Glossary

GLOSSARY

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

Abandonment - The relinquishment of all rights and title to a property with no intention of reclaiming ownership.

Abstract - A disclosure statement to initial condo purchasers.

Abstract Of Title - A condensed history or digest of the title to a parcel of land consisting of a summary of every recorded instrument, together with a statement of all liens, charges or encumbrances affecting title to that land.

Abutting Owner - An owner whose land touches a highway or other public place.

Acceleration Clause - A clause in a mortgage or agreement of sale stating that upon default of a payment due, immediate and full payment of the balance of the obligation becomes due and payable.

Access Right - The right of a property owner to have ingress and egress to and from his property.

Accession - Acquisition of property by its joining or union with other property.

Accretion - Gradual additions to land by deposits of sand or soil by bordering waters through natural causes.

Acknowledgement - A formal declaration made before a notary public or other authorized person, by a person who has executed an instrument, that such execution is hi free act and deed.

Acre - A measure of land equal to 160 square rods, 4,840 square yards, or 43,560 square feet.

Accrued Depreciation - In appraisal, any loss of utility that causes the actual value of a property to be less than the reproduction cost new.

Actual Authority - Such authority that a principal intentionally gives his agent.

Adjoining Owner - One whose property is contiguous; to he next to.

Administrator - A person appointed by the court to administer the estate of a deceased person who died intestate, or left no will; a personal representative.

Administrator’s Deed - A deed given by an administrator.

Ad Valorem - Tax according to valuation.

Adverse Possession - The means of acquiring title to land against the real owner, where possession has been actual, open, hostile, exclusive, continuous, and under claim of right for the statutory period of 20 years.

Affidavit - A statement reduced to writing and sworn to before a notary public or some other authorized officer.

Affirm - To confirm or to ratify.

Agency - The legal relationship resulting from an agreement that the agent if authorized by a principal to perform certain acts on behalf of the principal in dealing with a third party.

Agreement of Sale - A written agreement in which the buyer agrees to buy certain realty and the seller agrees to sell upon terms and conditions set forth therein. Title remains with the seller until terms and conditions are fulfilled; buyer has equitable title; there are two closings.

Air Rights - The rights vested by a grant of an estate in real property to all or any portion of the space above the property.

Alienation - The transferring of real property from one person to another.

Allegation - The assertion or declaration of a party setting out what he expects to prove.

Alluvion - That increase of soil on a shore or bank or a river as the result of accretion.

American Land Title Association (ALTA) - An extended coverage title insurance policy usually protecting the mortgagee against loss due to errors in the public records.

Amortization - The gradual paying off of a debt on an installment basis.

Anchor Tenant - Major tenant in a shopping center that serves as a magnet to attract customers to the center.

Annexation - The act of attaching, adding, joining, or uniting one thing to another.

Annual Percentage Rate (APR) - The effective annual cost of credit calculated on the basis of procedures specified by Regulation Z (Truth-in-Lending).

Annuity - A sum of money that constitutes one of a series of periodic payments.

Anti-Trust Laws - Federal and state laws prohibiting conduct which interferes with business competition, such as price fixing, group boycotts and tying agreements.

Appraisal - An estimate of value of real estate; the report stating and supporting the estimated value of realty.

Appraisal By Capitalization - Determine the value of property by dividing net annual income by the capitalization rate. Used on income producing properties.

Appraisal By Cost Approach - Estimating the value of a piece of property by adding to the estimated land value the estimate of the replacement cost or reproduction cost of the building less depreciation. Also called summation or reproduction cost approach.

Appraisal By Market Comparison - An appraisal of property through the examination and comparison of actual sales of comparable properties. Also called a “comparable.”

Appreciation - An increased value of property due to economic or related causes which may prove to be either temporary or permanent.

Appurtenance - That which has been added to a property, which becomes an inherent part of the property, and will pass with it when conveyed; includes improvements.

As Is - A phrase indicating the property is sold in its present conditions with no warranties.

Assemblage - Putting together two or more lots to form a large parcel. To be distinguished from plottage, which is the resulting value.

Assessment - A charge against real estate made by a unit of government or a condo association to cover the proportionate cost of improvement.

Assignee - The person to whom an agreement or contract is transferred.

Assignor - A party who assigns or transfers an agreement or contract to another.

Assignment - The method or manner by which a right, or contract is transferred from one person to another.

Assumption Of Mortgage - Taking of title to property by assuming liability for payment of an existing note secured by a mortgage.

Attachment - The act of taking realty by judicial order and placing it within the custody of the court.

Attestation - The act of witnessing in writing another’s execution of an instrument; to affirm to be true or genuine.

Attorney In Fact - One who is authorized to perform certain acts for another under a power of attorney.

Avulsion - The sudden removal of land of one owner and depositing on the land of another when a stream changes its channel.

Balloon Payment - The final installment payment on a note which is greater than the preceding installment payments and pays the note in full.

Bankruptcy - A condition of financial insolvency in which a person’s liabilities exceed his assets, and he is
unable to pay his debts.

Bargain And Sale Deed - A deed used to convey title to real property, which usually does not include warranties; if any, they are generally an assertion by the grantor that he has possession of the property.

Baseline And Meridian - Imaginary lines used by surveyors in locating and describing land under the rectangular survey method. The north-south line is the meridian, the east-west line is the base line. Used mostly in Midwestern states.

Basis - Original cost of property plus value of any improvement put on by the seller and minus the depreciation taken by him.

Before And After Method - An appraisal method used in condemnation cases where there has been a partial taking of the property.

Benchmark - A natural or unnatural permanent reference mark or point established for use in measuring differences in elevation.

Beneficiary - A person who receives and benefits from the gifts or acts of another; one who receives the proceeds from a will, insurance policy, or trust; the lender in a deed of trust.

Bequeath - The giving of personal property by will.

Biannual - Happening twice each year; semi-annual.

Biennial - Happening once every two years.

Bilateral Contract A contract in which both parties have reciprocal obligations toward each other.

Bill Of Sale - A written instrument which passes title of personal property from seller to buyer.

Binder - An agreement to cover a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser; shows the receipt of a deposit and outlines the basic terms of the transaction.

Blanket Mortgage - One mortgage covering two or more specific parcels or realty.

Blockbusting - The discriminatory practice of encouraging members of one race or creed to move into a neighborhood, and then exploiting the Situation by persuading residents to sell their houses at deflated prices because of the alleged social deterioration of the neighborhood.

Block Interest - interest computed on the original face amount and which remains the same as the principal declines.

Bona Fide - In good faith, without fraud: genuine: real.

Boot - The payment to satisfy the difference in equities in an exchange, which may he in cash, personal property, note, financing, or anything of agreed upon value.

Breach Of Contract - Violation of any of the terms or conditions of a contract; default: non-performance.

Broker - A Licensed person who negotiates the purchase and sale f real estate of another.

Budget Mortgage - A mortgage with payment that covers principal and interest, plus taxes, fire insurance, lease rent, etc.

Building Codes - Rules established by local governments to regulate construction standards.

Building Restrictions - Limitations on the use of property or the size and location of improvements established by legislation or by covenants in deeds.

Bulk Transfer - Any transfer of a major part of the materials, inventory or supplies of an enterprise not in the ordinary course of the seller’s business.

Bundle Of Rights - Ownership concept in real estate which embraces the rights of possession. use, enjoyment. and disposition.

Bureau Of Conveyances - The Hawaii state office which houses all legal documents relative to title to both land court and regular system property recorded since 1848; located in Honolulu.

Business Opportunity - The assets for an existing business enterprise including its goodwill.

Buy-down - The one-time, nonrefundable prepayment of a portion of the interest of a loan to subsidize reduced monthly payments.

Capitalization - The act of converting future income into current equivalent value.

Capitalization Rate - The relationship or ratio between the net income from a real estate investment and the value of the investment, usually expressed as a percentage; the rate of interest which is considered a reasonable return on the investment, plus the recapture rate which computes a return of the investment.

Caveat Emptor - Let the buyer beware; the buyer must examine the goods or property and buy at his own risk.

CC&R’s - Covenants, conditions and restrictions.

Certificate Of No Defense - An instrument executed by the mortgagor and attesting to its validity: estopped certificate.

Chain Of Title - A sequential history of the conveyances, encumbrances, and records of ownership to a piece of property through the years from the original grant to present; the succession of owners as revealed through the public records.

Chattel - Personal property which is tangible and movable; personally.

Chattel Mortgage -. A personal property mortgage.

Cite - To quote as authority or an example: to call to attention or enumerate.

Closing - The time when a transaction is consummated, or the actual signing over of the documents and delivery of the deed; the time after signing when the documents are recorded.

Closing Statement - A statement of settlement made by a broker or an escrow company that reflects the financial position of the buyer or seller in that particular real estate transaction.

Cloud On Title -Any conditions revealed by a title search which may affect or impair the owner’s title to property because of their apparent or probable validity.

Codicil - A supplement or addition to a will which adds to, subtracts from, alters, revokes, or qualifies the provisions of a will.

Collateralized Loan - A loan secured by property; unlike a debenture.

Color Of Title - That which appears to be good title hut which is not in fact good title, such as title held under a defective deed.

Commingling - Mixing money belonging to clients with personal funds.

Commission - An agent’s compensation for performance of the duties of his agency; in real estate practice, a percentage of the selling price of the property, or percentage of rentals, etc.

Commitment - A pledge or a promise; an agreement.

Common Element - In a condominium, land and all parts of a building normally used by all of the owners for their mutual convenience or safety.

Common Expense - In a condominium, the expenses of operation; all sums designated as such by the declaration or by-laws.

Common Interest - The percentage of undivided interest in the common elements of a building appertaining to each apartment in a condominium.

Common Law - Laws which have evolved from general usage and legally established through court decision.

Common Profit - The balance of all income, rent, profits and revenues from the common elements remaining after the deduction of the common expenses in a condominium.

Community Property - Property accumulated and owned in Common through joint efforts of husband and wife during their marriage. Hawaii is not a community property state.

Compound Interest Interest paid both on the original principal and on interest accrued from the lime it fell due.

Condemnation - The process by which property of a private owner is taken for public use, with just compensation to the owner, under the right of eminent domain.

Condemnee One whose property is condemned.

ConditionalFee - A fee estate based upon a condition.

Condominium Ownership - The individual outright ownership of a single unit in a multi-unit property together with an interest in the common elements of that property.

Consideration - Valuable consideration, a promise or an act of legal value bargained for and received in return for a promise; good consideration, love and affection.

Constructive Eviction - Breach of the covenant warranting quiet enjoyment in a lease; when a landlord performs an act depriving the tenant of quiet enjoyment of the premises thereby causing the tenant to move.

Constructive Notice - Notice given by the public records: legal presumption of notice given by the public records. Also called legal notice.

Consummate - To bring to completion, perfection, or fulfillment.

Contiguous - In close proximity; adjoining.

Contingent - Dependent upon an uncertain future event.

Continuation - An update of a title search, covering the period from the preliminary title report to the time of the recording of the documents.

Contract - A legal agreement between competent parties for a consideration to perform or refrain from performing certain acts,

Conventional Mortgage - A mortgage which is not Fl-IA insured, or VA guaranteed.

Conversion - Transforming an apartment building into a condo.

Conveyance - The transfer of the title of land from one to another; an instrument which carries from one person to another an interest in land.

Conveyance Tax - Tax paid by seller upon transfer of deed, based upon $.10 per $100.00 valuation.

Cooperating Broker - A broker who joins with another broker in the sale of real property; usually, one who represents the buyer of property listed with another broker: the selling broker.

CooperativeOwnership - Ownership that usually takes the form of shares of stock in a corporation owning the entire building and a proprietary lease giving the stockholder/tenant the right to occupy a unit for which he pays a proportionate share of the maintenance and operating expenses.

Corporation - A vehicle used to carry on business with its owners having liability only to the extent of their stock ownership; considered to be an individual or separate entity.

Corporeal - Pertaining to a right or rights of a visible and tangible nature.

CorrectionDeed – A deed used to correct a prior erroneous deed; a deed of confirmation; a reformation deed.

CourtesyToBroker - The practice of sharing commissions with cooperating brokers; also, where a selling owner states he will give a commission to the buyer’s broker.

Covenant - An agreement written into deeds and other instruments which promises or guarantees that something shall or shall not he done; an agreement stipulating certain uses or non uses of property.

Credit In closing statements, the acknowledgement of payment: the opposite of a charge or debit.

CRV - Certificate of Reasonable Value (VA).

Cul-De-Sac - A passage way or Street with only one outlet: a blind alley: a turn-around.

Curtesy - The right which a husband may have in his wife’s estate at her death.

Damages - The indemnity recoverable by an injured party to compensate him for the loss suffered through an act of default of another.

Debenture - A note or bond given as evidence of a debt: an unsecured note; that is, there is no collateral security.

Debit - A charge on a closing statement: opposite of a credit.

Debt Service - The amount needed for payment of principal and interest on an amortized debt.

Declaration - To make known openly and in definite terms: that which, along with by-laws, defines the rules by which a condominium will exist.

Dedication - An appropriation of land by its owner for some public use, and acceptance for such use by authorized public officials on behalf of the public. In certain cases five years of uninterrupted public use will be considered an acceptance.

Deed - An instrument in writing, duly executed and delivered by the grantor that conveys to the grantee some right, or interest in or to real estate.

D eed Of Trust - Similar to a mortgage hut title is transferred to a trustee pending payment of the debt.

Default - Failure to meet an obligation or promise when due.

Defeasance Clause - The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligation to the mortgagee, and declares the instrument null and void upon payment of debt when due: also found in leases.

Defeasible FeeSimple - A fee estate subject to being divested or voided. (see Conditional Fee)

DeficiencyJudgment - A judgment for the balance of a debt: issued when the net proceeds from the foreclosure sale are less than the indebtedness sued upon.

Delivery - The. act or intent of transferring an instrument from one person to another in such a way that it cannot he recalled.

Demise- A conveyance of an estate to another for life, for years, or at will; to lease: “the demised premises.”

Deposit - Money given by one to another as evidence of his good faith; evidence or security for performance of a contract.

Deposit Receipt - Upper section of contract used by Hawaii Association of Realtors when accepting earnest money to hind an offer for property; also includes terms of the contract.

Depreciation - Loss of value brought about by physical deterioration or functional or economic obsolescence.

Depth Table - Tables which provide uniform measurement of additional value to lots because of added depth of the lot.

DerivativeTitle - Any title other than original title.

Descent - Ownership transferred by means of inheritance.

Deterioration - Loss in value brought about by wear and tear.

Devise - A gift of realty by will.

Devisee - One who receives a gift of real estate by will.

DirectSalesComparisonApproach - A means of estimating value by comparing recent sales of comparable properties to the subject property after making appropriate adjustments for any differences. Also called Market Data Approach.

Discount Points - A fee based on a percentage of a loan, charged by a lender, as a service charge, or as an amount needed to produce the same yield on a VA loan that he would receive in the conventional mortgage market: each point charged represents I percent of the loan amount and increases the interest rate by 1/8 of one percent.

DispossessProceedings - A legal process by a landlord to remove a tenant and regain possession of real property due to some breach of lease agreement by the tenant.

Distraint - The right of a landlord to seize and hold possessions of a tenant, for rent in arrears, pursuant to a court order.

DominantEstate An estate attached to and benefiting from the servient estate, e.g., an easement runs over the servient estate and serves the dominant estate; also called dominant tenement.

Donee - A person lowborn a gift is made.

Donor - A person who makes a gift.

Dower - The one-third interest a wile may have in the property of her husband acquired prior to July 1, 1977; a life estate in 1/3 o the land the husband owns during the continuance of the marriage relationship and an absolute interest in 1/3 personal property.

Dower Consummate The completed dower; the right a wife may have in her husband’s property upon his death.

Dower Inchoate - The right a wife may have in her husbands property during his life.

Down Payment The amountof cash -paid by a buyer which, added to the mortgage amount, equals the total sales price. At the time of closing this is referred to as equity.

Dual Agency - A relationship which one owes fiduciary duties to both buyer and seller in real estate transaction.

Due on Sale - A mortgage clause permitting acceleration of the loan if the mortgagor attempts to transfer title or interest to the secured property.

Duress - Unlawful constraint or action against a person forcing him to perform some act against this will.

Earnest Money - Initial payment made by a purchaser of real estate as evidence of good faith.

Easement - A right, privilege or interest which one party has in the land of another.

Easement Appurtenant - An easement that is attached to and runs with the land, it cannot exist apart from the particular land to which it is attached.

Easement In Gross - An easement which encumbers the land, and is usually given to a quasi-public corporation, such as the electric or phone company.

Easement By Prescription - A method of acquiring a right to a portion of property by lapse of time, in the manner of adverse possession.

Economic Life - The period of time over which a property may he profitably used.

Economic Obsolescence - See Obsolescence, referred to as External Obsolescence.

Ejectment - A form of action to regain possession of real property, with damages for the unlawful retention; generally used when there is no landlord/tenant relationship.

Emblements - Trees or crops that are cultivated annually; the rights of a tenant to harvest the annual crop even after his tenancy has ended.

Eminent Domain - The right of a government to take private property for public use upon the payment of just compensation.

Encroachment - A building or fixture which intrudes partly or wholly upon the property of another.

Encumbrance - A claim, lien, charge or liability attached to and binding upon real property which affects or limits the title or use thereof. e.g., mortgage, lien, easement.

Endorsement - The placing of one’s signature on a document, to make it negotiable or transferable.

EquitableTitle - Title of a purchaser under a contract of sale, or agreement of sale.

Equity - The interest or value which an owner has in real estate over and above the debts against it. e.g., you buy a house for $80,000 with $20,000 cash plus a $60,000 mortgage. The house later appreciates to $100,000 so your equity Is now at least $40,000. Branch of remedial justice by and through which relief is afforded to parties in courts of equity.

EquityOf Redemption - The right of an owner to reclaim property before it is sold through foreclosure proceedings by payment of the debt, interest and cost.

Erosion - The gradual wearing away of land due to natural causes of wind and water.

EscalationClause - A clause in a contract permitting an adjustment of certain payments up or down to cover certain contingencies; mostly found in agreements of sale, mortgages and leases.

Escheat - The reverting of property to the state when heirs capable of inheriting are lacking; or the property is abandoned.

Escrow - The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract.

EscrowHolder - The one who receives a deed or other item from a grantor to he delivered to the grantee upon the performance of a condition or the occurrence of a contingency.

Estate - The degree, quantity, nature, and extent of interest a person has in real property.

EstateFor Years - A lease; an interest in land by virtue of a contract for the possession for a definite and limited period of time.

Estoppel - A doctrine which bars one from asserting rights which are inconsistent with a previous position or representation. e.g. the seller of an apartment building may ask the tenants to sign lease estoppel agreements stating the amount of rent and security deposits.

EstoppelCertificate - See Certificate Of No Defense.

Et Al - Latin for “and others.”

Et Ux - Latin for “and wife.”

Eviction - A legal proceeding by a landlord to recover possession of leased premises from a tenant due to some breach of lease contract.

Exchange - A method of conveying real property by trading with another property.

ExchangeAgent - A person who operates an exchange program in time sharing projects.

ExclusiveAgency - A written instrument giving one agent the right to sell property for a specified time, hut reserving the right of the owner to sell the property himself without the payment of a commission.

ExclusiveRightToSell - A written agreement between owner and agent giving agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

Execute - To complete, to perform, to make, to do, to follow out; to execute a deed, to make a deed, including especially signing; to execute a contract, to perform the contract, to follow out to the end, to complete.

ExecutedContract - A contract that is fully performed.

Executor - A person named in a will to carry out its provisions as to the disposition of the estate of a deceased person; a personal representative.

ExecutoryContract - A contract not yet fully performed; e.g., DROA.

ExpressAuthority . Clearly stated duties of an agent as set forth by his principal.

ExternalObsolescence - Loss in value due to factors outside of the property (such as near airport).

Federal H ome Loan Mortgage Corporation (FIILMC) A Federal agency which buys mortgages in the secondary money market from commercial banks and federally insured savings and loan associations; Freddie Mac.’

Federal Housing Administration (FHA) - An agency of the Federal Government which insures certain real estate loans.

Federal National Mortgage Association (FNMA) - An agency formerly of the Federal Government that buys and sells mortgages in the secondary money market. Fannie Mae.’

Fee Conditional - An estate granted absolutely hut only so long as a specified event occurs Or does not occur.

Fee Simple - An estate in real property, by which the owner has the greatest power over the title which it is possible to have, being an absolute estate; an estate of inheritance belonging to the owner, that he may dispose of, trade, or will, as he chooses.

FeeTail - An estate which is inheritable by particular lineal heirs. Upon lack of such heirs the estate reverts back to the grantor or his heirs.

Fiduciary - A person in a position of great trust and confidence, as the relationship between principal and broker.

Finders Fee - A fee paid to a person for the services of putting together the two parties in a real estate transaction.

First Refusal, Right Of- A right, usually given by an owner to a lessee, which gives the lessee the first chance to buy the property if the owner decides to sell. The owner must have a legitimate offer which the lessee can then match or refuse.

FIRPTA Federal Investment in Real Property Tax Act. An amount withheld from the sale of Hawaii property when the seller is a foreigner.

Fiscal Year A year, used for tax, corporate and accounting purposes which begins on a date other than January I.

Fixture - An article of personal property which has been installed in or attached to land or a building thereon, in such a manner, that it is now considered to he a part of the real estate.

Foreclosure - Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.

Forfeiture - Loss of money or anything of value, due to failure to perform: a right expressly given in an installment contract whereby the seller terminates the contract for non-payment, and retains all of the payments previously made by the buyer.

Fraud - The intentional and successful employment of deception in order to cheat or deceive another person and to thereby gain some dishonest advantage.

Freehold - An estate in real property for an indefinite and uncertain time, such as a fee simple or a life estate.

Front Foot - Property measurement by the front foot on its street line or waterfront line with each front foot extending the depth of the lot

Functional Obsolescence - See Obsolescence.

Gap Loan - Any loan filling the deficiency created when the permanent financing and the equity are unable to cover the total cost of a project.

General Lien - A lien which attaches to all property owned by the debtor.

G.I. Loan - See Veterans Administration.

Good Funds Act - Requires Escrow to clear all funds and checks before closing.

Government National Mortgage Association (GNMA) - A federal agency which provides special assistance for federally aided housing programs; active in the secondary money market for government subsidized housing programs; “Ginnie Mae.”

Graduated Lease A lease that provides for periodic increases of rent at regular intervals.

Graduated Mortgage - One where monthly payments start low and increase later. An Fl-1A245 is one of these,

Grandfather Clause - See Nonconforming use.

Grant - A transfer of real property.

Grantee - The purchaser; the person to whom an interest in realty is conveyed.

Grantor - The seller; the person who conveys an interest in realty by deed.

Grantor/Grantee Index - Books found in Bureau of Conveyance showing respective grantor to grantee. Or grantee to grantor by year. alphabetically.

GreatMahele - A division of Hawaiian lands which occurred in 1848 during reign of King Kamehameha III.

GRI - The professional designation of Graduate, Realtors Institute, earned by completion of prescribed courses of study conducted by state boards of Realtors.

GrossIncome - Total income derived from a business or income property before expenses are deducted.

Gross Lease -. A lease of property in which the lessor meets all property charges incurred through ownership.

Ground Lease - lease for the use of the land, usually providing for improvements to be placed on the land by the user.

Ground Rent - The net rent paid for a parcel of unimproved land; that portion of the total rental is considered to represent a return upon the land only.

Habendum Clause - The portion of a deed beginning “to have and to hold,” which usually follows the granting clause, and explains or limits the estate granted.

HARPTA - Hawaii Real Property Tax. An Amount withheld from sale of Hawaii property belonging to a nonresident seller.

Heir - One who succeeds to the estate.

Hereditaments - Every sort of inheritable property whether corporeal, incorporeal, real, personal or mixed.

Highest And Best Use - That use of land, which al the lime of an appraisal is most likely to produce the greatest net return over a given period of time.

Holding Escrow - An arrangement whereby escrow holds the final title documents pursuant to an agreement of sale.

Holdover Tenant - A tenant who remains in possession of a property after expiration of lease term.

Holographic Will - A will written in hand by the person leaving the will and not witnessed.

Homestead - A right given to a householder or head of a family to designate real estate as his homestead and said homestead is exempt, up to a stated amount, from execution by his creditors; a tract of land whose ownership has been established under the provisions of the Homestead Act,

Homogeneous - The same or similar kind, as used in appraising; homogeneity tends to stabilize values in an area.

Horizontal Property Regime - The name once given to the laws pertaining to condominiums in the State of Hawaii; horizontal layers of ownership, now called the Condominium Property Regime.

HulaMae The Hawaii Housing Authority issued tax-exempt revenue bonds to fund a mortgage loan program, offering first-time home buyers interest rates below conventional rates by way of the Housing and Loan Mortgage Act.

Hypothecate - To place property as security; to mortgage.

Implied Authority - The authority an agent is assumed to have because of a course of conduct, or which is inferred from the fact that he has been authorized to perform certain acts.

ImpoundAccounts - A reserve account required by lenders, usually equal to two months taxes and hazard insurance, to cover future payments of taxes, insurance, or cover any increases in these amounts.

Improvements - All real estate except land. Includes buildings, fixtures, fences, curbs, sewers, etc.

Incapacity - The lack of legal qualifications making a person incapable of performing some act. Mental deficients, minors. etc. lack capacity to perform certain acts.

Inchoate - Incomplete; not perfected.

Incorporeal - Intangible; without physical existence.

Indefeasible - Not capable of being annulled or voided; irrevocable.

IndependentContractor - One who is retained to perform a certain act, hut who is not under the control or direction of the hiring person as to how he performs the act, just the end result.

Initiate - To begin: to set in motion or originate.

Injunction - A writ or order issued under the seal of a court to restrain one or more parties from performing an act which is deemed to be inequitable or unjust in regard to the rights of some other party.

InstallmentContract - A contract which provides for payment of a purchase price in installments; an agreement of sale. Also called installment land contract or installment sale.

Instrument - A written legal document.

InterVivos - During one’s life: between living persons; from one living person to another.

Interim Financing - A short-term loan obtained to cover financing of the construction of a building.

Intestate - A person who dies without a will, or will one which is defective in form.

Involuntary Lien - A lien imposed against property without consent of an owner: e.g., taxes, special assessments, federal income tax liens, etc.

Irrevocable - Incapable of being recalled or revoked; unchangeable.

Joint Tenancy - Ownership by two or more persons with rights of survivorship; all joint tenants own equal interests and have equal rights in the property; each owner is possessed of an undivided part of the whole.

Joint Venture - A joining of two or more people in a specific business enterprise: similar to a partnership, and generally with no intention of a continuing relationship beyond the original purpose.

Judgment - The final determination of the rights and liabilities of the parties by a court in an action before it.

Junior Lien - A subordinate lien.

Junior Mortgage - A mortgage which is subordinate to prior existing mortgage on the same realty.

Laches - Delay or negligence in asserting one’s legal rights.

Land Contract - See Agreement of Sale.

Land Court - A court designated to preside over the registration of land under the Torrens system; the court which is used to verify title.

Land Patent - An instrument conveying government owned lands to individuals.

Land Trust - A device to hold title to land in a trust with the beneficial ownership held by the landowner.

Land Use Ordinance -. County code which sets forth zoning regulations for the county.

Landlord Tenant Code (LTC) - A Hawaii state law outlining the rights, obligations and remedies of a residential landlord and a tenant.

Landmark - A monument or object used to establish the boundary line of a property.

Latent Defect - A hidden structural defect in real estate, known to the seller but not the buyer and not discoverable by mere observation.

Lateral Support - The support which the soil of an adjoining owner gives to his neighbor’s land.

Lease - A contract whereby the lawful owner of the property transfers his rights of use and possession to another for a specified term. .

Leased Fee - The landlord-owners interest in the demised premises: valued as the rent plus the reversionary interest.

Lease hold - An estate or right in real property held under a lease by the lessee.

Legacy - A gift of personal property, usually money in a will.

Legal Description - A description, recognized by law, that will definitely locate and identify the property.

Lessee - One who rents property under a lease contract.

Lessor - An owner who enters into a lease with a tenant.

Less Than Freehold - A lease; a leasehold estate.

Leverage - The use of borrowed funds in financing, with the anticipation that the property acquired will increase in return so that the investor will realize a profit, not only on his own investment, but on the borrowed funds as well.

Liher - Books which contain public records such as copies of deeds.

License - A personal privilege to perform some act on the land of another.

Lien - A right, given by law, whereby a creditor may satisfy a debt out of the proceeds of the sale of real or personal property belonging to the debtor; an encumbrance, usually naming property as security for payment of a debt or for the discharge of an obligation.

Lien Letter - A limited title search issued to cover Land Court property in Hawaii.

Life Estate - An estate or Interest in real property held for the duration of the life of a certain person. Upon the expiration of that life, the estate will automatically be vested in a remainderman or reversioner.

LimitedCommon Element - In a condominium, those common elements reserved for the use of a certain apartment, or certain apartments, to the exclusion of other apartments.

LimitedPartnership - A partnership composed of general and limited partners whose contribution and liability are limited and specifically defined.

LiquidatedDamages - An amount pre-determined by the parties to an agreement that will he forfeited as compensation for breach of contract.

Lis Pendens - A legal document giving Constructive notice that an action at law is pending; a notice of pendency.

Listing - A written employment agreement between a property owner and a broker authorizing the listing broker to sell, lease or exchange the realty.

Loan Commitment - A commitment by a lender as to the amount he will loan to a qualified borrower on a particular piece of real estate.

M.A.1. - Designates a person who is a member of a professional appraisal organization.

Marginal Land - Land which barely pays the cost of working or using.

Marketable Title - Title free and clear of objectionable liens or encumbrances; title which is free from reasonable doubts or defects, which can be readily sold or mortgaged.

Market Value - The highest price a ready, willing and able buyer, not forced to buy, will pay to a ready, willing and able seller, not forced to sell, allowing a reasonable time for exposure in the open market.

Material Fact - A fact is material if it is one which the agent should realize would he likely to affect the judgment of the principal in giving his or her consent to the agent to enter into the particular transaction on the specified terms.

Mechanic’s Lien - A lien which exists against real property in favor of persons who have performed work or furnished materials for the improvement of real estate.

Merger Of Title - The absorption of one estate into another.

Metes And Bounds - A method of describing or locating real property; metes are measures of length and bounds are boundaries; a description starting with a well-marked point of beginning and following the boundaries of the land until it returns once more to the point of beginning.

Mile - A linear measurement of distance equal to 1,760 yards, 5,280 feet, or 1,608 meters.

Military Clause A clause inserted in some leases to allow the military tenant to terminate the lease in case of transfer, discharge or other circumstances.

Mill - One-tenth of one cent. Used in some states to compute property taxes.

Minor A person who is under the legal age of competence; one under 18 years of age.

Misrepresentation - A false statement of a material fact made with the intent to induce some action by another party.

Monument :A fixed object and point established by surveyors to establish land locations; includes not only artificial objects such as posts and fences, hut natural objects such as trees, mountains and water courses.

Mortgage - An instrument in writing which, when recorded, creates a lien upon property pledged as security for the repayment of a debt or obligation.

Mortgage Banker – A corporation or firm which makes, delivers and services mortgage loans.

Mortgage Broker - A person or firm which acts as an intermediary between borrower and lender.

Mortgagee - The party who lends money and accepts a mortgage to secure the payment of the debt.

Mortgagor - The party who borrows money and gives a mortgage on the properly as security for his obligation to repay the debt.

Mud Tunnel - Passageway for subterranean termites.

Multiple Listing Service (M.LS.) - An arrangement among brokers whereby they share their listings.

N.A.R. - The National Association of REALTORS. Only brokers who arc members of local real estate hoards are entitled Co use the trademark name “REALTOR”, salespeople are called “REALTOR-ASSOCIATES.”

Navigable Waters - Those bodies of water which are capable of being used for public transportation.

Negotiable Instrument A written instrument signed by its maker or drawer, containing an unconditional promise to pay a certain sum of money; can be passed freely from one person to another.

Negotiate - To transact business; to arrange terms of a contract.

NetIncome - With reference to property, the sum derived after a vacancy allowance and expenses have been deducted from the gross income; generally described as net income before depreciation, and usually defining the income a property will earn in a normal year’s operation (net operating income).

Net Lease - A lease in which the tenant pays rent for occupancy, plus maintenance and operation expenses, and usually including taxes and insurance.

Ne tListing - A listing which provides that the agent may retain all sums received over and above a net price to the owner as compensation for his services.

Nominal Consideration - One bearing no relation to the real value of the contract. An example is a property which is deeded for $10.00.

Nonconforming Use - A use which is contrary CO zoning laws, hut which is permitted because the use was allowed before the zoning law came into effect a grandfather clause.

Note - A written instrument acknowledging a debt and promising payment.

Notice Of Nonresponsibility - A notice provided by law designed to relieve a property owner from responsibility for the cost of work done on the property or materials furnished therein: usually applicable when a lessee contracts to have work performed. Not applicable in Hawaii.

Notice To Quit - Notice to a tenant to vacate.

Novation - The substituting of a new obligation for an old one (as in a VA Substitution).

Obsolescence - Functional obsolescence or lack of desirability in terms of layout, style and design as compared with that of a new property serving the same function; economic obsolescence or a loss in value from causes in the neighborhood, hut outside the property itself.

Offer - A promise by one party to act in a certain manner provided the other party will act in the manner requested. In a real estate sales contract, the offer to purchase realty according to certain stipulated terms and conditions.

Ohana Zoning -Amends the Comprehensive Zoning Code by permitting a second dwelling unit on certain residentially zoned lots, thus providing immediate and less expensive housing alternatives.

Open-End Mortgage - A mortgage containing a clause which permits the mortgagor to borrow additional money up to the original amount of the loan after the loan has been reduced, without rewriting the mortgage. Not to confuse with open mortgage, which is any mortgage with no payment penalty.

Open Listing - A listing given to any number of agents without liability to compensate any except the one who first procures a buyer ready, willing and able to meet the terms of the listing.

Option - A right given for consideration to purchase or lease a property upon specified terms within a specified time. Purchaser is the optionee.

Ordinance - A legislative enactment of a city or county, such as zoning.

Over Improvement - An improvement which is not the highest and best use for the site on which it is placed. Usually by reason of excess size or cost.

Package Mortgage - A mortgage commonly used in subdivision developments whereby chattels such as appliances are “packaged” into the mortgage along with the real property.

Panic Peddling - Creating an atmosphere of fear in persuading owners to sell: a discriminatory act.

Parol - Oral; verbal.

Parol Evidence - Verbal or written testimony which precedes a written contract.

Partial Taking - The taking of a portion of a piece of property through condemnation,

Parties (Party) - Those entities taking part in a transaction as a principal, e.g., seller, buyer, or lender in a real estate transaction.

Partition - Court proceedings by which co-owners of commonly owned property seek to sever their common ownership; not with tenancy by entirety.

Partnership - A contract between two or more persons to carry on as co-owners of a business, and to share the profits in certain proportions.

Party Wall - A wall erected on the line between adjoining properties which are under separate ownership, for the use of both owners.

Patent - A conveyance for the transfer of title to land owned by the government; land patent.

Payment Bond - The part of a performance bond which assures the owner that material and labor furnished in the construction of the building will be fully paid for and no mechanic’s liens will be filed.

Percentage Lease - A lease of property in which the rental is based upon the volume of gross sales made on the leased premises.

PerformanceBond - A bond which provides assurance of the completion of an undertaking in accordance with an agreement, such as that supplied by a contractor guaranteeing the completion of a building project.

Periodic Tenancy - A lease running from period to period, such as week to week, or month to month.

Personal Property - Any property not real property, personality.

Pertinent - Relevant, applicable.

Piggy-Back Loan - One lender originates loan, another joins in as co-operating lender, with neither junior. One property. two lenders.

Plain Language - Hawaii law requiring certain contracts (under $25,000) and leases to he written in ordinary, everyday, non-legal language.

Plan Manager - A person who undertakes the duties, responsibilities and obligations of managing a time share plan.

Planned Unit Development - A development and zoning concept which is designed to produce a high density of dwelling units with maximum utilization of open spaces.

Plat - A plan map of a certain piece or pieces of land.

Plat Field Book - A public record containing facts pertaining to land.

Plottage - The land increment produced by combining smaller individually owned plots into a large tract under a single ownership; see Assemblage.

Points - See Discount Points.

Police Power - The inherent right of a government to enact such legislation as may be deemed necessary to protect and promote the health, safety and general welfare of the public, such as zoning.

Power Of Attorney - A written instrument authorizing a person (an attorney in fact) to act as the agent on behalf of another to the extent indicated in the instrument.

Power Of Sale - A provision in a mortgage permitting the lender, upon borrower’s default, to sell the secured property at public auction without need to have a court foreclose.

Prepayment Clause - The clause in a mortgage or note stating the penalty, if any, for payment before it actually becomes due.

Prescription - An easement or title obtained by possession for a prescribed period; prescriptive rights.

Prima Facie Evidence - Evidence which is good and sufficient on its face (“at first view”) to establish a given fact or case, unless rebutted or contradicted.

Primary Money Market - The source of loan funds available directly to borrowers, whether for first or second mortgages; loan originations.

PrimeRate - The minimum interest rate charged by a hank on short term loans to its best clients.

Principal - The employer of an agent or broker; a sum of money owed as a debt upon which interest is calculated, not spelled Principle.

Probate - An action of the court to determine the validity and legality of a last will and testament.

ProcuringCause - The cause of a series of events which leads to the Consummation of a sale.

Promulgate - To publish, announce or declare.

Proprietary Lease - A lease in a cooperative apartment between the Owner-Corporation and the tenant- stockholder.

Proprietorship - A business held by a person who has legal title or exclusive right thereto.

Prorate To divide or distribute proportionately; to divide monies, usually at time of closing, proportionately between seller and buyer.

Prospectus - A printed statement distributed to describe and to advertise a new business venture, a real estate project or stock issue.

Purchase Money Mortgage - A mortgage on property given by a buyer, either to the seller or to a third party in order to secure a portion of the purchase price.

Qualified Fee - An estate in fee simple hound by limitations imposed by the grantor.

Quiet Enjoyment - The right of an owner or tenant legally in possession to the use of property without interference from the landlord, or grantor, or anyone claiming through him.

Quiet Title - A Court action brought to establish title or to remove a cloud on the title; an action clearing tax titles or titles based upon adverse possession.

Quitclaim Deed - A deed containing no warranties or covenants, which relinquishes any interest, title or claim in property the grantor may have, if any.

Quorum - A majority of the entire body; minimum needed to legally conduct a meeting.

Ratification - The approval or confirmation by one person, of an act or contract performed or entered into on his behalf by another, who at the time lacked authority to act as his agent.

Ready, Willing And Able - A person who is prepared, financially able, and willing to enter into a binding contract.

Realtor A broker who belongs to NAR. (See NAR).

Realtor-Associate - A salesperson who works for a Realtor and belongs to the local Board of Realtors.

RecaptureRate A factor used in the capitalization approach to value to estimate the return OF the investment.

Receiver - A court appointed custodian who holds property for the court, pending final disposition of the matter before the Court.

Reconveyance A conveyance to the land owner of the title held by a trustee under a deed of trust.

Recording - The act of writing or entering an instrument into a hook of public records, which constitutes notice to all persons of the rights or claims contained in the instrument; olten called constructive notice.

Redemption - The right of an owner to redeem or reclaim property by paying the debt after default, together with interest and costs, and before sale at foreclosure. Equity of redemption refers to the right to redeem the property after default but before foreclosure. Statutory right of redemption refers to the right in some states (hut not Hawaii), to redeem the property after foreclosure or other enforcement action, during a certain period of time specified by statute.

Redlining - A practice by lending institutions restricting the number of loans that will he underwritten in a given community. The practice is illegal if based on the racial composition of a community.

Reduction Certificate - A certificate showing the unpaid balance of a mortgage, the interest, and the maturity date. Used when a prospective purchaser is going to assume a mortgage or take title subject to an existing mortgage. It is given by the mortgagee.

Refinance - To obtain a new loan to pay off an existing mortgage or agreement of sale.

Reformation - An action to correct a mistake in a deed or other document.

Release - The relinquishment or surrender of a right, claim, or interest.

Release Clause A clause in a blanket mortgage which gives the property owner the right to pay off a portion of the indebtedness, thereby freeing a portion of his property from the mortgage.

Release Of Mortgage - The instrument given by the mortgagee to the mortgagor indicating discharge of the mortgage, stating that the obligation has been fulfilled and the debt paid off.

Reliction - Gradual recession of water from the usual watermark.

Remainder Estate - An estate created by single grant simultaneously with another which vests with a third party after termination of the prior estate: such as a life estate.

Remainderman - The one in whom an estate vests after termination of a prior estate.

Rendered - Furnished, presented; performed; made.

Rescind - To annul; cancel.

Rescission - The annulling, revocation, or repealing of a contract by mutual consent of the parties, or for cause by either party to the contract, and returning the parties to their original position (the “status quo”).

Rescission Clause - A clause occasionally found in an agreement of sale which requires the seller to return all of the buyer’s payments less costs and a fair rental value in the event the buyer defaults.

Reservation - A right retained by a grantor in conveying property.

Restriction - A clause in a deed or other written instru

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