• Absolute and Unqualified (Acceptance): An acceptance of an offer that agrees to all terms without any changes or conditions.

• Abstract of Judgment: A document filed in the county recorder’s office that creates a general lien on all real property owned by the judgment debtor in that county, typically valid for 10 years.

• Abstract of Title: A summary of all pertinent recorded documents affecting the title to a property, used to determine the status of the title.

• Accusation: A formal statement of charges against a real estate licensee, issued by the Commissioner of the Department of Real Estate, initiating disciplinary action.

• Acknowledgment: A formal declaration before a public officer (like a Notary Public) that the person signing a document did so voluntarily and that the signature is authentic.

• Accretion: The gradual and imperceptible accumulation of land by natural causes, such as the deposit of soil by water.

• Advance Fee: Any fee collected by a licensee before services are rendered, particularly regulated in loan modification services. Must be deposited into a trust account and is subject to specific DRE rules.

• Agency: A relationship in which one party (the agent) is authorized to act on behalf of another party (the principal) in dealings with third persons.

• Alienation Clause (Due-on-Sale Clause): A clause in a loan agreement that permits the lender to demand full payment of the outstanding loan balance if the property is sold or transferred without the lender’s consent.

• All-Inclusive Trust Deed (AITD) / Wrap-Around Mortgage: A type of junior loan that includes the amount of an existing senior loan. The buyer makes payments to the seller, who then continues to make payments on the first loan.

• ALTA (American Land Title Association) Policy: An extended coverage title insurance policy that offers broader protection, often covering issues not found in public records like boundary disputes and unrecorded liens.

• Amenities: Features of a property or its surroundings that enhance its attractiveness or value, such as recreational facilities, proximity to schools, or shopping centers.

• Amortization: The process of gradually paying off a debt over time through a series of regular payments, where each payment includes both principal and interest.

• Annual Percentage Rate (APR): The total cost of credit expressed as a yearly percentage rate, including interest and other finance charges. Used for comparing the true cost of different loans.

• Appurtenant: Something that belongs to and passes with real property, such as an easement or water rights.

• Assessed Value: The value assigned to a property by a governmental tax assessor for the purpose of property taxation. It may not reflect the current market value.

• Assignment (of Lease): The transfer of an entire leasehold interest from the original tenant (assignor) to a new tenant (assignee), often with the landlord’s consent, where the original tenant may or may not be released from liability.

• Assignment of Rents Clause: A clause in a loan agreement that gives the lender the right to collect rent directly from tenants if the borrower defaults on the loan, typically in commercial properties.

• Assumable Loan: A loan that can be transferred from the original borrower to a new borrower, who then takes over the responsibility for the remaining debt.

• Attachment Lien: A court-ordered seizure of a debtor’s property (attachment) to hold it as security for a possible judgment in a pending lawsuit. It acts as a specific lien.

• Attorney-in-Fact: A person authorized to act on behalf of another (the principal) through a power of attorney, typically for specific legal or business matters.

• Avulsion: The sudden tearing away of land by the action of water, such as a flood or a change in a river’s course. The landowner does not lose title to the detached land.

• Backfill: Material (often dirt or sand) used to fill in an excavated area, such as around a foundation or a filled-in swimming pool.

• Balloon Payment: A large, lump-sum payment that is due at the end of a loan term, often occurring with partially amortized or interest-only loans.

• Base Line: An imaginary east-west line used as a reference in the U.S. government survey system for land descriptions.

• Bearing Wall: A structural wall or partition that supports the weight from the floor or roof above, transferring the load to the foundation.

• Beneficiary (Trust Deed): The lender in a trust deed arrangement, who benefits from the security interest in the property.

• Bilateral Contract: A contract in which both parties make promises to each other; for example, a purchase agreement where the buyer promises to pay and the seller promises to convey title.

• Blank Endorsement: An endorsement on a negotiable instrument (like a check) that consists only of the endorser’s signature, making it payable to bearer.

• Blanket Mortgage/Trust Deed: A single loan that covers multiple parcels of real estate as security. Often used by developers for a subdivision.

• Blighted Area: A deteriorating urban area characterized by economic decline, high unemployment, and high crime rates, leading to depressed property values.

• Blind Advertising: An advertisement that does not clearly identify the advertiser as a real estate agent or broker, often prohibited by real estate law.

• Blockbusting: An illegal and discriminatory practice where real estate agents induce panic selling in a neighborhood by implying that a minority group is moving in, thereby lowering property values.

• British Thermal Unit (BTU): A unit of heat measurement, defined as the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

• Broker’s Disclosure of Agency Relationship: A document provided by real estate agents to clarify their agency relationship (e.g., representing buyer, seller, or both) to all parties in a transaction.

• CAL-VET Loan: A financing program sponsored by the State of California to assist eligible California veterans in purchasing homes, often characterized by the state holding legal title as the vendor.

• Cancel License: A real estate license that becomes inactive due to circumstances like a salesperson being terminated by their broker or the broker’s death, requiring re-affiliation with another broker to reactivate.

• Capable Parties: Individuals who have the legal capacity to enter into a contract, meaning they are of legal age and sound mind.

• Capitalization Rate (Cap Rate): The rate of return an investor expects to receive on a property, calculated by dividing the net operating income by the property’s value. Higher cap rates generally indicate higher risk.

• Cash Flow: The net amount of cash moving into or out of a business or property over a period. Positive cash flow means income exceeds expenses.

• Chain of Title: A historical record of all successive conveyances and encumbrances affecting a parcel of land, from the original grant to the present.

• Chattel Real: An item of personal property that is connected to real estate, such as a lease.

• CLTA (California Land Title Association) Policy: A standard title insurance policy, typically insuring against recorded defects and offering basic coverage, but usually not covering unrecorded encroachments or boundary disputes.

• Cloud on Title: Any claim, encumbrance, or defect that makes the title to real property questionable, rendering it less marketable.

• Codicil: A legal document that modifies, explains, or revokes a will or part of a will, often added after the original will is executed.

• Collateral: Property pledged by a borrower to a lender as security for a loan. If the borrower defaults, the lender can seize the collateral.

• Commingling: The illegal practice of mixing a client’s funds with a broker’s personal or business funds.

• Commissioner (DRE): The chief executive officer of the California Department of Real Estate, responsible for enforcing real estate law, investigating complaints, and approving subdivisions.

• Commingling: The illegal practice of mixing a client’s funds with a broker’s personal or business funds.

• Community Property: Property acquired by a husband and wife during their marriage, which is owned equally by both spouses.

• Community Property with Right of Survivorship: Community property that includes the right of survivorship, meaning that upon the death of one spouse, their interest automatically passes to the surviving spouse without probate.

• Company Dollar: The portion of a real estate commission that a broker retains after paying the salesperson’s share.

• Complete Escrow: The point at which all terms and conditions of the escrow instructions have been met, allowing the transfer of title and disbursement of funds.

• Condemnation (Eminent Domain): The process by which a government agency exercises its power of eminent domain to acquire private property for public use, paying just compensation.

• Conditional Delivery (of Transfer Instrument): The transfer of a document (like a deed) to a third party (escrow holder) with instructions that it is to be delivered to the grantee only upon the fulfillment of specific conditions.

• Condominium Project: A form of ownership where individuals own a single unit in a multi-unit development, plus an undivided interest in the common areas.

• Conspicuousness: The degree to which a property or business location is visible and easily noticed by potential customers or passersby.

• Construction Financing (Interim Loan): A short-term loan used to finance the construction of a building. It typically has a higher interest rate and is disbursed in stages as construction progresses.

• Consummation (of Loan): The point at which a borrower signs the loan documents, obligating them to the terms of the loan.

• Contract: A legally binding agreement between two or more parties that creates an obligation to do or not do a particular thing.

• Contract Rent: The amount of rent stipulated in a lease agreement, which may differ from the current market rent (economic rent).

• Conversion (Misappropriation): The illegal act of using or taking a client’s funds or property for one’s own use or for any purpose other than what was intended. More severe than commingling.

• Co-Ownership: Ownership of property by two or more individuals or entities simultaneously.

• Cost Approach: An appraisal method that estimates the value of a property by calculating the cost to build a new replica or substitute structure, subtracting depreciation, and adding the land value.

• Counter Offer: A new offer made in response to a previous offer, effectively rejecting the original offer and proposing new terms.

• Covenants, Conditions, and Restrictions (CC&Rs): A set of rules and limitations governing the use and architectural style of properties within a common interest development, typically enforced by a homeowners’ association.

• Crawl Space: The area between the ground and the first floor of a building, typically providing access for maintenance of utilities. FHA regulations require a minimum height of 18 inches.

• Curable Depreciation: A type of physical deterioration or functional obsolescence that can be economically corrected or repaired, meaning the cost of repair is less than the increase in property value.

• Deficiency Judgment: A court order allowing a lender to collect the remaining balance of a loan from a borrower after the proceeds from a foreclosure sale are insufficient to cover the debt.

• Definite and Certain (Offer): An offer that is clear, precise, and unambiguous in its terms, leaving no room for misunderstanding regarding the proposed agreement.

• Definite Termination Date: A specific date on which an exclusive listing agreement expires, a requirement under California real estate law to protect sellers.

• Demand (DUST): The desire or need for a property backed by the financial ability to purchase it, one of the four economic factors influencing value.

• Department of Fair Employment and Housing (DFEH): A California state agency responsible for enforcing fair housing and employment laws, investigating discrimination complaints.

• Department of Real Estate (DRE): The California state agency responsible for licensing and regulating real estate brokers and salespersons, and enforcing real estate law.

• Depreciation (Appraisal): A loss in property value from any cause, categorized into physical deterioration, functional obsolescence, and economic/social obsolescence.

• Depreciation (Tax): An income tax deduction that allows property owners (excluding land) to recover the cost of an income-producing asset over its useful life.

• Desist and Refrain Order: An order issued by the DRE Commissioner requiring a subdivider or developer to stop illegal or unauthorized sales or activities related to a subdivision.

• Devisee: A person who receives real property through a will.

• Direct Ownership: Direct ownership of a property, where the individual holds title in their own name.

• Directional Growth: The pattern of urban development or expansion, which can influence property values in areas experiencing growth.

• Discharge of Salesperson: The termination of a salesperson’s employment by a broker. The broker must notify the DRE Commissioner in writing if the termination is due to a violation of real estate law.

• Discount Points (Buy Down Points): Fees paid to a lender at closing to “buy down” the interest rate on a loan, resulting in a lower monthly payment for the borrower.

• Discrimination: Unfair treatment or denial of rights based on protected characteristics (e.g., race, religion, gender, disability).

• Disclosure Responsibilities (Brokers & Sellers): Legal obligations for real estate brokers and sellers to reveal all known material facts about a property to potential buyers.

• Distintegration: The third stage in the Principle of Change, characterized by decline or decay in property value and condition.

• Dominant Tenement: The property that benefits from an easement over another property (the servient tenement).

• Downzoning: The process of changing a property’s zoning classification to a more restrictive use (e.g., from commercial to residential), which can impact property value.

• Dual Agency: A situation where a single real estate agent or broker represents both the buyer and the seller in the same transaction. Requires full disclosure and consent from all parties.

• Duress: Unlawful force or constraint exerted upon a person to compel them to do something against their will, rendering a contract voidable.

• Dummy Buyer: An individual used in a fraudulent scheme (e.g., secret profit) to conceal the true buyer or the agent’s interest in a transaction.

• Earthquake Fault Zone (Alquist-Priolo): Geographically defined areas where active earthquake faults are located, requiring specific disclosures in real estate transactions.

• Easement: A non-possessory right to use another’s land for a specific purpose (e.g., for access, utilities), with definite limits.

• Easement by Necessity: An easement created by court order when a property is landlocked, and access is essential for its use and enjoyment.

• Easement by Prescription: An easement acquired through continuous, open, notorious, and non-permissive use of another’s property for a statutory period (typically five years in California).

• Easement in Gross: An easement that benefits a specific person or entity (e.g., a utility company) rather than a particular parcel of land.

• Economic Forces (Value): External factors influencing property value, such as population changes, employment rates, and purchasing power.

• Economic Rent: The market rent that a property could command if it were available for lease, which may differ from the contract rent.

• Electronic Signature (Docusign): A legal method of signing documents electronically, which requires the consent of all parties to be valid and enforceable under the Uniform Electronic Transactions Act (UETA).

• Eminent Domain: The power of the government to take private property for public use, provided that just compensation is paid to the owner.

• Encumbrance: A burden or claim on a property that affects its title or value, such as a lien, easement, or restriction.

• Equilibrium (Static Stage): The second stage in the Principle of Change, where property values and development are stable and in balance.

• Escheat: The process by which property reverts to the state when an individual dies without a will (intestate) and has no legal heirs.

• Escrow: A neutral third party that holds funds and documents related to a real estate transaction until all conditions of the agreement are met.

• Escrow Agent/Officer: A neutral third party (an individual or corporation licensed by the Department of Corporations) who handles the closing of real estate transactions.

• Estate for Years: A leasehold estate that has a definite beginning and end date, regardless of the actual length of the term.

• Estate in Remainder: A future interest in real property held by a third party who will inherit the property upon the termination of a preceding life estate.

• Estate in Reversion: A future interest in real property that reverts to the original grantor (or their heirs) upon the termination of a preceding life estate.

• Estate at Sufferance: A leasehold estate where a tenant (holdover tenant) remains in possession of the property after the lease has expired without the landlord’s consent.

• Estate at Will (Tenancy at Will): A leasehold estate that can be terminated by either the landlord or the tenant at any time, typically with proper notice, and often without a specified term or rent.

• Estoppel: A legal principle that prevents a person from asserting something contrary to what they have previously stated or implied by their actions, which another person has relied upon.

• Eviction: The legal process of removing a tenant from a rental property.

• Executed Contract: A contract in which all parties have fully performed their obligations and all terms and conditions have been satisfied.

• Execution Sale: A forced sale of property by court order to satisfy a judgment (e.g., from an unpaid debt).

• Executor/Executrix: A person (male/female) named in a will to carry out the instructions of the deceased and manage the estate.

• Executory Contract: A contract in which one or both parties still have obligations to perform; it is not yet fully executed.

• Exclusive Agency Listing: A listing agreement where the seller reserves the right to sell the property themselves without owing a commission to the agent, but the agent receives a commission if they or any other agent finds a buyer.

• Exclusive Right to Sell Listing: The most common and most preferred type of listing agreement, granting the agent the exclusive right to a commission regardless of who sells the property during the listing period.

• Express Contract: A contract in which the terms and intentions of the parties are explicitly stated, either verbally or in writing.

• Extinction of Subject: A condition for terminating an agency relationship where the subject matter of the agency (e.g., the property) is destroyed or ceases to exist.

• FHA Loan (Federal Housing Administration): A government-insured loan program that allows borrowers with lower credit scores and smaller down payments (e.g., 3.5%) to qualify for mortgages. FHA only insures the loan, banks originate them.

• Fair Housing Act (Federal): Federal legislation (Title VIII of the Civil Rights Act of 1968, also known as the Federal Fair Housing Act) prohibiting discrimination in the sale, rental, and financing of housing based on protected classes.

• False Advertising: Misleading or untrue statements in advertisements, often concerning a licensee’s qualifications, services, or property features, which is a violation of real estate law.

• Fannie Mae (FNMA – Federal National Mortgage Association): A government-sponsored enterprise (GSE) that provides liquidity to the mortgage market by purchasing FHA-insured and VA-guaranteed loans from lenders in the secondary market.

• Federal Home Loan Mortgage Corporation (Freddie Mac): A government-sponsored enterprise (GSE) that provides liquidity to the mortgage market by purchasing conventional (non-government-insured) residential loans from lenders in the secondary market.

• Federal Reserve System (FED): The central banking system of the United States, responsible for conducting monetary policy, regulating banks, and maintaining financial stability. Controls interest rates and money supply through various methods.

• Fee Simple Absolute: The highest and most complete form of ownership in real property, providing the owner with absolute rights to the property, freely transferable and inheritable, with no conditions or limitations.

• Fee Simple Defeasible: A type of Fee Simple estate where ownership is subject to a condition. If the condition is violated, the property may revert to the grantor or a designated third party.

• Final Map: A detailed map required for subdivisions of five or more parcels, indicating the exact boundaries, public improvements, and survey data. Must be approved and recorded.

• Finance Charge: The total cost of borrowing money, including interest, loan points, fees, and other charges.

• Financing Terms (Appraisal): The specific conditions and arrangements of a property’s financing, which appraisers adjust for when comparing properties in the sales comparison approach.

• First to Record, First in Right: A legal principle stating that among conflicting claims to title, the claim that is recorded first in the public records typically takes precedence.

• Fixtures: Items of personal property that have become permanently attached to real property and are, therefore, considered part of the real estate (e.g., built-in appliances, light fixtures). Determined by MARIA (Manner of Attachment, Adaptability, Relationship of Parties, Intention, Agreement).

• Flood Hazard Zone: Areas identified by federal agencies as having a high risk of flooding, requiring specific disclosures and flood insurance for properties within these zones.

• Footing: The lowest, widest part of a foundation, typically made of concrete, that supports the entire structure and distributes its weight over a larger area of soil.

• Forgery: The fraudulent making or altering of a written document, such as a deed, with the intent to deceive or defraud. A forged deed is void.

• Formaldehyde: A colorless, pungent gas often found in building materials and household products, considered an environmental hazard that requires disclosure.

• Fraud (Actual Fraud): An intentional misrepresentation or concealment of a material fact made to induce another to act to their detriment, rendering a contract voidable.

• Freddie Mac (FHLMC): A government-sponsored enterprise (GSE) that provides liquidity to the mortgage market by purchasing conventional (non-government-insured) residential loans from lenders in the secondary market.

• Freehold Estate: An estate in real property that is of indefinite duration, indicating ownership (e.g., Fee Simple, Life Estate).

• Front Footage: The width of a property that borders a street or other public way.

• Front Setback: The required distance between the front property line and the front of a building, as mandated by local zoning ordinances.

• Fully Amortized Loan: A loan structured so that regular payments (principal and interest) completely pay off the debt by the end of the loan term, with no balloon payment.

• Functional Obsolescence: A loss in property value due to outdated design, poor layout, or inefficient features within the property itself, making it less desirable to modern buyers.

• General Disclosure (Agency): The initial phase of agency disclosure, providing a written statement to all parties explaining the different types of agency relationships and their implications.

• General Lien: A lien that attaches to all real and personal property owned by the debtor, such as an income tax lien or a judgment lien.

• General Plan: A comprehensive, long-term plan adopted by local governments (cities and counties) to guide future growth and development within their jurisdiction, including land use, housing, and transportation.

• General Partnership: A business structure where two or more individuals agree to share in all assets, profits, and liabilities of a business.

• Grandfather Clause: A provision in a new law or regulation that allows existing non-conforming uses or structures to continue, even if they do not meet current standards, as long as they were legal when established.

• Grant Deed: A legal document used to transfer title to real property, containing two implied warranties: that the grantor has not previously conveyed the property to another and that the property is free from undisclosed encumbrances created by the grantor.

• Grantee: The party who receives title to real property in a deed.

• Grantor: The party who conveys title to real property in a deed.

• Gross Lease: A lease agreement where the tenant pays a fixed rent, and the landlord is responsible for paying all property expenses (e.g., taxes, insurance, maintenance). Commonly used for residential leases.

• Gross Rent Multiplier (GRM): A simple appraisal method used for income-producing residential properties, calculated by dividing the property’s sales price by its gross annual rental income.

• Habitability: The legal requirement that a rental property be fit for human occupation, safe, and free from conditions that endanger the tenant’s health or safety (e.g., leaky roof, no hot water, mold).

• Hazard Insurance (Property Insurance): Insurance that protects a property owner against financial losses from specified hazards, such as fire, storms, or other natural disasters.

• Highest and Best Use: The reasonably probable use of property that results in its highest value, considering legal, physical, and financial factors. Appraisers analyze this to determine optimal property use.

• Hip Roof: A type of roof that slopes upward from all four sides to meet at a ridge or a peak, without vertical ends.

• Holographic Will: A will written entirely in the testator’s own handwriting and signed by the testator, which does not require witnesses to be valid.

• Homestead: A legal declaration that protects a portion of a homeowner’s equity in their primary residence from forced sale to satisfy certain unsecured debts.

• HUD (U.S. Department of Housing and Urban Development): A federal agency responsible for national housing policy and programs, including enforcing fair housing laws.

• Illegal Contract: A contract whose purpose or terms violate the law, making it unenforceable.

• Implied Contract: A contract formed by the actions, conduct, or circumstances of the parties, rather than by express words or written agreement.

• Impounds (Escrow Account): Funds collected by a lender (typically from a borrower’s monthly mortgage payment) and held in an escrow account to pay for property taxes, homeowner’s insurance, and sometimes mortgage insurance.

• Income Approach (Income Capitalization): An appraisal method that estimates the value of income-producing property based on its expected future income stream, by converting that income into a present value.

• Income Characteristics (Appraisal): Factors related to a property’s income potential, such as rent amounts, tenant credit quality, and lease terms, which appraisers consider when valuing income properties.

• Increasing and Decreasing Returns, Principle of: An economic principle stating that adding successive increments of capital and labor to a fixed amount of land will eventually lead to diminishing returns.

• Inducement to Panic Selling (Blockbusting): An illegal and discriminatory practice where real estate agents create fear in a neighborhood about declining property values due to the entry of minority groups, to encourage residents to sell their homes quickly and cheaply.

• Indirect Ownership: An ownership interest that is not direct, such as holding shares in a corporation that owns real estate.

• Individual Broker’s License: A real estate broker’s license held by a single person, allowing them to operate independently and establish their own office, even in their residence.

• Inheritance: The act of receiving property from a deceased person, usually through a will or by law of succession. Inherited property often receives a “stepped-up basis” for tax purposes.

• Insulation (R-Value): Materials used in building construction to reduce heat transfer. R-value is a rating system indicating the material’s resistance to heat flow; a higher R-value means better insulation.

• Integration (Development Stage): The first stage in the Principle of Change, characterized by development and growth in property value.

• Intention of Parties (Fixture): One of the criteria (MARIA) used to determine if an item is a fixture: what the original installer intended when attaching the item to the real estate.

• Interim Loan (Construction Financing): A short-term loan used to finance construction, later replaced by a long-term “take-out” loan.

• Interim Occupancy Agreement: A temporary agreement allowing a buyer to take possession of a property before the close of escrow, or a seller to remain in possession after closing.

• Interstate Land Sales Full Disclosure Act: A federal law designed to protect consumers from fraud in the sale or lease of undeveloped land, particularly across state lines. Requires developers of large subdivisions (25 or more lots) to provide a “Property Report” to buyers and offers a 7-day right of rescission.

• Intestate: The condition of dying without a valid will.

• Involuntary Lien: A lien placed on property without the owner’s consent, such as a property tax lien, mechanic’s lien, or judgment lien.

• Joint Tenancy: A form of co-ownership where two or more individuals own property with the “four unities” (Time, Title, Interest, Possession – TTIP) and the “right of survivorship” (the deceased’s interest passes automatically to the survivors without probate).

• Jones v. Mayer: A landmark U.S. Supreme Court case (1968) that prohibited all racial discrimination in the sale or rental of property, regardless of whether federal or state fair housing laws applied.

• Judgment Lien: A general lien placed on the property of a debtor as a result of a court judgment, typically valid for 10 years.

• Junior Trust Deed/Mortgage: A trust deed or mortgage that is subordinate to another trust deed or mortgage on the same property; it is not in the first lien position.

• Kickbacks: Illegal payments or gifts given as a reward for making a referral, particularly prohibited under RESPA when services are not performed.

• Land Descriptions: Methods used to identify and locate a parcel of real estate, including Metes and Bounds, U.S. Government Survey System, and Lot and Block System.

• Land Value Estimate: An appraisal step that estimates the value of the land as if it were vacant and available for its highest and best use, often using the sales comparison approach.

• Landslide Inventory Report: A disclosure report indicating if a property is located in an area identified as having a risk of landslides.

• Lapse of Time (Offer): The termination of an offer if it is not accepted within a specified time period or, if no time is specified, within a reasonable time.

• Lawful Object: A required element of a valid contract, meaning the purpose and terms of the agreement must be legal and not against public policy.

• Lead-Based Paint Hazards: The presence of lead-based paint in properties built before 1978, which requires specific disclosures to potential buyers or tenants due to health risks.

• Lease: A contract that transfers the right of possession and use of real property for a specified period in exchange for rent. In California, it is generally considered personal property (chattel real).

• Leasehold Estate: An estate in real property that grants the right of possession for a limited period, typically a tenancy.

• Legal Description: A precise and legally acceptable description of a parcel of real estate that identifies it uniquely from all other properties (e.g., metes and bounds, lot and block number).

• Lessee (Tenant): The party who leases a property (the tenant).

• Lessor (Landlord): The party who grants a lease (the landlord).

• Lien (Money Encumbrance): A financial claim or charge against a property that provides security for a debt or obligation, allowing the lienholder to force the sale of the property to satisfy the debt.

• Life Estate: A freehold estate where ownership (possession and use) is limited to the duration of a specific person’s life, typically the life of the life tenant or another designated individual.

• Like Properties (Like-for-Like Exchange / 1031 Exchange): Real estate properties that are of the same nature, character, or class, allowing for a tax-deferred exchange under Section 1031 of the IRS Code.

• Limited Partnership: A partnership structure with both general partners (who manage the business and have unlimited liability) and limited partners (who are passive investors with limited liability).

• Liquidated Damages: An amount agreed upon in advance by the parties to a contract to be paid as compensation if one party defaults or breaches the contract. In real estate, often refers to the buyer’s earnest money deposit as a remedy for seller if buyer defaults.

• Lis Pendens (Notice of Pending Action): A recorded notice indicating that a lawsuit affecting title to real property is pending. It creates a “cloud on title” and warns potential buyers that the property is subject to litigation.

• Listing: A contract between a property owner (principal) and a real estate broker (agent) authorizing the broker to find a buyer or tenant for the property.

• Listing Agent (Seller’s Agent): The real estate agent who represents the seller in a real estate transaction and is responsible for listing the property.

• Littoral Right: The right of a property owner whose land borders a lake, sea, or ocean to use the water, typically limited to reasonable use and without altering its flow or level.

• Loan Priority: The order in which liens on a property are paid in the event of foreclosure, generally determined by the date and time the lien was recorded.

• Lock-in Clause: A provision in a loan agreement that prohibits the borrower from paying off the loan early, even with a prepayment penalty, typically found in commercial loans with specific return expectations for the lender.

• Location (Appraisal): The geographical position of a property, a fundamental and critical factor in determining its value. Appraisers make adjustments for differences in location when using the sales comparison approach.

• Manner of Attachment/Annexation (Fixture): One of the MARIA criteria for determining a fixture, referring to how permanently an item is attached to the real estate.

• Market Conditions (Appraisal): The state of the real estate market at a given time, including supply, demand, and economic trends. Appraisers adjust for changes in market conditions over time when using comparable sales.

• Market Value: The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, with a willing buyer and a willing seller, neither acting under undue pressure.

• Mechanic’s Lien: A specific lien created by state law that gives contractors, subcontractors, and material suppliers a claim against real property for labor and materials furnished for its improvement. Its priority often dates back to the commencement of work.

• Mello-Roos Bonds: Special assessment bonds issued by local government entities in California to finance public improvements (e.g., schools, parks, infrastructure) in new communities. Property owners in these districts pay a special tax (assessment) to repay the bonds.

• Menace: A threat or show of force that makes a person fear for their physical safety, potentially voiding a contract if used to induce agreement.

• Merger (Easement): The termination of an easement when the dominant and servient tenements (the properties involved in the easement) come under common ownership.

• Meridian Line: An imaginary north-south line used as a reference in the U.S. government survey system for land descriptions.

• Military Ordnance (Disclosure): Disclosure requirement for properties located within one mile of a military base or former military ordnance (explosives) site, due to potential hazards.

• Misrepresentation: A false statement or concealment of a material fact that induces another party to enter into a contract. Can be innocent, negligent, or fraudulent.

• Mobilehomes: Factory-built homes designed to be transported. Real estate licenses allow the sale of mobilehomes if they are located in a mobilehome park.

• Mold: A type of fungus that can grow in damp environments, considered an environmental hazard that requires disclosure.

• Monument: A natural or artificial fixed object used as a boundary marker in metes and bounds land descriptions.

• Mortgage: A legal document that pledges real property as security for a debt. In California, “deed of trust” is more commonly used.

• Mortgagee: The lender in a mortgage arrangement.

• Mortgagor: The borrower in a mortgage arrangement.

• Multiple Listing Service (MLS): A cooperative information network of real estate brokers that provides a comprehensive database of properties for sale, facilitating cooperation and compensation among agents.

• Mutual Agreement (Contract): An essential element of a valid contract, meaning both parties genuinely consent to the terms and have a “meeting of the minds.”

• National Association of REALTORS® (NAR): The largest trade association in the United States for real estate professionals. Only members can use the trademarked term “REALTOR®.”

• Necessity (Easement by): An easement created by court order when a property is landlocked and requires access over an adjacent parcel.

• Negotiable Instrument: A written promise or order to pay a specific sum of money, transferable from one person to another (e.g., checks, promissory notes).

• Net Listing: A listing agreement where the seller specifies a net amount they want to receive from the sale, and the agent’s commission is any amount above that net price. Legal in California but requires full disclosure.

• Net Operating Income (NOI): A property’s income after all operating expenses (excluding debt service and income taxes) have been deducted. A key metric in the income approach to appraisal.

• Non-Freehold Estate (Leasehold Estate): An estate in real property that grants possession for a limited period, without ownership.

• Non-Money Encumbrance: A burden on a property that is not a financial claim, such as an easement, restriction, or encroachment.

• Notice of Completion: A document recorded by a property owner to establish the completion date of a construction project, which shortens the time frame for mechanics’ liens to be filed.

• Notice of Default: A recorded notice indicating that a borrower has failed to make required payments on a mortgage or trust deed, initiating the foreclosure process.

• Notice of Non-Responsibility: A recorded and posted notice by a property owner stating that they will not be responsible for work done or materials supplied to the property by a tenant or other party, protecting the owner from mechanics’ liens.

• Novation: The substitution of a new contract or party for an old one, with the mutual consent of all parties involved, effectively extinguishing the original obligation.

• Obsolescence: A loss in property value due to outdated design (functional obsolescence) or external factors (economic obsolescence).

• Occupancy (Adverse Possession): The continuous and uninterrupted possession of another’s land for a statutory period (5 years in California) under specific conditions, which can lead to a claim of ownership through adverse possession.

• Open Listing: A non-exclusive listing agreement that allows the seller to hire multiple agents, and only the agent who procures the buyer (the “procuring cause”) earns a commission. The seller can also sell the property themselves without owing a commission.

• Operative Words (“Grant”): Specific words in a deed, such as “grant,” that clearly express the grantor’s intention to transfer title to the grantee.

• Option: A contract that gives one party (the optionee) the exclusive right, for a specified period and consideration, to buy, lease, or sell a property at a predetermined price and terms. The optionor (seller) is obligated to sell if the option is exercised, but the optionee is not obligated to buy.

• Optionee: The party who receives and holds the right to exercise an option (e.g., a buyer who has the option to purchase).

• Optionor: The party who grants the option (e.g., a seller who grants a buyer the option to purchase).

• Or More Clause: A clause in a loan agreement that allows the borrower to make payments larger than the minimum required, without penalty, to pay down the principal faster.

• Origination Fee: A fee charged by a lender for processing a loan application, often expressed as a percentage of the loan amount (points).

• Owner-Occupied Residential Property: A property that serves as the primary residence of the owner.

• Ownership Disclosure (Agent): The requirement for a real estate agent to disclose to all parties if they have a direct or indirect ownership interest in the property being transacted.

• Parcel Map: A map prepared for subdivisions of four or fewer parcels, showing parcel boundaries and other survey data.

• Partially Amortized Loan: A loan where the payments are not sufficient to fully amortize the loan over its term, resulting in a larger balloon payment at the end.

• Partition Action: A legal proceeding to divide co-owned property among the co-owners, either physically dividing the land or selling it and distributing the proceeds.

• Percentage Lease: A lease agreement where the rent is based on a percentage of the tenant’s gross sales or profits, often with a minimum base rent, common in retail properties.

• Periodic Tenancy (Estate from Period to Period): A leasehold estate that automatically renews for successive periods (e.g., month-to-month) until proper notice of termination is given by either party.

• Personal Property: Movable items not permanently attached to real estate, such as furniture, appliances (not built-in), or vehicles.

• Physical Characteristics (Appraisal): Features of a property such as size, age, condition, architectural style, and number of rooms, which appraisers adjust for in the sales comparison approach.

• Physical Deterioration: A loss in property value due to wear and tear, age, lack of maintenance, or damage from elements (e.g., dry rot, termites).

• Planned Unit Development (PUD): A type of subdivision where individually owned lots are combined with common areas and facilities managed by a homeowners’ association, allowing for greater flexibility in design and land use.

• Planning Commission: A local government body responsible for advising the city council or board of supervisors on land use matters, including zoning changes and subdivision approvals.

• Plottage: The increase in value achieved by combining two or more adjacent parcels of land into a single, larger parcel, where the combined value is greater than the sum of the individual parcel values.

• Points (Loan Fees): Fees charged by lenders, typically 1% of the loan amount per point, either as an origination fee or discount points to lower the interest rate.

• Police Power: The inherent right of the government to regulate private property for the public’s health, safety, morals, and general welfare (e.g., zoning laws, building codes).

• Political and Government Forces (Value): External factors influencing property value, such as government policies, legislation (e.g., rent control), and environmental regulations.

• Prepaid Rental Listing Service (PRLS) License: A special license in California required for individuals or companies that charge a fee to prospective tenants for lists of available rental properties.

• Preliminary Analysis (Appraisal): The initial step in the appraisal process, involving gathering general data (social, economic, governmental, environmental) and specific data (property details) to define the appraisal problem.

• Preliminary Public Report (Pink Report): An initial report issued by the DRE for subdivisions of five or more units, allowing developers to take reservations and deposits but not to enter into binding purchase agreements. Printed on pink paper.

• Prepayment Penalty: A fee charged by a lender if a borrower pays off a loan before its scheduled maturity date.

• Primary Residence (Personal Residence): The main home where a person lives, which qualifies for certain tax benefits, such as capital gains exclusion.

• Principal (Agent): The client in an agency relationship who hires the agent to represent their interests.

• Principle of Change: An appraisal principle stating that all properties are in a constant state of change (development, equilibrium, decline) and that property value is always evolving.

• Principle of Contribution: An appraisal principle stating that the value of an improvement (or a component of a property) is measured by how much it adds to the overall value of the property, not by its cost.

• Principle of Highest and Best Use: An appraisal principle stating that the highest and best use of a property is the reasonably probable use that results in its highest value, considering legal, physical, and financial factors.

• Principle of Increasing and Decreasing Returns: An appraisal principle stating that as additions are made to a property, the value eventually reaches a point where additional investments no longer produce a proportionate increase in value.

• Principle of Progression: An appraisal principle stating that the value of a lower-priced property can be enhanced by its proximity to higher-priced properties in the same area.

• Principle of Regression: An appraisal principle stating that the value of a higher-priced property can be negatively affected by the proximity of lower-priced properties in the same area.

• Principle of Substitution: An appraisal principle stating that a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property.

• Principle of Supply and Demand: An economic principle that states property values are influenced by the interaction of the availability of properties (supply) and the desire and ability of buyers to purchase them (demand).

• Private Mortgage Insurance (PMI): Insurance required by lenders for conventional loans when the borrower’s down payment is less than 20% of the home’s purchase price, protecting the lender against default.

• Private Restrictions (CC&Rs): Limitations on property use imposed by private agreements, typically through covenants, conditions, and restrictions (CC&Rs), often found in common interest developments.

• Probate: The legal process of proving the validity of a will and administering the estate of a deceased person, distributing assets to heirs or beneficiaries.

• Probate Sale: The court-supervised sale of real property that is part of a deceased person’s estate undergoing probate. Such sales may have specific requirements, including court confirmation.

• Procuring Cause: The effort that brings about the desired result in a real estate transaction (e.g., finding a ready, willing, and able buyer), entitling the agent to a commission in an open listing.

• Promissory Note: A written promise to pay a specified sum of money on demand or at a definite time, serving as evidence of a debt.

• Property Residual Process: Another name for the income capitalization approach, which values income-producing properties based on their net operating income and a capitalization rate.

• Proration: The division of expenses or income (such as property taxes, insurance, or rent) between the buyer and seller in a real estate transaction, based on their respective periods of ownership.

• Public Report (Subdivision): A report issued by the DRE for subdivisions of five or more units, providing essential information to potential buyers about the development.

• Public Restrictions (Zoning Law): Limitations on property use imposed by government bodies through laws such as zoning ordinances, building codes, and environmental regulations.

• Qualified Endorsement: An endorsement on a negotiable instrument that limits the endorser’s liability, often by adding “without recourse.”

• Quantity, Quality, Durability (Income): Factors used in the income approach to appraisal to assess the reliability and sustainability of a property’s income stream. Quantity refers to the rent amount, quality to the tenant’s credit, and durability to the lease term.

• Quiet Enjoyment and Possession: A tenant’s right to occupy and use a leased property without interference from the landlord or others.

• Quiet Title Action: A legal proceeding brought in court to establish a party’s title to real property and to remove any “clouds” or conflicting claims on that title.

• Quitclaim Deed: A legal document that transfers any interest or title the grantor may have in a property to the grantee, but without any warranties or guarantees of ownership. Often used to clear clouds on title.

• R-Value: A rating system used to measure the thermal resistance of insulation materials. A higher R-value indicates greater insulating effectiveness.

• Radon: A naturally occurring radioactive gas that can seep into homes from the ground, considered an environmental hazard that requires disclosure.

• Rafter: A sloping structural member of a roof frame that supports the roof covering and transmits the load to the bearing walls or beams.

• Ratification: The subsequent approval or adoption of an unauthorized act performed by an agent, making the act binding on the principal as if it had been authorized from the beginning.

• Real Estate Law (Licensing Law): The body of laws and regulations governing real estate professionals and transactions in California, primarily enforced by the Department of Real Estate.

• Real Estate Recovery Account (Fund): A state-managed fund in California that compensates members of the public who have suffered financial losses due to the fraudulent or dishonest acts of a licensed real estate agent, up to statutory limits ($50,000 per transaction, $250,000 lifetime maximum per licensee).

• Real Estate Sales Contract (Installment Sales Contract/Land Contract): A contract for the sale of real property where the buyer makes payments to the seller over time, and the seller retains legal title until the full purchase price is paid. The buyer holds “equitable title.”

• Real Property: Land and anything permanently attached to it, including fixtures, improvements, and appurtenances.

• Real Property Law: The body of law that governs the ownership, transfer, and use of real property.

• REALTOR®: A registered trademark term identifying a real estate professional who is a member of the National Association of REALTORS®.

• Recording (Deed): The act of filing a document, such as a deed, in the public records (e.g., county recorder’s office) to give constructive notice of its existence and protect property interests.

• Reconciliation (Appraisal): The final step in the appraisal process where the appraiser reviews and weighs the results from the different appraisal approaches to arrive at a final opinion of value. It is not an averaging process.

• Reconciliation (Trust Account): The process of regularly comparing and adjusting a broker’s trust account records with bank statements to ensure accuracy and account for all funds. Required at least monthly by DRE.

• Redlining: An illegal and discriminatory practice where lenders or insurance companies refuse to offer services to certain neighborhoods or areas, often based on the racial or ethnic composition of the residents.

• Rehabilitation: The restoration of a property to a satisfactory condition without changing its original architectural style or plan, often involving repairs and upgrades.

• Rejection (Offer): The refusal of an offeree to accept an offer, which terminates the original offer.

• Relationship of Parties (Fixture): One of the MARIA criteria for determining a fixture, considering the relationship between the parties (e.g., buyer-seller, landlord-tenant), with courts often favoring buyers and tenants.

• Release Clause: A provision in a blanket mortgage or trust deed that allows individual parcels of land to be released from the lien upon payment of a specified amount, enabling developers to sell lots separately.

• Renouncement (Agency): The act of an agent voluntarily terminating the agency relationship with the principal.

• Replacement Cost: The cost to construct a new building that has the same utility and functionality as an existing building, using modern materials and construction techniques, but not necessarily an exact replica.

• Reproduction Cost: The cost to construct an exact replica of an existing building using identical materials, design, and construction methods at current prices.

• RESPA (Real Estate Settlement Procedures Act): A federal law designed to protect consumers by requiring disclosures about closing costs and prohibiting certain practices, like kickbacks and referral fees, in residential real estate transactions (1-4 units).

• Restricted License: A real estate license issued with specific limitations or conditions imposed by the DRE Commissioner, often as a disciplinary measure, restricting certain activities.

• Restrictive Endorsement: An endorsement on a negotiable instrument that limits its further negotiation, such as “for deposit only.”

• Revocation (Agency): The act of a principal terminating the agency relationship with their agent.

• Revoked License: The permanent withdrawal or cancellation of a real estate license by the DRE Commissioner, typically for serious violations of real estate law.

• Right of Redemption (Mortgage): The right of a defaulting borrower to reclaim their property after a foreclosure sale by paying the full amount of the debt, interest, and costs within a specified period. Not available in California’s trustee’s sales.

• Right of Survivorship (Joint Tenancy): The characteristic of joint tenancy where, upon the death of one joint tenant, their interest automatically passes to the surviving joint tenant(s), avoiding probate.

• Riparian Right: The right of a landowner whose property borders a natural watercourse (e.g., a river or stream) to use the water for reasonable purposes.

• Roof Styles (Hip): Various designs for property roofs, with a “hip” roof being one that slopes upward from all sides to a ridge or peak.

• R-Value: A rating system used to measure the thermal resistance of insulation materials. A higher R-value indicates greater insulating effectiveness.

• Safety Clause (Protection Clause): A provision in a listing agreement that protects the agent’s commission if the property is sold to a buyer introduced by the agent during the listing period, even if the sale occurs after the listing expires, provided the buyer appears on a submitted list of prospects.

• Sales Comparison Approach (Market Data Approach): An appraisal method that estimates property value by comparing it to similar properties (comparables) that have recently sold in the same market, making adjustments for differences.

• Salesperson License: A real estate license that allows an individual to perform real estate activities but only under the direct supervision and employment of a licensed real estate broker.

• Scarcity (DUST): The limited availability of a particular type of property, which can increase its value (one of the four economic factors influencing value).

• Secret Profit: An undisclosed and unauthorized profit made by an agent in a real estate transaction, which is a violation of their fiduciary duty to the principal.

• Secondary Money Market: The market where existing mortgage loans and mortgage-backed securities are bought and sold, providing liquidity to primary lenders (e.g., Fannie Mae, Freddie Mac).

• Section (U.S. Government Survey): A square parcel of land, one mile by one mile (640 acres), used in the U.S. Government Survey System for land description.

• Security Deposits: Funds required by landlords from tenants at the beginning of a lease to cover potential damages, unpaid rent, or cleaning. California law limits the amount.

• Security Instrument: A document that pledges real property as collateral for a loan (e.g., a mortgage or deed of trust).

• Servient Tenement: The property that is burdened by an easement for the benefit of another property (the dominant tenement).

• Severalty (Sole Ownership): Ownership of property by one person or one legal entity only, completely separate from others.

• Short Sale: The sale of a property for less than the outstanding mortgage balance, where the lender agrees to accept the reduced payoff to avoid foreclosure.

• Side Yard Setback: The required distance between the side property line and the side of a building, as mandated by local zoning ordinances.

• Sole Ownership (Severalty): Ownership of property by one person or one legal entity only, completely separate from others.

• Special Assessments: Additional taxes or charges levied against specific properties to pay for local improvements that benefit those properties (e.g., street lights, sidewalks).

• Special Endorsement: An endorsement on a negotiable instrument that specifies the person to whom or to whose order it is payable (e.g., “Pay to the order of John Doe”).

• Specific Disclosure (Agency): The phase of agency disclosure where the agent explicitly states which party (buyer, seller, or both) they represent in a particular real estate transaction.

• Specific Lien: A lien that attaches only to a specific parcel of real property, such as a property tax lien, mortgage, or mechanic’s lien.

• Specific Performance: A legal remedy that compels a breaching party to fulfill the terms of a contract, rather than merely paying monetary damages. Often sought in real estate purchase agreements.

• Square Foot Method (Appraisal): A cost approach appraisal method where the estimated cost to build a structure is calculated by multiplying the building’s square footage by a construction cost per square foot.

• State Housing Law: California state law that sets minimum construction and occupancy requirements for residential buildings, serving as a baseline for local building codes.

• State Subdivision Map Act: A California state law that grants local governments (cities and counties) control over the physical design, layout, and improvements of subdivisions.

• Statute of Frauds: A legal principle requiring certain types of contracts, including most real estate contracts, to be in writing to be legally enforceable.

• Statute of Limitations: A law that sets the maximum time period within which legal proceedings (e.g., lawsuits) must be initiated after an event, after which no legal action can be brought.

• Stepped-Up Basis: A tax benefit for inherited property where the cost basis of the property for the heir is reset to its fair market value at the time of the deceased’s death, potentially reducing capital gains tax.

• Stock Cooperative Project: A form of common interest development where a corporation owns the entire property, and residents own shares in the corporation, granting them a right to occupy a specific unit.

• Straight Note (Interest-Only Note): A promissory note where only interest payments are made periodically over the loan term, with the full principal amount due as a balloon payment at the end.

• Structural Pest Control Certification Reports (Termite Report): Reports prepared by licensed pest control operators detailing the presence of wood-destroying pests or organisms and recommending corrective measures. Disclosure is often required.

• Studs: Vertical framing members within the walls of a building that provide structural support.

• Subdivided Lands Act: A California state law that regulates the marketing and sale of subdivisions (five or more parcels) to protect consumers from fraud. Requires developers to obtain a Public Report from the DRE.

• Sublease: The transfer of only a partial interest in a leasehold estate from the original tenant (sublessor) to a new tenant (sublessee), with the original tenant remaining primarily liable to the landlord.

• Subordination Clause: A clause in a loan agreement that permits the lien of a mortgage or trust deed to take a lower priority than another lien that would otherwise be junior.

• Subrogation: The legal right of an insurer, after paying a claim, to step into the shoes of the insured and pursue any legal rights the insured had against a third party who caused the loss.

• Sufficiency of Consideration: The adequacy or fairness of the value exchanged between parties in a contract. While some consideration is required for a valid contract, the law generally does not require it to be “sufficient” in terms of market value, unless fraud or undue influence is present.

• Summary of all Pertinent Recorded Documents (Abstract of Title): A comprehensive list of all recorded legal documents affecting a property’s title.

• Suspended License: A temporary loss of a real estate license, often for a specified period, as a disciplinary measure by the DRE.

• Syndicate (Real Estate Syndicates): A group of investors who pool their capital to invest in real estate projects, often in forms like limited partnerships or real estate investment trusts.

• Take-Out Loan: A long-term loan that replaces a short-term construction (interim) loan once construction is complete.

• Tax Calendar: The annual schedule for property tax payments in California, with two installments due on specific dates (November 1st and February 1st, with grace periods).

• Tax-Free Gain (Primary Residence): A federal tax exclusion that allows homeowners to exclude a certain amount of profit from the sale of their primary residence ($250,000 for single filers, $500,000 for married couples) if they have occupied it for at least two of the past five years.

• Tax Sale (Tax-Defaulted Property): A forced sale of property by the county tax collector due to unpaid property taxes for a statutory period (typically five years in California).

• Tenancy at Will: A leasehold estate that can be terminated by either the landlord or the tenant at any time, typically with proper notice, and often without a specified term or rent.

• Tenancy in Common: A form of co-ownership where two or more individuals own property, but without the right of survivorship. Each owner can sell or will their interest independently. There is only unity of possession.

• Termination of Agency: The various ways an agency relationship can end, including mutual agreement, renouncement by the agent, revocation by the principal, expiration of the agreement, extinction of the subject matter, or death/incapacity of either party.

• Termination of Offer: The various ways an offer can be ended before acceptance, such as by lapse of time, revocation, rejection, or death/insanity of either party.

• Testator/Testatrix: A person (male/female) who makes a will.

• Thoroughfare Conditions: The traffic and accessibility characteristics of a street or road, which can significantly influence the value of commercial properties.

• Title Burdens (Encumbrances): Claims or charges against a property that affect its title or value, such as liens, easements, or restrictions.

• Title Insurance: A form of indemnity insurance that protects property owners and lenders against financial loss resulting from defects in the title to real property.

• Title Plants: Databases maintained by title insurance companies containing historical records of all recorded conveyances and encumbrances for properties in their service area.

• Title Protections: Measures taken to ensure the validity and security of property ownership, primarily through title insurance.

• Total Cost in Dollars (Finance Charge): The comprehensive sum of all costs associated with obtaining a loan, including interest, fees, and other charges.

• Trade Fixture: An item of personal property attached to leased premises by a tenant for use in their trade or business. These fixtures are generally considered personal property and can be removed by the tenant at the end of the lease.

• Transfer Disclosure Statement (TDS): A statutory disclosure form required in California for the sale of 1-4 unit residential properties, where the seller and agents disclose known material facts and defects about the property.

• Transferability (DUST): The ease with which a property’s ownership can be conveyed from one party to another, one of the four economic factors influencing value. A clear title enhances transferability.

• Trust Account (Trust Fund Account): A separate bank account maintained by a broker to hold funds belonging to clients or others, legally distinct from the broker’s personal or business funds.

• Trust Deed (Deed of Trust): A legal document used in California (and other states) to secure a loan with real property. It involves three parties: a borrower (trustor), a lender (beneficiary), and a neutral third party (trustee) who holds “naked title” until the loan is paid or foreclosed.

• Trustee (Trust Deed): The neutral third party in a deed of trust who holds “naked title” to the property as security for the lender. The trustee’s power is limited, mainly to initiating a trustee’s sale upon borrower default.

• Trustee’s Sale: A non-judicial foreclosure process in California where the trustee, at the request of the beneficiary (lender), sells the property to satisfy a defaulted loan secured by a deed of trust.

• Trust Funds: Money or things of value received by a broker or salesperson on behalf of their principal or any other person, not belonging to the broker but held for the benefit of others.

• Trustor (Trust Deed): The borrower in a trust deed arrangement, who grants the property as security for the loan.

• Truth in Lending Act (Regulation Z): A federal law designed to protect consumers by requiring lenders to disclose the true cost of credit in consumer loan transactions, including the Annual Percentage Rate (APR).

• Undelivered Deed: A deed that, though signed, has not been legally conveyed to the grantee, rendering the transfer of title ineffective.

• Undue Influence: Taking unfair advantage of another person’s weakness or distress to influence them into entering a contract, potentially making the contract voidable. Often involves a relationship of trust.

• Unearned Increment: An increase in property value due to external factors (e.g., population growth, general prosperity) rather than the owner’s efforts or investment.

• Unenforceable Contract: A contract that, despite being valid, cannot be legally compelled or enforced in a court of law due to some legal impediment (e.g., it violates the Statute of Frauds).

• Uniform Electronic Transactions Act (UETA): A law that provides a legal framework for the use of electronic signatures and electronic records, ensuring their legal validity if all parties consent.

• Unilateral Contract: A contract in which one party makes a promise in exchange for a specific act from another party, who is not obligated to perform the act but earns the promise if they do.

• Unruh Civil Rights Act: A California state law that prohibits discrimination in all business establishments, including housing and public accommodations, based on protected characteristics.

• Unsecured Debts: Debts that are not backed by any collateral, such as credit card debt.

• Utilities (Plural): Essential services provided to a property, such as gas, water, electricity, sewer, and telephone.

• Utility (DUST): The capacity of a property to satisfy human needs or desires, or its usefulness, one of the four economic factors influencing value.

• VA Loan (Department of Veterans Affairs): A government-guaranteed loan program for eligible veterans, offering benefits such as no down payment. VA only guarantees the loan, banks originate them.

• Valid Contract: A legally binding and enforceable agreement that contains all essential elements: capable parties, mutual consent, lawful object, and consideration.

• Valuation Process (Appraisal): The systematic procedure followed by an appraiser to estimate the value of real property.

• Variance: A permitted deviation from the strict application of a zoning ordinance, granted by a local government to a property owner who demonstrates hardship.

• Vendee: The buyer in a real property sales contract (installment sales contract).

• Vendor: The seller in a real property sales contract (installment sales contract).

• Visual Inspection (Broker’s Responsibility): The legal duty of real estate agents in California to conduct a reasonably competent and diligent visual inspection of 1-4 unit residential properties and disclose all material facts affecting value or desirability.

• Void Contract: A contract that has no legal force or effect from its inception; it is unenforceable by any party.

• Voidable Contract: A contract that appears valid and enforceable on its face but can be rejected or canceled by one of the parties (e.g., a contract signed by a minor).

• Voluntary Lien: A lien placed on property with the owner’s consent, such as a mortgage or trust deed.

• Water Right: The legal right to use water, typically associated with land ownership, such as riparian rights or appropriative rights.

• Wildland Fire Area: A disclosure requirement for properties located in areas identified as having a high risk of wildland fires, potentially requiring special insurance.

• Will: A legal document by which a person expresses their wishes as to how their property is to be distributed upon death.

• Willing Buyer/Seller: Key elements of market value, referring to a buyer and seller who are not under any undue pressure to buy or sell, respectively, and are acting in their own best interests.

• Winding Up (Partnership): The process of liquidating a business after its dissolution, settling debts, and distributing remaining assets.

• Withhold the Rent: A tenant’s recourse in some jurisdictions, allowing them to legally refuse to pay rent if the landlord fails to maintain the property in a habitable condition, until the deficiencies are corrected.

• Without Recourse: A phrase used in endorsements of negotiable instruments, meaning the endorser is not liable if the maker of the instrument fails to pay.

• Witness Will: A will that is signed by the testator in the presence of two or more witnesses, who also sign the will to attest to its execution.

• Writ of Attachment: A court order directing a sheriff or other officer to seize property to secure a judgment in a pending lawsuit.

• Writ of Execution: A court order directing a sheriff or other officer to seize and sell a debtor’s property to satisfy a judgment.

• Zoning Law: Local government ordinances that regulate the use of land and the type, size, and density of structures that can be built on it, serving as an exercise of police power.

• Zoning Symbols: Alphabetic codes used in zoning ordinances to designate specific land use categories (e.g., R for residential, C for commercial, M for manufacturing, A for agriculture).