M
Management Agreement -
An employment contract between the owner
of real estate and a property management firm that agrees to oversee the
management of the property.
Market
- economic function of bringing buyers and sellers together through the
price mechanism.
Market Data Approach -
A means of estimating value by comparing similar properties. Used when
there is an active market and where comparables can be identified. Also
called comparable sales approach.
Market Value -
The most probable price a property would bring in an arm's-length
transaction (where neither buyer or seller is under any undue pressure, and both are negotiating with complete knowledge of the market).
Marketable Title -
One which is free from reasonable doubts or objections, and which the
courts would compel a purchaser to accept under the terms of a sales
contract.
Master Plan -
A program for the future development of a community which serves as the
guideline for capital expenditures.
Mechanic's Lien -
A statutory lien levied on property by a person who is wrongfully not
compensated after providing labor (mechanic) or material (material-man)
for the improvement to land. (Only on the specific property where the
work was complete.) Not on personal property.
Metes and Bounds -
A method of land description which involves identifying distances and
directions and makes use of both the physical boundaries and
measurements of the land.
Mill
- A mill is equal to one-tenth of one cent and is used to state the
property tax rate. (.001)
Millage Rate -
A tax rate stated in tenths of a cent. For example, a millage rate of
150 mills on property assessed at $100,000 would result in a property
tax of $1,500 ($100,000 x .150).
Minor
-
One who has not attained the age of majority in a state and does not
have legal capacity to be bound by most contracts. (Voidable contracts)
Misrepresentation
- An innocent or negligent mis-statement of a material fact, detrimentally
relied upon by the other party.
Month-to-Month Tenancy -
A lease which has a term of one month but renewable for successive
months at the option of both parties.
Monument
- Physical evidence of a point- of- beginning established by surveyors for
use in locating parcels of land.
Mortgage
- A legal document used to secure the performance of an obligation, in
which the borrower or mortgagor agrees to pledge property to secure the
debt represented by the promissory note. (A contract).
Mortgage Banker -
A financial middleman who, in addition to bringing the borrower and the
lender together, makes loans, packages them, and sells the packages to
both primary and secondary investors. Also services loans.
Mortgage Broker -
A person who brings together the user of capital (borrower) and the
supplier of capital (lender). For this service, a finder's fee is
usually paid by the borrower.
Mortgagee
- A lender who receives a pledge of property to secure a debt.
Mortgagor
- A borrower who pledges property through a mortgage to secure a debt.
Multiple Listing -
Marketing service in which many brokers pool all of their listings and
establish procedures for sharing commissions.
Mutual Assent -
An offer and acceptance which together form the terms of a contract.
N
Net Income, Net Operating Income
- Gross income less all operating expenses.
Used in the income approach
to value.
Net Listing -
The broker agrees to sell the property in order to achieve a net price
to the owner, and anything which is received above the net price is the
broker's commission. A net listing is prohibited by the licensing law in
many states.
Non-resident
- One whose primary residence is in another state.
Nonconforming Use -
A pre-existing use of land which does not conform to the zoning
ordinance but which may legally remain.
Notary Public -
A person with the authority to take oaths and acknowledgments.
Note
- A signed instrument acknowledging the existence of a debt and the
promise to pay.
Novation
- Occurs when the person in a contract, to whom the duty was owed,
expressly agrees to substitute the delegate, or new obligor, for a
consideration, and agrees to discharge the old obligor from the
obligations under the contract. For example, loan assumptions.
Null and Void -
Invalid and unenforceable.
O
Obsolescence -
A loss in value because of a decrease in
the usefulness of property due to decay, changes in technology or
people's behavior patterns and taste.
Offer and Acceptance -
The necessary elements of mutual assent; for example, an agreement of
one party to buy and another party to sell.
Open Listing -
An agreement between an owner and many brokers. If a broker produces a
ready willing, and able buyer, a commission is due. However, the owner
still has the right to sell his/her property and is not obligated to pay
a commission to anyone.
Open-end Mortgage -
A loan containing a clause which allows the mortgagor to borrow
additional money without rewriting the mortgage.
Option
- A right which is given for consideration to a party (optionee) by a
property owner (optionor) to purchase or lease property within a
specified time, at a specified price and terms. An option is irrevocable
by the optionee and will not be extinguished by death or insanity of
either party.
Optionee
- The holder of the option. Buyer.
Optionor
- The seller of the option.
Ordinance
- A statute enacted by the legislative branch of a local government.
Outbuilding
- An accessory structure other than the main structure on land.
Owner's Title Policy -
A policy insuring the owner of real estate against certain defects of
title.
Ownership
- The right to hold, possess, control and dispose of property.
Ownership in Severalty -
Individual ownership.
P
Parol Evidence Rule -
A rule of evidence designed to achieve a degree of certainty in a
transaction and to prevent fraudulent and perjured claims. Although the
word parol means oral, in this context, it refers to evidence that is
extrinsic to, or outside and separate from, the writing. (Must be in
writing to be enforceable in court)
Partial Release Clause -
A part of a mortgage, which provides for the release of part of the
property (used as security in the loan) upon payment of a certain amount
of the mortgage. Blanket mortgage.
Partially Amortized Mortgage -
A method of loan repayment in which the
balance of the outstanding loan is not zero at maturity, and thus a
balloon payment is due at that time.
Partition suit -
The dividing of real estate held by two or more people which results in
each of the parties holding individual or severalty ownership. (Tenants
in common and joint tenants)
Percentage Lease -
The lessor receives a percentage of the gross sales or net profits as
the rental payment for the lease of the property.
Percolation
- Ability of soil to absorb water; used for septic systems.
Periodic Tenancy -
A lease, which has the original terms automatically renewed for
successive periods, until proper notice to terminate is given by either
the landlord or tenant. Month to month rental.
Personal Property -
Movables, which are not annexed to or part of, the land; also referred
to as chattels.
Physical Deterioration -
The loss in value due to wear and tear of the structure.
PITI
- An abbreviation which means "Principal, Interest, Taxes and Insurance."
In residential financing, it is common for the monthly mortgage to
include these four payments.
Planned Unit Development (PUD) -
A type of exception, or special use,
permitted under many modern zoning ordinances, allowing a mixture of
different land uses or densities.
Planning Commission -
A local government agency which determines plans for the physical growth
of a community.
Plat
- A map showing the division of land into lots and blocks.
Plottage
- Occurs when two or more sites are combined, with the result that the
value of the assembled site is worth more than the value of the sum of
each of the individual sites.
PMI
- see
Private Mortgage Insurance.
Points
- 1% of loan
amount; used to pay down interest rate.
Police Power
- The inherent power of the state to regulate in order to promote public
health, safety, morality or welfare. For example, zoning and building
codes.
Possession
- The physical control of real property.
Possibility of Reverter -
The right retained when a fee simple determinable is granted.
Prepayment Penalty -
The charge levied by the lender for paying off a mortgage prior to its
maturity date.
Prescription
- A means of acquiring title to property through open and continuous use.
Prescriptive Easement -
An easement obtained by the open, notorious, hostile and continuous use
of the property belonging to someone else for a statutory period of
time. (POACH)
Price
- An amount usually expressed in terms of money paid for property.
Prime Rate -
The interest rate charged to a lender's AAA customer. This is normally
the base from which other interest rates are derived.
Principal
- (1) one who employs an agent, (2) money or capital.
Private Mortgage Insurance -
A private insurance program which insures
the lender for loan amounts in excess of 80% of value.
Pro-rata
- To divide or distribute proportionately.
Probate
- The process of proving a will before a duly authorized court or person.
Procuring Cause -
The actions by a broker which result in the owner being able to make a
sale.
Promissory Note -
The primary legal financing obligation in which the borrower promises to
pay back a sum of money borrowed. (A contract)
Proration
- Dividing property taxes, hazard insurance and other expenses or income
between the buyer and seller, as of date of settlement.
Puffing
- To exaggerate - for example, to refer to a house as having "the most
gorgeous view in the city."
Purchase and Leaseback -
The simultaneous buying of property and leasing it back to the seller.
Purchase Money Mortgage -
A mortgage given by the seller to the buyer to cover all or part of the
sale price. Seller financing.
Q
Quiet Enjoyment -
The right of an owner or lessee legally in
possession of property, to uninterrupted use of the property without
interference from the former owner, lessor or any third party claiming
superior title.
Quiet Title -
A court action to remove a cloud on the title.
Quitclaim Deed -
Only conveys what present interest a person may have in a particular
property but makes no representations or warranties of title.
Member, National Association of Realtors
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