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(Disclaimer: Always seek advice regarding
questions for: Legal,
Tax, Accounting, Lending, Surveying, Inspecting, etc. from those other areas of
expertise. They may best answer questions regarding these
matters! Additionally, please allow that
"typos" / errors / changes may occur at this site and / or
other sites, herein referred / linked to... Information is presented only for your convenience. Any corrections
or suggestions are gladly
received! Thanks for visiting our site! Quigley Team, Realty World - John Horton &
Assoc.)
Capital Gains:
Profit earned from the sale of real estate is capital
gain. However, with the new (1996) tax
law, a seller may not owe
tax on capital gains from the
sale. (This is true if the "home is occupied for '2 out
of the last 5 years' and any gain is less
than $250K for an individual / $500K per married couple, etc.")
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Cash Flow: The amount of cash derived over a certain period of time from an income-producing property. The cash flow should be large enough to pay the expenses of the income producing property (mortgage payment, maintenance, utilities, etc.).
Caveat Emptor: A legal (Latin) term, meaning, "let the buyer beware". Buying such a property may be at your own risk, without any recourse. Example: A property may be offered in an "as is" condition with no expressed or implied guarantee of quality or condition.
Covenants, conditions, and restrictions (CC & Rs): The basic rules establishing the rights and obligations of owners of real property within a condominium, townhouse, PUD, subdivision or other tract of land. An association is organized for the purpose of operating and maintaining property commonly owned by the individual owners. The association is normally made up of property owners.
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Certificate of Eligibility: The document issued by the Veterans Administration to those that qualify for a VA loan which may be used to buy a house with "Zero Down." Certificates of eligibility may be obtained by sending the form DD-214 to the local VA office along with VA form 1880.
Certificate of Reasonable Value (CRV): An appraisal performed by an VA approved appraiser which establishes the property's current market value. This value establishes the ceiling on the maximum VA mortgage loan principal.
Certificate of Occupancy ("CO"): Document issued by a local governmental agency that states a property meets the local building standards for occupancy and is in compliance with public health and building codes. A
"CO," is normally required by a lender, prior to closing a loan.
Certificate of Title: An opinion rendered by an attorney as to the status of title to a property, according to the public records. This certificate does not the same level of protection as
title insurance.
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Chain of Title: The chronological order of conveyance of a parcel of land from the original owner to the present owner. Example: An abstractor can research title to property going back to the date that the property was granted to the United States.
Clear Title: A marketable title, free of clouds and disputed interests. Most lenders require a clear title prior to closing.
Closing: Definition #1: The act of transferring ownership of a property from seller to buyer in accordance with a sales contract. Definition #2: The time when a closing takes place.
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Closing Costs: Expenses incurred by the buyer and seller in a real estate or mortgage transaction. There are two types of costs:
Non-recurring and
Recurring:
-
Non-recurring costs are
one time transactional costs which
may
include:
Discount and origination
points,
Lender fees (which may in turn
also include: underwriting, processing, document preparations, flood certificate, tax service, wire transfer, courier, etc.),
Title
Insurance fees,
Escrow,
Attorney or
closing agent fees,
Recording fees,
Inspection and
Appraisal fees, and
Real Estate Brokerage commissions….
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Recurring fees are costs associated with owning the property and they
recur
month after month. These costs may include: hazard insurance, interest, property taxes, mortgage insurance (PMI), and association fees. A pro-rated amount of these fees may have to be paid at closing typically include:
Pre-paid interest - interest charges from the date of closing to the end of the month,
Property Taxes if due,
Hazard Insurance,
Fire
Insurance or homeowner's insurance is normally paid at closing for one year,
Mortgage Insurance (PMI) - may be required if the loan amount is more than 80% of the value of the property. In the past a whole year of
PMI had to be paid up front, however in recent years many
PMI companies only require 1-2 months up front. Mortgage Insurance premiums are normally paid every month, with the loan payment. An
impound account may need to be set up for future payments.
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Cloud on Title: An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title. Compare with
clear title.
Commitment: A written document provided by a lender to agreeing to make a loan on specific terms to a borrower or builder.
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Condemnation: Definition #1 - Taking private property for a public use with compensation to the owner under eminent domain. Used by governments to acquire land for streets, schools, freeways, etc and by utilities to acquire necessary property. Definition #2 - Declaring a structure unfit for use because of violations in housing codes or other reasons.
Conditional Commitment: A written document provided by a lender agreeing to make a loan provided certain conditions are met prior to closing.
Condominium: Individual ownership of a dwelling unit and an individual interest in the common areas and facilities which serve the multi-unit project.
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Construction loan: A short term loan to pay for the construction of buildings or homes. These loans typically provide periodic disbursements to the builder as each stage of the building is completed. When construction is completed a "takeout" or "permanent loan" is used to pay off the construction loan.
Consideration: Anything of value given to induce another to enter into a contract. Earnest money deposit on a sales contract is consideration.
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Contingency: Conditions which must be satisfied before the buyer can close the purchase of a property. Contingencies are generally outlined in the purchase contract between the buyer and seller. Example: The buyer has 14 days to remove the property contingency under the sales contract. In this case the buyer has 14 days to inspect the property and request the seller to perform repairs. If the buyer is not satisfied with the condition of the property or if the buyer and the seller cannot agree on repairs, the buyer may back out of the contract with no penalty. After 14 days the buyer no longer has the right to back out with no penalty as a result of a problem with the condition of the property.
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Contract: An agreement between competent parties to do or not do certain things for consideration. Example: To have a valid contract for the sale of real estate there must be: 1. an offer, 2. an acceptance, 3. competent parties, 4. Consideration, 5. legal purpose, 6. written documentation, 7. description of the property, 8. signatures by principals or their attorney-in-fact.
Contract of Sale: Same as the Agreement of Sale.
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Contract sale or deed: A real estate installment selling arrangement where the buyer may occupy the property but the seller retains the title until the agreed upon sales price has been paid. Also known as an installment land contract. Example: John sells Mary a house. Mary has to put $10,000 and pay $1,000 per month for 24 months, after which time she will receive title to the property.
Conventional Loan: Any mortgage loan other than a VA or an FHA loan. A convention loan may be conforming or non-conforming.
Conveyance: The transfer of title of real from one party to another.
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Co-op (a cooperative): An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation, which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.
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Convertible ARMs: Some variable loans come with options to convert them to a fixed loan based on a pre-determined formula, during a given time period. For example the 1-year T
bill adjustable may be converted to a fixed during the first five years on the adjustment date. The means that you could convert during the 13th, 25th, 37th, 49th and
61st months of the loan.
Credit Report: A report detailing a borrowers credit history including payment history on revolving accounts (e.g. credit cards) and installment accounts (e.g.. car loan). A credit report also includes information found from public records including tax liens and
judgments.
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D Terms
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AUSTIN "STATS"