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Real Estate Glossary

implied warranty of habitability

A legal doctrine that requires landlords to offer and maintain livable premises for their tenants. If a landlord fails to provide habitable housing, tenants in most states may legally withhold rent or take other measures, including hiring someone to fix the problem or moving out. See constructive eviction.

improvements: Valuable additions to the land, such as buildings, fences, roads, etc., which increase the value of the property.

incidents of ownership: Any control over property. If you give away property but keep an incident of ownership--for example, you give away an apartment building but retain the right to receive rent--then legally, no gift has been made. This distinction can be important if you're making large gifts to reduce your eventual estate tax.

income approach to value: An estimate of value based on the monetary returns that a property can be expected to generate; capitalization. Contrast with the cost approach to value and the market data approach to value.

Independent School District: In Texas, all but one of the state's school districts are considered "Independent" since they do not fall under the direct control of any other local government, and their boundaries are not constrained by any city or county border lines. Each district is run by an elected school board, which appoints a superintendent and sets budgets and tax rates. Only the State of Texas has the authority to regulate and oversee the actions of an Independent School District.; The one exception is the Stafford Municipal School District, which de-annexed itself from the Fort Bend Independent School District. Stafford MSD lies entirely within the city limits of the City of Stafford, and shares its recreational and auditorium facilities.

index: A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based.

ingress: An entrance, or the act of entering. Compare egress.

inspection clause: A stipulation in an offer to purchase that makes the sale contingent on the findings of a home inspector.

insurable title: A title which a title company will insure.

interest: (1) The sum paid in return for the use of money; could be considered rent for the use of money.; (2) The type and extent of ownership in property.

interest rate: The periodic charge, expressed as a percentage, for use of credit.

intermediary: As of January 1, 1996, a broker may act as an intermediary between the parties if the broker complies with the The Texas Real Estate License Act. The broker must obtain the written consent of each party to the transaction to act as an intermediary. The written consent must state who will pay the broker and, in conspicuous bold or underlined print, set forth the broker's obligations as an intermediary. The broker is required to treat each party honestly and fairly and to comply with The Texas Real Estate License Act. A broker who acts as an intermediary in a transaction:; With the parties' consent, a broker acting as an intermediary between the parties may appoint a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under the Act and associated with the broker to communicate with and carry out instructions of the other party.

intestate: Legal designation of a person who has died without leaving a valid will.

intimidation: As defined in the fair housing laws, it is the illegal act of coercing, intimidating, threatening, or interfering with a person in exercising or enjoying any right granted or protected by federal, state or local fair housing laws.

invitee: A business guest, or someone who enters property held open to members of the public, such as a visitor to a museum. Property owners must protect invitees from dangers on the property. In an example of the perversion of legalese, social guests that you invite into your home are called "licensees."

joint tenancy: A way for two or more people to share ownership of real estate or other property. When two or more people own property as joint tenants and one owner dies, the other owners automatically own the deceased owner's share. For example, if a parent and child own a house as joint tenants and the parent dies, the child automatically becomes full owner. Because of this right of survivorship, no will is required to transfer the property; it goes directly to the surviving joint tenants without the delay and costs of probate. Contrast with tenancy in common.

judgment: The official and authentic decision of a court of justice concerning the respective rights and claims of the parties to an action or suit.

laches: Delay or negligence in asserting one's rights.

landlord: The owner of any real estate, such as a house, apartment building or land, that is leased or rented to another person, called the tenant.

latent defect: Hidden structural defects and flaws.

lease: An oral or written agreement (a contract) between two people concerning the use by one of the property of the other. A person can lease real estate (such as an apartment or business property) or personal property (such as a car or a boat). A lease should cover basic issues such as when the lease will begin and end, the rent or other costs, how payments should be made, and any restrictions on the use of the property. The property owner is often called the "lessor," and the person using the property is called the "lessee." In Texas, any lease over one year in length, must be in writing.

lease option: A contract in which an owner leases his house (usually for one to five years) to a tenant for a specific monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance. This allows a potential home buyer move into a house he may wish to eventually buy without having to come up with a down payment or financing at that time.

lease purchase: A contract in which an owner leases his house (usually for one to five years) to a tenant for an increased monthly rent, and which gives the tenant the right to buy the house at the end of the lease period for a price established in advance, with the incremental rent increase being used to form a down payment. Buyers should be wary of this type of contract since they may lose their extra rent/down payment money should the owner suffer financial setbacks before the purchase has been completed.
leasehold estate: A form of real estate in which a tenant is allowed to construct permanent structures upon a parcel of leased land, and derive some use or income from said structures during the period of the lease. Leasehold estates usually involve long-term leases, ranging from 20 to 99 years. Land owners are able to have their property developed, with no out of pocket expenses. Instead of having to sell their land too soon, they retain their family's rights to the land, while receiving a steady income stream. The tenant saves the initial land acquisation costs and may gain access to property that would be otherwise unavailable. The downside is, as the lease nears the end or its term, the tenant's investment becomes uncertain, and the landlord is in a position to make demands for compensation, above the fair market price. Leaseholds are much more common in commercial real estate, but can apply to some residential properties as well. Hawaii has many leasehold condominium projects, and even Houston has at least one mid-rise condominium building that lacks ownership of the land it occupies.

legal description: A description of a specific parcel of real estate which is acceptable to the courts in that state, and which will allows an independent surveyor to locate and identify it. Usually it uses one of the following methods; government survey (Not Used in Texas), metes and bounds, or recorded plat (lot and block number).

less favorable treatment: Any time a person is treated differently on the basis of race, sex, religion, color, familial status, disability, or national origin, either by action or inaction, in the selling or leasing of real property, it is a violation of the Fair Housing Laws. Also known as unequal treatment or different treatment.

lessee: Tenant leasing property.

lessor: One who leases property to a tenant.

leverage: The use of borrowed funds to finance an investment and to magnify the rate of return.
Levy Improvement District (LID): A type of Water Control and Improvement District, used to build and maintain levies. Levies are used to contain flooding creeks and rivers.

licensee: A person licensed by the Texas Real Estate Commission to engage in real estate brokerage, either as a broker or as a salesman.
LID: Acronym - Levy Improvement District.

lien: A monetary claim against a property. These should be settled before the sale is finalized.

lien theory state: Texas is a Lien Theory State, where legal title of mortgaged property resides with the mortgagor (borrower), with the mortgage as a lien against the property. Contrast with title theory state.

life estate: An interest in property only for the duration of someone's life.

life tenant: One who has a life estate in real property.

limited equity housing: An arrangement designed to encourage low-and moderate-income families to purchase housing, in which the housing is offered at an extremely favorable price with a low down payment. The catch is that when the owner sells, she gets none of the profit if the market value of the unit has gone up. Any profit returns to the organization that built the home, which then resells the unit at an affordable price.

lis pendens: A notice indicating that legal action is pending on a property.

listing agreement: The legal agreement between the listing agent/broker and the vendor, setting out the services to be rendered, describing the property for sale, and stating the terms of payment.
loan-to-value ratio (LTV): The ratio of the amount being loaned in respect to the appraised value of the property, usually expressed as a percentage. If a buyer was putting down $20,000, and borrowing a first lien of $180,000, on a $200,000 property, then the loan would have a 90% LTV. Loan-to-value ratios can effect interest rates, loan qualifying criteria, and lender requirements for PMI and escrow accounts.

lock or lock In: A commitment you obtain from a lender assuring you a particular interest rate or feature or a definite time period. Provides protection should interest rates rise between the time you apply for a loan, acquire loan approval, and, subsequently, close the loan and receive the funds you have borrowed.
loft: (1) A style of residential construction. In Houston the term "loft" is used quite liberally. It may refer to an older building that has been converted into residential condominiums, or it may mean a new mid-rise project with a "loft-style" finish to the units. There are also new construction townhomes that are promoted as being "lofts". A builder creates new loft space by leaving exposed brick walls, bare polished concrete floors and having unhidden heating ducts, trusses, etc.; (2) An upstairs room or area that has an open wall, overlooking a room or area below.
LTV: See loan-to-value ratio.

mandatory continuing education (MCE): The State of Texas requires that its licensed real estate brokers, and salesmen (who have met their SAE requirement), attend at least 15 hours of certified real estate education courses before each license renewal (every two years). At least six of the 15 hours must be in legal topics.

manufactured home: A structure built in a factory, that is later shipped to, and placed on, the homesite. The term can apply to both mobile homes and pre-fab homes.

margin: An amount, usually a percentage, which is added to the index to determine the interest rate for adjustable rate mortgages.

marginal land: Property which is barely profitable to use.

market approach to value: An estimate of value based on the actual sales prices of comparable properties. Contrast with cost approach to value and income approach to value.

market value: The price that a willing buyer and a willing seller, both given full information, and neither under pressure to act, would agree upon. Also known as Fair Market Value.
master-planned community: A large scale, mixed use, real estate development that follows a long term, comprehensive plan. Master-planned communities typically blend different price ranges of residential neighborhoods with some commercial properties designed to serve the residents' needs. Residential properties may include patio homes, townhouses, condominiums and apartment complexes in addition to neighborhoods of single-family homes. Likewise, multiple home builders are included in the construction of the various neighborhoods. Commercial development can consist of retail strip centers ans shopping malls, restaurants, entertainment venues and office buildings.; In addition, master-planned communities usually offer amenities such as public recreation areas and parks, neighborhood schools and extensive landscaping. Recreation areas may include public swimming pools, tennis courts, children's play grounds and sports fields. Many offer large water features and public or private golf courses.; The term "master-planned" has become somewhat of an overused buzzword in the current market place. True master-planned communities require a a multi-year commitment from the developer and contain thousands of homes.

MCE: See mandatory continuing education.

mechanic's lien: A legal claim placed on real estate by someone who is owed money for labor, services or supplies contributed to the property for the purpose of improving it. Typical lien claimants are general contractors, subcontractors and suppliers of building materials. A mechanics' lien claimant can sue to have the real estate sold at auction and recover the debt from the proceeds. Because property with a lien on it cannot be easily sold until the lien is satisfied (paid off), owners have a great incentive to pay their bills.

mediation: A dispute resolution method designed to help warring parties resolve their own dispute without going to court. In mediation, a neutral third party (the mediator) meets with the opposing sides to help them find a mutually satisfactory solution. Unlike a judge in her courtroom or an arbitrator conducting a binding arbitration, the mediator has no power to impose a solution. No formal rules of evidence or procedure control mediation; the mediator and the parties usually agree on their own informal ways to proceed.

metes and bounds: A system of land description using distance (metes) and angles/compass directions (bounds), beginning and ending at the same point. Contrast with government survey and recorded plat method.

mid-rise: A 4-story to 8-story tall building that contains residential apartment or condominium units. While not offering the panoramic views of a high-rise, mid-rise buildings can offer comparable levels of amenities and services. Building features may include 24-hour concierge service, swimming pools, spas, saunas, tennis courts, exercise areas, and party rooms. Security is enhanced at these buildings by the manned entry desks and limited access, covered parking garages.

mineral rights: An ownership interest in the minerals contained in a particular parcel of land, with or without ownership of the surface of the land. The owner of mineral rights is usually entitled to either take the minerals from the land himself or receive a royalty from the party that actually extracts the minerals.

minimum payment: The minimum amount that you must pay, usually monthly, on a home equity loan or line of credit. In some plans, the minimum payment may be "interest only," (simple interest). In other plans, the minimum payment may include principal and interest (amortized).

minority: As defined in the Civil Rights Act of 1968 as part of the Fair Housing Laws "'minority' means any group, or any member of a group, that can be identified either: (1) by race, color, religion, sex, disability, or national origin; or (2) by any other characteristic (such as familial status) on the basis of which discrimination is prohibited by a federal, state, or local fair housing law.

misrepresentation: A false statement, or concealment, of material fact with the intention of inducing action of another.

mobile home: A type of manufactured home, that is transported to the home site using wheels attached to the structure. Mobile homes come in various widths and lengths, and maybe composed of one to three pieces. A one piece home is called a "single-wide", while a house that is joined together from two halves is called a "double-wide". Recently, "triple-wides" have appeared, and become as the largest mobile homes available. Most sections are between 14 and 16 feet wide, and 54 to 80 feet in length. Mobile homes do not require any foundation or substructure. They sit up off the ground, with skirting used around the base to hide the wheel and jacks. While it is possible to tie down a mobile home to a piece of land, using straps and screw-in anchors, the structures are very susceptible to high winds and tornados.

month-to-month tenancy: A rental agreement that provides for a one-month tenancy that is automatically renewed each month unless either tenant or landlord gives the other the proper amount of written notice (usually 30 days) to terminate the agreement. Some landlords prefer to use month-to-month tenancies because it gives them the right to raise the rent after giving proper notice. This type of rental also provides a landlord with an easy way to get rid of troublesome tenants, because in most states month-to-month tenancies can be terminated for any reason. It is also common for leases to revert to month-to-month tenancies at the end of the original lease period, if another lease has not been signed.

monument: A fixed object or point, either natural or man-made, used in making a survey.

mortgage: A contract providing security for the repayment of a loan, registered against property, with stated rights and remedies in the event of default. Lenders consider both the property (security) and financial worth of the borrower (covenant) in deciding on a mortgage loan.

mortgage banker: Originates mortgage loans, loaning you their funds and closing the loan in their name.

mortgage broker: A person or company having contacts with financial institutions or individuals wishing to invest in mortgages.

mortgage loan: A loan which utilizes real estate as security or collateral to provide for repayment should you default on the terms of your loan. The mortgage or deed of trust is your agreement to pledge your home or other real estate as security.

mortgagee: The lender in a mortgage loan transaction.

mortgagor: The borrower in a mortgage loan transaction.

MUD: See Municipal Utility District.

Multiple Listing Service (MLS): A system by which a number of real estate firms share information about homes that are for sale. Membership usually provides a monthly book and/or computer service that provides Realtors^� with detailed listings of most homes currently on the market.

Municipal Utility District (MUD): Municipal Utility Districts are authorized under the Texas Constitution, Article III, Section 52, or Article XVI, Section 59. They are local political subdivisions of the State, governed by a board of directors. After the terrible floods in Texas during 1912-14, people across the state realized there was a real need to confirm the State's duty to not only prevent floods but, also through the storage of flood waters, to conserve the water for beneficial usages. This was the genesis for the passage of Section 59 of Article XVI in 1917, which allowed water districts to operate with unlimited bonded indebtedness. In 1925, legislation was passed which authorized the creation of Water Control and Improvement Districts -- WCIDs -- with the same bonded indebtedness and taxing authority.; To create a new water district, a developer files an application through the Office of the State Attorney General to the TNRCC. The application outlines the developer's plans for providing various services such as water, sewer and drainage to areas where municipal services are not already in place. A Board of Directors is established, which is assisted by qualified professionals who provide services on a fee basis. Not all water districts are created equal. Some are established under General Law by theTexas Natural Resource Conservation Commission (TNRCC); some by Commissioners Court; and others are created by the governing board of a city. Special law districts are created by an act of the State Legislature. All water districts, however, must comply with the laws contained in the Texas Water Code.; Water districts are generally empowered to incur debt and levy taxes. If voters approve unlimited tax bonds, a debt service tax to pay the bonds is also approved. Each year, the water district board is obligated to levy a property tax adequate to cover the debt. This tax is levied on all property in the district based on appraised value, regardless of services received, and must comply with the Property Tax Code. The tax rate must be published each year and public hearings held if the effective tax rate increases more than three percent over the previous year. District voters may also approve a maintenance tax. Water districts must comply with the Texas Open Meetings Act and the Texas Open Records Act and have an annual audit performed by an independent auditing firm. Water districts are generally empowered to:

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Real Estate Directory Real Estate Glossary

Real Estate Glossary

Real Estate Directory
Real Estate Glossary