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Real Estate Terms
G - L

GARNISHMENT - A legal process designed to provide a means for creditors to safeguard for themselves the personal property of a debtor which is in the hands of a third party ("garnishee").

GENERAL AGENT - One who is authorized to perform any and all acts associated with the continued operation of a particular job or a certain business.

GENERAL CONTRACTOR - A construction specialist who enters into a formal construction contract with a land owner or master lessee to construct a real estate building or project.

GENERAL PARTNER - A co-owner of a partnership who is empowered to enter into contracts on behalf of the partnership and who is fully liable for all partnership debts.

GIFT TAX - A graduated federal tax paid by a donor upon making a gift.

GOOD FAITH - Bona fide. An act is done in good faith if it is in fact done honestly, whether it be done negligently or not.

GOOD WILL - An intangible, salable asset arising from the reputation of a business.

GOVERNMENT SURVEY - A system of land description in which large blocks of land are divided into tracts bounded by imaginary lines conforming to the true meridian.

GRADUATED RENTAL LEASE - A lease in which the rent payments commence at a fixed, often low rate, but "step up" or increase at set intervals as the lease term matures.

GRANDFATHER CLAUSE - Common expression used to convey the idea that something which was once permissible continues to be permissible despite changes in the controlling law.

GRANTEE - The person who receives from the grantor a grant of real property.

GRANTOR - The person transferring title to, or an interest in, real property. A grantor must be competent to convey; thus, for example, an insane person cannot convey title to real property.

GROSS AREA - The total floor area of a building measured from the exterior of the walls (excluding those unenclosed).

GROSS INCOME MULTIPLIER - A useful rule of thumb to estimate market value of income producing residential property. The multiplier is derived by using comparable sales divided by the actual or estimated monthly rentals and arriving at an acceptable average.

GROSS LEASE - A lease of property under which the lessee pays a fixed rent, and the lessor pays the taxes, insurance, and other charges regularly incurred through ownership.

GUARDIAN - One who is given the lawful custody and care of another(called a ward).

H

HABENDUM CLAUSE - That part of the deed beginning with the words "to have and to hold," following the granting clause and reaffirming the extent of ownership that the grantor is transferring.

HABITABLE - Being fit to live in. The residential landlord has an obligation to keep the leased premises in a habitable condition.

HEIR - A person who inherits under a will or a person who succeeds to property by the laws of descent if the decedent dies without a will (intestate).

HIGHEST AND BEST USE - That use which, at the time of appraising the property, is most likely to produce the greatest net return to the land and/or the building over a given period of time.

HIGH RISE - A popular expression for a condominium or apartment building generally higher than six stories.

HOLD HARMLESS CLAUSE - A clause inserted in a contract whereby one party agrees to indemnify and protect the other party from any injuries or lawsuits arising out of the particular transaction.

HOLDOVER TENANT - One who stays on the leased premises after his lease has expired. The landlord normally has the choice of evicting the holdover tenant or permitting him to remain and continue to pay rent.

HOMEOWNER'S ASSOCIATION - A non-profit association of homeowners organized pursuant to a declaration of restrictions or protective covenants for a subdivision, a PUD, or a condominium.

HOMESTEAD - A home which is used as a personal residence.

HOUSE RULES - Rules of conduct adopted by a board of directors of a condominium and designed to promote harmonious living among the owners and occupants.

HUD - A federal cabinet department officially known as the Department of Housing and Urban Development.

HYPOTHECATE - To pledge specific real or personal property as security for an obligation, without surrendering possession of it.

I

IMPLIED WARRANTY OF HABITABILITY - A legal doctrine imposing on the landlord a duty to make the leased premises acceptable to live in and ready for occupancy and to continue to maintain them in a state of repair throughout the entire term of the lease.

IMPOUND ACCOUNT - A trust account established to set aside funds for future needs.

IMPROVED LAND - Real property whose value has been enhanced by the addition of on-site and off-site improvements such as roads, sewers, utilities, buildings, etc.; as distinguished from raw land.

IMPROVEMENTS - Valuable additions made to property, amounting to more than repairs, costing labor and capital and intended to enhance the value of the property. Improvements of land would include grading, sidewalks, sewers, streets, utilities, etc. Improvements on land would include buildings, fences, and the like.

IMPUTED INTEREST - Interest implied by the federal tax law.

INCOME APPROACH - An approach to the valuation or appraisal of real property as determined by the amount of net income the property will produce over its remaining economic life.

INCOME PROPERTY - Property purchased primarily for the income to be derived plus certain tax benefits, such as accelerated depreciation. Income property can be commercial, industrial or residential.

INCORPOREAL RIGHTS - Intangible or non-possessory rights in real property such as easements, licenses, profits and the like.

INDEPENDENT CONTRACTOR - One who is retained to perform a certain act, but who is subject to the control and direction of another only as to the end result and not as how he performs the act. The critical feature, and what distinguishes an independent contractor and an employee or agent, is the right to control.

INDUSTRIAL PARK - An area zoned industrial and containing sites for many separate industries and developed and managed as a unit, usually with provisions for common services for the users.

INJUNCTION - A legal action which forbids a party defendant from doing some act; it requires a person to whom it is directed to refrain from doing a particular thing.

INSPECTION - A visit to and review of the premises. A prudent purchaser of property always inspects the premises before closing.

INSTITUTIONAL LENDER - Financial institutions such as banks, insurance companies, savings and loans or any lending institution whose loans are regulated by law.

INTEREST - The sum paid or accrued in return for the use of money.

INTERIM FINANCING - A short-term loan usually made during the construction phase of a building project; often referred to as the "construction loan."

INTESTATE - To die without a valid will.

INVENTORY - An itemized list of property. Many brokers recommend that their clients attach to the sales contract an inventory of property to be included in the sale of a residential property, including a condominium dwelling.

INVERSE CONDEMNATION - An action for "just compensation "brought by one whose property has been effectively "taken" or substantially interfered with or taken without just compensation

J

JOINT AND SEVERAL LIABILITY - A situation in which more than one party is liable to repay a debt or obligation and a creditor can obtain compensation from one or more parties, either individually or jointly, whichever he chooses.

JOINT TENANCY - A form of property ownership by two or more persons in which the joint tenants have one and the same interest, arising by one and the same conveyance, commencing atone and the same time and held by one and the same possession (the concept of "four unities").

JOINT VENTURE - The joining of two or more people in a specific business enterprise such as the development of a condominium project or a shopping center.

JUDGMENT LIEN - A lien binding on all the real estate of a judgment-debtor and giving the holder of the judgment a right to levy (i.e. to seize) the land for satisfaction of the judgment.

JUDICIAL FORECLOSURE - A method of foreclosing upon real property by means of a court supervised sale. After an appraisal, the court determines an upset price below which no bids to purchase will be accepted.

JUNIOR MORTGAGE - A mortgage which is subordinate in right or lien priority to an existing mortgage on the same realty, such as a second mortgage.

JURISDICTION - The authority or power to act, such as the authority of a court to hear and render a decision that binds both parties.

JUST COMPENSATION - An amount of compensation to be received by a party for the taking of property under the power of eminent domain.

L

LAND - The surface of the earth extending down to the center and upward to the sky, including all natural things thereon such as trees, crops, or water; plus the minerals below the surface and the air rights above.

LAND CONTRACT - Another name for an installment purchase contract, by which the buyer obtains equitable title (the right to use the property) while the seller retains legal title (recorded title) as security for payment of the balance of the purchase price.

LAND DESCRIPTION - A description of a particular piece of real property.

LAND LEASEBACK - A creative financing device often used with raw land which a developer wants to improve, in which the developer sells the land to an investor who leases the land back to the developer under a long-term net lease and subordinates his fee ownership to the lender providing development financing.

LAND, TENEMENTS AND HEREDITAMENTS - A feudal phrase used to describe all types of immovable realty including the land, buildings and all appurtenant rights thereto.

LAND TRUST - An association organized by common owners of real property, which holds title to the real property in the name of one or more trustees for the benefit of the owners, whose beneficial interests may be represented by trust certificates.

LANDLOCKED - Real property having no access to a public road or way.

LANDLORD - The lessor or the owner of leased premises. The landlord retains a reversion interest in the property so that when the lease ends the property will revert to the landlord.

LANDMARK - A stake, stream, cliff, monument or other object or feature which is used to fix or define land boundaries; also a prominent feature of a landscape or property that is the symbol for the place.

LANDSCAPING - Shrubs, bushes, trees and the like, on the grounds surrounding a structure.

LATERAL AND SUBJACENT SUPPORT - The support received by a parcel of real property from the land adjoining it is called lateral support. Subjacent support is that support which the surface of the earth receives from its underlying strata.

LAW DAY - The date an obligation becomes due; sometimes refers to the closing date.

LEASE - A lease is both a contract between lessor (landlord) and lessee (tenant) and a conveyance or demise of the premises by the lessor to the lessee. A lease is a contract in that item bodies the agreement between the parties.

LEASEHOLD - A less-than-freehold estate which a tenant possesses in real property.

LEGAL DESCRIPTION - A description which is complete enough that an independent surveyor could locate and identify a specific piece of real property.

LEGAL NOTICE - That notice which is either implied or required by law. Constructive notice under the recording laws is also referred to as legal notice.

LEGAL RATE OF INTEREST - The maximum interest rate permitted bylaw, with anything above that rate being usury.

LESSEE - The person to whom property is rented or leased; called a "tenant" in most residential leases.

LESSOR - The person who rents or leases property to another. In residential leasing, the lessor is often referred to as a landlord.

LESS-THAN-FREEHOLD ESTATE - An estate held by one who rents or leases property. This classification includes an estate for years, periodic tenancy, estate at will, and estate at sufferance.

LETTER OF CREDIT - An agreement or commitment by a bank ("issuer") made at the request of a customer ("account party") that the bank will honor drafts or other demands of payment from third parties ("beneficiaries") upon compliance with the conditions specified in the letter of credit.

LETTER OF INTENT - An expression of intent to invest, develop or purchase without creating any firm legal obligation to do so.

LEVEL PAYMENT MORTGAGE - A mortgage which is scheduled to be repaid in equal periodic payments which include both principal and interest.

LEVERAGE - The use of borrowed funds to purchase investment property with the anticipation that the property acquired will increase in return so that the investor will realize a profit not only on his own investment, but also on the borrowed funds; the employment of a smaller investment to generate a larger rate of return through borrowing.

LICENSEE - A person who has a valid license. A real estate licensee can be a salesperson or a broker, active or inactive, an individual, a corporation, or a partnership.

LIEN - A charge or claim which one person (lienor) has upon the property of another (lienee) as security for a debt or obligation. Liens can be created by agreement of the parties (mortgage) or by operation of law (tax liens).

LIFE ESTATE - Any estate in real or personal property which is limited in duration to the life of its owner or the life of some other designated person.

LIMITED COMMON ELEMENTS - That special class of common elements in a condominium reserved for the use of a certain apartment(s) to the exclusion of other apartments.

LIMITED PARTNERSHIP - A partnership formed by two or more persons having as members one or more general partners and one or more limited partners.

LINE OF CREDIT - A maximum amount of money a bank will lend one of its more reliable and credit worthy customers without need for any formal loan submission.

LIQUIDATED DAMAGES - An amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive in the event the other party breaches a specified part of the contract.

LIQUIDITY - The ability to sell an asset and convert it into cash at a price close to its true value.

LIS PENDENS - A legal document recorded in the Bureau of Conveyances, which gives constructive notice that an action has been filed in either a state or federal court affecting a particular piece of property. "Lis Pendens" is a Latin term which means "action pending" and is in the nature of a quasi-lien.

LISTING - A written employment agreement between a property owner and a broker authorizing the broker to find a buyer or a tenant for a certain real property.

LITTORAL LAND - Land bordering on the shore of a sea or ocean and thus affected by the tide currents.

LOAN COMMITMENT - A commitment by a lender of the amount he will loan to a qualified borrower on a particular piece of real estate for a specified amount of time under specific terms.

LOAN-TO-VALUE RATIO - The ratio that the amount of the loan bears to the appraised value of the property or the sales price, whichever is lower.

LOCUS SIGILLI - Latin for "under seal", used in the abbreviated form, "L.S.," at the end of signature line in some formal legal documents; used instead of the actual seal.

LOSS PAYEE - The person designated on an insurance policy to be paid in case the insured property is damaged or destroyed.