CANTILEVER - A projecting beam or overhanging portion supported
at one end only.
CAPITAL GAIN - The taxable profit derived from the sale of a
capital asset.
CAPITAL IMPROVEMENT - Any structure which is erected as a
permanent improvement to real property; any improvement which is
made to extend the useful life of a property, or to add to the
value of the property. CAPITALIZATION - A mathematical process
for converting net income into an indication of value, commonly
used in the income approach to appraisal.
CAP RATE (CAPITALIZATION RATE) - The percentage selected for use
in the income approach to valuation of improved property. The
cap rate is designed to reflect the recapture of the original
investment over the economic life of the improvement, to give
the investor an acceptable rate of return (yield) on the
original investment, and to provide for the return on borrowed
capital.
CERTIFICATE OF REASONABLE VALUE (CRV) - A certificate issued by
the Veterans Administration setting forth a property's current
market value estimate, based upon a VA approved appraisal.
CERTIFIED CHECK - A check which the bank guarantees to be good,
and against which a stop payment is ineffective.
CERTIFIED PROPERTY MANAGER - A professional property manager who
has qualified for membership in and is a member of the Institute
of Real Estate Management, and is designated a CPM.
CHAIN OF TITLE - The recorded history of matters which affect
the title to a specific parcel of real property, such as
ownership, encumbrances and liens, usually beginning with the
original recorded source of the title.
CHATTEL - Personal property which is tangible and moveable.
CLEAR TITLE - Title to property that is free from liens, defects
or other encumbrances, except those which the buyer has agreed
to accept, such as mortgage to be assumed, the ground lease of
record, and the like; established title; title without clouds.
CLIENT TRUST ACCOUNT - An account set up by a broker to keep
client's monies segregated from the broker's general funds.
CLOSING - The final stage of consummating a real estate
transaction when the seller delivers title to the buyer, in
exchange for the purchase price.
CLOSING COSTS - Expenses of the sale which must be paid in
addition to the purchase price (in the case of the buyer's
expenses), or be deducted from the proceeds of the sale (in the
case of the seller's expenses). CLOSING STATEMENT - A detailed
cash accounting of a real estate transaction prepared by an
escrow officer or other person designated to process the
mechanics of the sale, showing all cash that was received, all
charges and credits which were made, and all cash that was paid
out in the transaction; also called a settlement statement.
CLOUD ON TITLE - Any document, claim, unreleased lien or
encumbrance which many impair or injure the title to property or
make the title doubtful because of its apparent or possible
validity.
CLUSTER DEVELOPMENT - The grouping of housing units on less than
normal size homesites, with the remaining land being devoted to
common areas.
CODE OF ETHICS - A written system of standards of ethical
conduct. The Code of Ethics of the National Association of
Realtors, first written in 1913, establishes the high standards
of conduct for members of the Realtor community.
COLLATERAL - Something of value given or pledged as security for
a debt or obligation. The collateral for a real estate mortgage
loan is the mortgaged property itself, which has been
hypothecated.
COLOR OF TITLE - A condition which has the appearance of good
title, but which in fact is not valid title, as where title is
founded on some written document which on its face appears valid
and effective, but which is actually invalid.
COMMERCIAL PROPERTY - A classification of real estate which
includes income producing property such as office buildings,
gasoline stations, restaurants, shopping centers, hotels and
motels, parking lots and stores, and other similar uses.
COMMINGLING - To mingle or mix; for example, to deposit client
funds in the broker's personal or general account. A licensee
found guilty of commingling can have the license suspended or
revoked by the Real Estate Commission.
COMMISSION - The compensation paid to a real estate
broker(usually by the seller) for services rendered in
connection with the sale or exchange of real property.
COMMITMENT - A pledge or promise to do a certain act, such as
the promise of a lending institution to loan a certain amount of
money at a fixed rate of interest to a qualified buyer, provided
the loan is obtained on or before a certain date.
COMMON AREAS - Land or improvements designated for the use and
benefit of all residents, property owners and tenants.
COMMON ELEMENTS - Parts of the property which are necessary or
convenient to the existence, maintenance and safety of the
condominium, or are normally in common use by all of the
condominium residents.
COMMON LAW - That body of law which is based on usage, general
acceptance, and custom, as manifested in decrees and judgments
of the courts; judge-made law, as opposed to codified or
statutory law.
COMMON WALL - A wall separating two living units.
COMMUNITY PROPERTY - A system of property ownership based on the
theory that each spouse has an equal interest in property
acquired by the efforts of either spouse during marriage.
COMPARABLES - Recently sold properties which are similar to a
particular property being evaluated, and which are used to
indicate a reasonable fair market value for the subject
property.
COMPOUND INTEREST - Interest which is computed upon the
principal sum plus accrued interest.
CONCESSIONS - Discounts given by landlords to prospective
tenants to induce them to sign a lease.
CONDEMNATION - Either a judicial or administrative proceeding to
exercise the power of eminent domain, i.e., the power of the
government to take private property for public use.
CONDOMINIUM OWNERSHIP - An estate in real property consisting of
an individual interest in an apartment or commercial unit, and
an undivided common interest in the common areas such as the
land, parking areas, elevators, stairways, and the like.
CONSIDERATION - An act or forbearance, or the promise thereof,
which is offered by one party to induce another to enter into a
contract; that which is given in exchange for something from
another.
CONSTRUCTIVE EVICTION - Acts done by a landlord which so
materially disturb or impair the tenant's enjoyment of the
leased premises that a tenant is effectively forced to move out
and terminate the lease without liability for any further rent.
CONSTRUCTIVE NOTICE - Notice of certain facts which are implied
bylaw to a person because he could have discovered the fact by
reasonable diligence or by inquiry into public records.
CONTINGENCY - A provision placed in contract which requires the
completion of a certain act or the happening of a particular
event before a contract is binding.
CONTRACT - A legal agreement between competent parties who agree
to perform or refrain from performing certain acts for a
consideration. In real estate, there are many different types of
contracts, including listings, contracts of sale, options,
mortgages, assignments, leases, deeds, escrow agreements, and
loan commitments, among others.
CONVEYANCE - The transfer of title to real property by means of
a written instrument such as a deed or an assignment of lease.
COOPERATING BROKER - A broker who joins with another broker in
the sale of real property.
COOPERATIVE OWNERSHIP - Cooperative ownership of an apartment
unit means that the apartment owner has purchased shares in a
corporation which holds title to the entire apartment building.
CO-TENANCY - Concurrent property ownership in which two or more
persons own an undivided interest in the same property.
COUNTER-OFFER - A new offer made as a reply to an offer received
from another; this has the effect of rejecting the original
offer, which cannot thereafter be accepted unless revived by the
offeror's repeating it. COURTESY TO BROKERS - The practice of
sharing commissions with cooperating brokers.
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