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OKLAHOMA REAL ESTATE
ACADEMY
GLOSSARY
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Abstract of Title: A summary or copy of all recorded transfers, conveyances, legal
proceedings, and other facts relied
on as evidence of title showing
continuity of ownership, together
with any other elements of record
which may impair title.
Abutting:
Adjoining, reaching or touching
adjacent land.
Accelerated Depreciation: (Tax term) Depreciation taken at any rate higher than
provided by the straight-line
method.
Acceleration Clause: The clause in a mortgage that allows the lender to demand immediate
payment of the balance owed upon
occurrence of a specific act.
Acceptance:
An indication of willingness to be
bound by the term of an offer
thereby establishing the "meeting of
the minds".
Access Rights: Rights of owners to have ingress an egress to and from their property
over adjoining properties.
Accession:
An addition to property through the
efforts of man or by natural forces.
Accord and Satisfaction: A method of discharging a contract whereby the parties
agree to give and accept something
in settlement of a dispute over the
performance of the agreement.
Accretion:
An addition to land from natural
causes as, for example, the gradual
action of river waters.
Accrued Depreciation: The difference between replacement cost and market
value.
Accrued Items of Expense: Those incurred expenses, which are not yet payable.
The seller's accrued expenses are
credited to the purchaser in a
closing statement.
Acknowledgement:
A formal declaration made before an
authorized person stating that the
execution of an instrument is
genuine and voluntary.
Acquisition:
The act or process by which a person
procures property.
Acres:
Measures of land equaling 160 square
rods, or 4,840 square yards, or
43,560 square feet, or tracts about
208.71 feet square.
Actual Authority: Under common law principles of agency, this is
authority given an agent either
expressly or impliedly by a
principal.
Actual Delivery: When the deed is placed in the possession of the grantee.
Actual Notice: The express or direct knowledge acquired in the course of a
transaction.
Ad Valorem: A Latin phrase meaning "according to value" is usually used in
connection with real estate
taxation.
Adjustable Rate Mortgage: A mortgage note that allows a lender to adjust the
interest rate at periodic
intervals. The rate change is most
commonly limited to the movement of
a published of a published interest
rate as an index.
Adjusted Market Value: The estimated value of subject property after
adjustments are made for each
comparable.
Adjustments:
Increases or decreases in market
value of a property comparable to
the subject property to account for
a feature (or features) that the
subject property has or does not
have which sets it apart from other
comparable properties.
Adjustments in Appraising: The process in the market approach of changing dollar
or percentage value of similar
properties to make them more
comparable.
Administrator / Administratrix: A person appointed by the probate court to take charge
of the estate of a deceased person
who died intestate.
Advance:
Transfer of funds from a lender to a
borrower in advance on a loan.
Adverse Possession: The right by which someone occupying a piece of land
might acquire title against the real
owner, if the occupant's possession
has been actual, continuous,
hostile, visible and distinct for a
statutory period.
Advertising:
Any paid form of non-personal
presentation of goods, services, or
ideas to a group by an identified
sponsor.
Affiant:
One who makes an affidavit or gives
evidence.
Affidavit:
A statement or declaration reduced
to writing sworn to or affirmed
before some officer who has
authority to administer an oath or
affirmation.
Affirm:
To confirm, to aver, to ratify, to
verify, to make a declaration.
Agency:
Under common law principles of
agency, this is a relationship
between a principal and the
principal's agent which arises out
of a contract, either expressed or
implied, written or oral, wherein
the agent is employed by the
principal to do certain acts dealing
with a third party. The Oklahoma
Broker Relationship Act prohibits
real estate licensees from
representing members of the public
as an agent.
Agent:
Under common law principles of
agency, this is one who acts for and
with authority from another called
the principal. The Oklahoma Broker
Relationship Act prohibits real
estate licensees from representing
members of the public as an agent.
Agents in Production : The four agents in production are labor, capital,
coordination (entrepreneurship or
management) and land, the last one
of which to be paid in land.
Agreement:
An exchange of promises, a mutual
understanding or arrangement; a
contract.
Agreement of Sale: A written agreement or contract between seller and purchaser in which
they reach a "meeting of minds" on
the terms and conditions of the
sale. The parties concur; are in
harmonious opinion.
Air Rights: The right in real property to the reasonable use of the air space
above the surface of the land.
Air Space: The area from the surface of land upward.
Alienation:
The act of transferring ownership,
title, or an interest or estate in
real property from one person to
another.
Alienation Clause: (Due-on-Sale) A clause in a contract giving the lender certain rights
in the event of a sale or other
transfer of mortgaged property.
Alienee:
The person to whom ownership, title
or interest in real estate is
transferred. They have the same
legal rights, objectives and
remedies as the grantor.
Allodial System: The real property ownership system that allows free and full ownership
right in land by individuals.
Alluvion:
The soil deposited on a shore or
bank of a stream resulting from
action of the water through the
process of accretion.
Amended Plat: An original plat re-subdivided or changed.
Amenities:
Features, both tangible and
intangible, that enhance and add to
the value or desirability of real
estate.
Amortizing Mortgage: A mortgage featuring periodic repayment of a debt, including partial
payment of principal plus accrued
interest, in a manner calculated to
pay off the obligation by maturity.
Annual Percentage Rate (APR): A uniform measure of the cost of credit that
includes interim discount points and
loan fees.
Anticipation,
Principle of: Affirms that value is
created by anticipated benefits to
be derived in the future.
Apparent Authority: Under common law principles of agency, this is
authority which the principal, by
words or conduct to others, has led
those others to believe that the
agent has an agency relationship
with the principal. Also known as
"ostensible agency". The Oklahoma
Broker Relationship Act prohibits
real estate licensees from
representing members of the public
as an agent.
Appraisal:
An estimate of the value of property
resulting from an analysis of facts
about the property, an opinion of
value.
Appraisal Process: The procedure used in reaching a final estimate of value.
Appraiser:
One qualified by education,
training, and experience who is
hired to estimate the value of real
and personal property based on
experience, judgment, facts, and use
of formal appraisal process.
Approaches to Value: The various ways to value determination, the most common being market,
cost and income.
Appurtenance:
Something adapted to the use of the
real property to which it is
connected or belongs, and which was
intended to be a permanent addition
to the land. It passes as an
incident to said land.
Area Preference: The choice and preferences of people for a given area
within a geographic location; situs.
Arm's Length Transaction: A transaction in which the parties are dealing from
equal bargaining positions. Parties
are said to deal "at arm's length"
when all stand upon the strict
letter of their rights and conduct
the business in a formal manner
without trusting the fairness or
integrity of the others and without
being subject to the control or
dominant influence of the others.
Artifice:
Artful and skillful contriving or
trickery, involving deceit or
misleading strategy.
Assessed Value: Value established by the County Assessor as the basis for determining
ad valorem tax levies.
Assignment:
The transfer of ones rights in a
contract to another person.
Assignment/Subleasing:
One who assigns or transfers property.
Assignor:
One who assigns or transfers property.
Assigns:
Assignees. Those to whom property or
interest therein shall have been
transferred.
Association of Real Estate License Law
Officials (ARELLO):
An organization of state license law
officials, which promotes uniform
policies, standards and enforcement in
the real estate industry.
Assumption:
Where the buyers obligate themselves to
repay an existing loan as a condition of
the sale.
Assumption Fee: A lender's charge of changing over and processing new records for a
new owner who is assuming an existing
loan.
Assumption of Mortgage: The taking of a title to property by a grantee wherein
the grantee assumes liability 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.
Attorney-in-Fact:
One who is authorized by another to
perform certain acts for another under a
power of attorney; power of attorney may
be limited to a specific act or acts or
be general.
Attorney's Opinion: In real estate, the written opinion of an Attorney at Law regarding
the marketability of title to real
property, usually based upon an
examination of an abstract of title.
Avulsion:
A sudden and perceptible loss or gain of
land by the action of waters, such as a
sudden change in the course of a river.
Balance,
Principle of: A combination and variety
of land uses in an area.
Balloon Mortgage: A mortgage with the final payment larger than the preceding payments.
Base Lines: Imaginary east and west lines which intersect meridians. They are
used by surveyors to find and describe
the location of private and public
lands.
Bench Marks: Locations indicated on durable markers by surveyors.
Beneficiaries:
Those for whose benefits some action has
been arranged.
Betterment:
An improvement upon property which
increases the property value and is
considered as a capital asset as
distinguished from repairs or
replacements where the original
character or cost is unchanged.
Bilateral Contract: A contract where a promise from one party is given in exchange for the
promise of another party.
Bill of Sale: A written instrument by which one person transfers or conveys right,
title or interest in personal property
to another.
Binder:
An agreement to consider a down payment
for the purchase of real estate as
evidence of good faith on the part of
the purchaser. Also, a notation of
coverage on an insurance policy, issued
by an agent, and given to the insured
prior to issuing of the policy.
Blanket Mortgage: A mortgage secured by more than one piece of property.
Blind Ad: An advertisement that does not include the name and address of the
person placing the ad; an ad that lists
only a phone number or post office box
address.
Blockbusting:
An illegal and discriminatory practice
whereby one person induces another to
enter into a real estate transaction
from which the first person may benefit
financially. This is done by
representing that a change in the
neighborhood with respect to race, sex,
religion, color, or ancestry of the
occupants may occur which may result in
the lowering of the property values, a
decline in the quality of schools, or an
increase in the crime rate.
Bona Fide Buyer: A purchaser, who is without knowledge of prior claims,
pays value and wins the race to the
court house.
Bona Fide Offer: An offer made in good faith, authentic, and without
intent to defraud (by OREC rule, an
offer in writing).
Book Value: The amount at which an asset is carried on the financial books of a
person, partnership, association or
corporation. Book value is the
capitalized cost of an asset less
depreciation taken for accounting
purposes, based on the method used for
the computation of depreciation over the
useful life of the asset. It is the
adjusted basis of an asset, and usually
differs from appraised or market value.
Breach of Contract: Failure, without legal excuse, to perform any promise
called for in a contract.
Broker Associate or Sales Associate: A person employed by a broker to
list, negotiate, sell or lease real
property, or perform other acts
requiring a real estate license, for
others.
Budget Mortgage: A mortgage with payments set up to cover more than interest and
principal reductions, usually taxes and
insurance.
Building Codes: Standards affecting building and housing construction, cleanliness,
and safety.
Building Line: A line established by law or agreement, usually parallel to property
line, beyond which a structure may not
extend. This generally does not apply
to uncovered entrance platforms,
terraces and steps.
Building Restrictions: Zoning, regulatory requirements or provisions in a deed
limiting the type, size and use of a
building.
Bundle of Rights: The concept of land ownership that means ownership of
all legal rights to the land - for
example, possession, control within the
law, and enjoyment - rather than
ownership of the land itself.
Buyer's Market: The condition which exists when a buyer is in a more commanding
position as to price and terms because
real property offered for sale is in
plentiful supply in relation to demand.
Canvassing:
Going through a neighborhood or to
homeowners soliciting listings.
Capacity of Parties: The legal ability of persons to enter into a contract.
May have full, limited or no
contractual ability.
Capitalization:
The process of converting future income
from a property into a current value for
the property. In appraising,
determining value of property by
considering net income and percentage of
reasonable return on the investment.
The value of an income property is
determined by dividing annual net income
by the capitalization rate.
Capitalization Rate: The rate of return that an investor expects to earn on invested money.
Carry-over Clause: A clause (sometimes referred to as a safety clause) in a listing,
which provides that a broker is still
entitled to a commission for a set
period of time after the listing, has
expired if the property is sold to a
former prospect of the broker.
Caveat Emptor: A Latin phrase meaning "Let the buyer beware". The buyers must
examine the goods or property and buy at
their own risk.
Certificates of Eligibility: Certificates showing whether veterans are qualified for
VA loans and giving the amount of
guarantees available.
Certificate of Reasonable Value: A certificate issued to a veteran by the VA indicating
the appraised value of the property and
the maximum VA guaranteed loan a private
lender may make.
Chain of Title: A history of conveyances and encumbrances affecting the title from the
time the original patent was granted, or
as far back as records are available,
used to determine how title came to be
vested in the current owner.
Change:
Principle of: The law of cause and
affect is at work. Social economic,
government and environmental forces that
affect real estate values are in
constant, inevitable transition.
Characteristics of Value: The quality such as utility, scarcity, demand, transferability.
Chattel:
Goods or every species of property
moveable or immovable, which are not
real property. Personal property.
(Chattel Fixture, Chattel Property).
Chattel Mortgages: Claims on personal property (instead of real property)
used to secure or guarantee promissory
notes. (See Security Agreement and
Security Interest).
City Planning: Planning by local officials including such items as land use, flood
control, sewage disposal, streets,
recreation and solid waste disposal.
Cimarron Meridian: The meridian from which property in the Oklahoma Panhandle is legally
described. It parallels the New Mexico
border with Oklahoma. The base line is
the Texas border of the Panhandle.
Civil Rights Acts: 1866 - 1964 - 1968. The Congressional Acts which
provide the basis of the fair housing
regulations, which prohibit
discrimination in real estate.
Client:
A party to whom a representative owes a
greater obligation of service than if
the party was a customer or prospect.
Closing:
The consummation of a real estate
transaction whereby the seller delivers
title to the property in exchange for
the consideration.
Closing Costs: The numerous expenses buyers and sellers normally incur in the
transfer of ownership of real property.
Closing Statement: An accounting of funds to the buyer and seller at the
completion of a real estate transaction.
Cloud on Title: A claim, encumbrance or condition which impairs the title to real
property until disproved or eliminated
as for example through a quitclaim deed
or a quiet title legal action.
Codes of Ethics: Sets of rules and principles expressing a standard of
accepted conduct for professional groups
and governing the relationship or
members to each other and to the
organizations.
Collateral:
Something of value pledged as security
for a debt.
Collusion:
Where two or more persons secretly have
a joint part in an action regarded as
fraudulent or deceitful.
Color of Title: Some plausible, but not completely clear-cut indication of ownership
rights.
Commercial Banks: Banks concerned primarily with the making of short-term loans.
Commercial Loans: Personal loans from a commercial bank, usually unsecured and short
term, and usually for business purposes
rather than for mortgages.
Commercial Paper: Bills of exchange (checks, drafts, promissory notes, etc.) used in
business trading.
Commingling:
The mixing of funds of a party with
personal or business funds of the
licensee.
Commission Fee: An agent's compensation for performing the duties of the agency; in
real estate practice, a percentage of
the selling price of property;
percentage of rentals, etc. A fee for
services.
Common Areas: That part of a condominium property owned jointly by all participants.
Common Law: The body of law that grew from customs and practices developed and
used in England.
Community Property: Property acquired by husband and/or wife during a marriage when not
acquired as the separate property of
each spouse. Each spouse has equal
rights of management, alienation and
testamentary disposition of community
property. (Oklahoma is not a Community
Property State.).
Comparable Properties: Recently sold properties which are similar to a
particular property being evaluated and
which are used to indicate a reasonable
fair market value for the subject
property.
Comparable Sales: Sales, which have similar characteristics as the subject property and
are, used for analysis in the appraisal
process. Commonly called "comparable",
they are recent selling prices of
properties similarly situated in a
similar market.
Competent Parties: Persons having the necessary age, ability, and authority to accomplish
any given acts or duties.
Compensation:
The pay a person gets in exchange for
time and/or services.
Competition:
Principle of. An element in our economic
order that preserves value. When anyone
makes excess profit, others drawn into
the market will wipe away the excess.
Competitive Market Analysis: A method of evaluating real property based on the
principle of comparison. The value of
property is figured by comparing the
prices paid for similar properties,
prices being asked for similar
properties, and prices for which
comparable properties did not sell.
Comptroller of the Currency: A government official who oversees the operations of
federally chartered banks.
Conclusion:
The final estimate of value, realized
from factors, data, experience and
judgment, set out in an appraisal.
Appraiser's certified conclusion.
Concurrent Ownership: More than one person having legal title to the same
parcel of land at the same time
(co-ownership).
Condemnation:
A judicial or administrative proceeding
to exercise the power of eminent domain;
that is, the power of government to take
private property for public use.
Condemnation also refers to the decision
by the appropriate public agency that
the property is no longer fit and must
therefore be closed or destroyed.
Condemnation Value: Value estimated in condemnation proceeding - legally defined as the
same as market value.
Condition:
A qualification of an estate granted
which can be imposed only in
conveyances. They are classified as
conditions precedent and conditions
subsequent.
Conditional Sales Contract: A contract for the sale of property stating that
delivery is to be made to the buyer,
title to remain vested in the seller
until the conditions of the contract
have been fulfilled.
Condominium Ownership: The individual outright ownership of a single unit in a
multi-unit property, together with an
interest in the common elements of the
property.
Confiscation:
The seizing of property without
compensation.
Conformity:
Principle of. The property values of an
area are maximized when there are
reasonable degrees of architectural
homogeneity and compatibility of land
uses in that area.
Conservation:
The process of utilizing resources in
such a manner as to minimize their
depletion.
Consideration:
Anything of value given or promised by a
party to induce another to enter into a
contract. It may be a benefit conferred
upon one party or a detriment suffered
by the other. It is one of the
essential elements of a contract.
Construction Loans: Loans, usually short term, made for the construction of homes or
commercial buildings with funds
disbursed by the lender after periodic
inspections.
Constructive Delivery: If a deed is recorded, it is presumed to have been delivered.
Constructive Notice: Notice of certain facts, which may be discovered by diligence or
inquiry into the public record; a legal
presumption that a person is responsible
for knowing these facts.
Consumer Price Index: An index, which measures the general cost of living of
an average family.
Contiguous:
In close proximity; adjoining or
abutting; near.
Continuing Education: A provision of the Oklahoma Real Estate Licensing Code
requiring licensees to complete a
specified minimum number of hours of
acceptable instruction before renewal of
active status license.
Contract:
A legally enforceable agreement between
competent parties who agree to perform
or refrain from performing certain acts
for a consideration. In essence, a
contract is an enforceable promise.
Contract for Deed: An agreement between the seller and the buyer for the purchase of real
property. The purchase price is paid in
installments (of either principal and
interest or interest only) over the
period of the contract, with the balance
due at maturity. When the buyer
completes the required payments, the
seller is obliged to deliver good title
to the buyer by way of a deed or
assignment of lease (if the property is
leasehold property). Under the terms of
the contract for deed, the buyer is
given possession of the property and is
said to have equitable title to the
property while the seller retains legal
title.
Contractual Ability: The legal ability of persons to enter into a valid contract.
Contribution:
Principle of. The amount of value one
component adds to total value.
Conventional Loans: Real estate loans that are not insured by the FHA or guaranteed by the
VA.
Conventional Mortgages: Mortgages securing loans made by investors without
governmental underwriting, i.e, which
are not FHA or VA guaranteed.
Conversion:
When a broker uses a customer's earnest
money deposit for personal use.
Conveyance:
A written instrument that transfers
interest or title in real property from
one person to another, such as a deed.
Cooperative Apartment: A form of apartment ownership. Ownership of shares in a
cooperative venture, which entitles the
owner to use, rent, or sell a specific
apartment unit. The corporation usually
reserves the right to approve certain
actions such as a sale or improvement.
Cooperative Ownership: Individuals own shares in an association that controls
the property and each individual leases
dwelling space from the association or
corporation.
Co-Ownership:
More than one person having legal title
to the same parcel of land, concurrent
ownership.
Corporation:
A group or body of persons established
and treated by law as an individual or
unit with rights and liabilities, or
both, distinct and apart from those of
the persons composing it. A corporation
is a creature of law having certain
powers and duties of a natural person.
Being created by law, it may continue
for any length of time the law
prescribes.
Corporeal Rights: Possessory rights in real property.
Correction Lines: A system for compensating inaccuracies in the Government Rectangular
Survey System due to the curvature of
the earth. Every fourth township line,
24 mile intervals, is used as a
correction line on which the intervals
between the north and south range lines
are corrected to a full 6 miles.
Correlation:
Weighing the relative importance of
previously determined value and reaching
a single, final, supportable estimate of
market value.
Correspondent:
The intermediary position of mortgage
banking companies between the borrower
and the final lender in the market
place.
Cost Approach: The technique for estimating value based of reproduction or
replacement of the subject property,
less accumulated depreciation.
Cost of Production: A measure of past (or prospective) expenditures in
money, labor, material or sacrifices of
some nature in acquiring the property.
Counteroffer:
An offer (instead of acceptance) in
response to an offer.
County Assessor: The official who has the responsibility of determining assessed value.
Covenants:
Promises and guarantees found in a deed.
Credit:
A bookkeeping entry on the right side of
an account, recording the reduction or
elimination of an asset or an expense,
or the creation of or addition to a
liability or item of equity or revenue.
Crops:
Annual production from land by labor and
industry (fructus industriales) and
grown naturally on the land (fructus
naturales).
Cul de Sac: A street with a dead end, usually with adequate space at the end for
vehicles to turn around.
Curable Depreciation: Depreciation that may be economically corrected.
Customer:
A party to whom a representative owes a
lesser obligation of service than if the
party was a client.
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