REAL ESTATE GLOSSARY

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Calendar Year:	A year using the actual number of days in each month for a total of 365 days in a year (366 days in a leap year).

Call Option:	A provision of a note which allows the lender to require repayment of the loan in full before the end of the loan term. The option may be exercised due to breach of the terms of the loan or at the discretion of the lender.

Cap (interest):	Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage can change in an adjustment interval and/or over the life of the loan. For example, if your per-period cap is 1% and your current rate is 7%, then your newly adjusted rate must fall between 6% and 8% regardless of actual changes in the index.

Cap (payment):	Consumer safeguards which limit the amount monthly payments on an adjustable-rate mortgage may change. Since they do not limit the amount of interest the lender is earning, these consumer safeguards may cause negative amortization.

Capital Gains:	The profit on the sale of a capital asset, such as stock or real estate. If you sell your primary residence, you can exclude $250,000 in profit from capital gains tax. A couple can exclude $500,000.

Capitalization Rate:	The rate of expected return on investment property. A ratio of income to value.

Capitalization:	The estimation of the value of an income producing property by dividing the annual net income by the capitalization rate.

Cash Out:	Any cash received when you get a new loan that is larger than the remaining balance of your current mortgage, based upon the equity you have already built up in the house. The cash out amount is calculated by subtracting the sum of the old loan and fees from the new mortgage loan. For example, if your existing loan is $100,000, you might refinance it with a loan of $120,000. After you pay off your current loan ($100,000) and any loan-origination costs for the new loan (for example $2,000 in points), you would be left with $18,000 cash out. Cash-out loans may not be available for all types of property.

Cashier's Check (or Bank Check):	A check whose payment is guaranteed because it was paid for in advance and is drawn on the bank's account instead of the customer's.

CC&R:	See covenants, conditions & restrictions.

CCCS:	See Consumer Credit Counseling Service.

Ceiling:	The maximum allowable interest rate over the life of the loan of an adjustable rate mortgage.

Census:	An official count of the number of people living in a certain area, such as a district, city, county, state, or nation. The United States Constitution requires the federal government to perform a national census every ten years. The census includes information about the respondents' sex, age, family, and social and economic status.

Certificate of Eligibility:	The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility).

Certificate of Title:	Written opinion of the status of title to a property, given by an attorney or title company. This certificate does not offer the protection given by title insurance.

Certificate of Veteran Status:	FHA form filled out by the VA to establish a borrower's eligibility for an FHA Vet loan. Obtainable through local VA office by submitting form DD 214 (Separation Paper) with form 26-8261a (request for certificate of veteran status).

Chain of Title:	The chronological order of conveyance of a property from the original owner to the present owner.

Channeling:	The illegal practice of directing people to, or away from, certain areas or neighborhoods because of minority status; Steering. See Fair Housing.

Chattel:	See personal property.

Cleaning fee:	A nonrefundable fee charged by a landlord when a tenant moves in. The fee covers the cost of cleaning the rented premises after you move out, even if you leave the place spotless. Landlords in every state are allowed to use the security deposit to clean a unit that is truly dirty.

Clear Title:	Also known as a Clean Title. A land title that doesn't have any liens (including a mortgage) against it.

Computerized Loan Origination:	Also known as CLO. A computer network of major lenders that allows agents to initiate mortgage applications in their office. HUD has approved the procedure as long as 1) full disclosure is made of the fee; 2) multiple lenders are displayed on the computer screen to give borrowers a basis for comparison; 3) the fee charged is a dollar amount rather than a percentage of the loan.

Closing (or Settlement):	The settlement or closing is the conclusion of your real estate transaction. It includes the delivery of your security instrument, signing of your legal documents and the disbursement of the funds necessary to the sale of your home or loan transaction (refinance).

Closing Costs:	Costs for services that must be performed before your loan can be initiated. Examples include title fees, recording fees, appraisal fee, credit report fee, pest inspection, attorney's fees, and surveying fees. Closing costs can vary considerably from one financial institution to another.

Closing Statement:	A detailed written summary of the financial settlement of a real estate transaction, showing all charges and credits made, and all cash received and paid out.

Closing:	The conclusion of the sales transaction when the seller transfers title to the buyer in exchange for consideration.

Cloud on Title:	A claim or encumbrance that may effect title to land.

Competitive Market Analysis:	Also known as CMA. A method of determining the value of a property by comparing the prices paid for similar properties.

Code of Ethics:	A written standard of ethical conduct embraced by the NATIONAL ASSOCIATION OF REALTORSŽ, a trade organization of more than 700,000 members representing all branches of the real estate industry.

COFI:	See Cost of Funds Index.

Collateral:	Assets (such as your home) pledged as security for a debt.

Commingling:	The illegal practice of combining or mixing clients' funds with the agent's own funds.

Commission:	Compensation paid to a real estate agents for services rendered in connection with the sale, exchange, or lease of property. Usually a percentage of the selling price of the property.

Commitment:	A promise to lend and a statement by the lender of the terms and conditions under which a loan is made.

Community Reinvestment Act:	The federal law which requires federally regulated lenders to describe the geographical market area they serve. Deposits from that area are to be reinvested in that area whenever practical.

Comparables:	Properties which are similar to a particular property and are used to compare and establish a value for that property.

Compound Interest:	Interest which is computed on the principal and any unpaid accumulated interest. Contrast with simple interest.

Condemnation:	The act of taking private property for public use, through due process under the right of eminent domain, with compensation to the owner.

Condominium:	Also known as "Condo". Individual ownership of a portion of a building, where the homeowner holds title to an individual dwelling unit and a proportionate interest in common areas and facilities of a multi-unit project. Maintenance fees called "assessments" are paid to the condominium association to maintain, repair, or improve the property.

Conforming Loan:	A mortgage loan which meets all requirements to be eligible for purchase by federal agencies such as FNMA and FHLMC. The maximum conforming loan amount is $240,000 for a one-unit property.

Consideration:	The price or subject matter, which induces a contract; may be in money, commodity, exchange, or a transfer of personal effort.

Constructive Eviction:	The provision of housing that is so substandard that, for all intents and purposes, a landlord has evicted the tenant. For example, the landlord may refuse to provide light, heat, water or other essential services, destroy part of the premises or refuse to clean up an environmental health hazard, such as lead paint dust. Because the premises are unlivable, the tenant has the right to move out and stop paying rent without incurring legal liability for breaking the lease. Usually, the tenant must first bring the problem to the landlord's attention and allow a reasonable amount of time for the landlord to make repairs.

Consumer Credit Counseling Service:	Also known as CCCS. A national non-profit agency that, at no cost, helps debtors plan budgets and repay their debts. One major criticism of CCCS is that each office is primarily funded by voluntary donations from the creditors that receive payments from debtors repaying their debts through that office. The goal of CCCS is to insure that consumers repay the debts that they owe. CCCS may arrange easy payment plans that increase the chances for repayment, but harm a consumer's credit in the process. Agreeing to a payment plan and following it to the letter may not stop creditors from reporting delinquent repayment information to credit bureaus for each month the payment falls short of the previous minimum amount.

Contingency:	A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event. A common example is a Buyer who enters into the purchase of another home before his current home is sold. The Buyer will usually ask for the Seller to make the sale contingent upon the sale of the Buyer's current home. If the Seller receives another offer for the property, the first Buyer must either agree to buy the home without any contingency, or step aside and let someone else purchase the home.

Contract:	A legally enforceable agreement to do, or not to do, a particular thing for a consideration.

Contract for Deed:	A contract for the sale of real estate where the deed (title) of the property is transferred only after all the payments have been made. Also known as a land contract, agreement of sale, conditional sales contract, or installment contract. Buyers should be wary of this type of contract, since they can lose their entire investment if the owner declares bankruptcy, before the deed has been transferred.

Contract for Exchange of Real Estate:	A contract for the sale of real estate in which the consideration is paid wholly or partly in real property instead of cash.

Contract of Sale:	The agreement between the buyer and seller on the purchase price, terms, and conditions necessary to both parties to convey the title to the buyer.

Conventional Loan:	Loans that are not made under any government housing program; they are not subject to the restrictions of government housing programs, such as loan size limits.

Conversion Clause:	A provision in some ARMs that allows you to change an ARM to a fixed-rate loan, usually after the first adjustment period. The new fixed rate will be set at current rates, and there may be a charge for the conversion feature.

Convertible ARMs:	A type of ARM loan with the option to convert to a fixed-rate loan during a given time period.

Conveyance:	Written instrument, such as a deed, lease or mortgage, that evidences transfer of some ownership interest in real property from one person to another.

Co-op:	See cooperative housing or cooperative sale.

Co-operative:	Also known as Co-op. An arrangement in which a corporation made up of residents owns a building. The buyer owns a proprietary lease, rather than real property, and a corresponding number of shares in the corporation.

Cooperative Housing:	(1) A form of real estate, usually a dwelling in which residents own shares, but do not directly own the space they inhabit. Rather, owning a share of the building entitles the shareholder with the right to inhabit a certain space within the dwelling, such as an apartment. Shares are usually proportional to the amount of space in each apartment. (2) A living arrangement in which residents must perform certain duties or chores to benefit the entire residence, in addition to paying room and board. A common form of dormitory living.

Cooperative Sale:	A sale of property in which the buyer is brought to the transaction by a real estate agent who works for a different real estate broker than the listing agent. Both brokers/companies have agreed to cooperate in closing the property, and typically, splitting the commission. Offers of cooperation and compensation are also found in the MLS property listings.

Cost Approach:	to value An estimate of value based on current construction costs, less depreciation, plus land value. Contrast with the income approach to value and the market data approach to value.

Cost of Funds Index:	Also known as COFI. An index of the weighted-average interest rate paid by savings institutions for sources of funds, usually by members of the 11th Federal Home Loan Bank District.

Co-Tenants:	Two or more tenants who rent the same property under the same lease or rental agreement. Each co-tenant is 100% responsible for carrying out the rental agreement, which includes paying the entire rent if the other tenant skips town and paying for damage caused by the other tenant.

Counter Offer:	The rejection of an offer to buy or sell that simultaneously makes a different offer, changing the terms in some way. For example, if a Buyer offers $160,000 for a home, and the Seller replies that he wants $175,000, the Seller has rejected the Buyer's offer of $160,000 and made a counteroffer to sell at $175,000. The legal significance of a counteroffer is that it completely voids the original offer, so that if the Seller decided to sell for $160,000 the next day, the Buyer would be under no legal obligation to pay that amount for the property.

Covenant:	A restriction on the use of real estate that governs its use, such as a requirement that the property will be used only for residential purposes. Covenants are found in deeds or in documents that bind everyone who owns land in a particular development. See Covenants, Conditions & Restrictions.

Covenants, Conditions & Restrictions:	(CC&Rs) The restrictions governing the use of real estate, usually enforced by a homeowners' association and passed on to the new owners of property. For example, CC&Rs may tell you how big your house can be, how you must landscape your yard or whether you can have pets. If property is subject to CC&Rs, buyers must be notified before the sale takes place.

Credit Bureau:	A private, profit-making company that collects and sells information about a person's credit history. Typical clients include banks, mortgage lenders and credit card companies that use the information to screen applicants for loans and credit cards. There are three major credit bureaus, Equifax, Experian and Trans Union, and they are regulated by the federal Fair Credit Reporting Act.

Credit File:	See credit report.

Credit Insurance:	Insurance a lender offers or requires a borrower to purchase to cover the loan. If the borrower dies or becomes disabled before paying off the loan, the policy will pay off the remaining balance. Federal and state consumer protection laws require the lender to disclose to existing and potential borrowers the terms and costs of obtaining credit insurance because it can affect the terms of the loan.

Credit Limit:	The maximum amount that you can borrow under a home equity plan.

Credit Report:	A report prepared by a credit bureau detailing the credit history of a prospective borrower that's used to help determine borrower creditworthiness. A credit report will contain both credit history, such as what you owe to whom and whether you make the payments on time, as well as personal history, such as your former addresses, employment record and lawsuits in which you have been involved. An estimated 50% of all credit reports contain errors, such as accounts that don't belong to you, an incorrect account status or information reported that is older than seven years (ten years in the case of a bankruptcy).

Credit Score:	There are three different scores available to a mortgage lender each being generated by the three different credit agencies. The most popular, known as a Fico score is from Experian (formally TRW), then there is a Beacon score from Equifax, and finally an Emperica score from Trans Union. This is the "mortgage scoring" system used to get a conventional mortgage. Simply, credit scores are numbers calculated based upon your credit history. The better your credit, the higher your number or score will be - the worse your credit, the lower the score. The number of inquiries or times your credit has been pulled in the past 90 days will also lower your "score".

Creditor:	A person or entity (such as a bank) to whom a debt is owed.

Certified Residential Specialist:	Also known as CRP. A professional designation awarded to experienced agents who complete an advanced course of study in residential real estate and demonstrate proficiency in sales and production. CRS Designees are members of the Residential Sales Council, a not-for-profit affiliate of the NATIONAL ASSOCIATION OF REALTORSŽ.

Cul-de-sac:	A dead end street which widens sufficiently at the end to permit an automobile to make a "U" turn.

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