F

Four Zero One 401(k) retirement plan:

401(k) retirement plans allow an individual to contribute part of their "pre-tax" income to an investment account. Pre-tax contributions are not tax-free, they are tax-deferred, meaning the person does not pay income tax on this money until they withdraw it from the plan (which should be at retirement). Some companies offer to "match" the individual's contribution as an incentive to join the company's retirement plan. Depending on the provisions of a company's retirement plan, a person may take a loan from their 401(k) account, however, not all plans allow for loans. The loan is paid back, plus interest (a fixed rate determined at the time of the loan), through after-tax payroll deductions. As long as the individual repays the loan on time, they are not subject to withholding taxes or penalties.

Fair Credit Reporting Act:

The Fair Credit Reporting Act gave consumers the right of access to, and correction of, credit reports. (See credit report

)

Fair Employment and Housing Act:

California's Fair Employment and Housing Act (FEHA) (Sections 13100-13196 of the Government Code) prohibits housing discrimination based on marital status as well as race, color, religion, sex, national origin or ancestry. The Department of Fair Employment and Housing enforces the law, which is based on the former Rumford Fair Housing Act.
Fair Employment and Housing Act—Full Text

Example:

Some years ago Len Lessor tried to evict Alice Tenant because Alice, an unma

G

Gap:A defect in the chain of title of a particular parcel of real estate; a missing document or conveyance that raises doubt as to the present ownership of the land.

Garn-St. Germain Bill:Or the Depository Institutions Deregulation and Monetary Control Act of 1980 which authorized the deregulation of banks and savings institutions. Allowed savings and loan associations to offer checking-type accounts; to issue credit cards. Established loan loss reserve requirements. A follow-on bill, The Depository Institutions Act of 1982 (also sponsored by Senators Garn and St. Germain), allowed savings and loan associations to have up to 50% of assets in real estate development; 30% of assets in consumer loans and corporate debt; own real estate development companies; and offer money market deposit accounts.
Garn-St. Germain—Full Text

General agent:One authorized by a principal to perform any and all acts associated with the continued operation of a particular job or a certain business of the principal. The essential feature of a general agency is the continuity of service, such as that provided by a property manager of a large condominium project. Most real estate brokers are treated as special agents. (See agent, special agent)

General contractor:A licensed construction specialist who enters into a construction contract with a developer or property owner to construct a building or real estate project. The general contractor often negotiates individual contracts with sub-contractors who specialize in various aspects of the building process, such as electricity, drywall and plumbing.

General index:A county recorder's office index used by title company examiners when searching the chain of title of a property. The examiner uses the index to research all the grantors and grantees in the chain of title. The index lists all the things that apply to a person by name, including liens, judgments and power of attorneys. (See chain of title)

General lien:The right of a creditor to have all of a debtor's property—both real and personal—sold to satisfy a debt. (See lien)

H

habendum clause
That part of a eed beginning with the words "to have and to hold," following the grantor is conveying.
habitability
Fit for human habitation. (See implied warranty)


Handicap: As defined in the fair housing act, a physical or mental impairment that substantially limits one or more major life activities (walking, seeing, learning, working) or a record of having such an impairment or being regarded as having such impairment. Handicap does not include current, illegal use or addiction to a controlled substance. (See disability)

Hard money loan: A loan made in cash by a non-institutional lender.

Hazardous waste: A subset of solid wastes that pose substantial or potential threats to public health or the environment and meet any of the following criteria:

• Is specifically listed as a hazardous waste by EPA;
• Exhibits one or more of the characteristics of hazardous waster (ignitability, corrosiveness, reactivity, and/or toxicity;
• Is generated by the treatment of hazardous waste or is contained in a hazardous waste.

Toxic waste materials jeopardizing the value of real estate. (See asbestos, Environmental Protection Agency, undergound storage tanks, urea-formaldehyde)

Hazardous waste disclosure: California Health and Safety Code (§ 25359.7(a)) requires owners of nonresidential properties to disclose to prospective buyers or lessees the existence of hazardous substances on or beneath a property. Both residential and nonresidential tenants are required to notify landlords if hazardous substances have been released on a property.

Heat absorbing glazings: A technology that uses heat-absorbing glazing with tinted coatings to absorb solar heat gain through windows. This approach does allow some light to pass through the tinted windows.

Heat exchanger: Heat exchange is the method by which the unwanted heat is removed from a system. A heat exchanger is a device by which energy (in the form of heat) is

I

Identification period:The period during which the exchanger must identify replacement property in a 1031 tax deferred exchange. The identification period starts on the day the exchanger transfers the first relinquished property and ends at midnight on the 45th day thereafter.

Illusory contract:An apparent contract that is not a contract because the parties have not agreed to be bound.

Implied agency:An agency agreement created by the actions of the parties, and not a stated (written or verbal) agreement. (See express agency)

Implied agreement/contract:A contract under which the agreement of the parties is demonstrated by their acts and conduct.

Implied easement:When the owner of two or more adjacent properties sells a part thereof, he or she grants by implication all those apparent and visible easements which are necessary for the reasonable use of the property granted. (See easement)

Implied authority:The authority of an agent to perform acts which are reasonably necessary to accomplish the purpose of the agency.

Implied warranty:A theory in landlord/tenant law in which the landlord renting residential property implies quiet enjoyment of the property or that the property is habitable. (See habitability, quiet enjoyment)

Impound account:A trust account established to set aside funds for future needs relating to a parcel of real property. Many mortgage lenders require an impound account to cover future payments for taxes, assessments, private mortgage insurance and insurance in order to protect their security from defaults and tax liens. In the case of FHA loans, many lenders require a tax reserve of six months and an insurance reserve of one year. When the property is sold and the buyer assumes the seller's mortgage, the lender does not usually return the escrow accoun

J
Joint and several liability:A situation when more than one party is liable for repayment of a debt or obligation. A creditor can obtain compensation from one or more parties, either individually or jointly. (See liability

A title insurance policy insuring the interest of both owner and lender. four unities)

Joint venture:The joining of two or more people to conduct a specific business enterprise. A joint venture is similar to a partnership in that it must be created by agreement between the parties to share in the losses and profits of the venture. It is unlike a partnership in that the joint venture is for one specific project only, rather than for a continuing business relationship. (See partnership

)

Judgment:

The formal decision of a court on the respective rights and claims of the parties to an action or suit. A judgement that has been entered and recorded with the county recorder usually becomes a general lien on the property of the defendant.

Judgment decree:

Specifiies the award made by the court in a civil case.

Judgment lien:A general lien on the property of a judgment debtor, giving the holder of the judgment a right to levy the property to satisfy the debt. (See general lien

)

Judicial foreclosure:A method of foreclosing on real property by means of a court-supervised sale. In a judicial foreclosure, there is an appraisal, after which the court determines an upset price below which no bids to purchase will be accepted. (See nonjudicial foreclosure, strict foreclo

K

Kickback:Payment made to someone for referral of a customer or business. Unlike a commission, a kickback is made without the customer's knowledge; thus, the referral could have been made without the customer's best interest at heart.

Kiosk:A kiosk is a freestanding structure (open sides, usually multi ided) located in a shopping center or mall from which merchandise is sold. A multi-sided structure found in a shopping mall or center.

l
Laches:

An equitable doctrine used by courts to bar a legal claim or prevent the assertion of a right because of undue delay or failure to assert the claim or right.

Land:

The earth's surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water.

Land contract:A land contract is a real property sales contract. (See contract for deed

)

Landfill:

A landfill is an enormous hole, either excavated for the purpose of waste disposal or left over from a surface mining operation. The hole is lined with clay or a synthetic lining to prevent leakage of waste into the surrounding water supply. Waste is laid on the liner at the bottom of the landfill and a layer of topsoil is then compacted into the waste. The layering is repeated again and again until the landfill reaches its full capacity.

Landlord:The lessor or the owner of leased premises. The landlord retains a reversionary interest in the property, so that when the lease ends the property will revert to the landlord. (See lease, lessor, lessee)
Landlord-Tenant Law Overview

Land trusts:

A few states permit the creation of land trusts, in which real estate is the only asset. As in all trusts, the title to the property is conveyed to a trustee, and the beneficial interest belongs to the beneficiary. In the case of land trusts, however, the beneficiary is usually also the trustor. While the beneficial interest is personal property, the beneficiary retains management and control of the real property and has the right of possession and the right to any income or proceeds from its sale.

One of the distinguishing characte

M
M1, M2, M3:Three measurements of the United States money supply. M1, or the basic money supply, consists of cash in public hands, private checking accounts, credit union share accounts and demand deposits at thrifts. M2 includes all of M1 plus money market mutual fund shares, and savings deposits of less than $100,000 at all depository institutions. M3

includes M2 plus large time deposits at all depository institutions.

Maker:The maker of a check is known as the drawer. (See payee

)

Manifest system:Tracking of hazardous waste from "cradle to grave" (generation through disposal), with accompanying documents known as "manifests." (See hazardous waste

)

Maintenance charges:

Monthly or annual charges assessed in a condominium, planned united development, or cooperative development to cover operational costs.

Management:

Refers to the amount of personal or hired time, it takes to run the investment.

Management agreement:

A contract between the owner of income property and a management firm or individual property manager that outlines the scope of the manager's authority.

Management plan:The financial and operational strategy for the ongoing management of a property. It is based on market analysis, a property analysis and the owner's goals. (See market analysis, property analysis

)

Manufactured home:A structure (transportable in one or more sections) when in the traveling mode, is eight body feet or more in width, or 40 body feet or more in length, or, whe

N
Naked title:Bare title to the property, lacking the usual rights and privileges of ownership. A trustee in a deed of trust securing instrument may hold the title to a secured property, but only such title as is needed to carry out the terms of the lien document. (See deed of trust

)

National Association of Independent Fee Appraisers (NAIFA):A professional association of appraisers with more than 2,000 members nationally. NAIFA offers the specialty designations IFA (member), IFAS (senior member) and IFAC (appraiser-counselor).
NAIFA Website

National Association of REALTORS® (NAR):Formerly known as the National Association of Real Estate Boards (NAREB), NAR is the largest and most prestigious real estate organization in the world. Its members include REALTORS® and REALTOR-ASSOCIATES® representing all branches of the real estate industry. The national organization functions through local boards and state associations. Active brokers who have been admitted to membership in state and local NAR boards are allowed to use the trademark REALTOR®. Salespeople are admitted on a REALTOR-ASSOCIATE® active status. NAR members subscribe to a strict Code of Ethics.
NAR Website

National Bank Act of 1863:

In 1863, President Abraham Lincoln, at the urging of Salmon Chase, the Secretary of the Treasury, signed the National Bank Act. The Act established a national banking system and a uniform national currency to be issued by new "national" banks. The banks were required to purchase U.S. government securities as backing for their National Bank notes. In 1865, a 10-percent tax levied against State Bank notes essentially taxed those notes out of existence. From 1863 to 1877, National Bank notes were printed privately by the issuing banks. After 1877, the Bureau of Engraving and Printing, a division of the U.S. Department of th

O
Obedience:The fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. Because illegal acts do not serve the principal's best interests, obeying such instructions violates the broker's duty of loyalty. On the other hand, an agent who exceeds the authority assigned in the contract will be liable for any losses that the principal suffers as a result.

Obligor:A promisor; one who incurs a lawful obligation to another (the obligee). The maker of a promissory note is an obligor. In a performance bond, the contractor is the obligor. One who guarantees the performance of the obligation is a surety; also called a guarantor. (See payor

)

Obligatory advance:

Any advance which, under the terms of the credit line deed of trust or other agreement, the secured party has legally obligated itself to make in the absence of a default, breach, or other such event. Obligatory advances include, but are not limited to, advances which the secured party has agreed to make as a term or condition of the credit line deed of trust or other related agreement; obligations arising out of the occurrence of a condition, event or circumstance contemplated by the agreement; obligations arising on a specified date or time; or advances made upon application therefor by the grantor under the credit line deed of trust or by another obligor whose indebtedness is secured by the deed of trust.

Obsolescence:

The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.

Occupancy permit:

A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety a

P
Package loan:

A real estate loan used to finance the purchase of both real property and personal property, such as in the purchase of a new home that includes carpeting, window coverings and major appliances.

par:The face value of a bond or security. (See security

)

parol evidence rule:

A rule of evidence providing that a written agreement is the final expression of the agreement of the parties, not to be modified by oral or written negotiations.

partial release clause:

A mortgage provision under which the mortgagee agrees to release certain parcels from the lien of the blanket mortgage upon payment of a certain sum of money by the mortgagor. The clause is frequently found in tract development construction loans.

partial zoning:Zoning that does not consider its effect on other areas. (See zoning

)

participation financing:

Where a lender becomes a partner in a development.

participation certificates:

Certificates issued by Freddie Mac backed by pools of mortgages.

participation mortgage:

A mortgage loan wherein the lender has a partial equity interest in the property or receives a portion of the income from the property.

partition:Co-tenants who wish to terminate their co-ownership may file an action in court to partition the property. Partition is a legal way to dissolve the relationship when the parties do not voluntarily agree to its termination. If the court determines that the land cannot be divided physically into separate parcels without destroying its value, the court will order the real estate to be sold. The proceeds of the sale will then be divided among the co-owners according to their fractional interests. (See co-ownership

)

partnership:An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law a partnership is regarded as a group of individuals rather than as a single entity. (See general partnership, limited partnership, joint venture)
Uniform Partnership Act

—Full Text

parts per billion (ppb):

Units commonly used to expres

Q
Qualified intermediary:

Corporation or entity who facilitates a 1031 tax deferred exchange (also known as an "accommodator"). To be a qualified intermediary, the intermediary must not be a related party.

Quantity-survey method:The appraisal method of estimating building costs by calculating the cost of all of the physical components in the improvements, adding the cost to assemble them and then including the indirect costs associated with such construction. (See appraisal

)

Quasi contract:

A contract implied by law, as a matter of equity, when no actual contract exists.

Quiet enjoyment:An implied warranty that the landlord will not interfere with the tenant's reasonable use and enjoyment of a leased property. (See implied warranty

)
quiet title:

A court action to remove a cloud on the title.

Quitclaim deed:A conveyance by which the grantor transfers whatever interest he or she has in the real estate, without warranties or obligations.

R
Radon:A naturally occurring gas that is suspected of causing lung cancer.
National Safety Council on Radon

Rafter:A roof structural support system using "2 by" wood components that are nailed together (as opposed to trusses that are connected using press-on metal plates). (See truss

)

Range:1. A measure of the difference between the highest and lowest variates. (See variates) 2.

A strip of land six miles wide, extending north and south and numbered east and west according to its distance from the principal meridian in the rectangular (government) survey system of legal description. For example, Range 3 East would be a strip of land between 12 and 18 miles east of its principal meridian.

Rate cap:The limit on the amount the interest rate can be increased at each adjustment period in an adjustable rate loan. The cap may also set the maximum interest rate that can be charged during the life of the loan. (See adjustable rate mortgages (ARMs)

)

Rate factor:

The number of dollars required to pay off each $1,000 of a mortgage loan.

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