Oscar Castillo
"Residential" Real Estate

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    - Glossary

 

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Earnest money deposit  (EMD)   money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed. The cash deposit (including initial and additional deposits) paid by the prospective buyer of real property as evidence of good-faith intention to complete the transaction

Earthquake safety disclosure   by California law, real estate agents or owners are required to prepare a "Residential Earthquake Hazards Report" disclosing the earthquake safety preparedness of all houses sold in the state.

Easement   the right to a specific use of or right to travel over land owned by another. The land being used or traveled over is the servient tenement; the land that is benefited by the use is the dominant tenement. An easement appurtenant is a property interest belonging to the owner of dominant tenement and is transferred with the land; an easement in gross is a personal right that usually is not transferable by its owner

Easement by condemnation   an easement created by the government or government agency that has exercised its right under eminent domain

Easement by estoppels   an easement created when a person's words or actions lead another to believe that an easement exists. If, in relying on those words or actions, the easement user acts to his or her detriment, they may not deny the existence of the easement.

Easement by necessity   an easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.

Easement in gross   an easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example, a right granted by Eleanor Smith to Joe Blow to use a portion of her property for the rest of his life would be an easement in gross. If by chance Eleanor Smith sells the property, she cannot pass the "easement in gross" to the next property owner (buyer).

Easement by prescription   an easement acquired by continuous, open and hostile use of property for the period of time prescribed by state law.

Easement Rights   a right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example.

Economic rent   currently referred to as market rent, it is the rental income that real estate can command in an open, competitive market at any given time, as contrasted with contract rent, or the income actually received under a lease agreement.

Economic Obsolescence   loss of useful life and desirability of a property through economic forces, such as change in zoning, changes in traffic flow, etc. - rather than deterioration.

Effective interest rate   The actual rate or yield of a loan, regardless of the amount stated on the debt instrument. (See   nominal interest rate)

Egress   a way to exit from a property; the opposite of “ ingress”.

Electromagnetic fields (EMFs)  fields generated by the movement of electrical currents.

Eminent domain   the right of the government to acquire title to property for public use by condemnation; the property owner receives compensation which is generally fair market value (FMV)

Employment contract   in the real estate business this generally takes the form of a listing agreement or management agreement.

Encapsulation   a method of controlling environmental contamination by sealing off a dangerous substance (such as asbestos). The treatment of asbestos containing material with a liquid that covers the surface with a protective coating or embeds fibers in an adhesive matrix to prevent the release of asbestos fibers into the air.

Encroachment   an unauthorized invasion or intrusion of an improvement or other real property onto another's property, thus reducing the size and value of the invaded property. Common examples of encroachments are the roof of a building that extends over the property line or the front of a building that extends over the building setback line or extends onto a neighbor's property.

Encumber   to burden a parcel of land with a lien or charge, e.g., a mortgage.

Encumbrance   any claim, lien, charge or liability attached to and binding on real property that may lessen its value or burden, obstruct or impair the use of a property but not necessarily prevent transfer of title; a right or interest in a property held by one who is not the legal owner of the property.  There are two general classifications of encumbrances: (1) those that affect the title, such as judgments, mortgages, mechanics' liens and other liens, which are charges on property used to secure a debt or obligation; and (2) those that affect the physical condition of the property, such as restrictions, encroachments and easements.

Energy improvement mortgage (EIM)   a loan secured by real property that is made to an owner for the specific purpose of making energy efficient improvements to a home or building.

Entity rule   Three entities can hold property: individuals, partnerships and corporations. In the case of a property exchange, the way an exchanger holds property going into an exchange is the way they must hold the property coming out of the exchange.

Environmental hazards disclosure   by California law (AB 983) a real estate agent or owner is required to inform prospective buyers of environmental hazards located on a residental property.

Environmental impact report   a report required by the California Environmental Quality Act that projects the impact a project may have on the environment. The report includes relavant data and an analysis of its effects on the environment.

Environmental impact statement   required by the National Environmental Policy Act and applies to federal government actions or legislation, it includes relevant data about an action and an analysis of its effect on the environment.

Environmental site assessment    an independent investigation and assessment of a property to determine if any existing or potential environmental problems or hazards exist on property. It is usually done to determine if any environmental problems exist on a property that might effect the use or market value of the property. It is sometimes referred to as the "due diligence" audit since it can be done to establish the "innocent landowner" defense in a Superfund suit. Usually done by an outside environmental engineering firm.

Equalization   in some jurisdictions, when it is necessary to correct inequalities in state wide tax assessments, an equalization factor is used to achieve uniformity. An equalization factor may be applied to raise or lower assessments in a particular district or county. The assessed value of each property in the area is multiplied by the equalization factor, and the tax rate is then applied to the equalized assessment.

Equalization factor   a factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value.

Equitable redemption   a defaulted property owner recovering his or her property prior to its sale by curing the default.

Equitable right of redemption   the right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.

Equitable title   the interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.

Equity   the interest or value that an owner has in property over and above any indebtedness. Equity is computed by subtracting from the property's fair market value the total of the unpaid mortgage balance and any outstanding liens or other debts against the property. A homeowner's equity increases as he pays off his mortgage or as the property appreciates in value. When the mortgage and all other debts against the property are paid in full the homeowner has 100% equity in his property.

Equity Line of Credit   Home Equity Line of Credit (HELOC) is a type of mortgage loan usually taken using the home equity as a security for the loan. HELOC is used for home improvements, medical bills, and purchases. The funds are obtained by use of an issued credit/debit card or writing checks against the line of credit.   Interest paid on the loan is generally tax deductible. The difference between a conventional loan and a HELOC is that in HELOC, a borrower is not advanced the entire sum up front. The customer uses a line of credit to borrow sums that total no more than the credit limit.

Equity loans   a loan based on a percentage of the equity a borrower holds in a collateral property.

Equity Sale  is now being used as a way to define a traditional real estate sale that involves a seller who has equity in their home. Simply put the seller owes less than what the home is worth and in the end after everything is settled, the seller will net positive cash

Erosion   the gradual loss of soil due to the operation of currents, tides or winds.

Escalation Clause   a clause in a lease providing for an increased rent at a future time due to increased costs to lessor, as in cost of living index, tax increases, etc.

Escape clause    a contract provision relieving a party of liability for failure to perform, as where a stated contingency does not occur.

Escheat   the reversion/transfer of property to the state or county, as provided by state law, in cases where a decedent dies intestate (without a will) and there are no legal heirs capable of inheriting nor is there claimants to ownership that currently exist. Same reversion applies when the property is abandoned.  In some states, bank accounts that are unused for more than seven years will escheat to the government.  Escheat ensures that property always has a recognized owner, which would be the state or government if no other.  Most jurisdictions have their own laws and regulations defining escheat and the circumstances under which it can be invoked.  Escheat is usually done on a revocable basis, which means that ownership of the estate or property would revert to a rightful heir should one turn up.

Escrow    the Real Estate escrow process means putting something, such as a deed or money, in the custody of a neutral third party until certain conditions are met. Escrow or title companies often oversee a real estate transaction, from initial deposit to final funding, to ensure a smooth process. Once the transaction is complete,  the borower (buyer) may setup an escrow account in which a portion of the borrower's monthly payment is deposited for property taxes and insurance. (Escrow is at times also referred to as a "Settlement Agent").

Escrow Account  - Also known as a Trust Account; or Impound Account.  This is a Trust account into which a borrower’s funds are deposited and held to pay taxes, insurance premiums, and other escrow expenses.

Escrow account  (BROKER)   the trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction.

Escrow  (cancellation)   providing written notification that an escrow is to be terminated; must be done by mutual consent of all parties to the escrow and in accordance with governing agreements.

Escrow fee   a fee covering all the usual escrow services except for title insurance. The fee is normally determined by the amount of money involved in the transaction.

Escrow Holder - The party overseeing the escrow account. As holder of the account, this person or entity/department is charged with safeguarding all documents and money, and releasing them in the form of payments, to parties involved in a tranaction, when overall required conditions are met.

Escrow instructions   in a sales transaction, a writing signed by buyer and seller that details the procedures necessary to close a transaction and directs the escrow agent how to proceed. Sometimes the buyer and seller execute separate instructions and sometimes the contract of sale itself serves as the escrow instructions

Escrow officer   an individual qualified to perform all the steps necessary to prepare and carry out escrow instructions. Tasks include obtaining title insurance; securing payoff demands; prorating taxes, interest, rents, etc.; and distributing the funds held in escrow.

Estate   a person's possessions. The extent of a person's interest in real property.

Estate (tenancy) at sufferance  the tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.

Estate (tenancy) at will  An estate (or tenancy ) in which a person holds or occupies real estate with the permission of the owner, for a term of unspecified or uncertain duration; i.e., there is no fixed term to the tenancy.

Estate (tenancy) for years   An interest for a certain, exact period of time in property leased for a specified consideration.

Estate (tenancy) from period to period   an interest in leased property that continues from period to period--week to week, month to month or year to year.

Estate in land   the degree, quantity, nature and extent of interest a person has in real property.

Estate taxes   federal estate taxes and state inheritance taxes (as well as the debts of decedents) are general, statutory, involuntary liens that encumber a deceased person's real and personal property. These are normally paid or cleared in probate court proceedings. (see inheritance taxes, lien)

Estimated buyer's costs   an estimate of the buyer's total cash requirements to purchase real property. A realistic estimate of all costs and payments based on the buyer's offer.

Estimated seller's proceeds   an estimate of the net amount an owner will receive from the sale of his or her property. An "Estimated Seller's Proceeds" form is filled out by the listing broker and calculates the proceeds based on the listing price and seller's costs.

Estoppel   method of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation. A legal restraint that stops or prevents a person from contradicting or reneging on his previous position or previous assertions or commitments.

Ethics   the system of moral principles and rules that become standards for conduct.

Eviction     homeowners and/or renters that have not vacated a property are considered trespassers. Whether it is a foreclosure or rental, they will be served with an eviction notice from the County Sheriff.  If they fail to comply, they will be forcibly removed, and all personal belongings ejected from the residence

Evidence of title   proof of ownership of property; commonly a certificate of title, an abstract of title with lawyer's opinion, title insurance or a Torrens registration certificate.

Exchange   a transaction in which all or part of the consideration for the purchase of real property is the transfer of property of "like kind" (i.e., real estate for real estate).

Exclusions   a section of the offer to purchase designed to exhibit anything the buyer or seller would not like included with the real estate (i. e. debris in the yard or a chandelier).

Exclusive Buyer Representation   an agency relationship between a buyer and a broker that cannot result in dual agency.

Exclusive-authorization-and-right-to-sell listing   a written listing agreement appointing a broker as the exclusive agent for the sale of property for a specified period of time. The listing broker is entitled to a commission if the property is sold by the owner, by the broker or by anyone else. The phrase "right-to-sell" really means the right to find a buyer; it does not mean that the agent has a power of attorney from the owner to sell the property

Exclusive authorization to acquire real property   a contract providing for the exclusive representation of a buyer by a broker. It authorizes a broker to act as the exclusive agent of the buyer. Similar to an exclusive-authorization-and-right-to-sell listing.

Exculpatory Clause - a contract provision (makes clear what the subject matter agreement is or is not) that relieves one party of liability if damages are caused during the execution of the contract.

Execute   the act of making a document legally valid, such as formalizing a contract by signing or acknowledging and delivering a deed. In some cases, execution of a document may refer solely to the act of signing, in other cases it may refer to complete performance of the document's terms.

Executed Contract   an agreement that has been fully performed.

Executor   an individual appointed by a testator to carry out the directions and requests in his or her last will and testament, and to dispose of his or her property according to the provisions of the will. State probate laws generally refer to this person as a "personal representative of the decedent.

Executory contract   a contract under which something remains to be done by one or more of the parties.

Exemplary damages   monetary damages that go beyond the actual compensatory damages. They are awarded to punish a wrongdoer for fraudulent, malicious and wrongful conduct

Expiration Date and Time   a section of the offer to purchase designed to give the offer a time limit after which the offer is withdrawn.

Extended mortgage - One in which the due date of a mortgage is extended for a longer period, often at a higher interest rate than the original mortgage.

Extension of Time Agreement (ETA)   an agreement (normally written) giving additional time to pay an obligation.

External depreciation   a reduction in a property's value caused by outside factors (those that are off the property).

External obsolescence   a type of incurable depreciation caused by negative factors not on the subject property, such as environmental, social or economic forces. The loss in value cannot be reversed by spending money on the property.

 

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