed. For example, in a land contract sale the
Grantee is most often referred to as the purchaser.
Grantor
: The person conveying an interest in property. For example, in a land contract sale the grantor is
most often referred to as the seller.
Guaranty
: A written promise by one party to pay a debt or perform an obligation contracted by another in the event
that the original obligor fails to pay or perform as contracted. For example, a parent may guarantee payments
owed by a son or daughter.
Guarantee
:
The person who receives the rights to real property
in a transaction.
Guarantor
:
The person relinquishes their rights to real property
in a transaction.
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H:
Hazard Insurance
: A type of insurance bought to insure property against losses due to fire, theft, vandalism, etc. Most
land contracts require the purchaser to carry hazard insurance at all times to protect the seller from insurable
losses.
Heir
: One who inherits property.
Hereditaments
: Any property, whether real or personal, tangible or intangible, that may be
inherited.
Homeowner’s Policy
: An insurance policy designed especially for homeowners. Usually protects an owner from losses by
common disasters, theft, etc.
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I:
Improvements
: Those additions to undeveloped land such as buildings, streets, sewers, etc., that tends to increase its
value.
Installments
: Parts of the same debt, payable at successive periods as agreed; payments made to reduce a
mortgage.
Insurance Premium
: The amount paid for the purchase of insurance.
Interest Rate
: The percentage of money charged for its use. For example, a seller may charge a purchaser 10%
interest on the unpaid balance of a mortgage, trust deed or land contract.
Interest Rate : A
percentage to paid on top of the loan amount to compensate the lender for lending the money. Most buyers of real
estate notes look for a 6% interest rate or higher on the real estate notes they purchase. If your note has a lower
interest rate a buyer may ask you to modify the loan before they purchase the real estate note.
J:
Judgment
: A decree of a court stating that one individual is indebted to another for a certain fixed
amount.
Judgment Lien
: A lien upon the property of a debtor resulting from the decree of a court.
Judicial Foreclosure
: Having a defaulted debtor’s property sold at a price the court approves.
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L:
Land Contract
: A real estate installment sale arrangement whereby the buyer may use, occupy, and enjoy land, but no deed
is given by the seller (so no title passes) until all or a specified part of the sale price has been
paid.
Late Charge
: An additional fee charged to a person for a payment that is delinquent. The most common methods
of charging late fees are to charge a fixed dollar amount or a percentage of the payment.
Lease
: A contract in which, for a payment called rent, the one entitle to the possession of real property
transfers those rights to another for a specified period.
Legal Description
: A property description recognized by law which is sufficient to locate and identify the property. A
typical legal description will identify the county, township, and section of the township where the land is
located.
Legatee
: One who receives property by a will.
Lessee
: One who receives property by a lease.
Lessor
: One who leases property to a lessee.
Liability
: A debt or financial obligation.
Liable
: Responsible le or obligated. For example, one who borrowed on a mortgage generally becomes personally
liable for its repayment.
Lien
: A charge against poperty making it security for the payment of a debt, judgment, mortgage or
taxes. A lien is a type of encumbrance. A specified lien is against certain property only. A
general lien is against all of the property owned by the debtor.
Lien
: The right to retain the legal
possession of a property of another until the owner fulfills a legal duty to the person holding the property,
securing the repayment of a loan. It also affects the ability to transfer ownership.
Loan-To-Value
(LTV) :
The percentage relationship between the amount of the
loan and the appraised value or sales price (whichever is lower). It’s easy to say, the lower the LTV the higher
your quote will be on your real estate note. Money Now for Cash Flows looks for an LTV to be at least
80%.
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M:
Maturity
: The date on which an instrument of indebtedness, such as a mortgage or land contract, becomes due and
payable.
Mortgage
: A pledge of real property as security for the payment of a debt. With a mortgage, the borrower
retains possession and use of the property. A mortgage is typically signed simultaneously with a
note.
Mortgagee
: The party lending the money and receiving the mortgage.
Mortgagor
: The party borrowing money secured by real estate and giving a mortgage.
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N:
Notary Public
: One who is authorized by the state or federal government to administer oaths and attest to the authenticity
of signatures.
Notice of Default
: A letter sent to a defaulting party as a reminder of the default. Such a notice may state a
grace period and the penalties for tailing to cure the default.
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O:
Opinion of Title
: A certificate, generally from an attorney, as to the validity of the title of property being
sold.
Outstanding Balance
: The amount currently owned on a debt.
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P:
Parcel
: A piece of property under one ownership; a lot in a subdivision.
Parcel Number
: A number given to a piece of property by the county for tax purposes.
Payment
: An agreed upon dollar amount paid in regular installments by a purchaser. The most common installment
method for land contract payments is monthly payments.
Per Annum
: In or for each year annually.
Personal Property
: Any property that is not real property. For example, personal property is appliances, cash,
securities, furniture, and mobile home not permanently affixed to a site.
Plat
: A plan or map of a specific land area.
Plat Book
: A public record containing maps of land and showing the division of the land into streets, blocks, and lots
and indicating the measurements of the individual parcels.
Power Of Attorney
: An instrument authorizing a person to act as the agent of the person granting it.
Premises
: Land; an estate; the subject matter of a conveyance.
Principal
: The original amount of the total due on a mortgage, trust deed or land contract; the principal portion of a
payment is that portion which is not interest.
Principal Balance
: The unpaid balance owed on a mortgage or land contract.
Principal and Interest Payment
: A periodic payment, usually paid monthly, that includes the interest charges for the period puls an amount
applied to the amortization of the principal balance.
Property Value
: The appraised value of the property at the current
time. When dealing with real estate notes the sales price of the property takes precedence over the appraised
property value when figuring the LTV.
Purchase Money Mortgage
: A mortgage given by the purchaser of real property to the seller as part of the consideration in the sales
transaction.
Purchaser
: One who purchases property; also referred to as “Vendee” or “Buyer”.
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Q:
Quit Claim Deed
: A deed that transfers only such interest, title or right as a grantor may have at the time the conveyance
is executed; a deed without representations or warranties as to the nature of the rights
conveyed.
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R:
Real Estate
: Land and everything attached to it.
Real Property
: Real estate.
Representations
: Descriptions as to the quality of character of something. For example, a building may be
represented as being free from structural defects.
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S:
Sales Price
: The mutually agreed upon dollar amount to be paid for a particular piece of property.
Seasoned Note
: A real estate note that the payor has been paying
on time for at least 2 consecutive months. Real Estate notes that have not been seasoned are of no value to
investors. On the other hand, the more a real estate note has been seasoned the higher its value is to the
investor.
Section
: One square mile in a government rectangular survey. There are 36 sections in a mix-mile-square
township.
Security
: Something given as a pledge to payment.
Seller
: Individual who has sold real estate, also referred to as Vendor.
Sidwell Number
: See “Parcel Number”
Subordinate
: One who moves to a lower priority, as a lien would if it changes from a first mortgage to a second
mortgage.
Successor
: One who receives title to property.
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T:
Tenements
: Possessions that are permanent and fixed; structures attached to land.
Term
: The amount of time (usually computed in months) until the balance of a mortgage or land contract is due and
payable. For example, a land contract may fully amortize over a 10-year period (120 months). However,
the contract may also call for a balloon payment to made at the end of the fifth year (60th month). In this case, the term of the land contract would be 60 months or
five years.
Title
: Evidence that the owner of the land is in lawful possession therof.
Title Insurance
: A form of insurance purchased to protect against any losses or defects in the title of a particular
piece of property.
Title Search
: An examination of public records, law and court decisions to disclose the past and current facts
regarding ownership of real estate.
Township
: A six-mile-square tract delineated by a government rectangular survey.
Trust Deed
: A claim against real estate similar to a mortgage but title is held by a third part called a Trustee for
the Beneficiary.
Trustee
: One who holds property in trust for another to secure performance of an obligation.
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U:
Underlying Debt
: An original loan that is still in existence. This loan may be owed on a mortgage, trust deed or
land contract.
Use Restrictions
: A clause in a deed which places limitations or restrictions on the property’s use. For example,
“this property can never be used to sell liquor” or “this property can never be used to raise farm animals.”
These limitations “run with the land” and are therefore binding on subsequent owners.
V:
Vendee
: A person who buys property; another word for “Purchaser”.
Vendor
: A person who transfers property by sale; another word for “Seller”.
W:
Warranties
: Promises contained in a contract. For example, a seller may warranty that a property sold is
structurally sound.
Warranty Deed
: A deed that conveys or transfers title from one part to another with covenants assuring that the title
transferred is free from all encumbrances.
Waste
: See “Commit Waste.”
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Y:
Yield
: The rate of return on an investment. For example, if one invests $100 and receives $15 after the
first year, one’s yield is 15% on the invested cash for the first year.
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