Oscar Castillo
"Residential" Real Estate

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    - Glossary

 

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Obedience   the fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. Because illegal acts do not serve the principal's best interests, obeying such instructions violates the broker's duty of loyalty. On the other hand, an agent who exceeds the authority assigned in the contract will be liable for any losses that the principal suffers as a result.

Obligor   a promisor (payor); one who incurs a lawful obligation to another (the obligee). The maker of a promissory note is an obligor. In a performance bond, the contractor is the obligor. One who guarantees the performance of the obligation is a surety; also called a guarantor.

Obsolescence   the loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.

Occupancy permit  a permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.

Occupational Safety and Health Act (OSHA)  OSHA's mission is to prevent work-related injuries, illnesses and deaths. Congress created OSHA under the Occupational Safety and Health Act, which was signed by President Richard M. Nixon on December 29, 1970.

Offer   an offer is a promise made by one party, requesting something in exchange for that promise. The offer is made with the intention that the offeror (buyer)  will be bound to the terms if the offer is accepted. The terms of the offer must be definite and specific and must be communicated to the offeree (seller).

Offer and acceptance   two essential components of a valid contract; a "meeting of the minds."

Offeree   the person to whom an offer is made - usually the owner/seller.

Offeror   the party who makes an offer - usually the buyer.

Offsite improvements   these are considered improvements made outside of a property's boundaries, such as sidewalks and streets.

One stop shopping   an arrangement where settlement and service providers are all available through the broker.

Open-buyer-agency-agreement   this agreement is a nonexclusive agency contract between a broker and a buyer. It permits the buyer to enter into similar agreements with an unlimited number of brokers. The buyer is obligated to compensate only the broker who locates the property the buyer ultimately purchases.

Open house   the common real estate practice of showing listed homes to the public during established hours.

Open listing   a listing given to any number of brokers who can work simultaneously to sell the owner's property. The first broker to secure a buyer who is ready, willing and able to purchase at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold. Unlike an exclusive listing, an open listing need not contain a definite termination date. The Open Listing listing terminates after a reasonable time, usually whatever is customary in the community. Either party can, in good faith, terminate the agency at will.

Operating budget   a projection of income and expenses for the operation of a property over a one year period.

Operating expenses   (could be monthly or annual) those recurring expenses that are essential to the continuous operation and maintenance of a property. Operating expenses are generally divided into the following categories: (1)fixed expenses such as real property taxes and building insurance;  (2)variable costs such as utilities, payroll, administration and property management fees, repairs, supplies; and (3)reserves for replacement…. Operating expenses do not include items such as mortgage payments, capital expenditures and depreciation.

Opportunity cost   earnings that may be available on alternative investments.

Option listing   a listing in which the broker also retains an option to purchase the property for the broker's own account. In view of the body of litigation involving breach of fiduciary duties by brokers who conceal offers from buyers until after the broker has exercised the option, full and fair disclosure must be given to the seller.

Original basis   the sum of the purchase price of a property plus buying expenses on acquisition.

Ostensible agency   a form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document.

Owner-occupied   a property where the owner physically occupies the property.

Ownership    the right to use, possess, enjoy, transfer, and dispose of a thing to the exclusion of all others.

Owner's Policy   a policy of title insurance which protects the owner of real property against claims resulting from defects which may exist in the title to the real property.

Owner's title insurance   an insurance policy protecting the buyer for the amount of the purchase price in the event of a future title dispute.

  

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