Landlord & Real Estate Glossary

A

Abandon/abandonment

Vacating or giving up use of or rights in real property. Also a tenant vacating premises before a lease expires without consent of the landlord.

Abstract of title

Digest of convetances, transfers, wills, and other legal proceedings pertinant to title of a property, such as liens, charges or encumberances.

Acceleration Clause

A common provision of a mortgage or note providing the holder with the right to demand that the entire outstanding balance is immediately due and usually payable in the event of default.

Accrued Interest

Interest earned but not yet paid.

Acknowledgement

Formal declaration by a person executing an instrument that such act is intended as a free and voluntary act made before a duly authorized officer.

Acre

Measure of land area containing 43,560 square feet.

Ad valorem

According to value; the basis of real estate taxation.

Adjustable Rate Mortgage Loans (ARM)

Loans with interest rates that are adjusted periodically based on changes in a pre-selected index. As a result, the interest rate on your loan and the monthly payment will rise and fall with increases and decreases in overall interest rates. These mortgage loans must specify how their interest rate changes, usually in terms of a relation to a national index such as (but not always) Treasury bill rates. If interest rates rise, your monthly payments will rise. An interest rate cap limits the amount by which the interest rate can change; look for this feature when you consider an ARM loan.

Adjustment Interval

On an ARM loan, the time between changes in the interest rate or monthly payment.

Administrator

The person appointed by a probate court to settle the estate of a dead person.

Adverse possession

Right of an occupant of land to aquire title against the real owner, under color of title, where possession has been actual, continuous, hostile, visible and didtinct for the statuory period..

Agent

A person who represents another (a principal) by the principal's authority.

Agreement of Sale

Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

Alternative Documentation

A method of documenting a loan file that relies on information the borrower is likely to be able to provide instead of waiting on verification sent to third parties for confirmation of statements made in the application.

Amortization

Repayment of a loan with periodic payments of both principal and interest calculated to payoff the loan at the end of a fixed period of time.

Amount of Advance notice

the number of days' notice that must be given before a change in the tenancy can take effect. Usually, the amount of advance notice is the same as the number of days between rent payments. For example, in a month-to-month tenancy, the landlord usually must give the tenant 30 days' advance written notice that the landlord is increasing the amount of the security deposit.

Annual Percentage Rate (APR)

The cost of credit expressed as a yearly rate. The annual percentage rate is often not the same as the interest rate. It is a percentage that results from an equation considering the amount financed, the finance charges, and the term of the loan.

Appeal

A request to a higher court to review a lower court's decision in a lawsuit.

Application

An initial statement of personal and financial information required to apply for a loan.

Application Fee

Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges.

Appraisal

A written estimate of a property's current market value completed by an impartial party with knowledge of real estate markets.

Appraisal Fee

A fee charged by a licensed, certified appraiser to render an opinion of market value as of a specific date.

APR

See Annual Percentage Rate.

Arbitration

Using a neutral third person to resolve a dispute instead of going to court. Unless the parties have agreed otherwise, the parties must follow the arbitrator's decision.

Arbitrator

A neutral third person, agreed to by the parties to a dispute, who hears and decides a dispute. An arbitrator is not a judge, but the parties must follow the arbitrator's decision (the decision is said to be "binding" on the parties). (See arbitration.)

ARM

See Adjustable Rate Mortgage Loans.

Assignment

The transfer of ownership, rights, or interests in property by one person, the assignor, to another, the assignee.

Assumption

A method of selling real estate where the buyer of the property agrees to become responsible for the repayment of an existing loan on the property.

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B

Balloon Mortgage

Balloon mortgage loans are short-term fixed-rate loans with fixed monthly payments for a set number of years followed by one large final balloon payment ("the balloon") for all of the remainder of the principal. Typically, the balloon payment may be due at the end of 5, 7, or 10 years. Borrowers with balloon loans may have the right to refinance the loan when the balloon payment is due, but the right to refinance is not guaranteed.

  Bankruptcy

A proceeding in a federal court to relieve certain debts of a person or a business unable to pay its debts.

Bearer

The legal owner of a piece of property.

Bequest

A gift of personal property by will.

 

Blanket Mortgage

A mortgage that covers more than one parcel of real estate.

Bona Fide

In good faith.

  Borrower (Mortgagor)

An individual who applies for and receives funds in the form of a loan and is obligated to repay the loan in full under the terms of the loan.

Broker

An individual who brings buyers and sellers together and assists in negotiating contracts for a client.

Buy-Down Mortgage

A mortgage loan with a below-market rate for a period of time.

  

Buyer's Market

Market conditions that favor buyers. With more sellers than buyers in the market, sellers may be forced to make substantial price concessions.

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C

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.

 

Caps (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.

 

Caps (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.

 

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.

 Ceiling

The maximum allowable interest rate of an adjustable rate mortgage.

 

Certificate of Eligibility

Document issued by the Veterans Administration to qualified veterans which verifies a veteran's eligibility for a VA guaranteed loan. Obtainable through local VA office by submitting form DD-214 (Separation Paper) and 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.

 

Claim of Right to Possession

A form that the occupants of a rental unit can fill out to temporarily stop their eviction by the sheriff after the landlord has won an unlawful detainer (eviction) lawsuit. The occupants can use this form only if: the landlord did not serve a Prejudgment Claim of Right to Possession form with the summons and complaint; the occupants were not named in the writ of possession; and the occupants have lived in the rental unit since before the unlawful detainer lawsuit was filed.

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.

 

COFI

See Cost of Funds Index.

 

Collateral

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

 

Commission

Money paid to a real estate agent or broker for negotiating a real estate or loan transaction.

 

Commitment

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

 

Condominium

A form of property ownership in which the homeowner holds title to an individual dwelling unit and a proportionate interest in common areas and facilities of a multi-unit project.

 

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.

 

Contingency

A condition which must be satisfied before a contract is legally binding.

 

Contract of Sale

The agreement between the buyer and seller on the purchase price, terms, and conditions of a sale.

 

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

The document used to effect a transfer, such as a deed, or mortgage.

 

Cost of Funds Index (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.

 

Credit Report

A report detailing the credit history of a prospective borrower that's used to help determine borrower creditworthiness.

Credit reporting agency

a business that keeps records of people's credit histories, and that reports credit history information to prospective creditors (including landlords).

 

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D 

Deed

Legal document by which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing.

 

Deed of Trust

A legal document that conveys title to real property to a third party. The third party holds title until the owner of the property has repaid the debt in full.

 

Default

Failure to meet legal obligations in a contract, including failure to make payments on a loan.

 

Default judgment

a judgment issued by the court, without a hearing, after the tenant has failed to file a response to the landlord's complaint.

Delinquency

Failure to make payments as agreed in the loan agreement.

 

Demurrer

a legal response that a tenant can file in an unlawful detainer lawsuit to test the legal sufficiency of the charges made in the landlord's complaint.

Department of Fair Housing

the state agency that investigates complaints of unlawful discrimination in housing and employment.

Discount Points (or Points)

Points are an up-front fee paid to the lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are inherently connected: in general, the more points you pay, the lower the interest rate you get. However, the more points you pay, the more cash you need up front since points are paid in cash at closing.

 

Discrimination (in renting)

denying a person housing, telling a person that housing is not available (when the housing is actually available at that time), providing housing under inferior terms, harassing a person in connection with housing accommodations, or providing segregated housing because of a person's race, color, religion, sex, sexual orientation, national origin, ancestry, source of income, age, disability, whether the person is married, or whether there are children under the age of 18 in the person's household. Discrimination also can be refusal to make reasonable accommodation for a person with a disability.

Down Payment

The amount of your home's purchase price you need to supply up front in cash to get your loan. For conventional loans, you should strive for a down payment that's at least 20% of your home's value, since lenders generally do not require private mortgage insurance with a down payment of at least 20% of your home's purchase price. (Note, however, that FHA and VA loans have different policies regarding insurance.)

 

Due-on-Sale Clause

Provision in a mortgage or deed of trust allowing the lender to demand immediate payment of the loan balance upon sale of the property.

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E

Earnest Money

Deposit made by a buyer towards the down payment in evidence of good faith when the purchase agreement is signed.

 

ECOA

See Equal Credit Opportunity Act.

 

Effective Rate

The effective rate is a consumer-oriented rate that takes into account the projected amount of time you tell us you will actually have the loan, as well as the specific costs, fees, and potential rate changes associated with it. The fees and costs are distributed over the time you plan to be in the house, allowing you to do an apples-to-apples comparison of a variety of loan types. The effective rate is not the APR. It is similar in that it factors in interest, mortgage insurance, and other fees (including points); however, the APR assumes that you keep your loan for the entire term, while the effective rate takes into account how long you tell us you plan to be in your house.

 

Essential Landlord Forms

Key forms for landlords specially written to protect landlords, provided by The Landlord Protection Agency®

Eviction

A court-administered proceeding for removing a tenant from a rental unit because the tenant has violated the rental agreement or did not comply with a notice ending the tenancy (also called an "unlawful detainer" lawsuit or “Summary Proceedings”).

Eviction notice (or three-day notice)

a three-day notice that the landlord serves on the tenant when the tenant has violated the lease or rental agreement. The three-day notice usually instructs the tenant to either leave the rental unit or comply with the lease or rental agreement (for example, by paying past-due rent) within the three-day period.

Equal Credit Opportunity Act (ECOA)

Federal law requiring creditors to make credit equally available without discrimination based on race, color, religion, national origin, age, sex, marital status or receipt of income from public assistance programs.

 

Equity

The difference between the current market value of a property and the total debt obligations against the property. On a new mortgage loan, the down payment represents the equity in the property.

 

Escrow

A transaction in which a third party acts as the agent for seller and buyer, or for borrower and lender, in handling legal documents and disbursement of funds.

 

Escrow Account

An account held by the lender to which the borrower pays monthly installments, collected as part of the monthly mortgage payment, for annual expenses such as taxes and insurance. The lender disburses escrow account funds on behalf of the borrower when they become due. Also known as Impound Account.

 

Escrow Agent

A person with fiduciary responsibility to the buyer and seller, or the borrower and lender, to ensure that the terms of the purchase/sale or loan are carried out.

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F 

Fair housing organizations

city or county organizations that help renters resolve housing discrimination problems.

Fannie Mae

A common nickname for the Federal National Mortgage Association.

 

FDIC

See Federal Deposit Insurance Corporation.

 

Federal Deposit Insurance Corporation (FDIC)

Independent deposit insurance agency created by Congress to maintain stability and public confidence in the nation's banking system.

 

Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac)

This agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

 

Federal Housing Administration (FHA)

A federal agency within the Department of Housing and Urban Development (HUD), which insures residential mortgage loans made by private lenders and sets standards for underwriting mortgage loans.

 

Federal National Mortgage Association (FNMA, or Fannie Mae)

This agency buys loans that are underwritten to its specific guidelines. These guidelines are an industry standard for residential conventional lending.

 

Federal stay

an order of a federal bankruptcy court that temporarily stops proceedings in a state court, including an eviction proceeding.

Fee Simple

Absolute ownership of real property.

 

FHA

See Federal Housing Administration.

 

FHA Loans

Fixed- or adjustable-rate loans insured by the U.S. Department of Housing and Urban Development. FHA loans are designed to make housing more affordable, particularly for first-time homebuyers. FHA loans typically permit borrowers to buy a home with a lower down payment than conventional loans. With FHA insurance, eligible buyers can purchase a home with a down payment as little as 3% of the appraised value or the purchase price, whichever is lower. FHA borrowers typically are required to participate in a face-to-face meeting with their lender or a government approved mortgage counselor prior to closing on a new mortgage loan. The current FHA loan limits vary depending on home type and home location. To find the most recent limits for your home, consult the FHA Maximum Mortgage Limits web page.

 

FHLMC

See Federal Home Loan Mortgage Corporation.

 

First Mortgage

A mortgage which is in first lien position, taking priority over all other liens. In the case of a foreclosure, the first mortgage will be repaid before any other mortgages.

 

Fixed Rate

An interest rate which is fixed for the term of the loan.

 

Fixed-Rate Loans

Fixed-rate loans have interest rates that do not change over the life of the loan. As a result, monthly payments for principal and interest are also fixed for the life of the loan. Fixed-rate loans typically have 15-year or 30-year terms. With a fixed-rate loan, you will have predictable monthly mortgage payments for as long as you have the loan.

 

Flood Insurance

Insurance that compensates for physical damage to a property by flood. Typically not covered under standard hazard insurance.

 

FNMA

See Federal National Mortgage Association.

 

Forbearance

The act by the lender of refraining from taking legal action on a mortgage loan that is delinquent.

 

Foreclosure (or Repossession)

Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default.

 

Freddie Mac

A common nickname for the Federal Home Loan Mortgage Corporation.

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G

Good Faith Estimate

Written estimate of the settlement costs the borrower will likely have to pay at closing. Under the Real Estate Settlement Procedures Act (RESPA), the lender is required to provide this disclosure to the borrower within three days of receiving a loan application.

 

Grace Period

Period of time during which a loan payment may be made after its due date without incurring a late penalty. The grace period is specified as part of the terms of the loan in the Note.

 

Gross Income

Total income before taxes or expenses are deducted.

 

Guest

A person who does not have the rights of a tenant, such as a person who stays in a transient hotel for fewer than seven days.

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H

Habitable

A rental unit that is fit for human beings to live in. A rental unit that substantially complies with building and safety code standards that materially affect tenants' health and safety is said to be "habitable." See uninhabitable and implied warranty of habitability

Holding deposit

A deposit that a tenant gives to a landlord to hold a rental unit until the tenant pays the first month's rent and the security deposit.

Hazard Insurance

Protects the insured against loss due to fire or other natural disaster in exchange for a premium paid to the insurer.

 

Housing and Urban Development

See HUD.

 

HUD

Housing and Urban Development. A U.S. government agency established to implement federal housing and community development programs; oversees the Federal Housing Administration.

 

HUD-1 Uniform Settlement Statement

A standard form which itemizes the closing costs associated with purchasing a home or refinancing a loan.

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I

Implied warranty of habitability

A legal rule that requires landlords to maintain their rental units in a condition fit for human beings to live in. A rental unit must substantially comply with building and housing code standards that materially affect tenants' health and safety. The basic minimum requirements for a rental unit to be habitable are listed in the Dealing With Problems section.

Impound Account

An account held by the lender to which the borrower pays monthly installments, collected as part of the monthly mortgage payment, for annual expenses such as taxes and insurance. The lender disburses impound account funds on behalf of the borrower when they become due. (Also known as Escrow Account.)

 

Index

A published rate used by lenders that serves as the basis for determining interest rate changes on ARM loans.

 

Initial inspection

An inspection by the landlord before the tenancy ends to identify defective conditions that justify deductions from the security deposit. The landlord must perform an initial inspection if the tenant requests it.

Initial Rate

The rate charged during the first interval of an ARM loan.

 

Interest

Charge paid for borrowing money, calculated as a percentage of the remaining balance of the amount borrowed.

 

Interest Rate

The annual rate of interest on the loan, expressed as a percentage of 100.

 

Interest Rate Cap

Consumer safeguards which limit the amount the interest rate on an ARM loan 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.

Item of information

Information in a credit report that causes a creditor to deny credit or take other adverse action against an applicant (such as refusing to rent a rental unit to the applicant).

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J

Joint Liability

Liability shared among two or more people, each of whom is liable for the full debt.

 

Joint Tenancy

A form of ownership of property giving each person equal interest in the property, including rights of survivorship.

 

Jumbo Loan

A mortgage larger than the $240,000 limit set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

 

Junior Mortgage

A mortgage subordinate to the claim of a prior lien or mortgage. In the case of a foreclosure, a senior mortgage or lien will be paid first.

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K

 

No K terms.

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L

Landlord

A business or person who owns a rental unit, and who rents or leases the rental unit to another person, called a tenant.

Late Charge

Penalty paid by a borrower when a payment is made after the due date.

 

Lease

A rental agreement, usually in writing, that establishes all the terms of the agreement and that lasts for a predetermined length of time (for example, six months or one year). For landlord protection, see The LPA Lease

Legal aid organizations

Organizations that provide free legal advice, representation, and other legal services in noncriminal cases to economically disadvantaged persons.

Lender

The bank, mortgage company, or mortgage broker offering the loan.

 

LIBOR (London Interbank Offered Rate)

The interest rate charged among banks in the foreign market for short-term loans to one another. A common index for ARM loans.

 

Lien

A legal claim by one person on the property of another for security for payment of a debt.

 

Loan Application

An initial statement of personal and financial information required to apply for a loan.

 

Loan Application Fee

Fee charged by a lender to cover the initial costs of processing a loan application. The fee may include the cost of obtaining a property appraisal, a credit report, and a lock-in fee or other closing costs incurred during the process or the fee may be in addition to these charges.

 

Loan Origination Fee

Fee charged by a lender to cover administrative costs of processing a loan.

 

Loan-to-Value Ratio (LTV)

The percentage of the loan amount to the appraised value (or the sales price, whichever is less) of the property.

 

Lock or Lock-In

A lender's guarantee of an interest rate for a set period of time. The time period is usually that between loan application approval and loan closing. The lock-in protects you against rate increases during that time.

Lock out

When a landlord locks a tenant out of the rental unit with the intent of terminating the tenancy. Lockouts, and all other self-help eviction remedies, are illegal. (Also, when tenants locks themselves out of the rental unit and requires the landlord or a locksmith to allow them back into the unit.)

Lodger

A person who lives in a room in a house where the owner lives. The owner can enter all areas occupied by the lodger, and has overall control of the house.

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M

Margin

A specified percentage that is added to your chosen financial index to determine your new interest rate at the time of adjustment for ARM loans.

 

Mediation

A process in which a neutral third person meets with the parties to a dispute in order to assist them in formulating a voluntary solution to the dispute.

Mortgage

A legal document by which real property is pledged as security for the repayment of a loan.

 

Mortgage Banker

An individual or company that originates and/or services mortgage loans.

 

Mortgage Broker

An individual or company that arranges financing for borrowers.

 

Mortgage Insurance

Insurance to protect the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's appraised value. (Note, however, that FHA and VA loans have different insurance guidelines.)

 

Mortgage Loan

A loan for which real estate serves as collateral to provide for repayment in case of default.

 

Mortgage Note

Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage or deed of trust or other security instrument.

 

Mortgagee

The lender in a mortgage loan transaction.

 

Mortgagor

The borrower in a mortgage loan transaction.

Motion to Quash Service of Summons or Motion to Show Cause

A legal response that a tenant can file in an unlawful detainer lawsuit if the tenant believes that the landlord did not properly serve the summons and complaint.

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N

Negative Amortization

A loan payment schedule in which the outstanding principal balance of a loan goes up rather than down because the payments do not cover the full amount of interest due. The monthly shortfall in payment is added to the unpaid principal balance of the loan.

 

Negligence/negligently

A person's carelessness (that is, failure to use ordinary or reasonable care) that results in injury to another person or damage to another person's property.

Non-Assumption Clause

A statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender.

 

Note

Legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The agreement is secured by a mortgage or deed of trust or other security instrument.

 

Notice of Default

Written notice to a borrower that a default has occurred and that legal action may be taken.

Novation

In an assignment situation, a novation is an agreement by the landlord, the original tenant, and the new tenant that makes the new tenant (rather than the original tenant) solely responsible to the landlord.

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O

Origination Fee

Fee charged by a lender to cover administrative costs of processing a loan.

 

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P

Payment Cap

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, they may cause negative amortization.

 

Per Diem Interest

Interest calculated per day. (Depending on the day of the month on which closing takes place, you will have to pay interest from the date of closing to the end of the month. Your first mortgage payment will probably be due the first day of the following month.)

 

Periodic rental agreement

An oral or written rental agreement that states the length of time between rent payments - for example, a week or a month - but not the total number of weeks or months that the agreement will be in effect.

PITI

Abbreviation for Principal, Interest, Taxes and Insurance, the components of a monthly mortgage payment.

 

Points (or Discount Points)

Points are an up-front fee paid to the lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are inherently connected: in general, the more points you pay, the lower the interest rate you get. However, the more points you pay, the more cash you need up front since points are paid in cash at closing.

 

Power of Attorney

Legal document authorizing one person to act on behalf of another.

 

Pre-approval

The process of determining how much money a prospective homebuyer or refinancer will be eligible to borrow prior to application for a loan. A pre-approval includes a preliminary screening of a borrower's credit history. Information submitted during pre-approval is subject to verification at application.

 

Prejudgment Claim of Right to Possession

A form that a landlord in an unlawful detainer (eviction) lawsuit can have served along with the summons and complaint on all persons living in the rental unit who might claim to be tenants, but whose names the landlord does not know. Occupants who are not named in the unlawful detainer complaint, but who claim a right to possess the rental unit, can fill out and file this form to become parties to the unlawful detainer action

Prepaid Expenses

Taxes, insurance and assessments paid in advance of their due dates. These expenses are included at closing.

 

Prepaid Interest

Interest that is paid in advance of when it is due. Typically charged to a borrower at closing to cover interest on the loan between the closing date and the first payment date.

 

Prepayment

Full or partial repayment of the principal before the contractual due date.

 

Prepayment Penalty

Fee charged by a lender for a loan paid off in advance of the contractual due date.

 

Pre-qualification

The process of determining how much money a prospective homebuyer will be eligible to borrow prior to application for a loan. Information submitted during pre-qualification is subject to verification at application.

 

Principal

The amount of debt, not counting interest, left on a loan.

 

Private Mortgage Insurance (PMI)

Insurance to protect the lender in case you default on your loan. With conventional loans, mortgage insurance is generally not required if you make a down payment of at least 20% of the home's purchase price. (Note, however, that FHA and VA loans have different insurance guidelines.)

 

Purchase Agreement

Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

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Q No Q terms.

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R

Real Property

Land and any improvements permanently affixed to it, such as buildings.

 

Reconveyance

The transfer of property back to the owner when a mortgage loan is fully repaid.

 

Recording

The act of entering documents concerning title to a property into the public records.

 

Recording Fee

Money paid to an agent for entering the sale of a property into the public records.

 

Refinancing

The process of paying off one loan with the proceeds from a new loan secured by the same property.

 

RESPA

Real Estate Settlement Procedures Act. RESPA is a federal law that gives consumers the right to review information about loan settlement costs. The law gives you the right to review this information after you apply for a loan, and again at loan settlement. The law only obliges lenders to provide these settlement costs after application.

 

Relief from forfeiture

An order by a court in an unlawful detainer (eviction) lawsuit that allows the losing tenant to remain in the rental unit, based on the tenant's convincing the court that the eviction would cause the tenant severe hardship and that the tenant can pay all of the rent that is due, or to otherwise fully comply with the lease.

Rent control ordinances

Laws in some communities that limit or prohibit rent increases, or that limit the circumstances in which a tenant can be evicted.

Rent withholding

The tenant's remedy of not paying some or all of the rent if the landlord does not fix defects that make the rental unit uninhabitable within a reasonable time after the landlord receives notice of the defects from the tenant. (More often than not, this is a lease violation as the rental unit is not always uninhabitable.)

Rental agreement

An oral or written agreement between a tenant and a landlord, made before the tenant moves in, which establishes the terms of the tenancy, such as the amount of the rent and when it is due. See lease and periodic rental agreement. See The LPA Rental agreement and The LPA Lease for maximum landlord protection.

Rental application form

A form that a landlord may ask a tenant to fill out prior to renting that requests information about the tenant, such as the tenant's address, telephone number, employment history, credit references, and the like. See The LPA Rental Application for maximum landlord protection.

Rental period or rent period

The length of time between rental payments; for example, a week or a month.

Rental unit

An apartment, house, duplex, or condominium that a landlord rents to a tenant to live in.

Renter's insurance

Insurance protecting the tenant against property losses, such as losses from theft or fire. This insurance usually also protects the tenant against liability (legal responsibility) for claims or lawsuits filed by the landlord or by others alleging that the tenant negligently injured another person or property.

Repair and deduct remedy

The tenant's remedy of deducting from future rent the amount necessary to repair defects covered by the implied warranty of habitability. The amount deducted cannot be more than one month's rent. (When the implied warranty of habitability is misinterpreted, this is often construed as “withholding of rent, a lease violation in many cases.)

Retaliatory eviction or action

An act by a landlord, such as raising a tenant's rent, seeking to evict a tenant, or otherwise punishing a tenant because the tenant has used the repair and deduct remedy or the rent withholding remedy, or has asserted other tenant rights.

Right to Rescission

Under the provisions of the Truth-in-Lending Act, the borrower's right, on certain kinds of loans, to cancel the loan within three days of signing a mortgage.

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S

Sales Agreement

Contract signed by buyer and seller stating the terms and conditions under which a property will be sold.

 

Second Mortgage

An additional mortgage placed on a property that has rights that are subordinate to the first mortgage.

 

Security deposit

A deposit or a fee that the landlord requires the tenant to pay at the beginning of the tenancy. The landlord can use the security deposit, for example, if the tenant moves out owing rent or leaves the unit damaged or less clean than when the tenant moved in.

Security Settlement Challenge Crusher

A Letter designed to quickly squash any unfounded tenant arguments about deductions made from the security deposit refund.

Security Settlement Statement

An essential landlord form that allows the landlord to make valid, itemized and explained deductions from security deposits.

Serve/service

Legal requirements and procedures that seek to assure that the person to whom a legal notice is directed actually receives it.

Settlement (or Closing)

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).

 

Settlement Costs

Also known as closing costs, these costs are 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, taxes, and surveying fees.

 

Settlement Cost (HUD guide)

HUD - published booklet that provides an overview of the lending process, and that is given to consumers after completing loan application.

 

Sixty-day notice

A written notice from a landlord to a tenant telling the tenant that the tenancy will end in 60 days. A sixty-day notice usually does not have to state the landlord's reason for ending the tenancy.

Sublease

A separate rental agreement between the original tenant and a new tenant to whom the original tenant rents all or part of the rental unit. The new tenant is called a "subtenant." The agreement between the original tenant and the landlord remains in force, and the original tenant continues to be responsible for paying the rent to the landlord and for other tenant obligations. (Compare to assignment.)

Subpoena

An order from the court that requires the recipient to appear as a witness or provide evidence in a court proceeding.

Subtenant

See sublease.

Survey

A measurement of land, prepared by a licensed surveyor, showing a property's boundaries, elevations, improvements, and relationship to surrounding tracts.

 

Sweat Equity

Value added to a property in the form of labor or services of the owner rather than cash.

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Tax Impound

Money paid to and held by a lender for annual tax payments.

 

Tax Lien

Claim against a property for unpaid taxes.

 

Tax Sale

Public sale of property by a government authority as a result of non-payment of taxes.

 

Tenancy

The tenant's exclusive right, created by a rental agreement between the landlord and the tenant, to use and possess the landlord's rental unit.

Tenant

A person who rents or leases a rental unit from a landlord. The tenant obtains the right to the exclusive use and possession of the rental unit during the lease or rental period.

Tenant screening service

A business that collects and sells information on tenants, such as whether they pay their rent on time and whether they have been defendants in unlawful detainer lawsuits.

Term

The period of time between the beginning loan date on the legal documents and the date the entire balance of the loan is due.

 

Three-day notice

See eviction notice.

Thirty-day notice

A written notice from a landlord to a tenant telling the tenant that the tenancy will end in 30 days. A thirty-day notice usually does not have to state the landlord's reason for ending the tenancy.

Title

Document which gives evidence of ownership of a property. Also indicates the rights of ownership and possession of the property.

 

Title Company

A company that insures title to property.

 

Title Insurance

Insurance which protects the lender (lender's policy) or the buyer (owner's policy) against loss due to disputes over ownership of a property.

 

Title Search

Examination of municipal records to ensure that the seller is the legal owner of a property and that there are no liens or other claims against the property.

 

Transfer Tax

Tax paid when title passes from one owner to another.

 

Truth-in-Lending Act

Federal law requiring written disclosure of the terms of a mortgage (including the APR and other charges) by a lender to a borrower after application. Also requires the right to rescission period.

 

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U

Underwriting

In mortgage lending, the process of determining the risks involved in a particular loan and establishing suitable terms and conditions for the loan.

 

Uninhabitable

The condition of a rental unit which has such serious problems or defects that the tenant's health or safety is affected. A rental unit may be uninhabitable if it is not fit for human beings to live in, or if it fails to substantially comply with building and safety code standards that materially affect tenants' health and safety. (Compare to habitable.)

Unlawful detainer lawsuit

A lawsuit that a landlord must file and win before he or she can evict a tenant (also called an "eviction" lawsuit).

U.S. Department of Housing and Urban Development

A/K/A HUD. The federal agency that enforces the federal fair housing law, which prohibits discrimination based on sex, race, religion, national or ethnic origin, familial status, or mental handicap.

Usury

Interest charged in excess of the legal rate established by law.

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V

VA Loans

Fixed-rate loans guaranteed by the U.S. Department of Veterans Affairs. They are designed to make housing affordable for eligible U.S. veterans. VA loans are available to veterans, reservists, active-duty personnel, and surviving spouses of veterans with 100% entitlement. Eligible veterans may be able to purchase a home with no down payment, no cash reserve, no application fee, and lower closing costs than other financing options. The maximum VA loan amount is currently $203,000.

 

Variable Rate Mortgage

See Adjustable Rate Mortgage.

 

Variable Rate

Interest rate that changes periodically in relation to an index.

 

Verification of Deposit (VOD)

Document signed by the borrower's bank or other financial institution verifying the borrower's account balance and history.

 

Verification of Employment (VOE)

Document signed by the borrower's employer verifying the borrower's position and salary.

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W

Waive

To give up a right, claim, privilege, etc. In order for a waiver to be effective, the person giving the waiver must do so knowingly, and must know the right, claim, privilege, etc. that he or she is giving up. In some states, a waiver can unknowingly be given merely by the actions or inactions of the individual.

Waiver

Voluntary relinquishment or surrender of some right or privilege.

 

Walk-through

A final inspection of a home to check for problems that may need to be corrected before closing.

 

Writ of possession

A document issued by the court after the landlord wins an unlawful detainer (eviction) lawsuit. The writ of possession is served on the tenant by the sheriff. The writ informs the tenant that the tenant must leave the rental unit by the end of five days, or the sheriff will forcibly remove the tenant.

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Z

Zoning Ordinances (or Zoning Regulations)

Local law establishing building codes and usage regulations for properties in a specified area.

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