Real Estate Glossary - C - Chamberlin Real Estate School

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

CAL-FIRPTA
California’s version of the federal FIRPTA. It is a tax act which became effective in 1988 and was subsequently amended in September, 2002 to become a withholding tax for residents and non-residents who sell California real estate. Assembly Bill 2065 requires that all sales closing after December 31, 2002 in California withhold 3 1/3% of the sales price for certain California real property transactions. (See FIRPTA)

Cal-Vet
A program to help eligible California Veterans finance the purchase of farms and ranches within the state. Information can be found at CA Department of Veterans Affairs and Cal-Vet Loan Programs

CalHFA loan program
The California Housing Finance Agency provides low down payment fixed-rate financing at below-market interest rates.

California Attorney General
The Attorney General represents the people of California in civil and criminal matters before trial courts, appellate courts and the supreme courts of California and the United States. The Attorney General also serves as legal counsel to state officers and, with few exceptions, to state agencies, boards and commissions.

The Attorney General assists district attorneys, local law enforcement, and federal and international criminal justice agencies in the administration of justice. To support California’s law enforcement community, the Attorney General coordinates statewide narcotics enforcement, participates in criminal investigations and provides forensic science services, identification and information services and telecommunication support.

Under the state Constitution, the Attorney General is elected to a four-year term in the same statewide election as the Governor, Lieutenant Governor, Controller, Secretary of State, Treasurer, Superintendent of Public Instruction and Insurance Commissioner. In 1990, voters imposed a two-term limit on these statewide offices. Information can be found at CAG Homepage.

California Bureau of Real Estate Appraisers (BREA)
California office, part of the California State Transportation Agency, that licenses and regulates Real Estate Appraisers. Information can be found at www.brea.ca.gov.

California Department of Fair Employment and Housing
California agency that enforces anti-discrimination laws. Information can be found at www.dfeh.ca.gov

California Department of Financial Protection & Innovation
California agency that regulates licensees and industries formerly under the control of the Department of Corporations and Department of Financial Institutions. More information is available at dfpi.ca.gov/.

California Department of Insurance
The California agency that regulates insurers. Information can be found at www.insurance.ca.gov

California Department of Public Health
California agency that regulates construction activities affecting the water supply and other public health issues; formerly part of the California Department of Health Services. The California agency that regulates insurers. Information can be found at www.cdph.ca.gov

California Department of Real Estate (DRE)
California agency that administers the Real Estate Law, including the licensing of real estate brokers and salespeople.

California Department of Veterans Affairs
Provides California veterans and their families with aid and assistance in presenting their claims for veterans’ benefits under the laws of the United States; to provide them with beneficial opportunities through direct low-cost loans to acquire farms and homes; and to provide the state’s aged or disabled veterans with rehabilitative, residential, and medical care and services in a home-like environment at the California Veterans Homes. Information can be found at CA Department of Veterans Affairs

California Environmental Quality Act
The Act allows local governments to require environmental impact reports for private or government projects that may have a significant impact on the environment. (See environmental impact report, National Environmental Policy Act)

California finance lender
Licensee under the California Finance Lenders Law who is in the business of making consumer loans or commercial loans in which personal property may be used as collateral. Information can be found at dfpi.ca.gov/california-financing-law/

California Finance Lenders Law
Allows licensed California lenders to make consumer or commercial loans in which personal property may be used as collateral.

California Foreclosure Reduction Act
Effective January 1, 2013, revised procedure for non-judicial foreclosures; also known as the California Homeowner Bill of Rights.

California Franchise Tax Board
California department that collects state personal income taxes and bank and corporation taxes. (See franchise tax)

California good funds law
The California state law that specifies when funds deposited into escrow may be disbursed. (See escrow holder)

California Health and Safety Code
California Health and Safety Code (HSC) Section 18035(a) requires that an escrow account be opened for dealer sales and leases of new or used manufactured homes subject to registration by HCD.

California Homeowner Bill of Rights
(See California Foreclosure Reduction Act)

California Housing Financial Discrimination Act of 1977
Also known as the Holden Act. A California act prohibiting discrimination by a lender for any reason unrelated to the creditworthiness of the loan applicant.

California property tax chart
The chart used by escrow holders which shows the property taxes due from the buyer and seller respectively based on the escrow closing month.

California Residential Mortgage Lending Act
An act administered by the Commissioner of Corporations which provides licensing authorizing mortgage lending and brokering. Information can be found at dfpi.ca.gov/california-residential-mortgage-lending/

California Solar Initiative (CSI)
California Solar Initiative State law effective January 1, 2008, that requires municipal utilities to offer a solar incentive program to customers.

California withholding
California withholding requires real estate transferees (buyers) to withhold a certain portion of the sales price paid for specified California real property from funds that would otherwise be paid to sellers. According to the law, the amount withheld must be held in trust for the State of California. Originally implemented in 1988, California tax withholding was amended in 2002 with provisions that became effective for real property transfers that occurred on or after January 1, 2003.

callable debt
A debt security whose issuer has the right to redeem the security at a specified price on or after a specified date, but prior to its stated final maturity.

caller identification service
A service that allows a telephone subscriber to have the telephone number, and, where available, name of the calling party transmitted contemporaneously with the telephone call, and displayed on a device in or connected to the subscriber’s telephone.

canceling escrow
Providing written notification that an escrow is to be terminated; must be done by mutual consent of all parties to the escrow and in accordance with governing agreements. (See escrow)

candidate profile
A candidate profile defines the essential or minimum qualifications (knowledge and skill sets) to perform a job, and secondary qualifications that would be helpful. The more thought given to whom the company needs to hire, the more efficiently management can screen candidates. Developing a candidate profile is a way to convert desired qualifications to a hiring guide.

canons of business ethics
Common law rules that govern the practice of business.

capacity
The amount of data that can be stored on a computer disk.

capacity of parties
The legal ability of people or organizations to enter into a valid contract. A person entering into a contract will have full, limited or no capacity to contract.

No capacity to contract: The inability of a person to enter into a valid contract under any circumstances. Such inability can arise when a person has been adjudicated insane or is an officer of a corporation who is not authorized to execute a contract in behalf of a corporation.

Cape Cod
One-and-a-half story house with sufficient head room in the second floor to provide livable space.

capital
Capital is defined as the amount of common stock outstanding and unimpaired, plus the amount of perpetual preferred stock outstanding and unimpaired.

capital asset
A long-term asset that is not bought or sold in the regular course of business.

capital expenditure
Capital expenditure, often referred to as CapEx, is money spent by a business or organization to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment. This type of expenditure is typically intended for investment in assets that will have long-term benefits and are not consumed or fully used up within a single accounting year.

capital gain
Profit earned from the sale of an asset, where the sales price was greater than the adjusted basis. (See adjusted basis, deferred capital gain, excluded capital gain, realized capital gain (loss), recognized capital gain)

capital gains exemption
The capital gains exemption applies when a primary residence is sold. Married people can make up to $500,000 in profit, and not pay capital gains. Individuals can realize up to $250,000 in profit and not pay capital gains. The property owner must have lived in the property for two of the last five years.

capital improvement
A structure or other addition to property or an addition or alteration to an existing improvement that adds value to the property, substantially increases its useful life, or makes the property suitable for a new use.

capital improvements
The addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increases its useful life. Capital improvements can be made by both individual homeowners and large-scale property owners (such as cities, counties, states or land developers).

capital loss
Loss sustained from the sale of an asset, where the sales price is less than the adjusted book basis. (See adjusted basis)

capital market
The market for securities, including stocks and bonds, that allows companies and governments to raise funds.

capital recapture
The return of an investment; the right of the investor to get back the amount invested at the end of the term of ownership or over the productive life of the improvements.

capitalism
An economic system where private individuals and/or organizations make the majority of decisions about the production and distribution of goods and services. Also called a ‘market economy.’

capitalization
A mathematical process for converting net income into an indication of value, commonly used in the income approach to value. The net income of the property is divided by an appropriate (capitalization) rate of return to give the indicated value. (Income ÷ Rate = Value)

capitalization rate
The rate of return a property will produce on the owner’s investment.

capitalized value method
A method of computing depreciation by determining loss in rental value attributable to a depreciated item and applying a gross rent multiplier to that figure. (See gross rent multiplier)

capping
The process at of laying two to four feet of soil over the top of a landfill site and then planting vegetation to prevent erosion and enhance the landfill’s aesthetic value. (See landfill)

caps
Yearly and/or life-of-loan limitations on the amount of variation allowed when adjusting interest on variable-rate loans. (See adjustable rate mortgage (ARM), rate cap)

caravan
A group tour by a real estate office’s sales agents to view listed properties. (See agent property evaluation)

carbohydrate
Any of various neutral compounds of carbon, hydrogen, and oxygen (as sugars, starches, celluloses) most of which are formed by green plants and which constitute a major class of animal foods. Carbohydrates, along with proteins and lipids constitute the principal structural components of living cells. (See lipids, protein)

carbon monoxide (CO)
A colorless, odorless gas that occurs as a byproduct of burning such fuels as wood, oil and natural gas due to incomplete combustion. For further information, see the Fact Sheet on Carbon Monoxide published by the National Safety Council on Carbon Monoxide.

carbon monoxide device
A device that is designed to detect carbon monoxide and produce a distinct, audible alarm. It can be a battery-powered device, a plug-in device with battery backup, or a device installed as recommended by Standard 720 of the National Fire Protection Association that is either wired into the alternating current power line of the dwelling unit with a secondary battery backup or connected to a system via a panel. For Further Information, see: Carbon Monoxide Poisoning Prevention Act

carcinogen
A cancer producing substance. (See asbestos, radon)

care
The agent must exercise a reasonable degree of care while transacting the business entrusted to him or her by the principal. The principal expects the agent’s skill and expertise in real estate matters to be superior to that of the average person. The most fundamental way in which the agent exercises care is to use that skill and knowledge on the principal’s behalf. The agent should know all facts pertinent to the principal’s affairs, such as the physical characteristics of the property being transferred and the type of financing being used. (See agent, law of agency, principal)

career assessment instruments
Tests and inventories that help clients learn more about their interests, values, and skills so that they can make well-informed decisions about their future.

career coaches
Career coaches provide an interactive process of exploring work-related issues-leading to effective action. The coach acts as both a catalyst and facilitator of individual and, in turn, organizational development and transformation. It is an ongoing partnership that does not focus on the past’s impact on the present or directly on relieving psychological pain or treating cognitive or emotional disorders.

career counselors
Professional career counselors are academically trained to help people make and carry out decisions and plans related to career/life issues. They tailor their services to the specific needs of the person seeking help. For more information on the services that career counselors provide, view www.ncda.org. Link to Consumer Guidelines to Selecting a Career Counselor.

career development facilitators
The CDF credential was developed to provide standards, training specifications and credentialing for career providers who are currently providing career assistance, such as career group facilitator, job search trainer, career resource center coordinator, career coach, career development case manager, intake interviewer, occupational and labor market information resource person, human resource career development coordinator, employment/placement specialist, or workforce development staff person.

career planning
General information about the process of career development.

carry-back
Financing where the seller takes back a note for part of the purchase price secured by a junior mortgage, wraparound mortgage or contract for deed. (See wraparound, junior mortgage)

case law
Case law is law that is based on judicial decisions rather than law based on constitutions, statutes, or regulations. Case law concerns unique disputes resolved by courts using the concrete facts of a case. By contrast, statutes and regulations are written abstractly. The term “case law” is also used interchangeably with common law, which refers to the collection of precedents and authority set by previous judicial decisions on a particular issue or topic. In that sense, case law differs from one jurisdiction to another.

cash basis
In accounting, a system of recognizing revenue and expense items only at the time cash is received or paid out. (See accrual basis)

cash equivalency technique
A method of adjusting a sales price downward to reflect the increase in value due to assumption or procurement by a buyer of a loan at an interest rate lower than the prevailing market rate.

cash flow
Cash flow refers to the movement of money into and out of a rental property over a specific period. Cash flow is typically measured and reported using a financial statement called the “cash flow statement”.

cash flow analysis
A cash flow analysis shows the effect an investment property has on an owner’s income in terms of tax benefits. Analyzes the return on investment after taxes on an income producing property. Measures the property manager’s performance from period to period by comparing income and expenses for a given property.

cash flow report
A cash flow report is a financial document that tracks the amount of cash generated and spent by a business during a specific period. It provides a detailed breakdown of various cash inflows, from operations, investments, and financing activities, and cash outflows to these same categories. This report helps stakeholders understand the liquidity position of the business, showing how well it manages its cash to fund operations, pay debts, and invest in growth.

cash flow statement
A cash flow statement is one of the quarterly financial reports any publicly traded company is required to disclose to the SEC and the public. The document provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given quarter.

cash for keys
Often, when a home is undergoing foreclosure, or has already been foreclosed, the new owner will send a representative to to the home to discuss incentives for the former owner to move out. A smart owner will offer the former owner the necessary cash to move out right away or within a short period of time. Its common for a representative of the new owner to offer $5000 to move out in 30 days or $3000 to move out in 60 days.

cash management plan
The cyclical nature of the real estate business and the time lag between signatures on the contracts and settlement makes cash flow erratic. The objective of a cash management plan is to provision a company with the right amount of cash at the right time and make the best use of cash until it is needed to meet the company obligations.

cash method
The cash method is an accounting method where receipts are recorded during the period they are received, and the expenses in the period in which they are actually paid.

cash now
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative cash flow results.

cash on cash return
Cash on cash return is a calculation for measuring the potential performance of a property targeted for investment. An investor estimates the monthly rental income the property can generate, subtracts a vacancy percentage, then subtracts all the conservatively researched monthly expenses, then subtracts the mortgage payment to get a monthly cash flow. Multiply that monthly cash flow by 12 months and divide it by the hard earned cash equity the buyer invested. The percentage calculated is the Cash on Cash Return.

cash out scheme
Where a buyer offers a large cash downpayment and asks the seller to carry-back the balance as a subordinate trust deed. (See carry-back, subordination clause)

cash rent
In an agricultural lease, the amount of money given as rent to the landowner at the outset of the lease, as opposed to share cropping.

cash-out
When a seller of a property wants to receive the entire sales price in cash with no carry-back financing. (See carry-back)

casita
A small house.

casualty
Casualty insurance policies include coverage against theft, burglary, vandalism and machinery damage as well as health and accident insurance. Casualty policies are usually written on specific risks, such as theft, rather than being all-inclusive.

catabolism
The destructive aspect of metabolism involving the release of energy through the breaking down of complex materials within the organism. (See metabolism)

cause
Something that precedes and usually induces an effect or result. (See effect)

caveat emptor
A Latin phrase meaning “let the buyer beware.” A buyer should inspect the goods or realty before purchase.

CC&Rs
Covenants, conditions and restrictions are limitations on land use, which are imposed by deeds, usually when land is subdivided. CC&Rs are a means of regulating building construction, density and use. May be referred to simply as restrictions. (See covenant, condition, restriction, deed restrictions, restrictive covenants)

CD
Compact disk (See CD-R, CD-ROM, CD-RW)

CD-R
Recordable Compact Disk. A disk that can be written to by using the proper kind of CD-drive. It can only be written to one time. (See CD-ROM, CD-R, CD-RW)

CD-ROM
Compact Disk-Read Only Memory. The most commom CD format. Data can only be read from the disck, not written to the disk. (See CD-R, CD-RW)

CD-RW
Rewritable Compact Disk. Users can save, erase and write new data to the same disk. Made from difference materials than CD-ROM and CD-R disks. (See CD-ROM, CD-R)

cease and desist order
A cease and desist (also called C & D) is an order or request to halt an activity (cease) and not to take it up again later (desist); or else face legal action. The recipient of the cease-and-desist may be an individual or an organization.

census bureau
The Census Bureau’s mission is to serve as a source of quality data about the United States population and economy. The Bureau makes every effort to honor privacy, protect confidentiality, and conduct their work openly. The Census Bureau operates under Title 13 and Title 26 of the U.S. Code.

centers of influence
Influential people in a community. Real estate agents cultivate relationships with these “centers of influence” as a method of locating prospects in the community where the person has influence. Also known as “bird dogs,” indicating that these people “point the way” to new prospects.

central bank
A Central Bank is a governmental institution responsible for issuing currency and regulating monetary policy, which involves the overall growth of money and credit and the level of short-term interest rates. The Federal Reserve is the central bank of the United States. (See Federal Reserve, monetary policy)

Central Processing Unit (CPU)
A CPU is the brain of a computer. The CPU processes all the basic and expert instructions that run a copmuter. (See microchip, microprocessor, RAM, ROM, SDRAM)

certificate of discharge
Document that is recorded by a mortgagee as evidence of the release of the mortgagee’s lien rights.

certificate of eligibility
A certificate issued by a Veterans Administration regional office to veterans who qualify for a VA loan. The Veteran Housing Act permits regional administrators to restore a veteran’s entitlement to loan-guarantee benefits after his or her property purchased with an existing VA-guaranteed loan has been disposed of and 1. this loan has been paid in full; 2. the administrator is released from liability under the guarantee or 3. any loss suffered by the administrator has been repaid in full. It is no longer required that property ownership was transferred for a compelling reason.

The act also authorizes regional administrators to restore a veteran/seller’s entitlement to loan-guarantee benefits and release the veteran from liability to the VA when another veteran has agreed to assume the outstanding balance on the veteran/seller’s existing VA-guaranteed loan and consented to the use of his or her entitlement to the same extent that the veteran/transferor had used the original entitlement. This is not a release from the lender, however. The veteran/transferee and the property must otherwise meet the requirements of the law. Reinstatement of eligibility is never automatic but must always be applied for, preferably at the time of the sale of property purchased with an existing VA-guaranteed loan.

Many veteran/sellers presume that they are eligible for a new VA loan after selling their property by way of a loan assumption. In a loan assumption, the broker should point out that for the seller to have complete VA entitlement restored, the buyer must be a veteran and must agree in the sales contract to substitute his or her entitlement for the seller’s. (See VA loan)

certificate of occupancy (CO)
A certificate issued by a governmental authority indicating that a building is ready and fit for occupancy and that there are no building code violations. Some condominium developers insert language into the sales contract to the effect that upon notification that the units are ready for occupancy, the buyer must accept the unit despite any construction defects that may exist, although acceptance will not bar the buyer from obtaining redress for such defects. Once the building has been certified for occupancy the developer can then close the individual sales, transfer title to the buyers and, most important, begin to pay off the construction loan and eliminate the interest payments.

certificate of reasonable value (CRV)
A certificate insured by the Veterans Administration setting forth a property’s current market value estimate, based on a VA-approved appraisal. The CRV places a ceiling on the amount of a VA-guaranteed loan allowed for a particular property. (See VA loan)

certificate of redemption
Issued by the county tax collector when all past due amounts have been paid.

certificate of sale
Document received by the bidder at a tax sale or judicial foreclosure sale; replaced by a deed if the debtor fails to redeem the property during the statutory redemption period.

certificate of status
Document issued by the California secretary of state showing a corporation’s place of domicile, date of incorporation, corporate number, name and address of agent for service of process, and other information about the corporation.

certificate of title
A statement of opinion prepared by a title company, licensed abstracter or an attorney on the status of a title to a parcel of real property, based on an examination of specified public records. This certificate of title should not be confused with the certificate of title that is issued to a titleholder of land registered under the Toreens system, or with a title insurance policy.

A certificate of title does not guarantee title, but it does certify the condition of title as of the date the certificate is issued, on the basis of an examination of the public records maintained by the recorder of deeds, the county clerk, the county treasurer, the city clerk and collector and clerks of various courts of record. The certificate also may include records involving taxes, special assessments, ordinances, zoning and building codes.

Note that a certificate of title does not offer protection against “off -the-record” matters such as undisclosed liens, rights of parties in possession and matters of survey and location. Nor does it protect against “hidden defects” in the records themselves, such as fraud, forgery, lack of competency or lack of delivery. A title insurance policy, not a certificate of title, protects against certain off-the-record and hidden defects risks.

Certified Apartment Manager
An individual who has completed professional Apartment Association training on tenant credit, maintenance, legal forms and other topics relating to on-site property management.

Certified Commercial Investment Member
A Certified Commercial Investment Member (CCIM) is a recognized expert in the disciplines of commercial and investment real estate. Only 6 percent of the estimated 125,000 commercial real estate practitioners nationwide hold the CCIM designation.
CCIM Homepage

Certified Property Manager
Professional certification given by the Institute of Real Estate Management (IREM).
IREM Homepage

cessation of work
In California legal terms, “cessation of work” refers to the stopping or halting of work or employment, either temporarily or permanently. In California construction law, cessation of work is defined as a period of 60 continuous days without any work being conducted on a construction project. (See notice of cessation)

CFPB
The Bureau has issued the Final Rule that will simplify and improve disclosure forms for mortgage transactions.

chain of command
A system where authority passes from the top down through a series of executive positions in which each is accountable to the one directly superior.

chain of title
The history of conveyances and encumbrances affecting the present owner’s title to property, as far back as records are available. (See conveyance)

change
The appraisal principle that holds that no physical, economic, social, or political condition remains constant. (See appraisal)

change
To make or become different; to undergo a modification.

change in ownership
For property tax purposes, a change in ownership in real property is the transfer of a present interest in real property, including the transfer of the rights to the beneficial use thereof, the value of which is substantially equal to the value of the fee interest. All three factors must be present in order for a change in ownership to occur. Often a change in, or transfer of, title may indicate a change in ownership, which generally occurs upon the purchase, sale, gift, or inheritance of real property.

changed circumstances
Changed circumstances are 1) Acts of God, war, disaster, or other emergency; 2) Information particular to the borrower or transaction that was relied on in providing the Good Faith Estimate (GFE) and that changes or is found to be inaccurate after the GFE is provided, which may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE; 3) New information particular to the borrower or transaction that was not relied on in providing the GFE; or 4) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.

chapter 13 bankruptcy
Chapter 13 bankruptcy sets a payment plan between the borrower and the creditor monitored by the court. The homeowner can keep the property, but must make payments according to the court’s terms within a 3 to 5 year period.

chapter 7 bankruptcy
Chapter 7 bankruptcy requires assets be liquidated in exchange for the cancellation of debt.

charge-off
The portion of principal and interest due on a loan that is written off when deemed to be uncollectible.

chattel
The word chattel evolved from the word cattle, one of the early important possessions. Chattels real are annexed to real estate, whereas, chattels personal are movable. A lease is an example of a chattel real. (See personal property)

chlorofluorocarbons
Nontoxic, nonflammable chemicals containing atoms of carbon, chlorine, and fluorine, such as air conditioners and refrigerators. CFCs are safe in application but cause ozone depletion.

choose
To freely select.

chronological log or systematic manner
The phrase “chronological log or systematic manner” simply means that if the folder is maintained in hardcopy form, the hard copies of documents should be in transaction folders, and the folders should be systematically arranged in the file drawer. If the folder is maintained in electronic form, then all transaction records must be also organized systematically. The arrangement can be either chronological or in some other systematic manner, such as in alphabetical order.

chronological resume
Resume format that is organized by date and job title. It emphasizes whom you worked for, what you did, and when you did it.

chunking
A fraudster promises to show investors how to get rich buying investments. They submit multiple loan applications to various lenders without disclosing the intent to purchase other properties. Sometimes, the fraudster promises to handle the transactions, including leasing the properties, and takes a cut of the profit without ever leasing the property.

churning
Excessive selling or lending activity for the purpose of generating fees and commissions. In some cases, the lender steps the rate down through multiple refinances. Each refinance is only to a slightly lower rate until the pre-arranged rate is reached.

cimex
Cimex species are ectoparasites that typically feed on the blood of birds and mammals. Two species, Cimex lectularius and Cimex hemipterus, are known as bed bugs and frequently feed on humans.

circulation
Flow; orderly movement through a circuit; the movement of fluids through the vessels of the body.

circulatory system
The system of blood, lymph, blood vessels, lymph vessels, and heart muscle concerned with the circulation of body fluids. (See blood, lymph)

City Beautiful movement
Emphasizing design and aesthetics, the City Beautiful movement emerged from the 1893 Columbian Exposition in Chicago. The Exposition provided a prominent American example of a great group of buildings designed in relation to each other and in relation to open spaces.

City Efficient movement
The City Efficient Movement saw the passage of new laws and court cases relative to land use, zoning, subdivision control, and administrative planning regulation. Civil engineers, attorneys, and public administrators began to play a larger role in city planning with an increase in demand for public services and facilities such as highways and sanitary sewers.

City Functional movement
This movement emphasized functionalism and administrative efficiency, and contributed to the federal government’s increased involvement in local planning and the passage of Section 701 of the Housing Act in 1954. The 701 program subsidized thousands of general plans and special projects for cities, counties, regional councils of government, and states until 1981.

City Humane movement
This movement concentrated on social and economic issues and ways of alleviating the problems of unemployment, poverty, and urban plight.

city planning
Land-use recommendations adopted by local jurisdiction, determined by use of demographic, geographic, economic, and other data.

civil action
An action where an issue, formed by some kind of complaint, is presented for trial. Proceedings are for declaration, enforcement, protection of a right, redress, or prevention of a wrong.

civil law
A system of law codified by statutes. (See common law, constitutional law, Roman Civil Law, statutory law)

civil lawsuit verification
Checking a prospective resident/tenant’s past civil lawsuit history. It can usually be reviewed by checking the owner/landlord’s local county court database and any other areas where the prospective resident/tenant may have lived, or businesses they own or owned.

Civil Rights Act of 1866
The Civil Rights Act of 1866 prohibits racial discrimination in the sale and rental of housing.

Civil Rights Act of 1870
The Voting Rights Act of 1870 (aka, Civil Rights Act of 1870) includes a clause reaffirming the remedies of the Civil Rights Act of 1866.

Civil Rights Act of 1964
The first modern civil rights act made into law by President John F. Kennedy’s Executive Order 11063 prohibiting discrimination in housing where federal funds were involved. (See Federal Fair Housing Law)

Civil Rights Act of 1968
In 1968, Congress enacted Title VIII of the Civil Rights Act, called the federal Fair Housing Act, which declared a national policy of providing fair housing throughout the United States (Reference Sections 3601-3631 of Title 42, United States Code). This law makes discrimination based on race, color, sex, familial status, handicap, religion or national origin illegal in connection with the sale or rental of most dwellings and any vacant land offered for residential construction or use.

Civil Rights Housing Act of 2006
California’s Civil Rights Housing Act of 2006 provides that, as of January 1, 2007, all of the protected classifications of FEHA are extended automatically to all other nondiscrimination laws; this includes the Unruh Civil Rights Act.

class 6 felony (AZ)
A class 6 felony is the least serious of the six felony classifications (classes 1-6, class 1 being the most serious). In Arizona, the minimum penalty for a class 6 felony is .33 years imprisonment. However, in Arizona, if a court is of the opinion that it would be unduly harsh to issue a sentence for a felony, the court may enter judgment of conviction for a class 1 misdemeanor; or place the defendant on probation and refrain from designating the offense as a felony or misdemeanor until the probation is terminated.

classified ads
Advertisements purchased by the line and placed in the classified ad section of newspapers or real estate magazines. Used primarily for advertising residential properties and rentals. (See display ads)

classified ads
The want ads in your local newspaper.

clear title
A property title that has no defects. Properties with clear titles are marketable for sale.

clerical or support duties
Clerical or support duties may include, subsequent to the receipt of an application, the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan. Communicating with a consumer to obtain the information necessary for the loan processing to the extent that such communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms.

client
The person who employs an agent to perform a service for a fee. In traditional real estate brokerage, the client is the seller, and the buyer is the prospect or customer. In modern practice, more and more buyers are seeking representation as a client. Dual agency occurs when a broker represents the seller and the buyer as clients.

client server
A computer (server) located in a remote location that processes a request for data and returns the results of the request to the requesting (client) computer.

CLIMB job interview process
A process that you can follow to prepare for the job interview.

clipboard
A section of computer memory used to temporarily hold data that has been cut or copied for transfer to another document or location within a document. The clipboard can hold only one thing at a time.

clock hour
According to Arizona Real Estate Department regulations, one clock hour is equal to 50 minutes.

close-of-escrow/closing
The consummation of a real estate transaction, when the seller delivers title to the buyer in exchange for payment by the buyer of the purchase price. Closing in some areas may not occur until the documents are recorded; however, under general rules of real estate law, transfer of title takes place upon delivery of the deed to the grantee. (See escrow)

closed-record state
A closed-record state typically refers to a legal framework in which certain government records or documents are restricted from public access or disclosure. In these states, laws are in place to limit public access to certain types of government records, often for reasons such as privacy protection, national security, or to maintain the integrity of ongoing investigations.

closing
An event where promises made in a sales contract are fulfilled and real estate loan funds (if any) are distributed to the buyer.

closing agent
A closing agent is a person, including a title insurance agent or a title insurance company, that acts in the normal course of business in a fiduciary capacity as a disinterested third party for the seller and buyer of real property for the purpose of consummating a sale of real property, including the preparation of deeds, mortgages, promissory notes, deeds of trust, real estate contracts, assignments, or other documents incidental to the sale as permitted by law; calculations and disbursements of prorated taxes, insurance premiums, utility bills, and other charges incidental to the sale; preparation of sellers’ and buyers’ closing statements; supervision of signing of documents; collection and disbursement of down payments, commissions of real estate licensees, fees, and other charges pursuant to a sales agreement and recordation of documents.

closing costs
Expenses of the sale (or loan refinancing) that 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). Some closing costs result from legal requirements; others are a matter of local custom and practice. Typical closing costs include charges for the mortgage loan such as origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayment of taxes and insurance, and real estate transfer taxes. A common estimate of a buyer’s closing costs is 2 to 4 percent of the purchase price of the home. A common estimate for seller’s closing costs is 3 to 9 percent.

closing disclosure
The name of the redesigned form to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. Replaces existing HUD-1 Settlement Statement and TILA Disclosure.

closing statement
A detailed cash accounting of a real estate transaction showing all cash received, all charges and credits made and all cash paid out in the transaction.

cloud on title
Any document, claim, unreleased lien or encumbrance that may impair the title to real property or make the title doubtful: usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.

CLTA policy
A standard coverage title insurance policy protects real estate buyers in matters of record and specific risk. (See standard coverage policy, title insurance)

clustering
The grouping of homesites within a subdivision on smaller lots than normal, with the remaining land used as common areas.

CMO
Securities (a series of bonds) issued backed by mortgages.

co-ownership
Title ownership held by two or more persons.

coastal zone
An area of about 1,800 square miles that runs the length of the state from the sea inland about 1,000 yards, with wider spots in coastal estuarine, habitat, and recreational areas; any development or improvement of land within the coastal zone must meet local requirements for coastal conservation and preservation of resources, as authorized by the California Coastal Act and subsequent legislation.

code of ethics
A written system of standards of ethical conduct. Because of the nature of the relationship between a broker and a client or other persons in a real estate transaction, a high standard of ethics is needed to ensure that the broker acts in the best interests of both his or her principal and any third parties.

codes
Bound volumes of laws and regulations.

codicil
A supplement or an addition to a will, executed with the same formalities as a will, that normally does not revoke the entire will.

coinsurance clause
A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property’s actual replacement cost.

coinsured
Requiring the lender to be named as a coinsured would mean that the lender is also protected under the insurance policy. This ensures that the lender’s interest in the property is protected in the event of damage or loss covered by the insurance policy. If the borrower fails to maintain adequate insurance coverage, it could potentially put the lender at risk, which is why lenders often require borrowers to name them as coinsured on the insurance policy.

COLAs
An adjustment made to Social Security or other supplemental security income in order to adjust for the effects of inflation. COLAs are generally equal to the percentage increase in the consumer price index (CPI) for a specific period. (See consumer price index, inflation)

collateral
Something of value given or pledged as security for a debt or obligation. The collateral for a real estate mortgage loan is the hypothecated mortgaged property itself.

collusion
An agreement, usually secretive, which occurs between two or more persons to deceive, mislead, or defraud others of their legal rights, or to obtain an objective forbidden by law, typically involving fraud or gaining an unfair advantage.

color of title
Color of title is the possession of a document that erroneously appears to convey title to an occupant of a real property.

Colorado Board of Real Estate Appraisers
The Colorado Board of Real Estate Appraisers oversees real estate appraisers.

Colorado Division of Real Estate
The Colorado Division of Real Estate houses five regulatory programs, including real estate brokers, real estate appraisers, mortgage loan originators, conservation easement trusts, and homeowners’ associations.

Colorado Real Estate Commission
The Colorado Real Estate Commission oversees real estate brokers and subdivision developers.

combination resume
Resume format that brings together the best of the chronological and functional styles. It highlights both accomplishments and history.

combination trust
A trust that participates in real estate investments as both financier and investor.

combined loan to value
A ratio used by lenders to determine the risk of default by prospective homebuyers when more than one loan is used. In general, lenders are willing to lend at CLTV ratios of 80% and above to borrowers with a high credit rating. The combined loan to value ratio is determined with a mathematical equation: Amount of 1st loan + amount of 2nd loan ÷ the appraised value of the home.

combined loan-to-value (CLTV) ratio
A ratio that is used for a mortgage loan that is subject to subordinate financing. CLTV ratio is calculated by dividing the sum of the original loan amount of the first mortgage, the drawn portion (outstanding principal balance) of any home equity line of credit from which the borrower has withdrawn funds, and the unpaid principal balance of all other subordinate financing, by the lower of the property’s sales price or appraised value.

combustion gases
The gasses that are emitted from a flame upon the combustion of a flammable material.

command economy
If the government makes most of the economic decisions in a society, it is called a ‘command economy.’

command language interpreter
A program that translates the user’s keystrokes into 0’s and 1’s that the computer’s central processing unit (cpu) understands.

commercial acre
A commercial acre is that portion of an acre of newly subdivided land remaining after dedication for streets, sidewalks, parks and so on. (See acre)

commercial bank
A financial institution designed to act as a safe depository and lender for many commercial activities (usually short-term loans or lines of credit). Commercial banks rely heavily on demand deposits—checking accounts—for their basic supply of loanable funds, although they also receive capital from savings accounts, loans from other banks, short-term loan interest and the equity invested by their owners. (See line of credit)

commercial frustration
Excuse for failure to perform contract obligation because of changed circumstances that make a purchase uneconomic; also called impracticability of performance.

Commercial Investment Real Estate Institute (CIREI)
A professional organization of real estate practitioners specializing in commercial real estate. CIREI, affiliated with the National Association of REALTORS®, confers the designation CCIM (Certified Commercial Investment Member).
CCIM Commercial Real Estate Network

commercial leasehold insurance
Insurance that covers payment of rent in the event the insured (tenant) cannot pay it.

commercial mortgage banker (Arizona definition)
A person who originates, services, makes, negotiates, or offers to make or negotiate commercial mortgage loans.

commercial mortgage broker (Arizona definition)
A person who, for compensation or in the expectation of compensation, makes, negotiates, or offers to make or negotiate a commercial mortgage loan.

commercial property (Arizona definition)
Real estate that is located in Arizona and that is not used for a one- to four-family residence.

commercial real estate/property
A classification of real estate that includes income-producing property such as office buildings, gasoline stations, restaurants, shopping centers, hotels and motels, parking lots and stores. Public accommodations.

commercial waste
All solid waste from businesses. This category includes but is not limited to, solid waste originating in stores, markets. office buildings, restaurants, shopping centers, and theaters.

commingling
The illegal act of mixing deposits or monies belonging to a client (trust funds) with one’s personal money. By law brokers are required to maintain a separate trust or escrow account for other parties’ funds held temporarily by the broker. (See trust funds)

commission
Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

commission
The commission is the Financial Services Commission. The purpose of the Financial Services Commission is to safeguard the public by regulating the banking, securities, and insurance industries in Florida. The commission includes the Governor and Cabinet, which appoints the officials who oversee the Office of Financial Regulation and the Office of Insurance Regulation. These two offices are administratively housed in the Department of Financial Services but report directly to the commission.

commissioner
The commissioner is the Commissioner of Banks.

commissioner
The commissioner is the commissioner of the Department of Banking and Finance.

Commissioner’s Rule for Placing Signs
Before placing or erecting a sign giving notice that specific property is being offered for sale, lease, rent, or exchange, a salesperson or broker shall secure the written consent of the property owner, and the sign shall be promptly removed upon request of the property owner.

commitment
A pledge to do a certain act, such as a promise by a lender to loan a certain amount of money at a specific rate of interest to a qualified borrower, provided the loan is made by a certain date.

commitment for title insurance
A title report that is made before a title insurance policy is issued or when escrow is opened. A commitment for title insurance reports only on those documents having an affect on the title and should not be relied on as being an guarantee of marketable title.

commitment or commitment agreement
A commitment or a commitment agreement is a statement by a lender, who is required to be licensed or registered, that sets forth the terms and conditions upon which the lender is willing to make a particular mortgage loan to a particular borrower.

common areas
Land or improvements in a condominium development designated for the use and benefit of all residents, property owners and tenants. Common areas frequently include such amenities as corridor or hall areas, elevators, parks, playgrounds and barbecue areas, which are sometimes called green belts. In shopping centers, the common areas are parking lots, malls and traffic lanes.

common elements
Parts of a property that are necessary or convenient to the existence, maintenance and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements. (See condominium ownership)

common interest
The percentage of undivided ownership in the common elements belonging to each condominium apartment, as established in the condominium declaration.

common interest development
A property where many units have a common ownership interest, like on the same parcel of land, and/or share ownership of common facilities like clubhouses or pools, or a multi-unit multiple story property. (See common interest)

common interest subdivision
A subdivision in which the owners own or lease a separate lot or unit together with an undivided interest in the common areas of the subdivision. (See common areas, subdivision)

common law
The body of law based on custom, usage and court decisions. (See civil law, constitutional law, stare decisis, statutory law)

common law duties of agency
The common law duties of agency are: Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.

common law independent contractor
In determining if an individual is an independent contractor under common-law rules, an employer must have no control over the details of a worker’s performance, including his or her methods. Independent contractors are more likely to have unreimbursed expenses; often have a significant investment in the facilities he or she uses in performing services for someone else; is generally free to seek out business opportunities; is usually paid by a flat fee for the job; and can make a profit or loss.

common promotional plan (AZ Defintion)
A common promotional plan is a plan, undertaken by a person or a group of persons acting in concert, to offer lots for sale or lease. If the land is offered for sale by a person or group of persons acting in concert, and the land is contiguous or is known, designated or advertised as a common unit or by a common name, the land is presumed, without regard to the number of lots covered by each individual offering, as being offered for sale or lease as part of a common promotional plan.

common-law dedication
Transfer of private land to public use or ownership, such as a roadway through a subdivision, by permitting such use or referencing the use in deeds to adjoining parcels.

communication skills
Connection between people that includes speaking and listening, writing and reading, and non-verbal interaction.

communism
Communism is a stage of economic development said to occur when all classes in society have been absorbed into the proletariat. In this society, the state (government) would have withered away and each person would contribute according to ability and receive according to needs. This utopia envisioned by Karl Marx was seen to be the stage of economic development that follows capitalism and socialism.

community apartment project
A form of subdivision in which the owner has an individual interest in the land and exclusive right of occupancy of an apartment on the land.

community facilities district
Community Facilities Districts (CFDs), more commonly known as Mello-Roos, are special districts established by local governments in California as a means of obtaining additional public funding. A CFD is a geographic area where a special property tax on real estate situated within the geographic area (in addition to the regular property tax subject to Proposition 13) is imposed on taxable real property. These districts seek public financing through the sale of bonds for the purpose of financing public improvements and some public services, such as streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax paid is used to make the payments of principal and interest on the bonds.

community property
Community property is a system of property ownership based on the theory that each spouse has an equal interest in the property acquired by the efforts of either spouse during marriage. This system stemmed from Germanic tribes and, through Spain, came to the Spanish colonies of North and South America.

In states that maintain a community property system, such as California and other states with laws of Spanish origin, there are two classifications of property – separate property and community property. Separate property is property that either the husband or wife owned at the time of marriage or that was acquired by one spouse during marriage by inheritance, will or gift. Separate property is entirely free from all interest or claim on the part of the other spouse. All other property is community property and is automatically owned equally by each spouse regardless of whose name record title is held under.

There are nine community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction.

These states generally regard as community property all property that has been acquired during the marriage, other than a gift or inheritance. Even if one spouse earns all the money to acquire the property, all the property acquired is considered to be community property. While there are a number of differences in each state, all states have special laws that operate on the theory that both spouses contribute equally to the marriage; thus all property acquired during the marriage is the result of the combined efforts of both spouses. In community property jurisdictions, spouses equally own all community property (fifty percent owned by the husband and fifty percent owned by the wife).

community property states
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. In addition, Puerto Rico is a community property jurisdiction.

community property with right of survivorship
Method of property ownership by a married couple that specifically provides for transfer of the interest of the first to die to the spouse, instead of the interest being willed or passed by intestate succession. (See intestate succession, right of survivorship)

community redevelopment agency (CRA)
An agency authorized by state law but formed by a local governing body to provide low- and moderate-income housing and employ low-income persons by rehabilitating existing structures and/or bringing new development. All CRAs have been dissolved as of February 1, 2012.

Community Reinvestment Act of 1977 (CRA)
Community reinvestment refers to the responsibility of financial institutions to help meet their communities’ needs for low- and moderate-income housing. In 1977, Congress passed the Community Reinvestment Act of 1977 (CRA). Under the CRA, financial institutions are expected to meet the deposit and credit needs of their communities, participate and invest in local community development and rehabilitation projects, and participate in loan programs for housing, small businesses and small farms.
Community Reinvestment Act of 1977

community renewal
Community renewal includes all of the programs geared toward community and economic development, job creation, and downtown revitalization in New York.

compact disk (CD)
Disk on which data such as music, text, or graphic images is digitally encoded.

company dollar
The term “company dollar” is the amount left over after all commissions have been paid out.

company signature
A company signature is the imagery and/or sound bite that creates brand recognition. A signature makes a short but powerful statement with words, music, colors, and graphics that stick in people’s minds.

comparable periods of maturity
The phrase comparable periods of maturity refers to the treasury constant maturities published in the Federal Reserve selected interest rates. When calculating the interest rate for adjustable-rate loans, the creditor may not use any introductory rate. The interest rate will be based on the loan’s disclosed index plus the margin, which is the fully indexed rate, at the time the loan is made. For example, if the index is 2 percent and the margin is 3 percent for a first lien mortgage, the interest rate is 5 percent (fully indexed rate).

comparables
Comparable properties that are used in an appraisal to determine the value of the property that is the subject of the appraisal. It refers to properties with characteristics that are similar to a subject property whose value is being sought.

comparative income and expense analysis
A comparative income and expense analysis is a financial tool used to evaluate the performance of a business or property by comparing income and expenses across different periods. This analysis helps identify trends and efficiencies by breaking down and comparing various revenue streams and costs such as rent income, operating expenses, and capital expenditures. The process involves collecting financial data, categorizing and calculating key financial metrics, and interpreting these to assess the financial health and operational effectiveness of the entity.

comparative market analysis (CMA)
This is a term often used by real estate brokers in preparing a report for prospective sellers and buyers, indicating market trends in various neighborhoods, based on computer statistics generated from multiple-listing service data. Generally, these analyses are used for clients to determine a listing price for the sale of a home or for buyers to determine if a list price is reasonable for a given location.

comparative unit method
A method used to estimate the cost of a structure based on the value of comparable structures that were recently constructed and adjusted for time and physical differences.

comparitive advantage
An economic principle that states that the standard of living for the entire world would increase if each nation specialized in the production of goods and/or services for which it has the lowest unit cost.

compelling government interest
With fundamental Constitutional rights (those rights that are specifically mentioned by name in the Constitution), any state regulation of that right must be something necessary or crucial, as opposed to something merely preferred. Examples include national security, preserving the lives of multiple individuals, and discriminatory publications with regard to housing. The laws or policies must be narrowly tailored, and be the least restrictive means possible to achieve the government interest.

compelling need
A need that is necessary to avert a clear and imminent danger to the health and safety of the public.

compensating factors
Positive factors in an individual’s credit history which offset negative factors. “Compensating factors” increase the possiblity that a borrower’s loan application will be approved. (See credit score)

compensation
Compensation means any fee, commission, salary, money or other valuable consideration for services rendered or to be rendered as well as the promise of consideration whether contingent or not. The source of compensation does not determine agency. An agent does not necessarily represent the person who pays his or her commission. In fact, agency can exist even if no fee is involved (called a gratuitous agency). Buyers and sellers can agree, whichever way they choose, to compensate the broker, regardless of which is the agent’s principal. For instance, a seller could agree to pay a commission to the buyer’s agent. The written agency agreement should state how the agent is being compensated and explain all the alternatives available.

compensation (Arizona definition)
Anything of value or any benefit, including points, commissions, bonuses, referral fees, loan origination fees, and other similar fees, but excluding periodic interest resulting from time to time. Arizona Administrative rules specifically exclude the following from the statutory definition:
* Charges or fees customarily received after a loan’s closing, including prepayment penalties, termination fees, reinvestment fees, late fees, default interest, transfer fees, impound account interest and fees, extension fees, and modification fees. However, extension fees and modification fees are compensation if the lender advances additional funds or increases the credit limit on an open-end mortgage as part of the extension or modification.
* Out-of-pocket expenses paid to independent third parties, including appraisal fees, credit report fees, legal fees, document preparation fees, title insurance premiums, recording, filing, and statutory fees, collection fees, servicing fees, escrow fees, and trustee’s fees
* Insurance commissions
* Contingent or additional interest, including interest based on net operating income
* Equity participation

compensatory damages
Monetary damages paid to compensate an injured party for a loss. (See exemplary damages, nominal damages)

competition
The appraisal principle that states that excess profits generate competition. (See appraisal)

competitive market analysis (CMA)
This is a term often used by real estate brokers in preparing a report for prospective sellers and buyers, indicating market trends in various neighborhoods, based on computer statistics generated from multiple-listing service data. Generally, these analyses are used for clients to determine a listing price for the sale of a home or for buyers to determine if a list price is reasonable for a given location.

complaint
The initial pleading that starts a civil action and states:

the basis for the court’s jurisdiction;
the basis for the plaintiff’s claim
the demand for relief.

(In some jurisdictions, a pleading is called a petition.)

completion bond
A surety bond posted by a landowner or developer that guarantees a proposed development will be completed according to specifications and free of mechanics’ liens.

complexity
Complexity is generally used to characterize something with many parts where those parts interact with each other in multiple ways. The study of these complex linkages at various scales is the main goal of complex systems theory.

compound interest
Interest computed on the principal sum plus accrued interest. At the beginning of the new interest period, all interest is added to the principal, forming a new principal figure on which interest is then calculated. This process repeats itself each interest period interest may be compounded daily, monthly, semiannually or annually. (See simple interest)

Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites, forcing liable parties to cleanup toxic sites, bringing legal action against responsible parties and funding the abatement of toxic sites. (See Superfund) EPA CERCLA Overview

comprehensive planning
The board of supervisors of a county, in order to conserve and promote the public health, safety, convenience and general welfare…[have statutory authority to] plan and provide for the future growth and improvement of its area of jurisdiction, and coordinate all public improvements in accordance therewith. A.R.S. 11-821 provides that a county planning commission and board of supervisors are responsible for formulating and adopting a long term, comprehensive plan.

comprehensive zoning
A broad zoning plan over a large area. (See general plan, zoning)

computer-assisted mass appraisal (CAMA)
Use of computerized databases and techniques in valuing commercial and residential properties for tax assessment purposes.

computerized loan origination system
An electronic network for handling loan applications through remote computer terminals linked to various lenders’ computers.

concealment
obscuring something from view or rendering it inconspicuous, the opposite of exposure.

concession
Discount given to prospective tenants by landlords to induce them to sign a lease. Concessions are frequently encountered in commercial leases, where landlords may give the first two months’ rent free or provide an allowance to the tenant for renovating or customizing the demised space. A purchaser of a commercial or income-producing property should check all existing leases to see if there are any lease concessions that would reduce the amount of rent receivable in the future (such as free cable TV or one month’s free rent per year for the term of the lease). If so, the value of these concessions should be computed to reduce the amount of contract rent specified. An estoppel certificate should also be obtained from the tenant. Some state laws require concessions to be noted on a lease by special wording. Concessions are negotiable points in a lease that are resolved in favor of the prospective tenant. Another example in leasing a new office building is the owner’s assumption of the lessee’s remaining obligation under the lessee’s existing lease in another building.

Conciliation agreement
A written agreement setting forth the resolution of the issues in conciliation. Conciliation is the resolution of a complaint by obtaining assurances that the person against whom the complaint was made will remedy any violation that may have occurred. Conciliation agreements are enforced through civil actions.

concurrent ownership
Ownership by two or more persons at the same time, such as joint tenants, tenants by the entirety, tenants in common or community property owners. (See joint tenancy, tenants in common)

concurrent performance
Occurring simultaneously; real estate exchanges often must be recorded concurrently.

condemnation
A judicial or administrative proceeding to exercise the power of eminent domain, through which a government agency takes private property for public use and compensates the owner. (See eminent domain).

condition
A qualification of an estate granted that can be imposed only in a conveyance; it can be a condition precedent or a condition subsequent. (See CC&R)

condition precedent
A condition that requires a certain action or a specified event to take place before an estate granted can take effect. For example, most installment real estate sales contracts require all payments to be made by the time specified before the buyer can demand transfer of title.

condition subsequent
A fee simple estate, may be qualified by a condition subsequent. This means that the new owner must not perform some action or activity. The former owner retains a right of reentry so that if the condition is broken, the former owner can retake possession of the property through legal action. Conditions in a deed are different from restrictions or covenants because of the grantor’s right to reclaim ownership, a right that does not exist under private restrictions. (See fee simple, restrictive covenant).

conditional delivery
Transfer of documents and funds to escrow agent or settlement officer to be held until the transaction is closed, at which time they are transferred to the designated party.

conditional license
A conditional license is issued to a real estate salesperson who has not completed all of the required education courses, and is contingent on all education requirements being met.

conditional public report
An interim report that allows a subdivider to enter into a binding contract with a buyer prior to the issuance of the final public report. (See public report)

conditional sales exemption
An exemption to the A.R.S. legislation that an owner of six or more lots in the state of Arizona cannot sell those lots, except to a bulk purchaser (purchasing six lots or more), unless the owner has received a subdivision public report from the Arizona Real Estate Commissioner. Those who have been granted the conditional sales exemption may write purchase contracts on the lots before the issuance of a public report.

conditional use permit
A permit that allows a city or county to consider special uses which may be essential or desirable to a particular community, but which are not allowed as a matter of right within a zoning district, through a public hearing process. The issuance of this permit is conditional upon certain requirements that the recipient of the permit must meet.

conditional-use permit
Written governmental permission allowing a use inconsistent with zoning but necessary for the common good, such as locating an emergency medical facility in a predominantly residential area. (See zoning)

condo certification from mortgage lender
When a lender is financing a unit in a homeowners association for purchase or refinancing, they usually require the board of directors to fill out a questionnaire asking pertinent questions about the community, including ownership structure, delinquent fee percentages, reserves, etc. Buyers should obtain and carefully review this questionnaire.

condo unit demand statement
A document prepared by the homeowners association (HOA) management company that alerts a buyer to the HOA fees amount, and any restrictions, violations, lawsuits, etc. on the unit or against the HOA.

condominium
A subdivision providing an exclusive ownership interest in the airspace of a particular portion of real property, as well as an undivided interest in the common area portion of that property.

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 in the condo project such as the land, parking areas, elevators, stairways, exterior structure and so on. Each condominium unit is a statutory entity that may be mortgaged, taxed, sold or otherwise transferred in ownership, separately and independently of all other units in the condo project. Units are separately assessed and taxed based on the combined value of the individual living unit and the proportionate ownership of the common areas. The unit also can be separately foreclosed upon, in case of default on the mortgage note or other lienable payments. In effect, the condominium permits ownership of a specific horizontal layer of airspace as opposed to the traditional view of vertical property ownership from the center of the earth to the sky. Typically, the unit, the percentage of common interest and the limited common elements are appurtenant to each other and cannot be sold or transferred separately.

conduits
A party that purchases loans from one lender and resells the loans to investors.

Conference of State Bank Supervisors (CSBS)
Self Described as ” the nation’s leading advocate for the state banking system, and the only national organization dedicated to advancing the state banking system”

confession of judgment clause
Permits judgment to be entered against a debtor without the creditors needing to institute legal proceedings.

confidentiality
Obligation to safeguard the principal’s confidence and secrets (any information that might weaken the principal’s bargaining position if it were revealed).

Confirmation bias
The unconscious mind’s tendency to seek only the information that confirms a pre-existing belief, while ignoring facts that suggest otherwise.

conflict of interest
Refers to a situation when someone, such as a lawyer, public official or REALTOR®, has competing professional or personal obligations or personal or financial interests that would make it difficult to fulfill his or her duties fairly.

conforming loan
A mortgage loan that meets all Fannie Mae and Freddie Mac underwriting guidelines. (See Fannie Mae, Freddie Mac)

conformity
The appraisal principle that holds that the greater the similarity among properties in an area, the better they will hold their value. (See appraisal)

consensual lien
A lien to which the debtor has consented, to the lien, as in a loan or an advancement of a line of credit. As a general rule, with a consensual lien, the debtor will have signed a promissory note. This differs from statutory liens or judgments because under those types of liens the debtor did not consent to the lien, but the creditor has a legal right to recover the debt.

consent order
A consent order is governed by federal and state laws, which vary by jurisdiction. Generally, it is a voluntary agreement worked out between two or more parties to a dispute. It has the same effect as a court order and can be enforced by the court if one of the parties to the agreement does not comply with the orders.

Consent orders may also be issued by administrative agencies. For example, a licensing commission may issue a consent order to a licensee in which the licensee agrees to the imposition of certain disciplinary sanctions, such as reprimand or the suspension or revocation of his or her license. The use of a consent order allows the licensing agency and the parties involved to resolve a disciplinary proceeding initiated by the agency without the time and expense required by a formal administrative hearing.

consent order
An order given by a state agency to a licensee in which the licensee agrees to the imposition of certain disciplinary sanctions, such as reprimand or the suspension or revocation of his or her license. A consent order allows the licensing agency and the parties involved to resolve a disciplinary proceeding initiated by the agency without the a formal administrative hearing.

conservator
A guardian, protector, preserver or receiver appointed by a court to administer the person and property of another (usually an incapable adult) and to ensure that the property will be properly managed. A conservator may not need a real estate license to sell the protected real estate, although the sale does require court approval.

consideration
An act 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; also the promise to refrain from doing a certain act, like filing a justifiable lawsuit (the forbearance of a right). Consideration, which distinguishes a contractual obligation from a gift, is usually something of value, such as the purchase price in and paid for a promise or it may be a return promise. Thus, the mere promise to pay money is sufficient consideration, so an earnest money deposit is not necessary for purposes of creating a binding contract.

conspirator
A person who takes part in a conspiracy, which is a plan or agreement to carry out an illegal or harmful act.

constitutional law
Law set forth in federal or state constitutions. (See civil law, common law, statutory law)

construction loan
A short-term loan made during the construction phase of a building project, often referred to as a interim financing.

construction terms
baluster, bearing wall, bracing, building code, building paper, building permit, coping, crawl space, detached garage, downdrain, drywall, , eave, elevations, flashing, header, joist, junction box, masonry, on center, P trap, plot plan

construction/permanent loan
A construction permanent loan, also known as a “construction-to-permanent loan” or “CP loan,” is a type of loan used to finance the construction of a new home or building. Unlike a traditional construction loan, which is typically short-term and covers only the cost of construction, a construction permanent loan combines the construction financing with a long-term mortgage.

constructive eviction
Actions of a landlord that so materially disturb or impair a tenant’s enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent. (See eviction, actual eviction, lease)

constructive fraud
Breach of a legal or equitable duty that the law declares fraudulent because of its tendency to deceive others, despite no showing of dishonesty or intent to deceive. A broker may be charged with constructive fraud for failing to disclose a known material fact when the broker had a duty to speak — for example, if a listing broker failed to disclose a known major foundation problem not readily observable upon an ordinary inspection. (See material fact)

constructive notice
Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents, whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.

constructive receipt
Control of the cash proceeds in a delayed exchange without actual physical possession by the exchanger or his or her agent.

consulting contract
A consulting contract is an agreement between a homeowner and a distressed property consultant under which the consultant agrees to provide consulting services.

consulting services
Consulting services are services provided by a distressed property consultant to a homeowner that the consultant represents will help to achieve any of the following:

top, enjoin, delay, void, set aside, annul, stay, or postpone a foreclosure filing, a foreclosure sale, or the loss of a home for nonpayment of taxes
Obtain forbearance from any servicer, beneficiary, or mortgagee, or relief with respect to the potential loss of the home, for nonpayment of taxes
Assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance a distressed home loan
Obtain any extension of the period within which homeowners may reinstate or otherwise restore their rights with respect to the property
Obtain a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a property in foreclosure
Assist the homeowner to obtain a loan or advance of funds
Assist the homeowner in answering or responding to a summons and complaint, or otherwise providing information regarding the foreclosure complaint and process
Avoid or ameliorate the impairment of the homeowner’s credit resulting from the commencement of a foreclosure proceeding or tax sale
Save the homeowner’s property from foreclosure or loss for nonpayment of taxes

consumer
Consumer means a natural person who seeks or acquires goods, services, or money for personal, family, or household use other than for the purchase of real property.

consumer confidence
Consumer confidence is a measure of how optimistic or pessimistic consumers are about the overall state of the economy and their personal financial situation. It influences spending and saving behaviors, as higher confidence typically leads to increased spending, while lower confidence can result in reduced consumer activity.

Consumer Financial Protection Bureau
Federal agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to create and coordinate regulations intended to correct the mortgage lending practices that led to the housing crisis of 2007-2010.

consumer loan
A consumer loan establishes consumer credit; usually for unsecured purposes. Also known as a personal loan.

Consumer Price Index (CPI)
Published by the Bureau of Labor Statistics, the CPI measures change in prices for a carefully defined market basket of goods and services, including food, rent, maintenance costs, medical and dental services, transportation, entertainment, clothing, and other items commonly purchased. The average prices of a base year are defined as 100, so an index of 200 means prices have doubled since that base year.

Consumer Recovery Account
State fund financed by real estate license fees and intended to help compensate victims of real estate licensee fraud, misrepresentation, deceit, or conversion of trust funds, when a court-ordered judgment cannot be collected.

consumer transaction
Consumer transaction means a transaction between a lender and a consumer, in which the money, property, or services are primarily for personal, family, or household purposes.

consumer-driven model
Creating products and services tailored to suit consumer demand, essentially answering the question about what consumers want.

consumer-driven model
A business model where a company creates products and services tailored to suit consumer demand, essentially answering the question about what consumers want.

consumerism
1. Advocating the rights of consumers, as against the efforts of advertisers; 2. The emphasis of advertising and marketing toward creating consumers.

consummate
The word consummated, when used to describe a loan, means “to make the borrower responsible” for the loan.

consumption
The use of goods and services by consumer purchase or in the production of other goods.

contact management
A program that allows the user to manage contact information and scheduling.

contempt
A civil contempt is the refusal to obey an order in a civil case. Usually the person is ordered into custody or is fined progressively, or both, until the contempt is purged by compliance.

contested case
Contested case hearing is the name for quasi-judicial administrative hearings governed by state law. It is simply a hearing where the accused party is allowed to present his/her case. State agencies that make decisions that could affect people’s rights, duties, and privileges must have a process for holding contested case hearings.

contingency
A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.

contingency plan
A contingency plan is designed to take effect in the event of a possible future circumstance.

contingency recruiters
Recruiters who place candidates in order to collect fees.

contingent beneficiary
Person or other legal entity designated to receive a benefit in case the primary beneficiary is unable, unavailable, or unwilling to receive it. Also called secondary beneficiary.

continuing education
A requirement in most states that real estate and appraiser licensees complete a specified number of educational offerings as a prerequisite to license renewal or reinstatement.

continuum
Something absolutely continuous and homogenous; an uninterrupted sequence.

contract
A legally enforceable promise or set of promises that must be performed and for which, if a breach of the promise occurs, the law provides a remedy. A contract may be either unilateral, by which only one party is bound to act, or bilateral, by which all parties to the instrument are legally bound to act as prescribed. (See valid contract)
FindLaw Contract Law Web Guide

Contract Compliance Unit (CCU)
The Contract Compliance Unit (CCU) implements Executive Law Article 15-A to ensure the participation of minority- and women-owned business enterprises (M/WBEs) in contracts for construction, commodities, and professional services with housing entities under DHCR supervision in New York. It monitors M/WBE participation goals in contracting and subcontracting opportunities and reviews the affirmative action aspects of contractors’ workforce utilization plans to ensure the hiring of minorities and women.

contract for deed
The contract for deed is used extensively in many areas, where it may be called a land contract, agreement of sale, installment contract, articles of agreement, conditional sales contract, bond for deed or real estate contract.

contract of sale
A contract for the purchase and sale of real property in which the buyer agrees to purchase for a certain price and the seller agrees to convey title by way of a deed or an assignment of lease (for leasehold property). In addition to binding the parties to the purchase and sale of the property during the period of time required to close the transaction, the contract frequently serves as the initial directions to the closing agent or escrow company to process the mechanics of the transaction. In essence, the contract of sale is an executory contract to convey property, serving as the vehicle to get to the deed, which finally conveys title; it is the blueprint for the entire transaction. Some of the many names for this contract are sales contract, purchase agreement, deposit receipt, offer and acceptance, agreement of sale, offer to lease or purchase and sale agreement.

contract rent
The rental income as stipulated by the parties in a lease. (See market rent)

Contract Writing Course Certificate (AZ)
The contract writing course certificate is given by the providing school to each student who completes the 6-hour “Introduction to Contract Writing” course. It must be included in your application package.

contractor system
Home construction involves a large number of specialized trades, including carpenters, painters, plumbers, glaziers, and stonemasons among others. The demands of organizing and supervising a this legion of specialists gave rise to the contractor system under which a single supervising contractor oversees an entire building project. The specialists hired by the contractor are referred to as subcontractors.

Contractors State License Board
The state agency that licenses and regulates building contractors.
www.cslb.ca.gov

contractual obligation
The agreed-on performance by one of the parties to a contract.

contribution
The appraisal principle that states that the value of any component of a property is what it contributes to the value of the whole or what its absence detracts from that value. (See appraisal)

control person
A control person is an individual, partnership, corporation, trust, or other organization that directs the management or policies of a company. The term includes, but is not limited to, the following: A company’s executive officers, including the president, chief executive officer, chief financial officer, chief operations officer, chief legal officer, chief compliance officer, director, and other individuals having similar status; For a corporation, each shareholder that, directly or indirectly, owns 10 percent or more, or that has the power to vote 10 percent or more, of a class of voting securities unless the applicant is a publicly traded company; For a partnership, all partners who have contributed 10 percent or more of the partnership’s capital; For a trust, each trustee; For a limited liability company, all elected managers and members who have contributed 10 percent or more of the partnership’s capital; Principal loan originators.

controlled business arrangements
As defined under the Real Estate Settlement Procedures Act (RESPA), an arrangement or combination in which an individual or a firm has more than a 1 percent interest in a company to which the individual or firm regularly refers business. Such arrangement is permitted provided that written disclosure of the affiliation is made; an estimated charge for the service is provided; consumers are free to obtain the services elsewhere; and referral fees are not exchanged among the affiliated companies. (See Real Estate Settlement Procedures Act (RESPA))

controlled substance
A drug or chemical substance whose possession and use are either controlled by law, or illegal.

conventional lender
One who makes loans that are neither insured by the FHA nor guaranteed by the VA.

conventional life estate
A conventional life estate is created intentionally by the owner. It may be established either by deed at the time the ownership is transferred during the owner’s life or by a provision of the owner’s will after his or her death. The estate is conveyed to an individual who is called the life tenant. The life tenant has full enjoyment of the ownership for the duration of his or her life. When the life tenant dies, the estate ends and its ownership passes to another designated individual or returns to the previous owner. (See life estate)

conventional loan
A loan made with real estate as security and not involving government participation in the form of insuring (FHA) or guaranteeing (VA) the loan. The mortgagee can be an institutional lender or a private party. The loan is conventional in the sense that it conforms to accepted standards and the lender looks solely to the credit of the borrower and the security of the property to ensure payment of the debt. Conventional loans include those loans insured by private mortgage insurance companies.

Because the lender is not subject to the more stringent government regulations of the FHA and VA, conventional loans are frequently more flexible with respect to terms and interest rates, although they do reflect a higher interest rate and larger down payment requirements due to the higher risk involved. Nonconventional loan interest rates (VA loans) are fixed by federal regulation. Conventional loans are subject to institutional regulation, which may be statutory (federal, state) or self-created. (See FHA, VA loan)

conventional mortgage rate
Conventional mortgage rate means the most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System.

conventional prepayment penalty
Conventional prepayment penalty means any prepayment penalty or fee that may be collected or charged in a home loan and that is authorized by law, provided the home loan does not have an annual percentage rate that exceeds the conventional mortgage rate by more than two percentage points and does not permit any prepayment fees or penalties that exceed 2 percent of the amount prepaid. The penalty is usually limited to the first 3 to 5 years of the loan’s term.

conversion
The appropriation of property belonging to another. The conversion may be illegal (as when a broker misappropriates client funds), or it may be legal (as when the government condemns property under the right of eminent domain). (See eminent domain)

conversion clause
A provision in some ARMs that allows you to change the ARM to a fixed-rate loan at some point during the term.

converted-use properties
Factories, warehouses, office buildings, hotels, schools, churches and other structures that have been converted to residential use. Developers often find renovation of such properties more aesthetically and economically appealing than demolishing a perfectly sound structure to build something new. An abandoned warehouse may be transformed into luxury loft condominium units, a closed hotel may reopen as an apartment building, and an old factory may be recycled into a profitable shopping mall.

convertible loan
An adjustable-rate loan that the borrower can convert to fixed-rate at any time during the life of the loan. (See adjustable-rate mortgage, hybrid financing)

conveyance
A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring. (See title)

cookie
A cookie is a message sent to a web browser by a web server. The browser stores the cookie as a text file. When you return to the same web site, your browser will send the cookie to the web server. The server uses the cookie information to present custom web pages. For example, instead of seeing a generic page when you return to a proU.net course, you are returned to the page in the course where you left off after a previous study session. Your web browser settings must allow cookies to be accepted for proU.net courses to function correctly.

cooperating broker
A broker who assists another broker in the sale of real property. Usually the cooperating broker is the selling broker who found a buyer for the listing broker. (See listing broker)

cooperating broker fee agreement
An agreement between brokers specifying the commission split should the cooperating broker sell a property listed by the listing broker. (See cooperating broker, listing broker)

cooperating split
Sharing of the compensation (usually, a commission) received by the listing broker with the broker who brings the buyer to the transaction.

cooperative
A residential multiunit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building, who are the beneficial owners of the trust or stockholders of the corporation, each possessing a proprietary lease.

coping
1. The tile around the outer edge of a swimming pool at the water line. 2. The flat portion at the top of a parapet wall rising above the roof line of a building. (See construction terms)

copyright
Copyright is the exclusive legal right to print, publish, perform, film, or record literary, artistic, or musical material, and to authorize others to do the same. (See copyright infringement)

core services
For real estate, the meaning of core services has expanded beyond brokerage in many companies to include an array of services that seamlessly take buyers and sellers from doorstep to settlement. In some companies, that includes linking consumers with job placement for a spouse, day care for a child or elderly parent, or housecleaning, yard care, or handyman services.

corporate deed
A deed conveying corporation-owned real estate that is valid when signed by an authorized officer of the corporation. If all or a substantial portion of a corporation’s real estate is being conveyed, usually a resolution authorizing the sale must be secured from the shareholders.

corporate property manager
A corporate property manager is a professional responsible for overseeing and managing real estate assets owned by a corporation. This role can vary significantly depending on the company’s size, the nature of its property holdings, and the strategic importance of the real estate to its business operations. Duties include property maintenance and operations, tenant relations, budget management, and strategic planning to increase the corporation’s real estate portfolio.

corporation
An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.

corporation franchise tax lien
State governments generally levy a corporation franchise tax on corporations as a condition of allowing them to do business in the state. Such a tax is a general statutory involuntary lien on all real and personal property owned by the corporation.

correction lines
Provisions in the rectangular survey (government survey) system made to compensate for the curvature of the earth’s surface. Every fourth township line (at 24-mile intervals) is used as a correction line on which the intervals between the north and south range lines are measured and corrected to a full six miles. Range lines are only parallel in theory. Due to the curvature of the earth, range lines gradually approach each other. If they are extended northward, they eventually meet at the North Pole. The fact that the earth is not flat, combined with the crude instruments used in early days, means that few townships are exactly six-mile squares or contain exactly 36 square miles. Also called guide meridians. (See government survey system)

Corrective action
Corrective action is process of rectifying problems. Corrective action to real property usually involves structural change to ensure that such problems do not recur.

corrective decisions
Corrective decisions resolve problems, dilemmas, or crises that require solutions to keep the organization on track or to maintain order in its systems and processes.

correlation
Also known as reconciliation. The step in the appraisal process in which the appraiser reconciles the estimates of value received from the sales comparison, cost, and income capitalization approaches to arrive at a final opinion of market value for the subject property. (See cost approach, income capitalization approach, sales comparison approach)

correlative use
Doctrine that states that property owners may use a reasonable amount of water from an underground source, but not to the detriment of adjoining property owners. Information about California water rights can be found at the Web site of the Bureau of Land Management (www.blm.gov).

correlative water rights
A modern law in some states that holds that a riparian owner who has rights in a common water source is entitled to take only a reasonable amount of the total supply for the beneficial use of land (such as irrigation). (See appropriative water rights, riparian rights)

correspondent
A mortgage banker. (See mortgage banker)

correspondent contracts (Arizona definition)
An agreement between a lender and a funding source under which the funding source may fund, or is required to fund, loans originated by the lender.

corridor development
Corridor development refers to the strategic planning and construction of infrastructure, commercial, residential, and mixed-use projects along major transportation routes such as highways, railways, or transit lines. This approach aims to maximize land use efficiency, improve connectivity, and stimulate economic growth in the surrounding areas. By focusing development along these corridors, communities can enhance accessibility, reduce traffic congestion, and promote sustainable urban growth.

corrosion
The dissolving and wearing away of metal caused by a chemical reaction such as between water and the lead pipes or solder in a home’s plumbing. (See corrosive)

corrosive
A substance that eats or wears away materials gradually by chemical action. (See corrosion)

cosigner
Additional signers of a financial agreement that add their personal guarantees to that of the borrower. A cosigner is a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation; or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account. Cosigner includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law.

cost approach
The process of estimating the value of a property by adding to the estimated land value, the appraiser’s estimate of the reproduction or replacement cost of the building, less depreciation. (See appraisal)

cost basis
A cost basis of real property is usually based on the purchase price of the property plus the buyer’s capitalized closing costs. (See closing costs)

cost manuals
Publications, now often electronic, that provide updated information on building and component construction costs in various areas.

cost of credit
The interest paid on a loan used to make a purchase.

cost of sales
Cost of sales are the direct costs of production of goods sold by a company. They include the cost of the materials and direct labor. It excludes indirect expenses, like distribution and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company’s gross margin. Also known as cost of goods sold.

cost recovery
An Internal Revenue Service term for depreciation. (See depreciation)

cost service index method
An appraisal technique used to determine reproduction or replacement cost. The appraiser multiplies the original cost of construction by a price index for the geographic area to allow for price changes. Also known as index method.

cost-plus
A method of paying construction contractors when the contractor is paid the actual costs of the job plus a percentage for profit. (See fixed-fee)

Costa-Hawkins Rental Housing Act
Costa-Hawkins refers to the Costa-Hawkins Rental Housing Act, a California state law that was enacted in 1995 to limit local rent control policies. The law established statewide guidelines for rent control and provided certain protections for property owners. Key aspects of Costa-Hawkins include:

Vacancy Decontrol: Under Costa-Hawkins, landlords can set rental rates for new tenants when a rental unit becomes vacant. This means that when a tenant moves out of a rent-controlled unit, the landlord can increase the rent to market rate for the new tenant.
Exemptions: The law exempts single-family homes and condominiums, as well as new construction from local rent control regulations.

counteroffer
A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter, unless revived by the offeror.

county assessor
The official responsible for determining property values for ad valorem taxation purposes.

covenant
A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds, mortgages, leases and contracts for deed. (See CC&R)

covenant against encumbrances
The grantor warrants that the property is free from liens or encumbrances, except for any specifically stated in the deed. Encumbrances generally include mortgages, mechanics’ liens and easements. If this covenant is breached, the grantee may sue for the cost of removing the encumbrances. (See encumbrances, liens)

covenant of further assurance
The grantor promises to obtain and deliver any instrument needed to make the title good. For example, if the grantor’s spouse has failed to sign away dower rights, the grantor must deliver a quitclaim deed (discussed later) to clear the title.

covenant of quiet enjoyment
The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant’s possession or use of the property. The grantor guarantees that the grantee’s title will be good against third parties who might bring court actions to establish superior title to the property. If the grantee’s title is found to be inferior, the grantor is liable for damages.

covenant of seisin
The grantor warrants that he or she owns the property and has the right to convey title to it (“seisen” simply means “possession”).

covenant of warranty forever
The grantor promises to compensate the grantee for the loss sustained if the title fails at any time in the future. These covenants in a general warranty deed are not limited to matters that occurred during the time the grantor owned the property: they extend back to its origins. The grantor defends the title even against himself/herself and all those who previously held title.

covenant to repair
In most lease agreements the landlord expressly covenants (promises) to make necessary repairs to the premises. If there is no express promise to repair, a court may find an implied covenant to repair, depending on the nature of the work required.

covenants that run with the land
Convenants that become part of the property rights and benefit or bind successive owners of the property.

Covered account
An account that a financial institution or creditor offers or maintains, primarily for personal, family, or household purposes, that involves or is designed to permit multiple payments or transactions, such as a credit card account, or mortgage loan.

covered contract
A covered contract is any contract, agreement, or arrangement between equity purchasers and equity sellers.

covered loss
A covered loss refers to an event or damage that falls within the terms of an insurance policy, entitling the insured party to a payout. It is typically outlined in the policy’s coverage section, specifying which types of losses are included. Exclusions and limits may apply, affecting the extent of the coverage.

covered multi-family dwelling (Arizona Fair Housing Act)
Residential building housing more than one household, such as an apartment building.

covered services
Covered services include financial counseling, including debt and budget counseling, to assist a homeowner in connection with a residence in foreclosure; contacting a creditor on behalf of a homeowner; receiving money for the purpose of distributing it to creditors; arranging, or attempting to arrange, an extension of the period within which a homeowner may cure a default and reinstate their obligation pursuant to a note, mortgage, or deed of trust; arranging or attempting to arrange any delay or postponement of the time of a foreclosure sale; advising in the preparation and filing of documents with the United States bankruptcy court; giving any advice, explanation, or instruction to a homeowner that relates to the cure of a default in, or the reinstatement of, an obligation secured by a mortgage or other lien on the residence in foreclosure, to the full satisfaction of the obligation or to the postponement or avoidance of a foreclosure sale.

crawl space
1. The space between the ground and the first floor, often found in homes with no basement. 2. The space found between the top floor and the roof, often found in the place of an attic. (See construction terms)

creative financing
Structuring the financing of a real estate transaction based on the cash positions of the buyer and seller. It involves working in conjunction with the existing financing to create a financing package that enables the buyer to purchase the property at better interest rates or terms than a conventional loan. (See conventional loan)

credit
In closing statements, that which is due and payable to either the buyer or seller—the opposite of a charge or debit. The credit appears in the right-hand column of the accounting statement.

credit agency/bureau
A credit agency is a company that maintains credit data and provides credit information. Also known as a credit bureau or credit repository. (See credit repository, credit report, credit score)
Equifax, Experian, TransUnion

credit bid
Bid made by a lender at a foreclosure sale representing the amount of the outstanding indebtedness owed to the lender by the defaulting borrower.

credit check
A report an owner/landlord obtains, with the prospective resident’s approval, providing an independent look at the resident’s past credit history, debts, judgments, evictions, etc.

credit loan
A mortgage issued upon the financial strength of a borrower, without regard for collateral. (See mortgage)

credit property insurance
The term credit property insurance does not include fire and hazard insurance, flood insurance, FHA mortgage insurance, DVA loan guarantees, guaranteed rural housing (GRH) loan guarantees, and private mortgage insurance that would compensate the holder of a home loan directly for any shortfall between the value of the real property securing the loan and the amount owed on an obligation in default.

credit rating
The Dun & Bradstreet credit rating system. Rating the financial strength of commercial and industrial companies. Information can be found at Dun & Bradstreet Website

credit report
A document, obtained from a credit repository, indicating an individual’s credit circumstances. Used to derive credit scores for borrowers seeking a real estate loan. (See credit repository, credit score)

credit reporting agency (CRAs)
Credit reporting agencies (CRAs), also called credit bureaus, collect information relevant to a person’s credit history, and use the information to assign a credit score to indicate creditworthiness. Prospective creditors purchase credit reports from CRAs about specific individuals, and use this information to decide how much credit, if any, to extend to the individual. (See credit bureau, credit repository, credit report, credit score) Information can be found at Equifax, Experian, TransUnion

credit repository
Organizations that maintain and make available public credit history records; lenders use information from credit repositories to derive credit scores for potential borrowers. (See credit report, credit score) Information can be found at Equifax, Experian, TransUnion

credit score
A snapshot of a borrower’s credit worthiness; a numerical score based on statistics indicating the risk of default on a loan; takes into consideration available credit, management of existing credit, and any detrimental credit information. (See credit repository, credit report)

credit unions
Credit unions are cooperative organizations whose members place money in savings accounts. In the past, credit unions made only short-term consumer and home improvement loans. Recently, however, they have branched out to originating longer-term first and second mortgages and deed of trust loans. (See noninstitutional lenders)

creditor
The person to whom a debtor owes a debt or obligation; a lender.

creditworthiness
The way a lender measures the ability of a person to qualify and repay a loan.

creosote
A potentially flammable oily byproduct of wood burning. Often builds up in the chimney of wood burning fireplaces. (See construction terms)

criminal history verification
Checking a prospective resident/tenant’s past criminal behavior can be part of the credit check. Owners/landlords might want to consider checking the local county court database for any additional information.

cross-default
A provision of many junior mortgages stipulating that a default in one mortgage also triggers a default in the mortgage in which the clause appears. (See junior lien/mortgage)

crunch down
A form of recasting where the lender rewrites an existing mortgage loan to a lower balance to avoid a foreclosure. (See foreclosure, recasting)

culture of inclusion
Roles and behaviors that respect mutual interests expressed internally, externally, at a community level and globally.

cumulative zoning
Zoning that allows more restrictive uses. For example, a lot zoned for a multi-family dwelling would allow a single-family home if the zoning were cumulative. (See zoning)

curable depreciation
A depreciated item that can be restored or replaced economically. (See also functional obsolescence and physical deterioration)

curb appeal
Curb appeal refers to the overall attractiveness of a property and its surroundings when viewed from the street. Enhancing curb appeal can involve various improvements such as landscaping, a fresh coat of paint on the exterior, updating the front door, and ensuring the property is well-maintained and visually appealing from the outside.

cure period
A cure period is a period of time given to a party in non-compliance to remedy the non-compliance. Failure to cure within the cure period will result in a breach.

currency
Notes and coin that are the “current” medium of exchange in a country (money supply). Gold, as well as national currencies, that act as reserve currencies—such as the U.S. dollar—are referred to as international currency because they are regarded as acceptable for the settlement of international debts.

current rent
Current rents are rents that tenants are currently paying. (As opposed to ‘market rents’, which refer to what the property would rent for if offered to new tenants.)

curriculum vita
Resume that is chronological in format and emphasizes educational background first, and then work history. It can exceed two pages because it can include publications, patents and research.

curtesy
A life estate, usually a fractional interest, given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.

customer
A prospective buyer of real estate. Not to be confused with a property seller, who is the listing broker’s client.

customer
Any person who is or may be required to pay for goods or services offered through telemarketing.

cyber security
Technologies and processes designed to protect computers, networks and data from vulnerabilities, unauthorized access, and attacks by criminals delivered over the Internet.

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