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Knowledge Base: GLOSSARY OF TERMS

ABSTRACT OF TITLE - A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record which may affect the marketability of the title.

ACCELERATION CLAUSE - Clause in trust deed or mortgage giving the lender the right to call all sums owing the lender to be immediately due and payable upon the happening of a certain event.

ADVERSE MATERIAL FACT - A fact which (1) significantly affects the desirability or value of the property to a party and is not reasonably ascertainable or known to a party or (2) establishes a reasonable belief that another party will not be able to, or does not intend to, complete that partyís obligations under a contract creating an interest in real property.

AFFILIATED LICENSEE - An associate broker or salesperson who is under the supervision of a designated broker.

AGENCY RELATIONSHIP - See Brokerage Relationship.

AMORTIZED LOAN - A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payments Loan.

APPRAISAL - An estimate and opinion of value; a conclusion resulting from the analysis of facts. See Fee Appraisal.

APPRECIATION - An increase in value of real estate.

ASSUMPTION OF MORTGAGE - The taking of title to property by a grantee, wherein he or she assumes liability to the lender for payment of an existing note secured by a mortgage or deed of trust against the property; becoming a co-guarantor for the payment of a mortgage or deed of trust note.

BROKERAGE FEE - A designated brokerís compensation for performing the duties of his or her brokerage relationship; in real estate practice, a specified dollar amount, a percentage of the selling price of property, percentage of rentals, etc. The designated broker normally shares his or her brokerage fee with the licensee with whom the client or customer is working.

BROKERAGE RELATIONSHIP - The relationship created between a designated broker and his or her affiliated licensees with a client, pursuant to Neb. Rev. Stat. Sections 76-2401 et. seq., relating to the services to be performed.

BUILDING CODE - A systematic regulation of construction of buildings within a municipality established by ordinance or law.

BUYER LIMITED AGENT - A single limited agent with duties and obligations to the buyer as set out in Neb. Rev. Stat. Sections 76- 2401 et. seq. and 301 NAC Chapter 1 and who has entered into a brokerage relationship with, and therefore only represents, the buyer in the real estate transaction. This relationship may be entered into in writing. However, under Nebraska law, licensees are considered single, limited agents of the buyer unless they have entered into a written brokerage relationship with a seller or are a limited dual agent.

CLIENT - A buyer or seller who has entered into a brokerage (agency) relationship with a licensee pursuant to Neb. Rev. Stat. Sections 76-2401 et. seq.

CLOSING - The final settlement of a real estate transaction between buyer and seller.

CLOSING STATEMENT - The computation of financial adjustments between buyer and seller, as of the day of closing a sale, to determine the net amount which the buyer must pay to the seller to complete purchase of the real estate and sellerís net proceeds.

COLLATERAL - This is the property subject to the security interest.

COMMISSION - See Brokerage Fee.

CONDEMNATION - The act of taking private property for public use by a political subdivision; declaration that a structure is unfit for use.

CONDOMINIUM - A system of individual fee ownership of units combined with joint ownership of common areas of the structure and the land.

CONTRACT FOR DEED - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all, or a certain part, of the purchase price is paid by the buyer. See Land Contract.

CONVENTIONAL MORTGAGE - A mortgage securing a loan made by investors without governmental underwriting, i.e. which is not FHA insured or VA guaranteed.

COUNTER-OFFER - A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing from the original offer.

COVENANT - Agreements written into deeds and other recorded instruments promising performance or nonperformance of certain acts or stipulating certain uses or nonuses of the property.

CUSTOMER - Buyer or seller in a real estate transaction in which a licensee is involved but who has NOT entered into a brokerage (agency) relationship with that licensee.

DEED - Written instrument which, when properly executed and delivered, conveys title.

DEED OF TRUST - Deed given by borrower to trustee to be held pending fulfillment of an obligation, which is ordinarily repayment of a loan to a beneficiary (lender).

DEED RESTRICTIONS - The term, as used relating to real property, means the owner of real property is restricted or prohibited for certain purposes. For example, the requirement in a deed that a lot may be used for the construction of not more than a one-party dwelling, costing not less than one-hundred thousand dollars ($100,000.00), is a deed restriction; also a legislative ordinance affecting all properties in a given area, such as requiring that improvements on property shall not be constructed any closer than twenty-five feet from the street curb, is a restriction by operation of law.

DEPRECIATION - Loss of value in real property brought about by age, physical deterioration or functional or economic obsolescence. Broadly, a loss in value from any cause.

DISCOUNT POINTS - Additional charges made by a lender at the time a loan is made. Points are measured as a percent of the loan, with each point equal to one percent. These additional interest charges are paid at the time a loan is closed to increase the rate of return to the lender so as to approximate the market level.

DUAL AGENT - A limited agent, who with the written informed consent of all parties to a contemplated real estate transaction, has entered into a brokerage relationship with, and therefore represents, both the buyer and the seller. The dual agent has certain duties and obligations to both the buyer and the seller as set out in Neb. Rev. Stat. 76-2401 et. seq.

EARNEST MONEY DEPOSIT - A portion of the down payment made by a purchaser of real estate as evidence of good faith at the time an Offer to Purchase is made. Normally applied to the purchase price at closing.

EASEMENT - Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another. For example, a right-of-way.

EMINENT DOMAIN - The right of the government to acquire property for necessary public or quasi-public use by condemnation; the owner must be fairly compensated.

ENCROACHMENT - The building of a structure or construction of any improvements, partly or wholly on the property of another.

ENCUMBRANCE - Anything which affects or limits the fee simple title to property, such as mortgages, deeds of trust, easements or restrictions of any kind. Liens are special encumbrances which make the property security for the payment of a debt or obligation, such as mortgages and taxes.

EQUITY - The interest of value which an owner has in real estate over and above the liens against real property.

ESCROW - The deposit of instruments and/or funds with instructions to a third neutral party (Escrow Agent) to carry out the provisions of an agreement or contract; when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow.

EXCLUSIVE AGENCY LISTING - In this form of listing the owner of the property lists the property with one designated broker and no others and, therefore, that designated broker will receive the brokerage fee or commission upon the sale of the property, unless the owner sells the house to a buyer that the owner was responsible for finding. When the owner sells the property in the latter situation, no brokerage fee or commission would be paid to the designated broker.

EXCLUSIVE RIGHT TO SELL LISTING - In this form of listing the owner agrees to give one designated broker the sole right to sell the property for a period of time. If the property sells during that time period, the seller owes a brokerage fee or commission to the designated broker. In contrast to the Exclusive Agency Listing and the Open Listing, if the owner sells the property to a buyer that the owner finds, a brokerage fee or commission is still due the designated broker.

This type of listing is used in the vast majority of transactions. It can be advantageous to the owner because the designated broker and those applicable affiliated licensees will apply their best efforts and upon the consummation of the transaction, will receive the brokerage fee or commission and recover any expenses.

FEE APPRAISAL - The act or process of estimating values of real estate or any interest therein for a fee. In Nebraska, a fee appraisal must be performed by a registered, licensed or certified appraiser. See Appraisal.

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

INTEREST RATE - The percentage of a sum of money charged for its use.

JOINT TENANCY - Joint ownership by two or more persons with right of survivorship; all joint tenants own equal interest and have equal rights in the property.

JUDGMENT - The final determination of a court of competent jurisdiction of a matter presented to it; money judgments provide for the payment of claims presented to the court, or are awarded as damages, etc.

LAND CONTRACT - A contract ordinarily used in connection with the sale of property in cases where the seller does not wish to convey title until all or a certain part of the purchase price is paid by the buyer. See Contract for Deed.

LATENT DEFECTS - Defects in the structure which are unknown to the seller and/or which cannot be easily detected by an inspection of the property.

LEASE - A contract between owner and tenant, setting forth conditions upon which tenant may occupy and use the property, and the term of the occupancy.

LICENSEE - An all inclusive term meaning a designated broker, an associate broker or a salesperson as defined under the Nebraska Real Estate License Act. Associate brokers and salespersons must work under the supervision of a designated broker and are considered the designated brokerís affiliated licensees.

LIEN - A form of encumbrance which usually makes property security for the payment of a debt or discharge of an obligation. Example: judgments, taxes, mortgages, deeds of trust, etc.

LIMITED AGENCY RELATIONSHIP - See Brokerage Relationship.

LISTING AGREEMENT - An employment contract between principal and a designated broker to perform services for the principal; listing contracts are entered into for the purpose of securing persons to buy, lease or rent property. Can be entered into by affiliated licensees when authorized by the designated broker.

MARKETABLE TITLE - Merchantable title; title free and clear of objectionable liens or encumbrances.

MARKET ANALYSIS - The analysis of likely present or future market demand for a particular use on a specific site, and the existing and likely future supply of closely competitive facilities in order to formulate the price at which the property may be sold or rented. Sometimes referred to as a Comparative Market Analysis (CMA). This is not an appraisal and need not be performed by a registered, licensed or certified appraiser.

MORTGAGE - An instrument, recognized by law, by which property becomes security to assure the payment of a debt or obligation; procedure for foreclosure in event of default is established by statute.

MULTIPLE LISTING SERVICE (MLS) - This is NOT a type of listing agreement and is oftentimes a misunderstood term. Multiple Listing Service is the name given a service performed by a local board of Realtors which is affiliated with the National Association of Realtors. If a designated brokerís company has joined the Multiple Listing Service, the member company submits listings to the Service and agrees that it will allow other

MLS members to cooperate in the sale of the designated brokerís listings and share in the brokerís compensation. Also, the MLS provides necessary information to aid in the sale of submitted listings. Therefore, it is not a type of formal listing but a marketing tool used by members of the MLS to expose properties to a wider market base.

OPEN LISTING - In an open listing, property is listed with a designated broker for a specified price with an agreement to pay a brokerage fee or commission on that price, or any other price offered which is accepted by the owner. The owner, also, receives the right to list the property with other designated brokers.

Upon the successful completion of the transaction, a brokerage fee or commission is paid only to the designated broker who found the buyer. If the owner sells the house to a buyer found by the owner, then no brokerage fee or commission is paid to anyone. This type of listing can cause disputes over who was responsible for finding the buyer and who gets the brokerage fee or commission, or if a brokerage fee or commission should be paid to anyone.

OPTION - A right given for a consideration to purchase or lease a property upon specified terms within a specified time.

PERSONAL PROPERTY - Any property which is not real property, i.e. money, savings accounts, appliances, cars, boats, chandeliers, gas grills, free standing bars, drapes, propane tanks, stoves, refrigerators, fireplace tools and screens, etc. 26

POINTS - See Discount Points.

PREPAYMENT PENALTY - Financial penalty paid to the lender for the payment of a mortgage or trust deed note before it actually becomes due, if the note does not allow for prepayment.

PRINCIPAL - A person authorizing another (an agent) to represent him or her.

PROMISSORY NOTE - The document signed by the borrower promising to repay the loan under stipulated terms. The promissory note makes the borrower personally liable for its repayment.

PRORATE - To allocate between seller and buyer their proportion ate share of an obligation paid or due: For example, a prorate of real property taxes, hazard insurance, condominium fee, etc.

PURCHASE AGREEMENT - An agreement between a buyer and seller for the purchase of real estate.

QUITCLAIM DEED - A deed to relinquish any interest in property which the grantor may have.

REAL PROPERTY - Land and whatever, by nature or artificial annexation, is a part of it.

SANITARY IMPROVEMENT DISTRICT (SID) - A legal entity formed by a group of landowners to install and maintain public improvements and utilities.

SECURITY INTEREST - A term designating the interest of the creditor in the property of the debtor in all types of credit transactions. It thus replaces such terms as the following: chattel mortgage; pledge, trust receipt; chattel trust; equipment trust; conditional sale; inventory lien; etc.

SELLER LIMITED AGENT - A single limited agent with duties and obligations to the seller as set out in Neb. Rev. Stat. Sections 76-2401 et. seq. and 301 NAC Chapter 1 and who has entered into a written brokerage relationship with, and therefore only represents, the seller in a real estate transaction.

SETTLEMENT STATEMENT - See Closing Statement.

SPECIAL ASSESSMENT - Legal charge against real estate by a public authority to pay cost of public improvements such as: street lights; sidewalks; street improvements; etc. 27

SUBAGENT - A designated broker together with his or her affiliated licensees, engaged by another designated broker to act as the single limited agent for a client. Owes same duties and obligations as does the primary designated broker.

SUB-DIVISION - A parcel of land that has been divided into smaller parts, i.e. lots, blocks or tracts.

TAX LIEN - A legal right to have property sold for payment of delinquent taxes.

TENANCY IN COMMON - Ownership by two or more persons who hold undivided interest in property. Each person controls who will succeed to their interest on death. The interests of the owners need not be equal.

TERM OF MORTGAGE - The period during which a mortgage must be paid.

TITLE - As generally used, a document that indicates rights of ownership and possession of particular property.

TITLE INSURANCE - Insurance written by a title insurance company to protect the property owner against loss if the title is imperfect.

TITLE SEARCH OR EXAMINATION - A check of title records, general ly, at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and to determine if there are no liens, overdue special assessments, or other claims against the property.

TRUST ACCOUNT - An account separate and apart and physically segregated from the designated brokerís own funds, in which the designated broker is required by law to deposit all funds collected for clients. Trust funds normally do not earn interest.

TRANSFER TAX - State tax imposed when title passes from one owner to another.

WARRANTY DEED - A deed used to convey real property which contains warranties of title and quiet possession, and the grantor thus agrees to defend the premises against the lawful claims of third persons.