California Real Estate Principles 7-11

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A relationship in which one party(principal) authorizes another party(agent) to act as the principal's representative in dealing with third parties: Agency
A person who acts for and in the place of another, called a principal, for the purpose of effecting the principals legal relationship with third persons: Agent
A transaction, such as a sale of property, in which all parties involved are acting in their own self-interest and are under no undue influence or pressure from the other parties: Arm's Length Transaction
The person who employs an agent to perform a service for a fee: Client
To deposit client funds in the broker's personal account: Commingling
A selling agent who is not the listing agent: Cooperating Agent
The appropriation of property belonging to another: Conversion
A prospective buyer of real estate: Customer
An agent who represents both parties in a transaction: Dual Agent
A legal doctrine which prevents a person form denying something to be true or a fact which is contrary to previous statements made by the same person: Estoppel
A relationship that implies a position of trust or confidence: Fiduciary
The real estate agent who actually wrote the offer and presented it to the seller for acceptance: Procuring Cause
A person who authorizes another to act in his or her place in regard to relations with third persons.: Principal
Exaggerated comments or opinions not made as representations of fact, thus not grounds for misrepresentation: Puffing
The approval of a previously authorized act, performed on behalf of a person which makes the act valid and legally binding: Ratification
Something that would warn a reasonably observant person of a potential problem, thus requiring further investigation: Red Flag
An agent of a person who is already acting as an agent for a principal: Subagent
A person who may be affected by the terms of an agreement but who is not a party to the agreement: Third Party
A negligent or intentional wrongful act arising from breach of duty created by law and not contract: Tort
A clause in a loan document describing certain events that would cause the entire loan to be due: Acceleration Clause
A note whose interest rate is tied to a flexible index: Adjustable Rate Mortgage (ARM)
A contract for the sale of real property where the seller gives up possession, but retains the title until the purchase price is paid in full: Agreement of Sale
A clause in a loan document that would allow the lender to call the entire loan due upon the sale of the property: Alienation Clause
A purchase money deed of trust subordinate to-but still including-the original loan: All-Inclusive Trust Deed
The relationship of the total finance charge to the total amount to be financed as required under the Truth-in-Lending Act: Annual Percentage Rate (APR)
An agreement between a property owner and the holder of trust deed or mortgage by which the holder receives, as security, the right to collect rents from tenants of the property in the event of a default by the borrower: Assignment of Rents
A buyer takes over the existing loan and agrees to be liable for the repayment of the loan: Assumption Clause
Under an installment loan, a final payment that is substantially larger than any other payment and repays the debt in full: Balloon Payment
The lender under a deed of trust: Beneficiary
A loan secured by several properties: Blanket Loan
Failure to pay a debt or on a contract: Default
Something of value given as security for a debt: Collateral
A personal judgment against a borrower for the balance of a debt owed when the sale of the security for the loan is not sufficient enough to pay the debt: Deficiency Judgment
A federal law that requires lenders to assure that credit is available with fairness, impartiality and without discrimination: Equal Credit Opportunity Act
The interest held by the trustor or vendee: Equitable Title
Also known as the right of redemption; the right of a debtor, before a foreclosure sale, to reclaim property that had been given up due to mortgage default: Equity of Redemption
The value where property is sold to satisfy a debt: Equity
A legal procedure by which mortgaged property in which there has been default on the part of the borrower is sold to satisfy the debt: Foreclosure
A sale where property is sold to satisfy a debt: Foreclosure Sale
A note that is fully repaid at maturity by periodic reduction of the principal: Fully Amortized Note
An agreed-upon time after the payment of a debt is past due, during which a party can perform without being considered in default: Grace Period
The evidence of a debt that is given in exchange for cash: Hard Money Loan
The party to whom a promissory note is made payable: Holder
A person who has obtained a negotiable instrument (promissory note, check) in the ordinary course of business before it is due, in good faith and for value, without knowledge that it has been previously dishonored: Holder in Due Course
A cash loan made against the equity in the borrower's home: Home Equity Loan
A process which allows a borrower to remain in possession of the property while using it to secure a loan: Hypothecation
The cost of borrowing money: Interest
Foreclosure by court action: Judicial Foreclosure
Any trust deed that is recored after a first trust deed, whose priority is less than the first trust deed: Junior Trust Deed
A contract for the sale of real property where the seller gives up possession, but retains the title until the purchase price is paid in full; also known as a contract of sale or agreement of sale: Land Contract
Title that is complete and perfect regarding right of ownership; may be held by a trustee under a deed of trust: Legal Title
The borrower who executes a promissory note and becomes primarily liable for payment to the lender: Maker
A legal document used as security for a debt: Mortgage
The lender under a mortgage: Mortgagee
The borrower under a mortgage: Mortgagor
Title lacking the rights and privileges commonly associated with ownership: Naked Legal Title
Any written instrument that may be transfered by endorsement or delivery: Negotiable Instrument
A notice to a defaulting party that their has been a nonpayment of a debt: Notice of Default
Notice given, and published, that a trustee's sale will be held to sell a property to satisfy a debt: Notice of Trustee's Sale
A loan where the borrower is given a limit up to which may be borrowed, with each advance secured by the same trust deed: Open End Loan
A clause in a promissory note that allows a borrower to pay it off early with no penalty: "Or More" Clause
A loan on real property that can be secured by land , structure, fixtures and other personal property: Package Loan
A promissory note with a repayment schedule that is not sufficient to amortize the loan over its term: Partially Amortized Installment Note
A transfer of property to a lender to be held as security for repayment of a debt;lender takes possession of property: Pledge
A clause in a trust deed or mortgage that gives the holder the right to sell the property in the event of default by the borrower: Power of Sale
A clause in a trust deed that allows a lender to collect a certain percentage of a loan as a penalty for an early payoff: Prepayment Clause
Someone who directs or authorizes another to act in his or her place regarding relations with a third person, buyer or seller.The original amount borrowed: Principal
A written promise or order to pay, evidence of a debt: Promissory Note
A trust deed created as evidence of a debt at the time of the sale of real property: Purchase Money Loan
Bring current and restore: Reinstate
A provision found in many blanket loans enabling the borrower to obtain partial release from the loan of specific parcels: Release Clause
A notice that is sent, upon request, to any parties interested in a trust deed informing them of a default: Request for Notice
A loan that enables elderly homeowners to borrow against the equity in their homes by receiving monthly payments from a lender, that are needed to help meet living costs: Reverse Annuity Mortgage
A loan that allows the rewriting of a new loan at the termination of a prior loan: Rollover Mortgage
The evidence of a debt that is recorded after a first trust deed; a junior trust deed: Second Trust Deed
Evidence of obligations to pay money: Security
Lender and borrower agree to share a certain percentage of the appreciation in market value of the property: Shared Appreciation Mortgage (SAM)
A federal law designed to protect persons in the military service from loss of property when their ability to make the payment has been affected by their entering military service: Soldier's and Sailor's Relief Act
A deed given by a court; a proof of a sale to satisfy a judgment: Sheriff's Deed
A federal law designed to protect persons in a military service from loss of property when their ability to make the payment has been affected by their entering military service: Soldier's and Sailor's Relief Act
Regarding laws created by the enactment of legislation as opposed to law created by court decisions: Statutory
a promissory note in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity; may also be a note with no payments on either principal or interest until the entire sum: Straight Note
A buyer takes over the existing loan payments, but assumes no personal liability for the loan: Subject-To Clause
A clause in which the holder of a trust deed permits a subsequent loan to take priority: Subordination Clause
A deed given to a buyer of real property at a trustee's sale: Trustee's Deed
The forced sale of real property, by a lender, to satisfy a debt: Trustee's Sale
Holds naked legal title to property as a neutral third party where there is a deed of trust: Trustee
The borrower under a deed of trust: Trustor
A law that requires borrowers to be informed about the cost of borrowing money: Truth In Lending Act (Regulation Z)
A act of changing a rate of interest in excess of that permitted by law: Usury
Related to an adjustable rate loan: Variable Rate Mortgage (VRM)
The buyer under a contract of sale (land contract): Vendee
The seller under a contract of sale (land contract): Vendor
A process where financial institutions that formerly had been restrained in their lending activities by the law are allowed to compete freely for profits in the marketplace: Deregulation
The process of depositors removing funds from savings: Disintermediation
An organization that obtains funds through deposits and then lends those funds to earn a return-such as savings banks, commercial banks, credit unions and mutual savings banks: Financial Intermediary
The process of transferring capital from those who invest funds to those who wish to borrow: Intermediation
A statement that informs the buyer of all charges and expenses related to a particular loan: Mortgage Loan Disclosure Statement
The device commonly used to secure a loan on personal property: Security Agreemen
An economic situation in which the supply of money is limited, and the demand for money is high, as evidenced by high interest rates: Tight Money
The process of assembling into one package a number of mortgage loans, prior to selling them to an investor: Warehousing
Accumulated over a period of time: Accrued
The difference between the cost to replace the property and the property's current appraised value: Accrued Depreciation
The real age of a building: Actual Age
That depreciation occurring as a result of physical, functional or economic forces, causing loss in value to a building: Actual Depreciation
The estimate or opinion of value supported by factual information as of a certain date: Appraisal
A written report stating an appraiser's estimated of a subject property's value: Appraisal Report
An increase in value: Appreciation
An accounting concept which refers to an allowance taken to provide for recovery of invested capital: Book Depreciation
The initial cost of the property plus capital improvements minus the total accrued depreciation: Book Value
A term sometimes used when referring to capitalization rate: Cap Rate
Any permanent improvement made to real estate for the purpose of increasing the useful life of the property in increasing the property's value: Capital Improvements
The process of calculating the present worth of a property on the basis of the capacity to continue to produce an income stream: Capitalization
A term used by real estate agents and appraisers to mean comparable properties: Comps
A lot found at the intersection of two lots: Corner Lot
Represents expenses in money, labor, material or sacrifices in acquiring or producing something: Cost
A lot found on a dead-end street: Cul-De-Sac Lot
Negligent care of a building; ordinary care and maintenance the owner fails to perform: Deferred Maintenance
Loss in value for any cause: Depreciation
The years of age shown by the condition and utility of a structure, rather than its actual or chronological age: Effective Age
The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller: Fair Market Value
Looks like a flag on a pole, which represents the access to the site; usually located to the rear of another lot fronting a main street: Flag Lot
The width of a property along a street: Front Footage
Income (figured annually) received from rental units before any expenses are deducted: Gross Rent
Any building or structures on a lot: Improvements
One that is surrounded by other lots, with frontage on the street; the most common type lot. which may or may not be desirable-depending on other factors: Interior Lot
So named because it resembles a key fitting into a lock; one that is surrounded by the backyards of other lots, therefore is the leaser desirable because of the lack of privacy: Key Lot
The rent a property should bring in the open market: Market Rent
Sometimes known as net operating income; the remaining income after operating expenses have been subtracted from the gross income of a property: Net Income
Putting several smaller, less valuable parcels together under one ownership to increase value of total property: Plottage or Assemblage
What is paid for something: Price
Sometimes called correlation. this is the adjustment process of weighing results of all three appraisal methods to arrive at a final estimate of the subject property's market value: Reconciliation
The cost of replacing improvements with modern materials and techniques: Replacement Cost
The current cost of building a replica of the subject structure, using similar quality materials: Reproduction Cost
The position, situation or location of a piece of land in the neighborhood: Site
A lot that is fronted head-on by a street; noise and glare from headlights may be detractors from this type of lot: T-Intersection Lot
The usefulness of the property: Utility Value
Loss of income because of a vacant unit: Vacancy Factor
The power of goods or services to command other goods in exchange for the present worth of future benefits arising form property ownership: Value

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