SCHOOL OF HARD MONEY
To help guide you through the Newmark Investment, Inc process, below you'll find thorough definitions to key terms used throughout our loan process documentation. Click on a letter below to view terms starting with that letter.
An owner who does not live or mange his or her own property but uses the services of a property manager.
1) A condition in a real estate financing instrument giving the lender the power to declare all sums owed to the lender immediately due and payable upon the happening of an event such as sale of the property or a delinquency in the repayment of the note.
2) Clause in a deed of trust or mortgage which "accelerates" the time when the indebtedness becomes due. For example some mortgages or deeds of trust contain a provision that the note balance shall become due immediately upon the resale of the land or upon the default in the payment of principal and interest."
The recording of instruments by a title company with the county recorder strictly as a convenience to a customer and without assuming any responsibility for their correctness or validity.
Money owning. The term is generally used in business rather than personal finances. Usually represents services or materials, such as wood, bricks, payment of subcontractors, etc., to a builder.
Money owed to a business for goods or services. Accounts receivable may be sold or borrowed against. Many time the sale of accounts receivable is for less than face value (discounted).
Interest on a note, bond, etc. which has been earned but not yet paid. Since interest is usually paid in arrears, accrued interest does not necessarily indicate a delinquency in payment.
1) A formal declaration by a person who has executed signed an instrument before a state-authorized person such as a notary public stating that the execution was his or her free act.
2) A formal declaration before a duly authorized officer (such as a notary public) by a person who has executed an instrument that such execution is his own.
Costs of acquiring property other than purchase price: escrow fees, title insurance, lenders fees, etc.
Most commonly refers to vacant land, but may refer to any parcel which may be measured in acres. The term also used to describe land which has not been subdivided.
Action to Quiet Title
Modernly used to describe any court action to establish ownership or remove a cloud on title.
A method of computing interest by adding the total interest for the life of the loan to the amount borrowed (principal) and then deducting the full amount of each payment as made. This method creates a higher yield than computing interest on the declining balance of principal.
Something added. A list or other material added to a document, letter, contractual agreement, escrow instructions, etc.
Adjustable Mortgage Loans (AML's)
Mortgage loans under which the interest rate is periodically adjusted to more closely coincide with current rates. The amounts and times of adjustment are agreed to at the inception of the loan.
Adjusted Gross Income
Total income of property if fully rented, less the adjustment for estimated vacancies and uncollectible rent.
Money advanced by a lender (mortgagee or beneficiary under a deed of trust) to pay the borrower's (mortgagor's or trustor's) obligations of taxes, insurance, or other items necessary to protect the secured property. The amounts advanced are then added to the balance owing on the mortgage or trust deed.
A written or declaration, sworn to before an officer who had the authority to administer an oath.
Any relationship in which one party (agent) acts for a represents another (principal) under the authority of the latter. Agency involving real property should be in writing, such as listings, trusts, powers of attorney, etc.
Agency Agreement (Agency Listing)
In some states, the term describing a listing under which the broker's commission is protected against a sales by other agents but not by sale by the principal. Called a "non-exclusive" listing in some states.
One who is authorized to act for or represent another (principal), usually in business matters. Authority may be express or implied.
All-Inclusive Deed of Trust
See: Wrap-Around Mortgage.
A method for appraising a site (land) by comparing other site values as a percentage of total value. Example: An area has a typical land value of 35% of the total value of a site (including improvements). Property X has a total (improved) value of $100,000. The land is worth $35,000. The term is often (and incorrectly) used synonymously with abstraction.
A.L.T.A. (American Land Title Association)
An organization, composed of title insurance companies, which has adopted certain insurance policy forms to standardize coverage on a national basis.
A change, either to correct an error or to alter a part of an agreement without changing the principal idea or essence.
Payment of a debt in equal periodic installments of principal and interest.
A schedule showing each payment of a loan to be amortized and breaking down the payment into the amount applied to principal and the amount applied to interest.
A loan repaid in periodic (Most commonly monthly) payments of principal and interest.
Annual Percentage Rate (A.P.R.)
The yearly interest percentage of a loan, as expressed by the actual rate of interest paid. For example: 6% add-on interest would be more than 6% simple interest, even though both would say 6%. The A.P.R. is disclosed as a requirement of federal truth in lending statutes.
1) A payment of money yearly for life or a given period of years.
2) A fixed amount given or left by will, paid periodically, not necessarily yearly.
An opinion of value based upon a factual analysis legally, an estimation of value by two disinterested persons of suitable qualifications.
Generally, three major method of appraisal: Cost approach, income approach, market value (comparable s) approach.
An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.
One who is trained and educated in the methods of determining the value of property through analysis of various factors which determine said value.
An increase in value to real property due to positive changes or the elimination of negative elements in a surrounding area. Although not within the original meaning, the word has been incorrectly used so often that is now acceptable to describe an increase in value for any reason, including inflation.
A clause in a lease calling for the decision of a third party (arbiter) regarding disputes over future rents based on negotiation. Also used in construction contracts, disputes between brokers, etc.
Legal slang meaning that there existed no special relationship between the parties involved in any manner which would taint the result.
Arm's Length Transaction
A transaction without collusion or duress between the parties involved.
1) Payment made after id is due is in arrears.
2) Interest is said to be paid in arrears since it is paid to the date of payment rather than in advance, as in rent. Example: A rental payment made July 1 pays the rent to August 1. An interest payment made July 1 pays the interest to July 1.
Articles of Incorporation
Documentation filed with the state which sets forth general information about a corporation. More specific rules of the corporation would be contained in the by-laws.
After Repaired Value - A.R.V. is the value of the real estate after it has been repaired or rehabilitated.
"As in Condition"
Premises accepted by a buyer or tenant in the condition existing at the time of the sale or lease, including all physical defects.
The price at which the seller is offering property for sale. The eventual selling price may be less after negotiation with a buyer.
One who estimates value of property for tax purposes.
A transfer to another of any property, real or personal, or of any rights or estates in said property. Common assignments are of leases, mortgages, deed of trust, but the general term encompasses all transfers of title.
Landers's charge for paperwork involved in processing records for anew buyer assuming an existing loan.
Assumption of Deed of Trust
See: Assumption of Mortgage
Assumption of Mortgage
Agreement by a buyer to assume the liability under an existing note secured by a mortgage or deed of trust. The lender usually must approve the new debtor in order to release the existing debtor (usually the seller) from liability.
One who is appointed to act (as agent) for another (principal) under a power of attorney. The scope of the agent's authority is limited to that given by the power of attorney, which may be limited to one specific act or may be broader.
Anything on a property which may may attract small children and is dangerous to them. Reasonable care must be used to prevent injury to children.
Average Daily Balance
The sum of the daily balances in a bank account over a monthly period divided by the number of days in a month.