Archive for June, 2010
OAKUM – A fiber used as a caulking, made by pulling apart hemp or rope.
OATH – An attestation by a person which binds him or her legally and morally. Usually attesting to the truth of something, as an affidavit, or the validity of one’s signature. A promise to tell the truth. Also, a promise to carry out a duty with high morality (oath of office). An oath has religious connotations and usually involves the word “swear”, and may contain the phrase “so help me God”, or require the one taking the oath to put his or her hand on a bible. An affirmation (see which) is still legally binding.
OBLIGATION BOND – A bond secured by a mortgage but over the mortgage amount. It creates a personal obligation on the part of the mortgagor.
OBLIGEE – One to whom an obligation (promise) is owed. See also: Obligor.
OBLIGOR – One who legally binds (obligates) oneself, such as the maker of a promissory note.
OBSOLESCENCE – An appraisal term meaning that the age of a structure may cause it to become undesirable in use or appearance (old fashioned) and consequently lose income and value.
OCCUPANCY – With reference to land, the word has become synonymous with possession.
OCCUPANCY RATE – The percentage of space or units rented. Opposite of Vacancy Rate.
OFF-SITE – Not on the property to be sold. For example: The developer of a housing tract sells only the house and lot, but must build the streets, sewers, etc., not on the lot.
OFF-SITE COSTS – The cost of off-site improvements.
OFF-SITE IMPROVEMENTS – Development of land to make adjacent property suitable for construction. Includes sidewalks, curbs, streets, sewers, streetlights, etc.
OFFER – A presentation or proposal for acceptance, in order to form a contract. To be legally binding, an offer must be definite as to price and terms.
OFFER AND ACCEPTANCE – Necessary elements of a contract to sell real estate. See also: Offer; Acceptance.
OFFER TO PURCHASE – See: Purchase Agreement.
OFFEREE – One to whom an offer is made.
OFFEROR – One making an offer.
OFFICE – A zoning designation allowing businesses to carry on their paperwork rather than manufacturing or sale of inventory to the public on the site. Some businesses may be conducted entirely out of such space, when only paperwork is involved, such as insurance companies, law firms, accounting firms, etc.
OFFICE OF THRIFT SUPERVISION – A federal bureau formed in 1989 as a branch of the Treasury Department as part of a major reorganization of the thrift (savings and loan) industry. OTS regulates, examines, and supervises both thrifts and their holding companies. The office director coordinates with other federal bureaus which regulate the nation’s financial institutions by serving on the boards of the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, and others. The purpose of this office is to ensure a sound operation of savings institutions and compliance with federal laws.
OFFSET – (1) A ledge across a wall (usually brick or masonry) formed by reducing the thickness of the wall above the ledge. (2) To balance, as claims in a law suit. Commonly called set-off (when a counter- claim is made to offset damages, the counterclaim being made concerning different subject matter).
OFFSET STATEMENT – (1) A statement given to a buyer of rental property by a tenant, setting forth the amount of rent and terms of the rental agreement. (2) A statement by an owner or lienholder to a buyer, setting forth the balance due on existing liens against the property being purchased.
OHM – An electrical measure of resistance of the dissipating of one watt when one ampere passes through it.
OIL AND GAS LEASE – A lease giving the lessee the right to extract oil and gas from land. More like a mining lease than a land lease, in that the lessee has ownership interest in a portion of the property (the oil and gas) rather than just the use of the property. The lessor is generally paid based on the oil and gas taken. See also: Slant Drilling; Profit a Prendre.
OMNIBUS CLAUSE – Clause in a will or decree of distribution passing all property not specifically mentioned.
ON CENTER – A construction term referring to a measurement of distance from the center of one structural member to another, such as a stud, joist, etc. Abbreviated on construction drawings as O.C.
ON RAIL – Refers to property (usually industrial) which is served by a railroad.
ON-SITE COSTS – The cost of on-site improvements.
ON-SITE IMPROVEMENTS – Structures erected permanently for use on a site, such as buildings, fences, etc.
ON-SITE MANAGER – A property manager who lives on the property being managed. The law in most areas requires an on-site manager for apartments over a specified number of units.
ON-SITE OFFICE – A real estate branch office specifically for a particular development, and located at said development. May be a sales or leasing office.
ONE HOUR DOOR – A fire resistant door; one which will hold back a fire for a minimum of one hour.
ONE HOUR WALL – A fire resistant wall; one which will hold back a fire for a minimum of one hour.
ONE, TWO, THREE FINANCING – A method of “creative” financing by which the buyer (1) assumes an existing loan, (2) secures a second loan from a third party lender, (3) takes a third loan from the seller.
ONE-HUNDRED PERCENT LOCATION – The best location in the area. The term is most commonly used to describe a location in a city ideal for retail sales.
OPEN AND NOTORIOUS POSSESSION – (See: Notorious Possession).
OPEN BEAM CONSTRUCTION – A design using heavy roof beams as interior finish, exposed to give a roomy, heavy, rugged appearance to a room.
OPEN END MORTGAGE – A mortgage loan allowing the borrower to increase the amount borrowed during the term of the loan.
OPEN HOUSE – A house which is open without an appointment to prospective buyers (or tenants) for inspection, during certain hours and days of the week.
OPEN HOUSING – Housing made available to persons without regard to race, religion, sex, color, or national origin.
OPEN LISTING – A written authorization to a real estate agent by a property owner, stating that a commission will be paid to the agent upon presentation of an offer which meets a specified price and terms. However, the agent has no exclusive right to sell and must bring in his offer before any other offer is presented or accepted.
OPEN MORTGAGE – A mortgage that can be prepaid without penalty. See: Or More Clause.
OPEN SPACE LAND – Land used for agriculture, recreation, scenic beauty, natural resources, water shed, or wild life, and so designed on a map.
OPEN SPACE RATIO – Ratio of land area to floor area of an apartment building. Used in zoning requirements.
OPERATING EXPENSE RATIO (OER) – The ratio of operating expenses to effective gross income. The percentage derived from the ratio can be used by an appraiser to determine if the operating expenses are appropriate for the property.
OPERATING EXPENSES – The cost of operating an income producing property, such as management, utilities, and similar day to day expenses, as well as taxes, insurance, and a reserve for replacement of items which periodically wear out.
OPERATION OF LAW – The fixing of rights and duties by law rather than by agreement of the parties involved. Examples would include Intestate Succession, certain types of Warranties, and Quasi Contract.
OPINION OF TITLE – See: Abstract of Title.
OPTION – A right, which acts as a continuing offer, given for consideration, to purchase or lease property at an agreed upon price and terms, within a specified time.
OPTION CONTRACT – See: Option.
OPTION FOR ADDITIONAL SPACE – An option given to a tenant to rent additional space at a specified rental amount and terms.
OPTION TERM – The time during which an option may be exercised.
OPTIONEE – One who, for consideration, receives an option.
OPTIONOR – One who, for consideration, gives an option.
OR MORE CLAUSE – A clause in a note, mortgage, or deed of trust, allowing for additional payments to be made without penalty. The words “or more” come after the specified payment.
ORAL APPRAISAL – A verbal appraisal report. The conclusions must be based on the same methods as would be used in a written appraisal.
ORAL CONTRACT – A contract, partly written and partly spoken, or not at all reduced to writing.
ORDER CONFIRMING SALE – Court order confirming the terms of a sale of property out of an estate.
ORDINANCE – A law of statute. The term used to designate the enactments of the legislative body of a municipal corporation or a county.
ORDINARY INCOME – A term having meaning only in relation to income tax. The regular graduated scale of tax is paid on income which is called “ordinary”, as opposed to capital gains or any other income taxed differently.
ORDINARY REPAIRS – Repairs necessary to keep a property in good condition, against ordinary wear and tear, decay, etc.
ORDINATE – A point along the vertical axis of a curve. When in conjunction with a point on the horizontal axis (abscissas), the point is called the “co-ordinates”.
ORIEL WINDOW – A window projecting outward, similar to a bay window. However, an oriel window is supported by brackets or a cantilever, as opposed to a bay window which is supported by the foundation.
ORIENTATION – Planning the most advantageous place on a parcel of land for an improvement to be located.
ORIGINAL COST – The purchase price of property, paid by the present owner. The present owner may or may not be the first owner.
ORIGINAL FACE VALUE – The principal amount of a note or mortgage before any payments or default.
ORIGINAL PAYEE – The person or entity to which a check or promissory note is originally payable.
ORIGINAL PRINCIPAL BALANCE – The amount, not including interest, that the borrower owes on a new loan.
ORIGINATION FEE – A fee made by a lender for making a real estate loan. Usually a percentage of the amount loaned, such as one percent.
OSTENSIBLE AGENCY – An agency created by law when a principal acts (intentionally or negligently) as if one is an agent who in fact is not. See also: Apparent Authority.
OSTENSIBLE AUTHORITY – See: Apparent Authority.
OTS – See: Office of Thrift Supervision.
OUTBUILDING – A freestanding structure that is not the main building on the property. An example would be a barn or storage shed.
OVER IMPROVEMENT – An improvement, excessive in cost or size in relation to land value or value of surrounding improvements.
OVERAGE INCOME – Rental which exceed the base rate. May be from a percentage of the tenant’s income (see: percentage) or some other formula (e.g. for a gasoline service station, a common overage would be x cents per gallon over x gallons per month, but nothing on repairs and the sale of other products such as oil, tires, etc.).
OVERAGE RENT – See: Overage Income.
OVERALL CAPITALIZATION RATE (R0) – The rate (expressed as a percentage) which is used to show the relationship between annual net operating income (N.O.I.) and estimated value (v). N.O.I. ÷ R0 = v. The overall capitalization rate includes both the rate of return of investment and rate of return on investment. See: Return of Investment; Return on Investment.
OVERBUILDING – Construction of an excessive number of similar properties (houses, apartments, etc.) so as to cause a surplus of supply over demands.
OVERHANG – An extension of a roof beyond the exterior walls, used as a shading or protection from rain, for a walkway.
OVERHEAD – The expenses of a business or property. Commonly referred to as the “nut”.
OVERPASS – A bridge or road elevated to avoid intersecting with a roadway, railway, or other traffic carrier.
OVERRIDE – A rental amount paid due to sales of the tenant. For example: A lease for a service station may contain a provision for a certain addition to the rent for every gallon of gasoline over a certain amount sold each month. The amount over is called the override, such as two cents per gallon for every gallon over fifty thousand sold each month.
OVERRIDING ROYALTY – Common in oil and gas leases. A retained royalty by a lessee when the property is subleased.
OVERT – Open, manifest, public; action as distinguished from mere intention.
OWELTY OF EXCHANGE – Money necessary to equalize the value of the properties being exchanged. See also: Boot.
OWELTY OF PARTITION – Money paid by one co-tenant to another when property is split, but the result is properties of unequal value.
OWNER – One who has the rights of ownership.See: Ownership.
OWNER FINANCING – See: Purchase Money Mortgage (1).
OWNER OCCUPIED – Property physically occupied by the owner.
OWNER OF RECORD – The owner of property according to the records of the county recorder.
OWNER WILL CARRY MORTGAGE – A term used to indicate that the seller is willing to take back a purchase money mortgage. See: Purchase Money Mortgage (1).
OWNER’S POLICY – Title insurance for the owner of property, rather than a lienholder.
OWNERSHIP – Rights to the use, enjoyment, and alienation of property, to the exclusion of others. Concerning real property, absolute rights are rare, being restricted by zoning laws, restrictions, liens, etc.
Posted in NAME CHANGE – In conveyancing, setting forth both the present name of the grantor and the name under which said grantor acquired title, if different. For example: Joan Doe, a married woman, who acquired title as (or also known as) Joan Smith.
NAR (NATIONAL ASSOCIATION OF REALTORS®) – An association of people engaged in the real estate business. Organized in 1908, it currently lists over half a million members. With headquarters in Chicago, it is dedicated to the betterment of the real estate industry through education, legislation, and high ethical standards for its members.
NAREB (NATIONAL ASSOCIATION OF REAL ESTATE BOARDS) – A national trade association whose members include not only real estate brokers, but appraisers, property managers, and other affiliated groups.
NARRATIVE APPRAISAL – The most detailed of the appraisal reports in which conclusions are supported and explained. The requirements for reaching said conclusions, however, do not differ from the shorter letter report of any properly done appraisal.
NATIONAL ASSOCIATION OF REAL ESTATE BROKERS – An organization dedicated to the betterment of the real estate industry and speci-fically to the role of blacks in the real estate industry. It is composed primarily of black real estate brokers who have adopted the term “Realists”. Originally founded in Miami in 1947, the association is now based in Washington, D.C.
NATIONAL PRIORITIES LIST – The list of sites which the Environmental Protection Agency considers the most hazardous and are not being used (usually abandoned). The list relies on the Hazard Ranking System (see which).
NATURAL DISASTER – See: Act of God.
NATURAL FINISH – A finish which retains the color and appearance of the surface covered, such as varnish over wood, rather than paint.
NATURAL PERSON – A human being rather than some type of business entity, such as a corporation, partnership, etc.
NATURAL RESOURCES – Resources of an area, such as minerals, oil, timber, water, etc. May also include people.
NATURALIZATION – Granting citizenship to an alien. In the United States, a naturalized citizen has the rights of a native citizen, with the exception that the naturalized citizen may not hold the office of president.
NAVIGABLE – (1) Capable of carrying commercial shipping, or boats for travel. (2) Any waters put to a public use are “navigable” in some states, giving the word a legal meaning different from its normal meaning.
NAVIGABLE WATERS – A general term which legally differs in different jurisdictions. May mean a body of water capable of carrying a commercial vessel, or a body of water large enough to ebb and flow. In some areas, minor streams have been held to be navigable.
NEAP TIDE – The tide during the first and third quarters of the moon; not as high as in the second and fourth quarters.
NEGATIVE AMORTIZATION – A condition created when a loan payment is less than interest alone. Even though payments are made on time, the amount owing increases.
NEGATIVE CASH FLOW – When the income from an investment property does not equal expenses. The owner must come up with cash each month to meet these expenses.See also: Cash Flow.
NEGATIVE EASEMENT – The servient estate or tenement. See: Easement Appurtenant.
NEGATIVE EQUITY LOAN – See: Title One Loan; Title One Look Alike Loan.
NEGATIVE LEVERAGE – A loss that occurs when the cost of borrowing exceeds the return on the investment. Example: A building with a six percent return if debt free would return less if a seven percent mortgage were placed on the property.
NEGOTIABLE – Capable of being transferred by negotiation (e.g. A negotiable instrument) rather than being assigned. A Transferee by negotiation may acquire greater rights than an assignee. (See: Holder In Due Course).
NEGOTIABLE INSTRUMENT – As defined by the Uniform Commercial Code, article 3 – 104: “(1) Any writing to be a negotiable instrument within this article must (A) Be signed by the maker or drawer; and (B) Contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this article; and (C) Be payable on demand or at a definite time; and (D) Be payable to order or to bearer”. Instruments which may be negotiable are: a draft (bill of exchange); a check: a certificate of deposit; a note.
NEGOTIABLE ORDER OF WITHDRAWAL CHECKING ACCOUNT (NOW ACCOUNT) – An interest bearing checking account which limits the amounts which may be withdrawn over a given period.
NEIGHBORHOOD – A general term describing a contiguous area of similar properties. Since the development of tract housing, the term is not as significant.
NEIGHBORHOOD SHOPPING CENTER – A group of retail stores, usually limited to food and convenience service stores (dry cleaner, barber, etc.) serving a limited area (neighborhood), and having common parking and ownership or management.
NET ACRE – An acre which may be used for building of structures. For example: A builder buys ten acres of raw land on which to build houses. Three acres are used for streets, sidewalks, and other off-site improvements. The remaining seven acres are the net acres of the ten acre site.
NET AFTER TAXES – The net income from property after income tax is paid. See also: Net Before Taxes; Net Income.
NET BEFORE TAXES – Net income before payment of income tax, but after payment of property taxes. See also: Net After Taxes; Net Income.
NET CASH FLOW – The amount of money an investor pockets after paying all expenses of a property, including operating and mortgage costs. See also: Net Income; Net Operating Income (NOI).
NET EARNINGS – See: Net Income.
NET GROUND LEASE – A net lease of unimproved land.
NET INCOME – The difference between adjusted gross income and operating expenses. May or may not include depreciation.
NET INCOME MULTIPLIER – The number which, when multiplied by the net income, gives the selling price. Found by dividing the sales price by the net income. Usually, a gross income multiplier is used.
NET LEASABLE AREA – See: Rentable Area
NET LEASE – A lease requiring the tenant to pay, in addition to a fixed rental, the expenses of the property leased, such as taxes, insurance, maintenance, etc. In some states the terms net net, net net net, triple net, and other such repetitions are used. See also: Gross Lease.
NET LISTING – A listing under which a real estate agent receives any amount over a given net amount to the seller. Illegal in some states.
NET LOSS – The excess of expense over income for a given period. May be more complicated in accounting procedures.
NET NET; NET NET NET – See: Net Lease.
NET OPERATING INCOME (N.O.I.) – The difference between the effective (also called adjusted) gross income of a property, and the operating expenses (not including debt service and book depreciation).
NET PROFIT – Remainder after deduction of all expenses from income for a given period. Generally classified as either net before taxes, or net after taxes.
NET RENTABLE AREA – See: Rentable Area.
NET RENTAL – Rental over and above the expenses of the property.
NET SALES AREA – The area (usually expressed in square feet) in a retail store where products are displayed and sold.
NET USABLE ACRE – See: Net Acre.
NET WORTH – The difference between total assets and liabilities of an individual, corporation, etc.
NEWEL – The post around which winds a circular stairway. In a noncircular stairway, the major post at the bottom of the stairway or at a landing.
NO BONUS CLAUSE – A clause under the eminent domain section of a lease, giving the lessee the right to recover only the value of his physical improvements in the event of a taking, and not the value of the leasehold interest (the difference between the fixed rent of the lease and current market rental value). Not applicable in all states.
NO CASH OUT REFINANCE – Replacing an existing mortgage or mortgages with a new mortgage in an amount that does not give the borrower money over and above the paying off of the existing liens and the cost of the new loan.
NOMINAL CONSIDERATION – Consideration in name only, and not related to the market value of the property. Still considered valuable consideration and the purchaser is considered a purchaser for value.
NOMINEE – Most commonly used in a deed, such as to John Doe, or nominee, when the actual grantee is not revealed. Has no legal meaning, other than representative of another.
NON LIQUID ASSETS – Those assets (things owned by a person) that cannot quickly be converted to cash. A home is an example. See also: Liquid Assets.
NON-FREEHOLD ESTATE – An estate other than a fee estate or life estate. Example: A lease.
NONBEARING WALL – A wall used only to separate areas, and which carries only its own weight.
NONCONFORMING USE – A property which does not conform to the zoning of the area. Usually, the property was built in conformity and then the zoning was changed.
NONEXCLUSIVE LISTING – A listing under which the real estate broker has an exclusive listing as opposed to other agents, but the owner may sell the property without using an agent, and not be liable to pay a commission. Also called an agency agreement.
NONJUDICIAL FORECLOSURE SALE – Sale by a trustee under a deed of trust, or mortgagee under a power of sale of a mortgage. There is no court (judicial) proceeding.
NONPROFIT CORPORATION – See: Eleemosynary Corporation.
NONRECOURSE LOAN – A loan not allowing for a deficiency judgement. The lender’s only recourse in the event of default is the security (property) and the borrower is not personally liable.
NONRECURRING EXPENSE – An expense which does not usually repeat itself, such as a fire or other natural disaster.
NORMAL WEAR AND TEAR – See: Wear and Tear.
NOSING – The edge of a step which projects over the riser below.
NOTARY PUBLIC – One who is authorized by the state or federal government, to administer oaths, and to attest to the authenticity of signatures. A federal authorization may extend the authority to attest to the authenticity of certain documents, and to act as a notary in foreign countries.
NOTE – A unilateral agreement containing an express and absolute promise of the signer to pay a named person, or order, or bearer, a definite sum of money at a specified date or on demand. Usually provides for interest and, concerning real property, is secured by a mortgage or trust deed.
NOTE RATE – The rate of interest set forth on a note. The note creates the promise to repay the debt; the mortgage uses the real estate to secure the promise to repay.
NOTICE – See types of notice: Actual; Constructive; Statutory.
NOTICE OF ACTION – A recorded notice that property may be subject to a lien, or even that the title is defective, due to pending litigation. Notice of a pending suit. Also called “Lis Pendens”.
NOTICE OF CESSATION – A notice stating that work has stopped on a construction project. Done to accelerate the period for filing a mechanic’s lien.
NOTICE OF COMPLETION – A notice, recorded to show that a construction job is finished. The length of time in which mechanic’s liens may be filed depends upon when and if a notice of completion is recorded.
NOTICE OF DEFAULT – A notice filed to show that the borrower under a mortgage or deed of trust is in default (behind on payments).
NOTICE OF NONRESPONSIBILITY – A notice filed by an owner of property to show that work being done has not been contracted for by said owner. If properly done, mechanic’s liens will not attach to the property. Often done when a tenant contracts for work on property.
NOTICE OF RECISION – A recorded notice to rescind a notice of default of a mortgage or deed of trust.
NOTICE TO QUIT – A notice by a landlord to a tenant to vacate rented property. There are two types; for nonpayment of rent or a second type for any reason. Usually the notice for nonpayment allows less time to vacate.
NOTORIOUS POSSESSION – A requirement for adverse possession. Possession so open (notorious) that the owner is presumed to have notice of it and its extent.
NOVATION – A contract that releases the obligation of a party to an existing contract and substitutes another party. Differs from assignment or delegation in that all parties must agree and an assignor or delegator is not released of obligation.
NOW – See: Negotiable Order of Withdrawal.
NPL – See: National Priorities List.
NUISANCE – A use of property which interferes with the use and enjoyment of other property by excessive noise, odors, fumes, or other harmful or unpleasant emissions.
NULL AND VOID – Void. Not legally binding. See also: Voidable.
NULLA BONA – No goods. The name of the return made by the sheriff to a writ of execution, when he has found no goods of the defendant on which to levy within the jurisdiction.
NUNC PRO TUNC – Now for then. Applied to acts or entries allowed to be done after they should have been done, with a retroactive effect.
NUNCUPATIVE WILL – A verbal “death bed” will. Not valid in all states and restricted to personal property of limited value.
NUT – A slang term See: Overhead.