Terminologies in Real Estate Service - Part 2 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.

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COMMISSION – An agent’s compensation for performing the duties of his agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc.

CONDEMNATION – The taking of public property for public use with fair compensation to the owner. An exercise of the Right of Eminent Domain.

CONJUGAL PROPERTY – property owned in common by the husband and wife

CONSULTANT – A Real Estate Consultant is a duly registered and licensed natural person who, for a fee, compensation or other valuable consideration, offers or renders professional advice and judgment on: (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) the conception, planning, management and development of real estate projects.

CONTRACT OF SALE – An agreement between a buyer and a seller whereby there is transmission of ownership on the object of the contract

CONTRACT TO SELL - An agreement whereby the seller promises to sell a thing in consideration of the buyer’s compliance to the terms and conditions of the contract and that only after the buyer’s compliance will the seller be obligated to transfer or convey the ownership of the thing subject of the contract.

CONVEYANCE – The means by which title to real estate is transferred

CORNER INFLUENCE – The added desirability or utility of a property due to its frontage to two streets, which for residential use provides better ventilation and as to commercial or industrial use, it provides better access, display and transportation convenience.

COUNTER OFFER – It is a qualified or conditional acceptance

CUL DE SAC – A passageway with one outlet; a blind alley.

CUSTOMER – A customer generally refers to person without representation involved in the transaction involved in the transaction. All agents and brokers have a duty to treat customers fairly.

DACION EN PAGO – Payment in kind. Payment of the debt or obligation with a property

DEED – A written instrument which, when properly executed and delivered, conveys title.

DEFAULT – The failure to fulfill a duty or promise or to discharge an obligation; an omission or failure to perform any act.

DEFEASANCE CLAUSE – The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligations to the mortgagee

DEFICIENCY JUDGMENT – It is a judgment for the mortgagor to pay the balance of the obligation if the proceeds of the foreclosure sale is not sufficient to cover the principal obligation.

DEPRECIATION – Loss in value brought about by deterioration through ordinary wear and tear and action of the elements, functional or economic obsolescence.

EARNEST MONEY – A sum of money tendered by a buyer to the seller which if accepted by the seller shall form part of the purchase price and as proof of the perfection of the contract. It is a sign of good faith on the part of the buyer. Actually, it is a partial payment of the purchase and it must be deducted therefrom. (see also BINDER)

EASEMENT – he right, advantage or privilege which an individual has in land of another, such as a right of way

ECA – Environmentally Critical Area is an area that is environmentally sensitive.

ECC – Environmental Compliance Certificate is the document issued by the DENR Secretary or the Regional Executive Director certifying that based on the representation of the proponent and the preparers, as reviewed and validate by the EIARC, the proposed project or undertaking will not cause a significant negative environmental impacts; that the proponent has complied with all the requirements of the EIS System, and that the proponent is committed to implement its approved EMP in the EIS or mitigation measures in IEE.

ECONOMIC LIFE – The period over which a property will yield a return on the investment, over and above the economic or ground rent to land

ECONOMIC RENT – The potential rent which a property can command, considering rental of similar or comparable properties in the neighborhood.

ECP – Environmentally Critical Project is a project that has a high potential for significant negative environmental impact.

EIS –Environmental Impact Statement refers to the documents or studies on the environmental impacts of a project including the discussions on direct and indirect consequences upon human welfare and ecological and environmental integrity.

EMB - Environmental Management and Protected Areas Sector of the DENR

EMINENT DOMAIN – The right of the government to acquire property for necessary public or quasi-public use

EMP – Environmental Management Plan is a section of the EIS that details the prevention, mitigation, contingency and monitoring measures to enhance positive impacts and minimize negative impacts of a proposed project or undertaking.

ENCROACHMENT – A building, part of building, or obstruction which intrudes upon or invades a highway or sidewalk or trespasses upon property of another.

ENCUMBRANCE – Anything which affects or limits the fee simple title to property, such as mortgages, easements, or restrictions of any kind. Liens are money encumbrances which make the property security for the payment of a debt or obligations, such as mortgages and taxes.

ESCHEAT -- it is the reservation or automatic conveyance of real property to the State upon the owner’s death due to the absence of will heirs or other legal claimants, to the title, or when the owner fails to pay the real estate taxes.

ESTOPPEL -- Estoppel is one way of how an agency relationship is created. It means that if the principal makes third persons to believe that someone is his agent and that third party deals with the agent, then the principal cannot deny the agency relationship even though it did not exist in fact.

EQUITY OF REDEMPTION – Right of the original owner to reclaim property sold through judicial foreclosure proceedings by payment of debt, interests, and cost.

EQUITY –The interest or value which an owner has in real estate over and above the mortgage against it.

ESCALATION CLAUSE – A provision in a contract providing for periodic proportional upward or downward adjustment of price or consideration

ESCHEAT – Reversion of property to the state owing to lack of any heirs capable of inheriting; or due to other causes provided by law

ESCROW – An agreement entrusted to a third person to be held by him until the performance or fulfillment of some act or condition ETHICS – That branch of moral science, idealism, justness, and fairness, which treats of the duties that a member of a profession or craft owes to the public, to his clients or patron, and to his professional brethren or members.

FAIR MARKET VALUE – The price which a willing seller will sell and a willing buyer will buy, neither being under abnormal pressure.

FEE SIMPLE – Largest estate of ownership in real property in which the owner holds all rights not reserved by society. Absolute ownership.

FIDUCIARY – A person in a position of trust and confidence, as between a principal and a broker; the broker as fiduciary owes certain loyalty which cannot be breached under rules of agency.

FORECLOSURE – A procedure where by property pledged as security for a debt is sold to pay the debt in the event of default in payments or terms. It is a process instituted by a mortgagee by which the mortgaged property is sold at public auction to satisfy the principal obligation which the debtor failed to fulfill. The property that has been transfered to the bank through a foreclosure proceeding is called a Foreclosed Property, which is also known as Bank Acquired Asset.

FORFEITURE – The loss of money or anything of value, due to failure to perform, such as under an agreement to purchase

HIGHEST AND BEST USE PRINCIPLE – The use for a property which will bring the optimum or highest returns or advantage as of a certain time

HOLDOVER CLAUSE- A provision in a listing agreement which entitles the broker to commission even when the sale was closed after the period of the authority provided that the buyer was registered by him with the seller and with whom he has negotiated during the period of his authority. It may also be applied in lease contracts wherein this provision determines what happens when the tenant remains beyond the expiration of the lease; example: after the expiration of lease, the landlord serves an eviction notice to the tenant, but the tenant was given an option to remain upon payment of a P3000 per day additional rent, according to the holdover clause. More about Holdover Clause..

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