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Terminologies in Real Estate Service - Part 3 of 3
[Basic Knowledge for Brokers]
This is a collection of Terminologies widely used in the Real Estate Service. If there is something I missed, please inform me. Thank you.
IN-HOUSE FINANCING- also known as VENDOR FINANCING, is a real estate buying at installment basis wherein the mortgage agreement is between the property developer and the buyer. When the buyer fails to fulfill the obligation to pay, the ownership of the property reverts back to the developer. In-house financing usually have higher interest rates compared to bank loan. What is bad in in-house financing is that the seller only issues a Contract-to-Sell. In Bank Financing, the seller issues an Absolute Deed of Sale to the name of the buyer, and then automatically mortgage the property to the bank.
KEY LOT – A lot adjoining a corner, at right angle to it and fronting an intersecting street. (Commonly referred to as a “Tumbok” Lot)
LATCHES – Delay or negligence in asserting one’s legal right
LIEN – A hold or claim which one person has upon a property of another as security for a debt or charge, judgments, mortgages
LIS PENDENS – An annotation in the title which serves as notice that the property is subject to a pending litigation. Lis pendens is Latin for "suit pending."This may refer to any pending lawsuit or to a specific situation with a public notice of litigation that has been recorded in the same location where the title of real property has been recorded.
LISTING – The broker’s “stock in trade” or the property being handled by the broker: it can be referred to also as the contract between the owner and broker: or the authority of the broker to negotiate the transaction of a property for a commission.
MASTER DEED – A document executed by a property owner which creates or converts his properly into a condominium pursuant to Rep. Act. 4726
MECHANICS LIEN – A lien created by law which exists in favor of persons who have performed or furnished materials in the erection or repair of a building
METES AND BOUNDS – Measurements and boundaries. A term used in describing the boundary lines of land, setting forth all the boundary lines, together with their terminal points and angles.
MULTIPLE LISTING – an arrangement among a group of real estate brokers to share its listings with a pre-arrange agreement especially on commission sharing
OBSOLESCENCE – Impairment of desirability and usefulness brought by physical, economic, functional deterioration, or other causes. Loss in value due to reduced desirability and usefulness of a structure because its design and construction becomes obsolete; loss because of becoming old-fashioned and not in keeping with modern needs with consequent loss of income.
OPEN MORTGAGE – A mortgage which can be paid off at any time even before its maturity.
OPEN-END MORTGAGE – A mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced, without re-writing the mortgage
OPTION – The right to purchase or lease a property at a certain price for a certain designated period, for which right a consideration is paid
OPTION MONEY – The amount paid to a property owner in consideration of giving a prospective buyer or lessee the exclusive right to buy or lease his property within a specified period at the agreed price and term. (Within the option period, the owner cannot sell or lease except to the person who paid the option money).
ORDINARY ASSET - Ordinary asset refers to all properties specifically excluded from the definition of capital assets under Sec. 39 (A)(1) of the NIRC.
OVER-IMPROVEMENT – The improvement which does not produce an adequate return for the amount invested on a building or property. An improvement which is not suitable to the site on which it is placed due to excessive size or cost.
PACTO DE RETRO SALE – A contract of sale with the stipulation that the vendor shall have the right to buy back the property within the agreed period
PACTUM COMMISSORIUM – A stipulation which authorizes the mortgagee to appropriate the property as his own upon failure of the debtor to fulfill the principal obligation
PACTUM DE NON ALIENDO – A stipulation which prohibits the mortgagor from alienating the property within the period of the mortgage
PARAPHERNAL LEASE – Property exclusively owned by the wife
PENRO -- Provincial Environment and Natural Resources Officer of the DENR
PERCENTAGE LEASE – A lease of a property in which the rental is based upon the volume of sales made upon the leased property
POLICE POWER – The right of the state to enact laws and enforce them for the order, safety, health, morals and general welfare of the public
PRINCIPAL – A principal is commonly known as the person who engages the agent for representation.
PROBATE – The proof or act of proving at a court that a last will and testament is actually that of the deceased person
PROCURING CAUSE – The act of a broker leading to the meeting of minds between the parties to a transaction or the consummation of a transaction.
PUT OPTION – This is a contract that authorizes a Broker to offer a property for sale at a premium profiteering price, which is normally a high price above the normal fair market value. When a real estate owner wants to sell his property that is currently under a Professional Real Estate Management Service (PREMS), he will just order a Put Option to the Broker.
QUITCLAIM – A deed of release or renunciation of a legal right. A deed to relinquish any interest in property which the grantor may have had an protest or adverse claim.
RATIFICATION -- Ratification is one way of how an agency relationship is created. It means that if a person having no authority whatsoever purports to act as an agent and the purported principal later adopts the acts of that agent, an agency relationship has retroactively been created.
REAL ESTATE - refers to the land and all those items which are attached to the land. It is the physical, tangible entity which can be seen and touched, together with all the addition on, above or below the ground.
REAL ESTATE DEVELOPMENT PROJECT - means the development of land for residential, commercial, industrial, agricultural, institutional and recreational purposes, or any combination of such including, but not limited to, tourist, resorts, reclamation projects, building or housing projects, whether for individual or condominium ownership, memorial parks and others of similar nature.
REAL PROPERY - includes all the rights and benefits related to the ownership of real estate.
REAL ESTATE SERVICE PRACTITIONERS - shall refer to and shall consist of Real Estate Salesperson, Real Estate Broker, Real Estate Appraiser, and Real Estate Consultant. :
RED - Regional Executive Director of DENR
REIT - Real Estate Investment Trust
RESA - Real Estate Service Act (R.A. No. 9646)
SALESPERSON – a Real Estate Salesperson is a duly accredited natural person who performs service for, and in behalf of, a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or in expectation of a share in the commission, professional fee, compensation or other valuable consideration.
TACITA RECONDUCTA – It means that if at the end of the period of lease, the lessee continues to enjoy the thing leased with the acquiescence of the lessor, it is understood that there is an implied new lease.
TIE LINE -- is an imaginary line connecting from the known geographic position (tie point) to the corner of the titled property. This term is used in Map Reading.
TIE POINT -- is a reference point with known geographic position established by the Bureau of Lands. This term is used in Map Reading.
UNDER IMPROVEMENTS – That improvement which does not sufficiently improve the land to product he highest and best value of return of which the land is capable.
UNEARNED INCREMENT – A value added to land for which the owner is in no way responsible, like the increase of population
VALUE IN EXCHANGE – Objective Value. Property’s value to an impartial buyer who represent the market.
VALUE IN USE – Subjective Value. The property’s value to its occupants or users.
WARRANTY DEED – A deed used to convey real property which contains warranties of title and quiet possessions. In a warranty deed, the grantor is to defend the premises against the lawful claims of the third person.
WRIT OF EXECUTION – A writ authorizes and directs the proper officer of the court, usually the sheriff to carry into effect a judgment or decree of the court.
ZONING ORDINANCE – The exercise of police power by the municipality or city and regulating and controlling the character and use of property .