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Glossary of real estate terms

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There are 942 entries in the glossary.
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Term	Definition
AAA tenant	A rating given to a prime tenant with the highest credit rating. The term is often used to describe the credit rating of a retail store. For example, a developer who plans to build a shopping center will seek a "Triple A" tenant to help secure financing.

Absorption rate	A rate that is a forecast of how quickly properties can be sold or leased in a given area. For example, if a developer can lease 20\% of the units available to the market in a given area for a given time, the absorption rate is 20 percent.

Abstract of title	A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cle ared before a buyer can purchase clear, marketable, and insurable title.

Abut	Connect or join. If two pieces of property touch each other, they abut each other.

Abutment	A load-bearing vertical member of a structure. A wall or a column are examples of abutments.

Acceleration Clause	A provision in a mortgage that gives the lender the right to demand payment of the entire principal balance if a monthly payment is missed.

Acceptance	An offeree's consent to enter into a contract and be bound by the terms of the offer.

Accessibility	All new construction of covered multifamily buildings must include certain features of accessible and adaptable design. Units covered are all those in buildings with four or more units and one or more elevators, and all ground floor units in buildings without elevators.

Accessory building	A building or structure detached from but on the same property as a main building. Examples of accessory buildings are garages, storage buildings and guest houses.

Accident and health premium	A premium paid by a mortgagor for an insurance policy to ensure the continuance of mortgage payments if the borrower is disabled or ill.

Accommodation party	One who accommodates another by signing a note or a bill without receiving compensation (a note being a negotiable instrument such as a promissory note).

Accrued interest	Interest earned but not paid since the last due date.

Acoustical tile	Tile that absorbs sound. Is often used in the ceilings of apartment units and offices.

Acre (AC)	Land that measures 43,560 square feet. A lot 208.71' x 208.71' is 4,840 square yards, 4,047 square meters, 160 square rods, 0.4047 hectare or 43,560 square feet.

Act of God	An event that causes damage by nature such as a flood, earthquake or winds; an occurrence not caused by man.

Action to quiet title	A court action to establish ownership of real property. This court action usually removes any interest or claim to title of real estate. The action results in removing any cloud on the title. Normally a lender will not commit to a mortgage with a cloud on the title. If the complainant is successful in the court action, the title is made quiet, or is clean.

Ad valorem	A method of taxation using a fixed proportion of property value; for example, real estate taxes collected at the rate of a specific dollar amount of appraised value or assessment. People use the ad valorem method as a formula to decide how much tax to pay the government. A commonly used formula for computing taxes is as follows (assumptions: properties are assessed at 25\% of valuation, appraisal is $100,000 and the tax rate is $7.50 per $100): $100,000 x 25\% = $25,000 1?2 $100 = 250 ($100 units), 250 x $7.50 = $1,875 1?2 12 (12 months) = $156.25 per month

Adaptive reuse	Providing a new use for an older, but sound, structure. An example would be an abandoned warehouse converted into business or residential condominiums.

Add-on interest	Interest added to the amount of the loan on the front end, or beginning of the loan repayment period. The balance is then paid by installments. This form of interest is much more expensive than simple interest paid on the entire amount for the entire term of the loan.

Additional Principal Payment	A payment by a borrower of more than the scheduled principal amount due in order to reduce the remaining balance on the loan.

Adjoin	Connect or join. If two pieces of property touch each other, they adjoin or abut each other.

Adjustable living expenses	Expenses you can change, such as costs of groceries, utilities, telephone.

Adjustable-Rate Mortgage (ARM)	A mortgage where the interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. The rate is usually based on indexes tied to the nation's economy. You may also see ARMs referred to as AMLs (adjustable mortgage loans) or VRMs (variable-rate mortgages).

Adjusted Basis	The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken.

Adjustment Date	The date on which the interest rate changes for an adjustable-rate mortgage (ARM).

Adjustment Period	The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM).

Administrative Services Center	HUD field offices providing administrative support in the areas of staffing, labor relations, computer, and a variety of day-to-day operational support needs such as space, supplies, equipment, furniture and mail to HUD employees in the field. (HUDWEB)

Administrator	A person appointed by a probate court to administer the estate of a person who died intestate.

Advance	To give someone a draw or payment by making them a loan.

Affidavits	As part of the closing process, you're likely to sign numerous affidavits. You may be required, for example, to sign an affidavit of occupancy. It states that you will use the property as a principal residence. Or, you and the seller may have to sign an affidavit stating all of the improvements to the property required in the sales contract were completed before closing.Your lender can provide additional information regarding any of these documents you will sign.

Affordability Analysis	A detailed analysis of your ability to afford the purchase of a home. An affordability analysis takes into consideration your income, liabilities, and available funds, along with the type of mortgage you plan to use, the area where you want to purchase a home, and the closing costs that you might expect to pay.

Affordable Housing Program (AHP)	A program of the Federal Home Loan Bank system which allows the Regional Banks of the System to make subsidized funds available through member institutions for the production of affordable housing to serve f amilies below 80 \% of their area median income (AMI).

Agrarian	Something that relates to land or to a distribution or division of land.

Agreement of sale	Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain speci fic terms and conditions spelled out in writing and signed by both parties.

Air rights	The right to use the space or air above the ground but not the ground itself. can be sold or leased. Ownership of land includes air rights above the property. Some use of air rights, such as traveling through airspace by airplane no longer require the approval of the property owner.

Alcove	A recessed room connected to a main or larger room.

Alienation	A transfer or conveyance of property. is voluntary when it is with the consent of the owner. Involuntary alienation is a transfer of property without the consent of the owner, as in a foreclosure, adverse possess ion and eminent domain.

Alienation clause	A clause closely associated in meaning with Due-On-Sale Clause and Acceleration Clause. An alienation clause in a mortgage can give the lender the option to call the loan (declare the entire balance due) when the proper ty owner transfers ownership, title or interest without the lender' s consent.

All Inclusive Trust Deed (AITD)	Also known as a Wraparound Mortgage. A junior lien on a property which encompasses the senior financing. Enables the borrower to increase the amount of borrowing without paying off the original loan or paying the higher interest rates associated with other types of secondary financing. The borrower makes one payment (usually to the seller) from which the senior financing is paid with the balance going to ward the holder of the Note. May be advantageous to the seller in that he can experience an additional return on money (the senior financing) which he never loaned.

Allodial system	Ownership of land with the owner having full and absolute dominion over the property. This system is the basis for our property rights in the United States. A contrasting system is the feudal system, which gives owners hip to a king or sovereign who gives rights to the citizenry to occupy the land for a period of time.

Allowance for vacancy and income loss	An allowance used on pro-forma or profit-and-loss projections for income properties. You subtract an allowance for vacancy from gross income to decide net effective income (income before expenses). An investor cannot use rental property that is 100\% occupied. Depending on the market area, the vacancy allowance for income properties such as apartments is usually from 5\% to 10\% of the gross rental.

Alluvion	The gradual building up of soil deposited by water against a shore. Also Alluvium.

Amenity	A feature of real property that enhances its attractiveness and increases the occupant's or user's satisfaction although the feature is not essential to the property's use. Natural amenities include a pleasant or desirable location near water, scenic views of the surrounding area, etc. Human-made amenities include swimming pools, tennis courts, community buildings, and other recreational facilities.

American Bankers Association (ABA)	A professional organization of banks based in Washington, D.C., that lobbies the federal government and monitors federal and state laws and regulations on issues pertinent to the banking industry.

American Institute Of Architects (AIA)	A professional organization of architects. All registered architects subscribe to AIA' s standards of ethical practice.

American Institute Of Certified Public Accountants	A professional organization of certified public accountants. AICPA is responsible for developing "GAAP" accounting -- generally accepted accounting principles. AICPA awards th e CPA designation.

American Institute Of Real Estate Appraisers	American Institute Of Real Estate Appraisers (AIREA) Formerly a member organization of the National Association of REALTORS (NAR). AIREA severed its affiliation with NAR in 1990 and merged with the Society of Real Estate Appraisers to form The Appraisal Institute. The Appraisal Institute officially began operation on January 1, 1991.

American Land Title Association (ALTA)	An organization comprising title insurance companies, abstractors and attorneys specializing in real property law. ALTA has adopted many title insurance policy forms that standardize coverage nation ally for property owners and lenders. Many states require ALTA standardized title insurance policies.

Amortization	The gradual repayment of a mortgage loan by installments.

Amortization Schedule	A timetable for payment of a mortgage loan. An amortization schedule shows the amount of each payment applied to interest and principal and shows the remaining balance after each payment is made.

Amortization Term	The amount of time required to amortize the mortgage loan. The amortization term is expressed as a number of months. For example, for a 30-year fixed-rate mortgage, the amortization term is 360 months.

Amount financed	The base loan amount without regard to closing costs, discount points or mortgage insurance premiums. This dollar amount is associated with a disclosure statement used in compliance with the Truth-in-Lending Act.

Anaconda mortgage	A mortgage that uses the subject property as collateral for all debts from various loans owed to the lender. Courts may disagree with what an anaconda mortgage intends since they may require a direct relationship between each loan and the collateral acquired by the loan proceeds.

Analysis of Impediments (AI)	A HUD requirement for each state to conduct an analysis to determine impediments to fair housing choice within the state. The Commonwealth must take appropriate actions to overcome the effects of any impediments identified through that analysis. Fair Housing Planning Guide, Volume I, Department of Housing and Urban Development, 1993

Anchor bolt	A bolt that attaches the sill of a house to the foundation wall.

Anchor tenant	A retail store in a shopping center used as a major draw to the center. The presence of an anchor tenant helps secure financing for the center and enhances the chance of success for other tenants as it draws the public to i ts store. The store is normally part of a major chain and is a name easily recognized by the public. Depending on the size of the shopping center, there can be several anchor tenants.

Ancillary income	Income that is secondary in nature and not the main reason for being in the business; income that an investor would not receive if they were not in a particular business.

Annex	To attach or add; to add to something else.

Annual Debt Service (ADS)	The total amount of principal and interest to be paid each year to satisfy the obligations of a loan contract.

Annual Mortgagor Statement	A report sent to the mortgagor each year. The report shows how much was paid in taxes and interest during the year, as well as the remaining mortgage loan balance at the end of the year.

Annual Percentage Rate	The cost of a mortgage stated as a yearly rate; includes such items as interest, mortgage insurance, and loan origination fee (points).

Annual Percentage Rate (APR)	A method for calculating an interest rate to the interest collected, discount points charged to either purchaser or seller or both, certain costs related to closing and mortgage insurance premiums.

Annuity	An amount paid yearly or at other regular intervals, often on a guaranteed dollar basis.

Application	A form used to apply for a mortgage loan and to record pertinent information concerning a prospective mortgagor and the proposed security.(See also "Loan Application")

Appointments	Decorative items such as furnishings and equipment in a building.

Apportionment	A division of expenses, liabilities, responsibilities or property among individuals.

Appraisal	A written analysis of the estimated value of a property prepared by a qualified appraiser. Contrast with home inspection.

Appraisal Institute	An organization that officially began operation on January 1, 1991. The Appraisal Institute is the result of a merger of the former American Institute of Real Estate Appraisers (AIREA) and the Society of Real Estate A ppraisers. The surviving designations are the MAI (Member of the Appraisal Institute) and SRA (Senior Residential Appraiser).

Appraised Value	An opinion of a property's fair market value, based on an appraiser's knowledge, experience, and analysis of the property.

Appraiser	A person qualified by education, training, and experience to estimate the value of real property and personal property.

Appreciation	An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.

Appropriation	The private taking of property and dedicating it to public use. It is also the dedication of public land for a private use.

Appurtenance	An item attributable to the land, such as improvements or an easement. Something that comes from outside the property but is considered part of the property and transfers with the property upon sale or other transfer. A u tility easement is an example of an appurtenance.

Apron	An area such as the entrance to a driveway or the concrete portion around a swimming pool.

Arm's-length transaction	A transaction between individuals who do not have a conflict of interest or reason for collusion. The parties are as strangers to each other. The value of property should be questioned for fairness or accuracy if there is not an arm's-length transaction between the seller and buyer. An appraiser should not use comparable sales not closed by an arm's-length transaction in the market approach to value.

Army Corps of Engineers (COE)	The Corps of Engineers is an agency of the U.S. Army that provides comprehensive engineering, management and technical support to the Department of Defense, other agencies, and to State and Local governments. Army Corps of Engineers Internet site: www.ace.army.mil

Arrears	At the end of a period. You pay interest on home mortgages in arrears. You pay rent in advance. For example, a mortgage payment due May 1 is for the interest for April; rent due May 1 is for the month of May. The term ca n pertain to delinquent mortgage payments. A mortgage loan that is three months delinquent can be said to be three months in arrears.

Artesian well	A deep well where water rises to the surface by natural pressure.

As is	Property sold in its present condition with no warranties made about the plumbing, heating, electrical system or infestation of termites is said to be sold "as-is."

Assemblage	Combining pieces of property to make one large, attractive property. The added value is plottage. People often use option contracts with the practice of assemblage.

Assessed value	The valuation placed upon property by a public tax assessor for purposes of taxation.

Assessment	The process of placing a value on property for the strict purpose of taxation. May also refer to a levy against property for a special purpose, such as a sewer assessment.

Assessment Rolls	The public record of taxable property.

Assessor	A public official who establishes the value of a property for taxation purposes.

Asset	Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others (including bank accounts, stocks, mutual funds, and so on).

Assign	The act of transferring rights or property to another.

Assignee	One who receives rights or property. An assignee stands in the place of the assignor for rights, liabilities and interest in the property.

Assignment	The transfer of a mortgage from one person to another.

Assignment of Mortgage (A/M)	A transfer of a mortgage from one mortgagee to another. Sometimes, FHA will accept an assignment of a mortgage to help a qualified, distressed mortgagor.

Assignment of servicing	A process of assigning the servicing rights from one lender to another.

Assignor	One who assigns rights or property.

Assumability	When a home is sold, the seller may be able to transfer the mortgage to the new buyer. This means the mortgage is assumable. Lenders generally require a credit review of the new borrower and usually charge a fee for the assumpt ion. Most mortgages now contain a due-on-sale clause, which means that the mortgage may not be transferable to a new buyer. Instead, the lender may insist that the entire balance is paid in full when the home is sold. Assumability may benefit the seller especially during periods of higher interest rates or after periods of property depreciation.

Assumable Mortgage	A mortgage that can be taken over ("assumed") by the buyer when a home is sold. A provision in an assumable mortgage allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon the sale or transfer of the property.

Assumption	The transfer of the seller's existing mortgage to the buyer.(See also "Assumable Mortgage")

Assumption Clause	A provision in an assumable mortgage that allows a buyer to assume responsibility for the mortgage from the seller. The loan does not need to be paid in full by the original borrower upon sale or transfer of the property.

Assumption Fee	The fee paid to a lender (usually by the purchaser of real property) resulting from the assumption of an existing mortgage.

Assumption of mortgage	An obligation undertaken by the purchaser of property to be personally liable for payment of an existing mortgage. In a full assumption, the purchaser is substituted for the original mortgagor in the mortgage instr ument and the original mortgagor is to be released from further liability in the assumption, the mortgagee's consent is usually required. The original mortgagor should always obtain a written release from further liability if he desires to be fully released under the assumption. Failure to obtain such a release renders the original mortgagor liable if the person assuming the mortgage fails to make the monthly payments. (Not to be confused with a subject-to purchase.)

Atrium	Usually a space in the center of a building with a translucent ceiling and sometimes decorated with such amenities as a water fountain and tropical plants.

Attachment	The actual taking of property into the custody of a court to serve as collateral for a judgment sought in an impending suit. Law, not private consent, creates the lien. This form of legal action is not available for obligation s secured by collateral, as in the case of a mortgage.

Attestation	The act of witnessing a signature on an instrument.

Attic	The portion of a house between the ceiling of the top floor and the underside of the roof. There must be access to an attic. By inspecting an attic you can check for signs of structural problems in the rafters and joists and ass ure that there is adequate ventilation.

Attorney-in-fact	One who holds a power of attorney from another to execute documents on behalf of the grantor of the power.

Attornment	A tenant's formal recognition of a new landlord. A mortgagee, who becomes an owner by foreclosure, with the tenant recognizing the mortgagee as the new landlord, has a defense against claims for rent by the defaulting mortgago r. Attornment starts a new tenancy between the new owner and the tenant.

Attractive nuisance doctrine	A legal doctrine holding that a property owner must protect children from injuring themselves by an attractive danger such as a swimming pool. As an example of adhering to this doctrine, a property owner shou ld build a fence around a swimming pool.

Automated Underwriting	After you complete your loan application with a lender, it is sent to "underwriting" for review. In short, underwriting is the process used to analyze how you have managed credit obligations in the past, whether you have the ability to repay the mortgage loan you are applying for (i.e., your income and assets), and whether the price you are willing to pay for the home is supported by the price of the property.

Average life of a mortgage	The average number of years one dollar of principal investment remains outstanding in a mortgage loan. The average life is used in deciding the true yield of a mortgage. A 30-year mortgage is said to have an average life of 12 years; a 10- to 15-year mortgage has an average life of 7 years. Investors base the yield of a mortgage on the average life as opposed to the original term.

Avulsion	The sudden removal of land by action of a body of water, such as a river.

Backfilling	The act of putting back dirt removed for construction. You backfill by filling the gap between the foundation wall and the yard so that water will drain away from the building.

Backup contract	A term often used with contracts to buy real estate. A backup contract is a contract that will replace a prior contract in the event of failure to perform or close by the parties of the prior contract. The seller shoul d get a release from the buyer on the first contract before canceling the contract and proceeding with the second, or backup, contract.

Balance Sheet	A financial statement that shows assets, liabilities, and net worth as of a specific date.

Balloon Mortgage	A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term.

Balloon note	A Promissory Note which requires only partial or no amortization (principal reduction.) Balloon Notes result in an eventual Balloon Payment. A Balloon Note may be coupled with an Extendible Rider which allows for the extension of the loan term as long as certain conditions are met. (Such as on 5/25 and 7/23 loans.)

Balloon Payment	The final lump sum payment that is made at the maturity date of a balloon mortgage.

Baluster	The support for the rail in a staircase; one of a series of upright posts.

Bank Holding Company (BHC)	A corporation that owns interests in one or more banks.

Bankrupt	A person, firm, or corporation that, through a court proceeding, is relieved from the payment of all debts after the surrender of all assets to a court-appointed trustee.

Bankruptcy	A proceeding in a federal court in which a debtor who owes more than his or her assets can relieve the debts by transferring his or her assets to a trustee.

Base line	A surveyor' s term used to show an east-west line.

Base rent	The minimum monthly rent due to the landlord. Typically, it is a fixed amount.

Baseboard	A board that runs along the base of the wall where it meets the floor.

Basement	The space that is below the first floor. Basements are usually wholly or partly below the exterior grade. Basements should be checked for signs of water leakage. Dampness in comers is a sign of moisture problems, and water marks along the base of walls or any cabinets suggest that there is or has been some serious water leakage.

Basis	The total amount paid for a property, including equity capital and the amount of debt incurred. For a LIHTC project, the initial value that is eligible for tax credits.

Basis points	A term used in relationship to interest rates. One basis point is equal to 1/100 of 1 percent. are used to describe the yield of a debt instrument, including mortgages. The difference between 9\% and 9.5\% i s 50 basis points.

Batten	A narrow board normally used to cover a joint or space between boards, often called a batten board.

Baty	The strip of insulation placed between the studs of a wall or joists of a ceiling or floor.

Beam	A load-bearing support that can be made of wood, iron, stone or other strong material.

Bearer bond	A coupon bond payable to the individual who has possession of the bond.

Bedrock	Solid rock for a foundation of a large building.

Bedroom community or suburb	Residential area for commuters who work at a nearby large city or employment center.

Before-Tax Income	Income before taxes are deducted.

Belly-up	A project, business or venture that has failed is said to have gone belly-up.

Beneficiary	The person designated to receive the income from a trust, estate, or a deed of trust.

Bequeath	To transfer personal property through a will.

Betterment	An improvement that increases property value as distinguished from repairs or replacements that simply maintain value.

Bill of Sale	A written document that transfers title to personal property.

Billing cycle	The date a bill is sent out and the payment due. Some bills are sent out on the first of the month, some on the fifteenth, some on other dates.

Binder	A preliminary agreement, secured by the payment of an earnest money deposit, under which a buyer offers to purchase real estate.

Biweekly Mortgages	With a biweekly mortgage, the monthly payment is split in half, resulting in the same total monthly mortgage, but the resulting 26 and sometimes 27 biweekly payments a year translate into 13 monthly payments, or one extra monthly payment per year. Borrowers can qualify for a 30-year monthly payment amount, but get a loan that pays off in approximately 22 years at current interest rates. At higher rates, the actual term declines. If you are looking to build up equity in your home faster without the higher mortgage payments that come with a shorter-term mortgage, you may want to consider the biweekly mortgage. Payments can be deducted from your bank account and scheduled to coincide with your payroll deposits to simplify budgeting. Lenders may charge an initial set-up fee to automatically debit your checking account.

Biweekly Payment Mortgage	A mortgage that requires payments to reduce the debt every two weeks (instead of the standard monthly payment schedule). The 26 (or possibly 27) biweekly payments are each equal to one-half of the monthly payment that would be required if the loan were a standard 30-year fixed-rate mortgage, and they are usually drafted from the borrower's bank account. The result for the borrower is a substantial savings in interest.

Blacktop	A paving surface usually made of asphalt.

Blanket Insurance Policy	A single policy that covers more than one piece of property (or more than one person).

Blanket Mortgage	The mortgage that is secured by a cooperative project, as opposed to the share loans on individual units within the project.

Blended rate	(1) A first-mortgage lender can use a blended rate in an advertisement to induce mortgagors to refinance and pay off their old low-interest-rate first mortgage. The first-mortgage lender could offer a 10\% interest loan as co mpared to the going rate of 12\% if the mortgagor will refinance the existing mortgage that is at 8 percent. (2) A second-mortgage lender or a wraparound lender will advertise not to pay off the old mortgage with the low rate and short term remaining, but instead, to place a second mortgage or wraparound loan behind the first and have a blended rate below market interest rates for first-mortgage loans.

Blighted area	Usually an inner city area where property values are falling and buildings are deteriorating.

Blockbusting	An illegal practice of promoting panic-selling in an all-white neighborhood because someone of a minority or ethnic background has moved into or is said to be moving into the neighborhood. The blockbuster will try to gain il legally from depressed prices either by buying or listing the properties at far below market values.

Blueprint	An architect's or designer's detailed plan for a building. If you remodel your house, you will probably need a blueprint.

Board of adjustment	A government body that hears appeals concerning zoning matters. A Board of Adjustment can grant zoning variances.

Board of equalization	A government body that hears appeals concerning real estate tax assessments. If a property owner thinks the assessment is too high, they can appeal to the Board of Equalization. This board can lower assessments, causing a lower real estate tax.

Board of Realtors®	The local association of REALTORS® who belong to the State and National Association of Realtors.®

Board of review	See Board Of Equalization.

Boilerplating	Standard language found in contracts, deeds or deeds of trust, and in covenants, conditions and restrictions (CC&Rs).

Bona fide	In good faith, without fraud.

Bond	An interest-bearing certificate of debt with a maturity date. An obligation of a government or business corporation. A real estate bond is a written obligation usually secured by a mortgage or a deed of trust.

Bond value	The mortgage bond's cash flow (or underlying collateral) that upholds the value of the bond. The mortgage bond's value is restricted to the mortgage loan's unpaid balance.

Bond-type security	An investment security, especially a mortgage-based one, that has the characteristics of a typical corporate bond, including a long-term, fixed rate of return and repayment of principal at maturity.

Book value	An accounting term used to show the value of a business as a whole or particular asset, such as real estate. You show the value by accounting records that give the cost of the assets plus any improvement minus depreciation. It is the value of an asset. Depending on the reason for valuation, book value may be marked down for a distress sale, but it is normally never marked up to reflect an increase in value.

Boot	Something of value given to even the exchange of like properties. For example, if parcel A is worth $100,000 and is exchanged for parcel B (worth $80,000) and $20,000 in cash, the boot is the $20,000 in cash.

Boring test	Using samples obtained by boring deep holes in the ground to decide the strength of the subsoil for construction purposes.

Borough	A section of a city, similar to an incorporated village, that has control over local matters. New York City has five boroughs.

Boti'om land	Low land situated near a body of water.

Bottom line	A phrase that means the net result, such as after-tax cash flow, or the final consequence.

Bracing	Placing boards between floor or ceiling joists to prevent them from twisting.

Breach	A violation of any legal obligation.

Breach of contract	Failure to perform according to the terms of a contract. The party who has not breached the contract can rescind the agreement and sue for damages or for performance.

Breach of trust	Abuse of the responsibilities or authority as set forth in a trust agreement.

Break-even cash ratio	Equalization of the ratio of operating expense plus debt service to gross income (1:1). Interpreted as the occupancy level that must be achieved to break even.

Break-even point	A point when gross income will cover operating expenses and the debt service.

Breakpoint	The Sales threshold over which percentage rent is due.

Bridge financing or bridge loan	Short-term mortgage financing between the end of one loan or financing instrument and the beginning of another.

Bridge Loan	A form of second trust that is collateralized by the borrower's present home (which is usually for sale) in a manner that allows the proceeds to be used for closing on a new house before the present home is sold. Also known as "swing loan."

British Thermal Unit (BTU)	A unit used to measure the efficiency or capacity of heating or cooling systems. A unit of heat required to raise one pound of water One degree Fahrenheit at sea level.

Broker	A person who, for a commission or a fee, brings parties together and assists in negotiating contracts between them.

Brownfields	Abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination. Environmental Protection Agency web site at www.epa.gov/swerosps/bf/glossary.htm

Brownfields Economic Development Initiat	Brownfields Economic Development Initiative (BEDI): BEDI grants enhance the security or improve the viability of a project financed with new Section 108 guaranteed loan authority. HUD intends BEDI and Section 108 funds to finance projects and activities that will provide near-term results and demonstrable economic benefits, such as job creation and increases in the local tax base. HUD web site at www.hud.gov/bedifact.html

Brownfields Redevelopment Initiative	Brownfields Redevelopment Initiative (BRI): An interagency initiative to address the financial and legal risks of cleaning up and redeveloping brownfields. To attract private financing, HUD brings together four existing types of assistance that communities can use to clean up and revitalize potentially contaminated sites: annual formula grants allocated through Community Development Block Grants; lower interest loan guarantee authority through the Section 108 Loan Guarantee program; accompanying competitive grants through the Brownfields Economic Development Initiative program; and additional competitive grants provided through the Lead-Based Paint Hazard Control program. HUD web site at www.hud.gov:80/progdesc/brownf.html

Budget	A detailed plan of income and expenses expected over a certain period of time. A budget can provide guidelines for managing future investments and expenses.

Budget Category	A category of income or expense data that you can use in a budget. You can also define your own budget categories and add them to some or all of the budgets you create. "Rent" is an example of an expense category. "Salary" is a typical income category.

Buffer strip or zone	Land between two areas of different use, such as commercial and residential.

Builder's risk insurance	Insurance used to protect builders against fire and special risks while they have buildings under construction.

Building Code	Local regulations that control design, construction, and materials used in construction. Building codes are based on safety and health standards.

Building line or setback	Distances from the ends and/or sides of the lot beyond which construction may not extend. The building line may be established by a filed plat of subdivision, by restrictive covenants in deeds or leases, by building codes, or by zoning ordinances.

Building permit	A written permit that must be purchased from the local government by anyone doing remodeling or rehabbing work on a property.

Buydown	With a buydown, the seller or borrower pays an amount to the lender so that the lender can offer a lower rate and lower payments, during the earlier portion of the loan term. If the seller pays, he may increase the sales price to co ver the cost of the buydown. Buydowns can occur in all types of mortgages; fixed rate, interim fixed and adjustables.

Buydown Account	An account in which funds are held so that they can be applied as part of the monthly mortgage payment as each payment comes due during the period that an interest rate buydown plan is in effect.

Buydown Mortgage	A temporary buydown is a mortgage on which an initial lump sum payment is made by any party to reduce a borrower's monthly payments during the first few years of a mortgage. A permanent buydown reduces the interest rate over the entire life of a mortgage.

Buyer's agent	A real estate agent who works for the buyer of a house, not the seller.

Cadastral map	A map with legal boundaries and ownership of real property used for title recording.

Call Option	A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.

Cap	A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.

Capacity	Lenders will want to know if you can repay the mortgage debt you incur -- this is known as your capacity. Lenders will base their evaluation on employment information, how long you've worked, and how much you are paid. Lenders will also review your expenses and any other debt obligations you have. This means they'll want to know how many dependents you have and whether you pay any alimony or child support, for example.

Cape cod	A Colonial-style house, usually 1-story in height. The house is small with a single centered front entrance. The entrance usually has one or windows on each side of the front door and is symmetrical. The chimney is often in center of the house, and the roof is a steep gable made of shingles.

Capital	(1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities.

Capital asset	As defined by the IRS, an asset that can receive favorable treatment upon sale. Assets excluded would be inventory, property held for resale property used in a trade or business.

Capital Expenditure	The cost of an improvement made to extend the useful life of a property or to add to its value.

Capital gain	The taxable profit from the sale of a capital asset. The gain is the difference from the basis for the capital asset and the value received less adjustments the cost of the sale, e.g., sales commissions, discount points, and closing costs.

Capital gains tax	A tax owed for selling something at a price that is more than the price the owner bought it for.

Capital Improvement	Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Capital loss	What a homeowner has if he sells his home for less money than he paid for it.

Capitalization	Process of estimating value by discounting stabilized net operating income by an appropriate rate.

Capitalization rate	Commonly called the cap rate, the capitalization rate can be used as a division factor to decide the capital value. The net income from an investment divided by the cap rate will equal the capital value, or value. The cap rate is a combination of a return or recapture of the investment and a return on the investment.

Carryback financing	When the seller helps to finances the sale of property.

Cash basis	The method of reporting income and expenditures as they are received. A way of deciding the net profit or loss of a business based solely on income received minus expenses paid.

Cash flow	Income from an investment after deducting expenses and debt service from gross income and before depreciation and income taxes. Net income minus debt service equals cash flow.

Cash flow model	The framework used to determine the cash flow from operations and the cash proceeds from sale.

Cash reserve	A requirement of some lenders that buyers have sufficient cash remaining after closing to make the first two monthly mortgage payments.

Cash-on-cash return	Rate of return based on cash returned to the investor on his or her cash investment. The cash-on-cash return is the relationship of the cash returned to the cash invested.

Cash-out Refinance	A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

CD-Indexed (Certificate of Deposit) ARMs	The Certificate of Deposit index represents the weekly average of secondary market interest rates on six-month negotiable CDs. The initial interest rate and payments adjust every six months after an initial six-month period