Abandonment - The relinquishment of all rights and title to a property with no intention of reclaiming ownership.

Abstract - A disclosure statement to initial condo purchasers.

Abstract Of Title - A condensed history or digest of the title to a parcel of land consisting of a summary of every recorded  instrument, together with a statement of all liens, charges or encumbrances affecting title to that land.

Abutting Owner - An owner whose land touches a highway or other public place.

Acceleration Clause - A clause in a mortgage or agreement of sale stating that upon default of a payment due, immediate and  full payment of the balance of the obligation becomes due and payable.

Access Right - The right of a property owner to have ingress and egress to and from his property.

Accession - Acquisition of property by its joining or union with other property.

Accretion - Gradual additions to land by deposits of sand or soil by bordering waters through natural causes.

Acknowledgment - A formal declaration made before a notary public or other authorized person, by a person who has  executed an instrument, that such execution is his free act and deed.

Acre - A measure of land equal to 160 square rods, 4,840 square yards, or 43,560 square feet

Accrued Depreciation - In appraisal, any loss of utility that causes the actual value of a property to be less than the  reproduction cost new.

Accrued Items - On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan.

Actual Authority - Such authority that a principal intentionally gives his agent.

Adjoining Owner - One whose property is contiguous; to be next to.

Adjusted Basis – Value of property used to determine the amount of gain or loss realized by owner upon sale of the property; equals acquisition cost plus capital improvements minus depreciation taken.

Administrator - A person appointed by the court to administer the estate of a deceased person who died intestate, or left no  will;

Administrator's Deed - A deed given by an administrator.

Ad Valerom - Tax according to valuation.

Adverse Possession - The means of acquiring title to land against the real owner, where possession has been actual, open,  hostile, exclusive, continuous, and under claim of right for the statutory period of 20 years.

Affidavit - A statement reduced to writing and sworn to before a notary public or some other authorized of officer.

Affirm - To confirm or to ratify.

Agency - The legal relationship resulting from an agreement that the agent if authorized by a principal to perform certain acts on behalf of the principal in dealing with a third party.

Agency by Ratification - An agency created "after the fact" by a principal expressly or impliedly affirming the conduct of a party claiming to act as his or her agent.  There must be some proof that the principal was aware of the act or acts and either accepted the benefits or elected to be bound by the agent's conduct.

Agreement of Sale - A written agreement in which the buyer agrees to buy certain realty and the seller agrees to sell upon  terms and conditions set forth therein. Title remains with the seller until terms and conditions are fulfilled; buyer has  equitable title; there are two closings.

Air Rights - The rights vested by a grant of an estate in real property to all or any portion of the space above the property

Alienation - The transferring of real property from one person to another.

Alienation Clause- A statement in a mortgage or deed of trust entitling the lender to declare the entire principal balance of the debt immediately due and payable if the borrower sells the property during the mortgage term.  Also know as due-on-sale clause.

Allegation - The assertion or declaration of a party setting out what he expects to prove.

Allodial System - The free and full ownership of rights in land by individuals, which is the basis of real property law in the United States.  By contrast, under the feudal system, ownership of land was vested in the king or sovereign.

Alluvion - That increase of soil on a shore or bank or a river as the result of accretion.

American Land Title Association (ALTA) - An extended coverage title insurance policy usually protecting the mortgagee  against loss due to errors in the public records.

Amortization - The gradual paying off of a debt on an installment basis.

Anchor Tenant - Major tenant in a shopping center that serves as a magnet to attract customers to the center.

Annexation - The act of attaching, adding, joining, or uniting one thing to another.

Annual Percentage Rate (APR) - The effective annual cost of credit calculated on the basis of procedures specified by  Regulation Z (Truth-in-Lending).

Annuity - A sum of money that constitutes one of a series of periodic payments.

Anti-Trust Laws - Federal and state laws prohibiting conduct which interferes with business competition, such as price fixing,  group boycotts and tying agreements.

Appraisal - An estimate of value of real estate; the report stating and supporting the estimated value of realty.

4-3-2-1 Appraisal Method - This method of Appraisal is used particularly in commercial property, where street frontage is important.  The concept is that the front 25% of the property facing the street is worth 40% of the total value of the property; the next 25% behind is worth 30% of the total value; the next 25% is worth 20% of the total value; and the back 25% is worth only 10% of the total value of the lot.  Therefore 40% + 30% + 20% + 10% = 100% of the total value.

Appraisal By Capitalization - Determine the value of property by dividing net annual income by the capitalization rate.  Used on income producing properties.

Appraisal By Cost Approach Estimating the value of a piece of property by adding to the estimated land value  the estimate of  the replacement cost or reproduction cost of the building less depreciation. Also called summation or reproduction cost approach.

Appraisal By Market Comparison - An appraisal of property through the examination and comparison of actual sales of   comparable properties. Also called a "comparable." 

Appreciation - An increased value of property due to economic or related causes which may prove to be either temporary or  permanent.

Appurtenance - That which has been added to a property, which becomes an inherent part of the property, and will pass with it when conveyed; includes improvements.

Association of Real Estate License Law Officials (ARELLO) – Founded in 1929, a group of real estate license law officials that regulates more than two million real estate licensees.

As Is - A phrase indicating the property is sold in its present conditions with no warranties.

Assemblage - Putting together two or more lots to form a large parcel. To be distinguished from plottage, which is the resulting value. 

Assessed Value – The dollar amount of worth to which a local tax rate is applied to calculate the amount of real property tax.

Assessment - A charge against real estate made by a unit of government or a condo association to cover the proportionate cost of improvement. 

Assignee - The person to whom an agreement or contract is transferred.

Assignor - A party who assigns or transfers an agreement or contract to another.

Assignment - The method or manner by which a right, or contract is transferred from one person to another. 

Associate-Broker -  A real estate license classification to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-associate, broker-salesperson.

Assumption Of Mortgage - Taking of title to property by assuming liability for payment of an existing note secured by a mortgage.

Attachment - The act of taking realty by judicial order and placing it within the custody of the court. 

Attestation - The act of witnessing in writing another's execution of an instrument; to affirm to be true or genuine. 

Attorney In Fact - One who is authorized to perform certain acts for another under a power of attorney. 

Attractive Nuisance - A doctrine of tort law stating that a person who maintains on his or her property a condition that is both dangerous and conceivably inviting to children owes a duty to exercise reasonable care to protect children from danger.  Thus, an owner who maintains a swimming pool, or unmarked open pit, or discards a refrigerator or freezer may be liable for injuries to trespassing children.

Avulsion - The sudden removal of land of one owner and depositing on the land of another when a stream changes its channel. 

 Back to top of page

Balloon Mortgage - A mortgage in which the scheduled payment will not fully amortize the loan over the mortgage term; therefore, to fully satisfy the debt, it requires a final payment called a balloon payment, larger than the uniform payments.

Balloon Payment - The final installment payment on a note which is greater than the preceding installment payments and pays the note in full. 

Bankruptcy - A condition of financial insolvency in which a person's liabilities exceed his assets, and he is unable to pay his debts. 

Bargain And Sale Deed - A deed used to convey title to real property, which usually does not include warranties; if any, they are generally an assertion by the grantor that he has possession of the property

Baseline And Meridian - Imaginary lines used by surveyors in locating and describing land under the rectangular survey method. The north-south line is the meridian, the east-west line is the base line. Used mostly in Midwestern states.

Basis - Original cost of property plus value of any improvement put on by the seller and minus the depreciation taken by him.

Before And After Method - An appraisal method used in condemnation cases where there has been a partial taking of the property. 

Benchmark - A natural or unnatural permanent reference mark or point established for use in measuring differences in elevation. 

Beneficiary - A person who receives and benefits from the gifts or acts of another; one who receives the proceeds from a will, insurance policy, or trust; the lender in a deed of trust.

Bequeath - The giving of personal property by will.

Biannual - Happening twice each year; semi-annual.  

Biennial - Happening once every two years.

Bilateral Contract - A contract in which both parties have reciprocal obligations toward each other.

Bill Of Sale - A written instrument which passes title of personal property from seller to buyer.

Binder - An agreement to cover a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser; shows the receipt of a deposit and outlines the basic terms of the transaction.

Blanket Mortgage - One mortgage covering two or more specific parcels or realty.

Blind Ad - An advertisement that does not include the name and address of the person placing the ad, only the phone number or post office box address.  Licensed real estate agents are generally prohibited by state license laws from using blind ads.

Blockbusting - The discriminatory practice of encouraging members of one race or creed to move into a neighbor-hood, and then exploiting the situation by persuading residents to sell their houses at deflated  prices because of the alleged social deterioration of the neighborhood.

Block Interest - Interest computed on the original face amount and which remains the same as the principal declines.

Blue-Sky Laws - State securities laws designed to protect the public from fraudulent practices in the promotion and sale of securities. ("promising the sky")

Board Foot - A piece of wood of any shape that contains 144 cubic inches of wood (12 inches X 12 inches X 1 inch, 6 inches X 6 inches X 4 inches, etc.).

Bona Fide - In good faith, without fraud; genuine; real.

Book Value – Dollar worth as it appears on the owner’s books, usually for tax purposes; also known as historic value.

Boot - The payment to satisfy the difference in equities in an exchange, which may be in cash, personal  property, note, financing, or anything of agreed upon value.

Breach Of Contract - Violation of any of the terms or conditions of a contract; default; non-performance.

Broker - A licensed person who negotiates the purchase and sale of real estate of another.  To qualify as a real estate broker in Hawaii, one must be licensed as a salesperson for a minimum of three years; meet educational requirements; pass a written test; pay the required fees.

Broker-Associate -  A real estate license classification to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-salesperson, associate-broker.

Broker In Charge (BIC) - A broker designated by the principal broker of a real estate brokerage company and registered with the state real estate license commission as the person directly in charge of, and responsible to the principal broker for the real estate operations conducted at a real estate office.

Broker-Salesperson - A real estate license classification to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-associate, associate-broker.

Budget Mortgage - A mortgage with payment that covers principal and interest, plus taxes, fire insurance,  lease rent, etc.

Building Codes - Rules established by local governments to regulate construction standards.

Building Restrictions - Limitations on the use of property or the size and location of improvements established by legislation or by covenants in deeds.

Bulk Transfer - Any transfer of a major part of the materials, inventory or supplies of an enterprise not in the ordinary course of the seller's business.

Bundle Of Rights - Ownership concept in real estate which embraces the rights of possession, use, enjoyment,  and disposition.

Bureau Of Conveyance - The Hawaii state office which houses all legal documents relative to title to both land court and regular system property recorded since 1848; located in Honolulu.

Business Opportunity - The assets for an existing business enterprise including its goodwill.

Buy-down - The one-time, nonrefundable prepayment of a portion of the interest of a loan to subsidize reduced monthly payments during the initial years.  For example; if the eventual note rate on a 4-3-2-1 buy down loan is 8%; the first year's interest rate would be 8% - 4% so the borrower's first year monthly payments would be calculated as if it were a 4% loan.  the second year's interest rate would be 8% - 3% so the borrowers monthly payments would be calculated as if it were a 5% loan.  the third year's interest rate would be 8% - 2% so the borrowers monthly payments would be calculated as if it were a 6% loan.  the fourth year's interest rate would be 8% - 1% so the borrower's payments would be calculated as if it were a 7% loan.  For the remaining years the borrower's payments would be calculated at 8%.

Buyer's Agent or Broker - A real estate broker who represents the buyer in a fiduciary capacity.  Also known as the selling broker.  The broker who sells the property often represents the buyer.

 Back to top of page

Capital Improvement - An item that adds value to the property, adapts the property to new uses, or prolongs the life of the property; maintenance is not a capital improvement.

Capitalization - The act of converting future income into current equivalent value.

Capitalization Rate - The relationship or ratio between the net income from a real estate investment and the value of the investment, usually expressed as a percentage; the rate of interest which is considered a reasonable return on the investment, plus the recapture rate which computes a return of the investment.

Cash Flow – Income produced by an investment property after deducting operating expenses and debt service.

Caveat Emptor - Let the buyer beware; the buyer must examine the goods or property and buy at his own risk.

CC&R's - Covenants, conditions and restrictions.

Certificate of Occupancy - A document issued by a local government agency, after satisfactory inspection of a structure, authorizing that the structure can be occupied.

Certificate or No Defense - An instrument executed by the mortgagor and attesting to its validity; estoppel certificate.

Certificate of Reasonable Value (CRV) – A document setting fourth the value of a property as the basis for a loan guarantee by the Veteran’s Administration to the lender.

Chain of Title - A sequential history of the conveyances, encumbrances, and records of ownership to a piece of property through the years from the original grant to present; the succession of owners as revealed through the public records.

Chattel - Personal property which is tangible and movable; personalty.

Chattel Mortgage - A personal property mortgage.

Chattel Real - Chattels real are annexed to real estate, whereas chattels personal are moveable.  A lease is an example  of a chattel real.

Cite - To quote as authority or an example; to call to attention or enumerate.

Civil Rights Act of 1866 - A federal law that prohibits all discrimination on the basis of race.

Client - The person who employs an agent to perform a service for a fee; also called a principal.  The client is owed the duty of care and diligence, fiduciary duties in common-law states and statutory duties where the common law has been abrogated.  In traditional real estate brokerage, the client is the seller, and the buyer is the prospect of customer.

Closed Mortgage – A mortgage that imposes a prepayment penalty.

Closing - The time when a transaction is consummated, or the actual signing over of the documents and  delivery of the deed; the time after signing when the documents are recorded.

Closing Statement - A statement of settlement made by a broker or an escrow company that reflects the financial position of the buyer or seller in that particular real estate transaction. 

Cloud On Title - Any conditions revealed by a title search which may affect or impair the owner's title to property because of their apparent or probable validity.

Coastal Zone Management Act - A federal law passed in 1972 recognizing the national interest in the effective planning, management, beneficial use, protection and development of the saltwater and Great Lakes coastal zones.  The act calls for states to plan and develop management programs for the land and water resources of their coastal zones.

Codicil - A supplement or addition to a will which adds to, subtracts from, alters, revokes, or qualifies the provisions of a will.

Coinsurance - A common provision in building insurance policies under which the insured agrees to maintain insurance on his or her property in an amount equal to at least 80 percent of the replacement cost.  If the property is not insured to that amount and a loss is incurred, the insurance company will make the insured share in the loss on a pro rata basis.  Example: If the building is insured for only 60 percent of its value and there is a $10,000 loss, the insurance company will pay only $7,500. (i.e. 60% divided by 80% times $10,000 = $7,500)

Collateralized Loan - A loan secured by property; unlike a debenture.

Color Of Title - That which appears to be good title but which is not in fact good title, such as title held under a defective deed.

Commingling - Mixing money belonging to clients with personal funds.

Commission - An agent's compensation for performance of the duties of his agency; in real estate practice, a percentage of  the selling price of the property, or percentage of rentals, etc.

Commitment - A pledge or a promise; an agreement.

Common Element - In a condominium, land and all parts of a building normally used by all of the owners for their mutual convenience or safety.

Common Expense - In a condominium, the expenses of operation; all sums designated as such by the declaration or by-laws.

Common Interest - The percentage of undivided interest in the common elements of a building appertaining to each apartment in a condominium.

Common Law - Laws which have evolved from general usage and legally established through court decision.

Common Profit - The balance of all income, rent, profits and revenues from the common elements remaining after the deduction of the common expenses in a condominium.  

Community-Based Planning - A form of land use control originating in the grassroots of a community.

Community Property - Property accumulated and owned in common through joint efforts of husband and wife during their marriage. Hawaii is not a community property state.

Compound Interest - Interest paid both on the original principal and on interest accrued from the time it fell due.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) - A federal law enacted in 1980 and reauthorized by the Superfund Amendments and Reauthorization Act of 1986 (SARA), which imposes on owners, lenders, occupants and operators liability for correcting environmental problems discovered on a property.  Superfund, as the statutes are known collectively, establishes a fund to clean hazardous waste sites and respond to spills and releases on property.

Condemnation - The process by which property of a private owner is taken for public use, with just compensation to the owner, under the right of eminent domain.

Condemnee - One whose property is condemned.

Conditional Fee - A fee estate based upon a condition.

Condominium Ownership - The individual outright ownership of a single unit in a multi-unit property together with an interest in the common elements of that property.

Consideration - Valuable consideration, a promise or an act of legal value bargained for and received in return for a promise;  good consideration, love and affection.

Constructive Eviction - Breach of the covenant warranting quiet enjoyment in a lease; when a landlord performs an act depriving the tenant of quiet enjoyment of the premises thereby causing the tenant to move.

Constructive Notice - Notice given by the public records; legal presumption of notice given by the public records. Also called legal notice.

Consummate - To bring to completion, perfection, or fulfillment.

Contiguous - In close proximity; adjoining.

Contingent - Dependent upon an uncertain future event.

Continuation - An update of a title search, covering the period from the preliminary title report to the time of the recording of the documents.

Contract - A legal agreement between competent parties for a consideration to perform or refrain from performing certain acts.

Conventional Mortgage - A mortgage which is not FHA insured, or VA guaranteed.

Conversion - Transforming an apartment building into a condo.

Conveyance - The transfer of the title of land from one to another; an instrument which carries from one person to another an interest in land.

Conveyance Tax - Tax paid by seller upon transfer of deed, based upon $.10 per $100.00 valuation 

Cooperating Broker - A broker who joins with another broker in the sale of real property; usually, one who represents the buyer of property listed with another broker, the selling broker.

Cooperative Ownership - Ownership that usually takes the form of shares of stock in a corporation owning the entire building and a proprietary lease giving the stockholder/tenant the right to occupy a unit for which he pays a proportionate share of the maintenance and operating expenses.

Corporation - A vehicle used to carry on business with its owners having liability only to the extent of their stock ownership; considered to be an individual or separate entity.

Corporeal - Pertaining to a right or rights of a visible and tangible nature.

Correction Deed - A deed used to correct a prior erroneous deed; a deed of confirmation; a reformation deed.

Correlating - A step in the appraisal process in which the appraiser weights the appraisal approaches to real a rational conclusion as to the value of the subject property; also known as reconciliation.

Counteroffer - A new offer made by an offeror rejecting an offer.

Courtesy To Broker - The practice of sharing commissions with cooperating brokers; also, where a selling owner states he will give a commission to the buyer's broker.

Covenant - An agreement written into deeds and other instruments which promises or guarantees that something shall or shall not be done; an agreement stipulating certain uses or non uses of property.

Credit - In closing statements, the acknowledgment of payment; the opposite of a charge or debit.

CRV - Certificate of Reasonable Value (VA).  A document setting forth the value of a property as the basis for the loan guarantee by the Veteran's Administration to the lender.

Cul-De-Sac - A passage way or street with only one outlet; a blind alley; a turn- around.

Cumulative Use Zoning - A type of zoning permitting a higher priority use even though it is different from the type of use designated for the area.

Curtesy - The right which a husband may have in his wife's estate at her death.

Curtilage - The enclosed ground space surrounding a dwelling, such as the lawn area or patio.

Customer - A prospective buyer of real estate.  Not to be confused with a property seller, who typically is the listing agent's client.  Also the unrepresented seller of a property that is being sold to a buyer represented by a buyer's agent. (see client)

 Back to top of page

Damages - The indemnity recoverable by an injured party to compensate him for the loss suffered through an act of default of another.

Datum - A level surface to which heights and depths are referred; the datum plane.

Debenture - A note or bond given as evidence of a debt; an unsecured note; that is, there is no collateral security.

Debit - A charge on a closing statement; opposite of a credit.

Debt Service - The amount needed for payment of principal and interest on an amortized debt.

Declaration - To make known openly and in definite terms; that which, along with by-laws, defines the rules by which a condominium will exist.

Dedication - An appropriation of land by its owner for some public use. and acceptance for such use by authorized public officials on behalf of the public. In certain cases five years of uninterrupted public use will be considered an acceptance.

Deed - An instrument in writing, duly executed and delivered by the grantor that conveys to the grantee some right, or interest in or to real estate.

Deed in Lieu of Foreclosure – Conveyance of title to the mortgagee by a mortgagor in default to avoid a record of foreclosure; also called a friendly foreclosure.

Deed of Release - A deed executed by a mortgage lender to release a title from the line of a mortgage when the debt has been satisfied, also used to release a dower right.

Deed Of Trust - Similar to a mortgage but title is transferred to a trustee pending payment of the debt

Deed Restriction - Limitation on land use appearing in deeds.

Default - Failure to meet an obligation or promise when due.

Defeasance Clause - The clause in a mortgage that gives the mortgagor the right to redeem his property upon the  payment of his obligation to the mortgagee, and declares the instrument null and void upon payment of debt when due;  also found in leases.

Defeasible Fee Simple - A fee estate subject to being divested or voided. (see Conditional Fee)

Deficiency Judgment - A judgment for the balance of a debt issued when the net proceeds from the foreclosure sale are less than the indebtedness sued upon.

Delivery - The act or intent of transferring an instrument from one person to another in such a way that it cannot be recalled.

De Minimus Structure Position Discrepancies - Amendments in 1997 to Hawaii statutes attempted to limit problems arising from encroachments of improvements that were the subject of older, less accurate surveys.  The new law gives minor allowable tolerances for different types of properties.

Demise - A conveyance of an estate to another for life, for years, or at will; to lease; "the demised premises.

Deposit - Money given by one to another as evidence of his good faith; evidence or security for performance of a contract.

Deposit Receipt - Upper section of contract used by Hawaii Association of Realtors when accepting earnest money to bind an offer for property; also includes terms of the contract.

Depreciation - Loss of value brought about by physical deterioration or functional or economic obsolescence.

Depth Table - Tables which provide uniform measurement of additional value to lots because of added depth of the lot.

Derivative Title - Any title other than original title. 

Descent - Ownership transferred by means of inheritance.

Deterioration - Loss in value brought about by wear and tear.

Devise - A gift of realty by will.

Devisee - One who receives a gift of real estate by will.

Direct  Comparison Approach - A means of estimating value by comparing recent sales of comparable properties to the subject property after making appropriate adjustments for any differences. Also called market data approach.

Discount Points - A fee based on a percentage of a loan, charged by a lender, as a service charge, or as an Amount needed to produce the same yield on a VA loan that he would receive in the conventional mortgage market: each point charged represents I percent of the loan amount and increases the interest rate by 1/8 of one percent; paid by seller.

Disintermediation - The process of individuals investing their funds directly instead of placing their savings with banks for investment by such banks.  This bypassing of financial institutions occurs when proportionately higher yields are available  on secure investments (such as high grade corporate bonds, money market funds and government securities) than can be obtained on savings deposits.  Disintermediation has a direct influence on the scarcity of mortgage money, in that diverted savings rarely find their way into mortgages.

Dispossess Proceedings - A legal process by a landlord to remove a tenant and regain possession of real property due to some breach of lease agreement by the tenant.

Distraint - The right of a landlord to seize and hold possessions of a tenant, for rent in arrears, pursuant to a court order.

Dominant Estate - An estate attached to and benefiting from the servient estate, e.g., an easement runs over the servient estate and serves the dominant estate; also called dominant tenement.

Donee - A person to whom a gift is made.

Donor - A person who makes a gift.

Dower - The one-third interest a wife may have in the property of her husband acquired prior to July 1, 1977; a life estate in 1/3 of the land the husband owns during the continuance of the marriage relationship and an absolute interest in 1/3 personal property.

Dower Consummate - The completed dower; the right a wife may have in her husband's property upon his death.

Dower Inchoate - The right a wife may have in her husband's property during his life.

Down Payment - The amount of cash paid by a buyer which, added to the mortgage amount, equals the total sales price. At the time of closing this is referred to as equity.

DROA - Deposit Receipt, Offer and Acceptance, a three-section contract used by a Hawaii Association of Realtors member when accepting earnest money (Deposit Receipt) to bind an offer for property; also includes terms of the contract (Offer); and a section for seller's to accept the offer; (Acceptance).

Dual Agency - A relationship which one owes fiduciary duties to both buyer and seller in real estate transaction.

Due on Sale - A mortgage clause permitting acceleration of the loan if the mortgagor attempts to transfer title or interest to the secured property.

Duress - Unlawful constraint or action against a person forcing him to perform some act against his will.

 Back to top of page

Earnest Money - Initial payment made by a purchaser of real estate as evidence of good faith.

Easement - A right, privilege or interest which one party has in the land of another.

Easement Appurtenant - An easement that is attached to and runs with the land, it cannot exist apart from the particular land to which it is attached.

Easement In Gross - An easement which encumbers the land, and is usually given to a quasi-public corporation, such as the electric or phone company.

Easement By Prescription - A method of acquiring a right to a portion of property by lapse of time, in the manner of  adverse possession.

Economic Life - The period of time over which a property may be profitably used.

Economic Obsolescence - See Obsolescence, referred to as External Obsolescence.

Ejectment - A form of action to regain possession of real property, with damages for the unlawful retention; generally used when there is no landlord/tenant relationship.

Emblements - Trees or crops that are cultivated annually; the rights of a tenant to harvest the annual crop even after his tenancy has ended.

Eminent Domain - The right of a government to take private property for public use upon the payment of just compensation.

Enabling Acts & Enabling Powers - Laws passed by state legislatures authorizing cities and counties to regulate land use in their jurisdictions.

Encroachment - A building or fixture which intrudes partly or wholly upon the property of another

Encumbrance - A claim, lien, charge or liability attached to and binding upon real property which affects or limits the title or use thereof, e.g., mortgage, lien, easement.

Endorsement - The placing of one's signature on a document, to make it negotiable or transferable.

Environmental Impact Statement (EIS) – A requirement of the National Environmental Policy Act prior to initiating or changing a land use that may have an adverse effect on the environment.

Equal Credit Opportunity Act (ECOA) - A federal law prohibiting discrimination in consumer loans.

Equitable Title - Title of a purchaser under a contract of sale, or agreement of sale.

Equity - The interest or value which an owner has in real estate over and above the debts against it.  Branch of remedial justice by and through which relief is afforded to parties in courts of  equity.

Equity Of Redemption - The right of an owner to reclaim property before it is sold through foreclosure proceedings by payment of the debt, interest and cost.

Erosion - The gradual wearing away of land due to natural causes of wind and water.

Escalation Clause - A clause in a contract permitting an adjustment of certain payments up or down to cover certain contingencies; mostly found in agreements of sale, mortgages and leases.

Escheat - The reverting of property to the state when heirs capable of inheriting are lacking; or the property is abandoned.

Escrow - The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract.

Escrow Account – (a) An account maintained by a real estate broker in an insured bank for the deposit of other people’s money; also called a trust account;  (b) An account maintained by the borrower with the lender in certain mortgage loans to accumulate the funds to pay an annual insurance premium, a real property tax, or homeowner’s associations assessment.

Escrow Holder - The one who receives a deed or other item from a grantor to be delivered to the grantee upon the performance of a condition or the occurrence of a contingency.

Estate - The degree, quantity, nature, and extent of interest a person has in real property.

Estate For Years - A lease; an interest in land by virtue of a contract for the possession for a definite and limited period of time.

Estoppel - A doctrine which bars one from asserting rights which are inconsistent with a previous position or representation. e.g. the seller of an apartment building may ask the tenants to sign lease estoppel agreements stating  the amount of rent and security deposits.

Estoppel Certificate - An instrument executed by the mortgagor and attesting to its validity; estoppel certificate.

Estovers - The right of a life tenant or lessee to cut timber on the property for fuel or to use in making repairs.

Et Al - Latin for "and others."

Et Ux - Latin for "and wife."

Eviction - A legal proceeding by a landlord to recover possession of leased premises from a tenant due to some breach of lease contract.

Exchange - A method of conveying real property by trading with another property.

Exchange Agent - A person who operates an exchange program in time sharing projects.

Exclusive Agency - A written instrument giving one agent the right to sell property for a specified time, but reserving the right of the owner to sell the property himself without the payment of a commission.

Exclusive Right To Sell - A written agreement between owner and agent giving agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

Exclusive Use Zoning – A type of zoning in which only the specified use may be made of property within the zoned district.

Execute - To complete, to perform, to make, to do, to follow out; to execute a deed, to make a deed, including especially signing; to execute a contract, to perform the contract, to follow out to the end, to complete.

Executed Contract - A contract that is fully performed.

Executor - A person named in a will to carry out its provisions as to the disposition of the estate of a deceased person; a  personal representative.

Executory Contract - A contract not yet fully performed; e.g., DROA.

Express Authority - Clearly stated duties of an agent as set forth by his principal.

Express Contract - A contract created verbally or in writing by the parties.

External Obsolescence - Loss in value due to factors outside of the property (such as near airport).

 Back to top of page

Face Amount - Amount of insurance coverage shown on the declaration page.

Fair Housing Act of 1968 – A federal prohibition on discrimination in the sale, rental, or financing of housing on the basis of race, color, religion, sex, or national origin.

Fair Housing Act of 1988 – A federal prohibition on discrimination in the sale, rental, financing, or appraisal of housing on the basis of race, color, religion, sex, national origin, handicap, or familial status.

Fair Market Value - A price for property agreed upon between buyer and seller in a competitive market with neither party being under undue pressure.

Federal Home Loan Mortgage Corporation (FHLMC) - A Federal agency which buys mortgages in the secondary money market from commercial banks and federally insured savings and loan associations; 'Freddie Mac.'¶

Federal Housing Administration (FHA) - An agency of the Federal Government which insures certain real estate loans.

Federal National Mortgage Association (FNMA) - An agency formerly of the Federal Government that buys and sells mortgages in the secondary money market. 'Fannie Mae.'

Federal Reserve System – The U.S. agency that regulates monetary policy and, thereby, the money supply and interest rates.

Fee Determinable - A fee estate which exists only until a specified event does or does not occur. Upon the happening of such event, the fee automatically ends and reverts back to the original grantor, or to his estate.

Fee Simple - An estate in real property, by which the owner has the greatest power over the title which it is possible to have, being an absolute estate; an estate of inheritance belonging to the owner, that he may dispose of, trade, or will, as he chooses.

Fee Tail - An estate which is inheritable by particular lineal heirs. Upon lack of such heirs the estate reverts back to the grantor or his heirs.

Feudal System - A type of land ownership whereby only the king can hold absolute title to real property.

Fiduciary - A person in a position of great trust and confidence, as the relationship between principal and real estate broker or an attorney to client.

Fiduciary Deed - The fiduciary deed is used to transfer real estate from a grantor who is a fiduciary – one who is put in a position of trust – to include executor, administrator, trustee, guardian, receiver or commissioner. Generally, the fiduciary warrants only that he or she is duly appointed and acting within his or her authority. 

Finders Fee - A fee paid to a person for the services of putting together the two parties in a real estate transaction.

First Right of Refusal - a right, usually given by an owner to a lessee, which gives the lessee the first chance to buy the property if the owner decides to sell. The owner must have a legitimate offer which the lessee can then match or refuse.

Fiscal Year - A year, used for tax, corporate and accounting purposes which begins on a date other than January 1.

Fixed Rate Mortgage - A mortgage in which the interest rate does not change over the term of the loan.

Fixture - An article of personal property which has been installed in or attached to land or a building thereon, in such a manner, that it is now considered to be a part of the real estate.

Flat Lease - A lease in which the rental amount does not change during the lease term.

Foreclosure - Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.

Forfeiture - Loss of money or anything of value, due to failure to perform; a right expressly given in an installment contract whereby the seller terminates the contract for non-payment, and retains all of the payments previously made by the buyer

Forfeiture Clause - A clause in an agreement of sale or contract for deed providing for giving up all payments by a buyer in default.

Fraud - The intentional and successful employment of deception in order to cheat or deceive another person and to thereby gain some dishonest advantage.

Freehold - An estate in real property for an indefinite and uncertain time, such as a fee simple or a life estate.

Friendly Foreclosure - Conveyance of title to the mortgagee by a mortgagor in default to avoid a record of foreclosure; also called a deed in lieu of foreclosure.

Front Foot - Property measurement by the front foot on its street line or waterfront line with each front foot extending the depth of the lot.

Functional Obsolescence - Loss in value resulting from things such as faulty design, inadequacies, over adequacies, and equipment being out of date.

 Back to top of page

Gap Loan - Any loan filling the deficiency created when the permanent financing and the equity are unable to cover the total cost of a project.

General Agent – An agent with full authority over one property of the principal, such as a property manager.

General Lien - A lien which attaches to all property owned by the debtor.

G.I. Loan - See Veterans Administration.

Good Faith Estimate - A lender's estimate of borrower's settlement costs, required by Real Estate Settlement Procedures Act to be furnished to the borrower within 3 days of the loan application.

Good Funds Act - A state law requiring assurance by escrow companies of receipt of loan funds (deposit or electronic wiring) prior to closing a transaction, thus eliminating a practice in which lenders obtained several days of float on loan proceeds.

Good Will - An intangible asset arising from the reputation of a business.

Government National Mortgage Association (GNMA) - A federal agency which provides special assistance for federally aided housing programs; active in the secondary money market for government subsidized housing programs; "Ginnie Mae."

Government Survey System - A type of land description utilizing townships and sections.

Graduated Lease - A lease that provides for periodic increases of rent at regular intervals.

Grant - A transfer of real property.

Grantee - The purchaser; the person to whom an interest in realty is conveyed.

Grantor - The seller; the person who conveys an interest in realty by deed.

Great Mahele - A division of Hawaiian lands which occurred in 1848 during reign of King Kamehameha III.

GRI - The professional designation of Graduate Realtors Institute, earned by completion of prescribed courses of  study conducted by state boards of Realtors.

Gross Effective Income – Total potential income less deductions for vacancy and credit losses plus other income.

Gross Income - Total income derived from a business or income property before expenses are deducted. 

Gross Income Multiplier - A numerical factor that expresses the relationship of gross income to sales price or value.  It is calculated by dividing price by gross annual income.  A rule of thumb for estimating the market value of industrial and commercial properties.

Gross Lease - A lease of property in which the lessor meets all property charges incurred through ownership.

Gross Potential Income - The amount of rental income that would be received if all units were rented 100 percent of the time and there were no credit losses.

Gross Rent Multiplier - A useful rule of thumb for estimating the market value of income producing residential property.  The multiplier is derived by using comparable sales divided by the actual or estimated rental income to arrive at an acceptable average.

Ground Lease - A lease for the use of the land, usually providing for improvements to be placed on the land by the user. 

Ground Rent - The net rent paid for a parcel of unimproved land; that portion of the total rental is considered to represent a return upon the land only. 

Growing Equity Mortgage (GEM) – Mortgage loan for which the monthly payments increase annually, with the increased amount applied directly to the loan’s principal, thus shortening the term of the loan.

 Back to top of page

Habendum Clause - The portion of a deed beginning "to have and to hold," which usually follows the granting clause, and explains or limits the estate granted. 

Heir - One who succeeds to the estate.

Hereditaments - Every sort of inheritable property whether corporeal, incorporeal, real, personal or mixed.

Highest And Best Use - That use of land, which at the time of an appraisal is most likely to produce the greatest net return over a given period of time. 

Holding Escrow - An arrangement whereby escrow holds the final title documents pursuant to an agreement of sale. 

Holdover Tenant - A tenant who remains in possession of a property after expiration of lease term. 

Holographic Will - A will written in hand by the person leaving the will and not witnessed. 

Home Buyer’s Guide – A booklet explaining aspects of loan settlement required by the Real Estate Settlement Procedures Act.

Homeowner's Policy - An insurance policy protecting against a variety of hazards.

Homeowner’s Warranty (HOW)  – An insurance policy protecting against loss caused by structural and other defects in a dwelling and including appliances.

Homestead Exemption - A right given to a householder or head of a family to designate real estate as his homestead and said homestead is exempt, up to a stated amount, from execution by his creditors; a tract of land whose ownership has been established under the provisions of the Homestead Act.

Homogeneous - The same or similar kind, as used in appraising; homogeneity tends to stabilize values in an area.

Horizontal Property Regime - The name once given to the laws pertaining to condominiums in the State of Hawaii; horizontal layers of ownership, now called the Condominium Property Regime. 

Housing and Urban Development (HUD) – An agency of the federal government concerned with housing programs and laws.

Hula Mae - The Hawaii Housing Authority issued tax-exempt revenue bonds to fund a mortgage loan program, offering first-time home buyers interest rates below conventional rates by way of the Housing and Loan Mortgage Act.

Hypothecate - To place property as security; to mortgage. 

 Back to top of page