Glossary M – R
Glossary of commonly used real estate industry terms
MARKET VALUE:
The price at which a willing seller would sell and a willing buyer would buy, neither being under abnormal pressure. As defined by the courts, it is the highest price estimated in terms of money which a property will bring if expected in terms of money which property will bring if exposed for sale in the open market, allowing a reasonable time to find a purchaser with the knowledge of the property"s use and capabilities for use.
MAJORITY:
The age at which a person is entitles to handle his or her own affairs. In the State of Colorado, the age of majority is 18 years.
MARKETABLE OF MERCHANTABLE TITLE:
Title free and cleat of objectionable liens or encumbrances; a title which is free from reasonable doubt of defect, which can be readily sold or mortgaged to a reasonable prudent purchaser or mortgagee; a title free from material defects and reasonably free from possible litigation. A good title about which there is no reasonable doubt.
MECHANICS LIEN:
A lien created by statute which exists against real property in favor of persons who have performed work or furnished materials for the improvement of the real estate. A lien allowed by statute to contractors, laborers, and materialmen on buildings, or other structures upon which work has been performed or material supplied.
MERIDIANS:
Imaginary north-south liens, which intersect base lines to form a starting point for the measurement of land.
METES AND BONDS:
A method of describing or locating real property; metes are measures of length and bonds are boundaries. This description starts with a well-marked point of beginning and follows the boundaries of the land until it returns once more to the point of beginning.
MILL:
One-tenth of one cent; a tax rate of one mill on the dollar is the same as a rate on one-tenth of one percent of the assessed value of the property.
MILL LEVY:
The amount of tax per $1,000.00 imposed on real property by taxing authorities.
MINOR:
A person under 18 years of age.
MODIFICATION AGREEMENT:
An instrument, which changes or modifies a mortgage or deed of trust from the original document as to terms.
MONETARY CONTROLS:
Federal Reserve tools for regulating the availability of money and credit to influence the travel of economic activity.
MONUMENT OF SURVEY:
A fixed object and point established by surveys to establish land locations. Visible marks or indications left on natural or other objects, indicating the lines and boundaries of a survey. May be posts, pillars, stones, cairns and other such objects, but may also be fixed natural objects, blazed trees, roads or even a watercourse.
MORATORIUM:
The temporary suspension, usually by statute, of the enforcement of liability for debt.
MORTGAGE:
A conditional conveyance of property as security for the payment of a debt or the fulfillment of some obligation. Upon payment of the debt or performance of the obligation the mortgage becomes void. As instrument recognized by law by which, property is hypothecated to secure the payment of a debt or obligation. The procedure for foreclosure of a mortgage in event of default is established by statute. A lien upon real property similar to a Deed of Trust; but upon final payment of the debt, the mortgage (secure party) releases the mortgage with a "satisfaction of mortgage." An instrument used to encumber land as sec
MORTGAGEE:
The party to whom the property is conveyed under a mortgage as security for the repayment of a loan or fulfillment of some obligation. One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; a lender. (See definition of Secured Party.)
MORTGAGOR:
the party who, by mortgage, conveys his interest in the property as secuty for the obligation to repay a loan or fulfill some obligation. A designation for the mortgage borrower on lands. One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation; a borrower. (See definition of Debtor.)
MORTGAGE POLICY:
A title insurance policy containing a written guaranteed statement of facts showing the mortgagee, the priority of its loan, and the status of all other interests in the property.
MUTUAL ASSENT:
One of the essential elements of a contract. Often called "Meeting of the Minds;" the agreement of the parties to the contract, mutually consenting to be bound by the exact terms thereof.
MUTUAL WATER COMPANY:
A water company organized by or for water users in a given district with object of securing an ample water supply at a reasonable rate; stock is issued to users.
NATIONAL ASSOCIATION OF REAL ESTATE BOARDS:
A national association of real estate personnel whose goal is the professional advancement of the real estate industry and whose membership is comprised of state and local real estate boards. Often abbreviated NAR.
NAR:
National Association of Realtors. (Formerly NAREB)
NATIONAL FOREST:
A forest or watershed reservation, which is administered by the Forest Service, United States Department of Agriculture.
NATURAL PARTIES OR NATURAL PERSONS:
Real people, as opposed to legal entities.
NEGOTIABLE:
Capable of being negotiated; assignable or transferable in the ordinary course of business.
NEGOTIABLE INSTRUMENT:
A written instrument signed by a maker or drawer, containing an unconditional promise to another.
NOTE:
"Promissory Note" - A written instrument acknowledging a debt and promising payment.
NOTICE:
Knowledge of a factor or occurrence. Acquired directly through information received or personal experience (actual knowledge) or constructively through publication of the information in the public record (constructive notice).
NOTARY PUBLIC:
An official authorized by law to attest and certify certain documents by his hand and official seal.
NOTICE OF ELECTION AND DEMAND:
The document filed in the public record, which demands that the real property given as security for a loan be sold by the Public Trustee to satisfy the delinquent debt.
NOTICE OF NONRESPONSIBILITY:
A notice provided by law designed to relieve a property owner for responsibility for the cost of work done on the property or materials furnished thereof. Notice must be verified, recorded and posted.
OBSOLSECENCE:
Impairment of desirability and usefulness of the property resulting from economic, functional, physical, fashion, or other changes.
OFFER:
A promise by one party to act in certain manner provided the other party would act in the manner requested.
OPEN-END MORTGAGE:
A mortgage containing a clause, which permits the mortgagor to borrow additional money after the loan has been reduced, without rewriting to mortgage.
OPEN HOUSING LAW:
A law passed by Congress in April 1968, which prohibits discrimination in the sale of real estate because of race, color, or religion of buyers.
OPINION OF TITLE:
An attorney"s evaluation of the condition of the title to a parcel of land after his examination of the abstract of title to the land.
OPTION:
A right given for consideration to purchases or lease a property upon specified terms within a specified time.
OPTIONEE:
One to whom an option has been granted.
OPTIONOR:
One who has granted an option to another.
ORAL CONTRACT:
A verbal agreement; one, which is not reduced to writing.
OVERHANG:
The part of the roof extending beyond the wall to shade buildings and cover walks.
OWNER:
One who holds legal fee simple title to real property; including tight to possess use and deal with the property to the exclusion of others.
PARTITION ACTION:
Court proceedings by which co-owners seek to sever their joint ownership.
PARTNERSHIP:
An association of two or more persons to carry on, as co-owners, a business for profit. Each partner is responsible for liabilities of the partnership, which is a separate entity from the individual interests of each partner. A decision of the California Supreme Court has defined a partnership in the following terms: "A partnership as between partners themselves may be defined to be a contract of two or more persons to unite their property, labor or skill, or some of them, in prosecution of some joint or lawful business, and to share the profits in certain proportions.
PARTICIPATION MORTGAGE:
A mortgage where the borrower not only amortizes the loan, but also pays a portion of the gross income to the lender.
PARTY WALL:
A wall erected on the line between two adjoining properties, which are under different ownership, for the use of both properties. A common wall dividing two properties and shared by both.
PATENT:
A document issued for the purpose of granting public lands to an individual. An exclusive right and title to property granted by the United States of America. Conveyance of title to government land.
PENALTY:
An extra payment or charge required of the borrower for deviating from the terms of the original loan agreement. Usually levied for being late in making a regular payment or for paying off the loan before it is due.
PERCOLATION TEST:
A soil test to determine if soil will take sufficient water seepage to permit use of a septic tank.
PERSONAL PROPERTY:
Any property, which is not real property; also called Personalty. Generally, all things which are not real property; things of a temporary or movable nature. (See Chattel)
PERSONAL REPRESENTATIVE:
One appointed by a probate court to administer the estate of a deceased person.
PROMISSORY NOTE:
A written instrument acknowledging a debt and promising payment. Following a loan commitment from the lender, the borrower signs a note, promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its repayment.
PROPERTY:
The rights of ownership. The right to use, possess, enjoy and dispose of a thing in every legal way and to exclude everyone else from interfering with these rights. Property is generally classified into two groups, personal property and real property.
PRORATE:
To allocate between seller and buyer their proportionate share of an obligation paid or due. For example, real property taxes or fire insurance.
PRORATION:
Adjustments of interest, taxes and insurance, etc…on a prorate basis as of the closing date. Fire insurance is normally paid for three years in advance. If a property is sold during this time, the seller wants a refund on that portion of the advance payment that has not been used at time of closing.
PUBLIC TRUSTEE:
The public official in each bounty whose office has been created by statute, to whom title to real property is conveyed by Deed of Trust for the use and benefit of the beneficiary, who usually is the lender.
PURCHASE MONEY MORTGAGE:
A mortgage given by the purchaser to secure a loan for part or all of the purchase price. Such a mortgage becomes a lien on the property simultaneously with the passing of title, and if promptly recorded becomes prior to any lien against the purchaser.
QUADRANGLE:
A tract of land in the U.S. Government Survey System measuring 24 miles on each side of the square. Sometimes referred to as a "check".
QUIET TITLE:
A court action brought to establish title; to remove a cloud on the title. An action in court to remove a defect, cloud or suspicion regarding the legal rights of the owner to the parcel of real estate.
QUIT CLAIM DEED:
A deed in which the grantor warrants nothing. It conveys only the grantor"s present interest in the real estate, if any. It is often used to correct technical defects in a title. A deed by which the grantor conveys whatever interest the grantor has at that moment in a particular piece of real property. It does not convey after acquired title and contains no warranties.
RANGE:
A component of the U.S. Government survey system for determining the location of real property, being a strip of land 6 miles wide numbered east or west of the principle meridian.
RATIFICATION:
The adoption or approval of an act performed without previous authorization on behalf of a person or legal entity.
REAL ESTATE BOARD:
An organization whose members consist primarily of real estate brokers and salesman.
REAL ESTATE TRUST:
A special arrangement under Federal law whereby investors may pool funds for investments in real estate and mortgages and yet escape corporation taxes.
RE:
Referring to, as Re: File #000.
REALTOR:
A real estate broker holding active membership in a real estate board affiliated with the National Association of Realtors.
REAL PROPERTY:
Land and that which is affixed to it. Land; the surface of the earth and whatever is erected, growing upon, or affixed to the land; including that which is below it and the space above it; synonyms with "land", "realty", and "real estate".
REALTY:
A brief term for real property.
RECAPTURE:
The rate of interest necessary to provide for the return of an investment. Not to be confused with interest rate, which is a rate of interest on an investment.
RECEIVER:
A court appointed custodian who holds property for the court, pending final disposition of the matter before the court.
RECONVEYANCE:
The transfer of the title of land from one person to the immediate preceding owner. This particular instrument of transfer is commonly used when the performance or debt is satisfied under the terms of a deed of trust, when the trustee conveys the title he has held on condition back to the owner. (Not generally used in Colorado.)
RECORDING:
Filing a document with a designated public official who is authorized to receive such documents for the purpose of establishing a public record. This public official is usually a county officer known as the Clerk and Recorder. The recorder places a stamp upon each document-received indication the time of day and the date when it was officially filed. Documents filed with the Clerk and Recorder is considered to provide open notice to the general public of that county. Claims against property usually are accorded priority on the basis of the time and the date they are recorded with the highest priority assigned.
REDEEM:
Literally, to buy back. The act of buying back lands after a mortgage of Deed of Trust foreclosure, tax foreclosure or other execution sale.
REDEMPTION:
The right of an owner to redeem or reclaim the real estate by paying the debt or charge (such as a Deed of Trust or tax lien) after default, together with interest and costs. More correctly, equity of redemption refers to the right to redeem the property after default but before foreclosure; the statutory right of redemption refers to the right to redeem the property after foreclosure, or other enforcement action, during a certain period of time specified by statute. For example, in Colorado, the mortgagor has the statutory right to redeem his property any time within six months for agricultural property or 75 days for platted residential properties after a Deed of Trust foreclosure or three years after a sale for delinquent property taxes.
REFERENCE TO PLAT:
A method of describing or locating real property by means of referring to a map of a subdivision, usually recorded in the office of the County Clerk and Recorder.
REFINANCE:
To pay off and existing obligation and assume a new obligation in its place.
REINSURANCE :
To insure again by transferring to another insurance company all or part of an assumed liability, thus spreading the loss risk any one company has to carry.
RELEASE:
The relinquishment or surrender of a right, claim or interest.
RELEASE CLAUSE:
This is a stipulation upon the payment of a specific sum of money to the holder of a Deed of Trust or mortgage, the lien of the instrument as to a specific described lot or area shall be removed for the blanket lien on the whole area involved.
RELEASE OF DEED:
An instrument executed by the mortgagee or the trustee reconveying to the mortgagor the real estate which secured the mortgage loan after the debt has been paid in full. Upon recording, it cancels the mortgage lien created when the mortgage was recorded.
RELEASE OF LIEN:
The discharge or release of specific property from the charge or lien of a mortgage, note or mechanics liens.
REMAINDER :
An estate, which takes effect after the termination of the prior estate.
RECISION OF CONTRACT:
The abrogation or annulling of a contract; the revocation or repealing of a contract by mutual consent of the parties to the contract.
REQUIREMENTS:
Conditions, which must be satisfied before a title insurance policy will be issued insuring marketable title to a parcel of real property.
RESPA:
Real Estate Settlement Procedures Act. Federal Law first enacted in 1974 to standardize real estate settlement procedures in the United States.
RESTRICTION:
A limitation on or prohibition of certain uses of real property. Restrictions may be found in public documents such as zoning ordinances or in private instruments such as deeds or declarations of covenants. They may apply to individual parcels (as in deed restrictions), to whole subdivisions (as in declarations of covenants appearing on or accompanying plats), or to entire by restrictions include such things as type of use permitted (e.g., residential, commercial or industrial), type of development permitted (e.g., quality, design and location of improvements), and privileges and duties of property owners (e.g., property maintenance, landscaping or keeping of animals).
RESTRICTIVE COVENANT:
A clause in a deed or other instrument limiting the use to which the property may be put.
REVERSION:
The right to future possession or enjoyment by the person who created the present estate, or by his heirs.
REVERSIONARY INTEREST:
The interest, which a person has in lands or other property, upon the termination of the preceding estate.
RIGHT OF FIRST REFUSAL:
The right to have the first opportunity either to purchase or lease real property. The holder of a right of first refusal cannot exercise the right until the owner actually offers the property for sale.
RIGHT OF SURVIVORSHIP:
Right to acquire the interest of a deceased joint owner; distinguished feature of a joint tenancy. A characteristic of a joint tenancy; upon the death of one of the joint tenants, his rights in the property pass automatically to the surviving tenant or tenants.
RIGHT OF WAY:
An easement or right of passage over another's land; the strip of land used as a roadbed by a railroad or used for a public purpose by other public utilities. The right or privilege to pass over a designated portion of the property of another. A privilege operating as an easement upon land, whereby the owner, by grant, or by agreement, gives to another the right to pass over his land, to construct a roadway, or use as a roadway a specific part of his land, or the right to construct through and over his land, telephone, telegraph or electric power lines, or the right to place underground water mains, gas mains, or sewer mains.
RIPARIAN RIGHTS:
The rights of a landowner to the water, on, under or adjacent to his land. Literally "river-bank." That body of the law, which has to do with real property, located adjacent to rivers or other bodies of water.
RISK ANALYSIS:
A study, usually made by the lender, of the various factors that might affect the repayment of a loan.