Terminologies in Real Estate Service - Part 1 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.

xxxxx
Go to PART 1
Go to PART 2
Go to PART 3
xxxxx

ABSTRACT OF TITLE – A condensed history of the title, consisting of the various links in the chain of title, together with a statement of all liens, charges or encumbrances affecting a particular property.

ACCELERATION CLAUSE – A clause in a contract stating that upon the happening of a certain event, like failure to pay any installment due shall make all the balance become immediately due and payable.

ACCEPTANCE - When the seller or agent's principal agrees to the terms of the contract of sale and approves the negotiation on the part of the agent and acknowledges receipt of the deposit in subscribing to the agreement of sale.

ACCRETION - An addition to land from natural causes as, for example, from gradual action of the ocean or the river waters.

ACKNOWLEDGEMENT - A formal declaration before a duly authorized officer by a person who has executed an instrument that such execution is his act and deed.

ACQUIRED ASSET - Usually refer to real estate properties that were previously mortgaged to the bank, by which because the owner failed to pay the mortgage, the ownership of the property transfered to the bank through a judicial foreclosure proceeding. Acquired Asset is called Foreclosed Properties.

ACQUISITION - The act or process by which a person procures property.

AD VALOREM - According to valuation.

ADMINISTRATOR - A person appointed by the probate court to administer the estate of a deceased person.

ADVERSE CLAIM – A claim of a person on property owned by another (Good only for 30 days no second adverse claim is allowed).

ADVERSE POSSESSION – Right of an occupant of land to acquire title against the real estate owner, where possession has been actual, continuous, hostile, visible, distinct and in the concept of owner for the statutory period. (Note: Statutory period is 30 years: adverse possession does not apply on lands titled under the Torrens System)

AFFIDAVIT - A statement or declaration reduced in writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.

AFFIRM - To confirm, to ratify, to verify.

AGENT – One who acts for and has the authority to represent another who is known as the principal

AGREEMENT OF SALE - A written agreement or contract between seller and purchaser which they reach a meeting of the minds on the terms and conditions of the sale.

AIR RIGHT - The right of the property owner to use, control, or occupy the air space over his property, subject to the requirements of air navigation and government regulation.

ALIENATION – The transferring of property to another; the transfer of property and possession of lands, or other things, from one person to another.

AMORTIZATION - staggered payment of the thing purchased. Also known as INSTALLMENT. It refers at the process of paying off a debt (often from a loan or mortgage) over time through regular payments. A portion of each payment is for interest while the remaining amount is applied towards the principal balance. An amortization could be in Equal Payments which has fix amounts throughout the loan period. It could also be a Balooning Payment wherein the monthly due increases through time. Given a number of pay-periods and interest rate, the amortization amount is calculated using Amortization Factor Table.

AMORTIZATION – The liquidation of a financial obligation on installment basis. (A periodic payment which includes interest and principal necessary to liquidate a financial obligation)

APPOINTMENT - Appointment is one way of how an agency relationship is created. It means that the principal gives express authorization to the agent. Under both common and statutory law, this requires writing when the sale of real estate is involved.

APPRAISER– A Real Estate Appraiser is a duly registered and licensed natural person who, for a fee, compensation or other valuable consideration, performs or renders, or offers to perform services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable written form. Also known as valuer, refers to a person who conducts valuation/appraisal; specifically, one who possesses the necessary qualifications, ability and experience to execute or direct the valuation/appraisal of real or personal property.

APPRECIATION – A rise in value or price due to such factors as inflation or market conditions.

APPURTENANCE – Something annexed to another thing which may be transferred incident to it. That which belongs to a thing as a barn, dwelling, garage, or orchard, is incident to the land to which it is attached.

ASSESSOR - refers to a government official who conducts appraisal and assessment of real properties for taxation purposes.

ASSIGNMENT – The transfer of property or right and obligations over it in favor of another. (The one who assigns or transfers a property is called ASSIGNOR while those to whom property is assigned are called ASSIGNS or ASSIGNEES)

AUTOMATIC REDEMPTION CLAUSE – A stipulation in a mortgage of several properties providing that when a buyer of one or more lots pays in full the purchase price, a portion of the payments shall be applied to the mortgage obligation and the mortgagee shall correspondingly release said lot or lots from the mortgage.

BALLOON PAYMENT – Where the final installment payment on a note is greater than the preceding installment payments and the payer pays the note in full, such a final installment is termed a balloon payment. (Payment in lump sum although not yet due)

BASE AND MERIDIAN – Imaginary lines used by surveyors to find and describe the location and boundaries of a real property

BINDER – A agreement to cover a down payment for the purchase of real as evidence of good faith of the part of the purchaser

BLANKET MORTGAGE – A mortgage that has two or more properties pledged as security for a debt

BREACH – The breaking of a law, or failure to perform a duty or obligation specified in a contract or agreement, or revelation of secret, either by omission or commission

BROKER – A Real Estate Broker is a duly registered and licensed natural person who, for a fee, commission or other valuable consideration acts as an agent of a party in a real estate transaction to offer, advertise, solicit , list, promote, mediate, negotiate, or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real estate or any interest therein.

BUNDLE OF RIGHTS – The rights of ownership whereby the owner has the right to enjoy, dispose, exclude others and to recover

CAPITAL ASSET - Capital asset means property held by the taxpayer (whether or not connected with his trade or business), but does not include – (a) Stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year; or (b) Property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business; or (c) Property used in the trade or business of a character which is subject to the allowance for depreciation provided in subsection (F) of Sec. 34 of the Code; or (d) Real property used in trade or business of the taxpayer.

CAPITAL GAINS TAX - Capital Gains Tax is a tax imposed on the gains presumed to have been realized by the seller from the sale, exchange, or other disposition of capital assets located in the Philippines, including pacto de retro sales and other forms of conditional sale.

CAPITAL PROPERTY – Property you own that could give you a capital gain if you sold it. Can include investments, a property other than your home and money from a trust account. A property that is acquired for investment purposes, or use in a business, that will give rise to a capital gain, and not an income gain, if it is sold at a profit. Land, buildings, machinery, equipment, shares in a farm corporation and an interest in a farm partnership will usually be capital property to the farmer.

CAVEAT EMPTOR – Means “let the buyer beware” (The buyer is duty-bound to examine the property he is purchasing and he assumes conditions which are readily ascertainable on the face of the title)

CENRO -- Community Environment and Natural Resources Officer of the DENR

CLIENT – A client is a person who empowers another to act as his or her representative or agent. Client-Agent relationship is equal to fiduciary relationship.

CLOSED MORTGAGE – A mortgage which can be paid off on its maturity

CLOUD ON THE TITLE – Any conditions revealed by a title search which affect the title to property; usually relatively unimportant items but which cannot be removed without a quit claim deed or court action

xxxxx
Go to PART 1
Go to PART 2
Go to PART 3
xxxxx