Glossary of Terms
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DAMAGES:
The estimated monetary value of the injury a person suffers as a
result of an unlawful act or negligent act of another person. Once
proven, damages may be awarded by a Court.
DATE OF APPRAISAL:
The precise day, month and year upon which an assessment of the
value of a property has been given.
DATE OF INSTRUMENT:
The specific day, month and year a legal document was signed or
prepared.
DATE OF REGISTRATION:
The specific day, month and year upon which an instrument was registered
on title to the property.
DEAD-END STREET:
Also known as " Cul de Sac ". A street which is closed
at one end so that traffic cannot flow through it.
DEALER:
Similar to a car dealer, a person who offers a collection of properties
for sale to the public.
DEBIT:
An entry on a financial statement which reflects payments or disbursements
made on behalf of a party for which the party is responsible (opposite
of "Credit").
DEBT:
1. An obligation to another person.
2. That obligation which is created by borrowing.
3. The total of all financial obligations of a person or corporation.
DEBT COVERAGE RATIO (DCR):
A comparison of the net income of a property with the cost of payments
(principal and interest) on the mortgage on the property, used to
assess the ability of the property to generate enough income to
pay for itself.
DEBT EQUITY RATIO:
A comparison of the amount owing on a property with the equity (value
of property minus amount owing).
DEBT FINANCING:
Paying for the purchase of a property with credit.
DEBT RATIO:
Also known as Debt-to-Income ratio. A comparison of the total monthly
payments of all of the borrower's debts (including the mortgage)
with the gross monthly income of the borrower, used to assess borrower's
ability to pay mortgage.
DEBT SERVICE:
The mortgage payment for a given period of time.
DEBTOR:
A person who has borrowed and therefore owes (opposite of Creditor).
DECLARATION OF RESTRICTIONS:
A Statement made by a developer of a new subdivision which sets
out the restrictions of general application throughout the new development.
DECLARATION OF TRUST:
A signed statement by a trustee acknowledging that she holds legal
title to property on behalf of someone else (the beneficiary of
the trust).
DECREE OF FORECLOSURE:
An order of the Court setting out the amount outstanding on a delinquent
mortgage and ordering the sale of the property to pay the mortgagee.
DEDICATION:
Often required under subdivision or development agreements, the
donation of parcels of land to the municipality for a public use,
such as a street, a park or a school.
DEED:
The instrument by which title to property is conveyed from one person
to another.
DEED BOOKS:
The permanent record of deeds registered in a particular jurisdiction.
Also known as "libers".
DEED IN LIEU OF FORECLOSURE:
A legal instrument in which a borrower conveys property to a lender
under a mortgage to save the expense of foreclosure. See also quit-claim
deed.
DEED IN TRUST:
A legal instrument conveying legal title to a property to a trustee,
may contain statements as to powers of trustee, duties of trustee
etc.
DEED OF RECONVEYANCE:
A legal instrument which conveys title from a trustee back to the
borrower under a mortgage once the mortgage has been paid out.
DEED OF RELEASE:
A legal instrument signed by lien claimants or mortgagees which
gives up their claim to the property. See Discharge and Quit Claim
Deed.
DEED OF SURRENDER:
A legal instrument in which a person with a life interest gives
up that interest to the person with underlying title.
DEED OF TRUST:
A legal instrument which secures the payment of a loan or mortgage,
used in some states instead of mortgages.
DEED POLL:
A legal instrument which conveys title and is made by only one party.
DEED RESTRICTION:
A clause in a deed which limits the use of the property in certain
respects.
DEFAULT:
Failure. In mortgages, the failure to make payments in full, on
time or at all or to live up to any other obligations placed on
the borrower by the loan agreement.
DEFAULT JUDGMENT:
A decision rendered by a Court when the defendant has failed to
respond to the claim.
DEFEASANCE CLAUSE:
A clause in a mortgage which ensures that, once the borrower has
met all of her obligations under the terms of the mortgage and paid
out the entire principle and interest borrowed, the lender's legal
interest in the property is extinguished.
DEFEASIBLE:
Able to be revoked in the case of the occurrence (or non-occurrence)
of a certain event or the performance (or failure) of a condition.
DEFECT OF RECORD:
A registered claim on title which serves to interfere with the marketability
of the owner's title to the property.
DEFECTIVE TITLE:
Ownership of property which is subject to some competing claim.
DEFENDANT:
The person against whom a claim is asserted in a Court action.
DEFERRED INTEREST:
Interest which is not paid as it accumulates but which is added,
instead, to the loan principle.
DEFERRED INTEREST MORTGAGE:
A technique for reducing the amount of each periodic payment on
a mortgage monthly by postponing the payment of a portion of the
interest until a certain date in the future (or to when the property
is sold), at which time the interest postponed is added to the principle
owing.
DEFERRED MAINTENANCE:
A nice way to say that the property has not been kept up and is
depreciating both physically and in value.
DEFICIENCY JUDGMENT:
A Court order against a borrower under a mortgage to pay to the
lender an amount sufficient to make up for the difference between
what the borrower owes under the mortgage and the amount the lender
sold the property for under a mortgage remedy action.
DEGREE:
One 360th of a circle. One 90th of a right angle. Used in astronomic
bearings in metes and bounds descriptions of land.
DELINQUENCY:
The condition of being late on a payment but not yet in default.
DELIVERY:
The act of turning over any legal document (including a Deed) to
another party so as to make it legally operative and no longer revocable.
DEMAND LOAN:
A type of loan where the lender may require payment in full of the
principal (and accumulated interest) at any time.
DEMISE:
A conveyance of an interest in property for a set period of time
(such as in a lease).
DEMISED PREMISES:
The portion of the entire property which is leased to a particular
tenant.
DENSITY:
A measure of the number of a certain thing within a defined space.
Population density, for example, measures the number of people in
a given area (a square-mile, an acre etc.)
DEPOSIT:
1. The money paid up-front by a purchaser as security for her completing
the transaction. Also known as "good faith money" or "earnest
money".
2. An instrument which is not registered on title but placed in
the records for a given piece of land for information purposes.
DEPOSIT OF TITLE DEEDS:
When a lender requires ownership documents to be left with it as
further security for a loan.
DEPRECIABLE BASIS:
The initial acquisition cost of an improvement on land, used for
income tax purposes. Land may not be depreciated but the improvements
(buildings, etc.) may be.
DEPRECIABLE LIFE:
An estimation of the useful, valuable life of certain assets (such
as buildings or production machinery).
DEPRECIATION:
1. The lessening of the value of a property over time.
2. A tax adjustment accounting for the reduction in value of an
asset (a building or a piece of machinery) over time.
DERELICTION:
The gradual receding of water, leaving more land than was there
previously.
DERIVATIVE CONVEYANCE:
A transfer of property made to correct or confirm an earlier conveyance.
DESCENT:
The conveyance of property to those heirs of a deceased person as
dictated by the laws of the jurisdiction when no will is left behind.
DESCRIPTION:
Also known as "Legal Description". The manner in which
a piece of land is identified. May involve metes and bounds measurements
using astronomic bearings or may simply set out Lot and Plan numbers
in a specific municipality. Most jurisdictions require description
of land to be included in all instruments to be registered on title
to that property.
DESIGNATED REAL ESTATE BROKER:
Person designated by a corporation to oversee all real estate activities
of that corporation. Must meet requirements for real estate broker's
license.
DESIGNATED REAL ESTATE INSTRUCTOR (DREI):
Any person who has met the requirements of the Real Estate Educators
Association for this designation.
DETACHED SINGLE-FAMILY HOME:
A free-standing dwelling that is designed to house one family unit.
DETERIORATION:
The impact of time and wear and tear on a dwelling or other building
which results in a decrease in its value if nothing is done to counteract
it.
DEVELOPER:
A person or company who makes a business of turning vacant or underused
parcels of land into new housing (or business, commercial or industrial)
surveys.
DEVELOPMENT LOAN:
A loan specifically designed to finance the transformation of a
vacant tract into a new survey. May provide for money to be advanced
as the stages of the development are completed.
DEVELOPMENT RIGHTS:
The legal ability to develop a parcel of land, usually purchased
from the owner of a vacant tract of land by the developer. Title
to the property does not change hands until the new survey of properties
is sold to third-party purchasers.
DEVISE:
The act of leaving a piece of land to another person in a will.
DEVISEE:
The beneficiary under a will who receives a gift of real estate
under the will.
DEVISOR:
The deceased person under whose will the beneficiary receives real
estate. More commonly called the "testator".
DINK:
Short form for "Double Income, No Kids". A description
of a type of Purchaser in the real estate market.
DIRECT COSTS:
Those expenses in the improvement of property which can be directly
attributed to the improvement itself (i.e. labor, material, taxes,
etc.). Also known as "hard costs".
DIRECT REDUCTION MORTGAGE:
A kind of mortgage where the principal and interest to be paid are
based on the principal remaining. An amortized mortgage.
DIRECTION:
1. A document containing written instructions to a person to do
a certain thing in a certain way.
2. A point on a compass, used in legal descriptions.
DIRECTION REGARDING FUNDS:
A direction made by a party who is entitled to money to the party
who is obligated to pay the money which sets out how the receiving
party wishes the money paid.
DIRECTION REGARDING TITLE:
Also known as "Title Direction". A direction made by the
Purchaser to the Vendor of property setting out how the Purchaser
wishes to take title. May include the full legal name, the birthdate
(if necessary), the address for service of the Purchaser and, if
there are more than one Purchaser, the capacity in which they wish
to share title ( i.e. as Joint Tenants or Tenants in Common).
DIRECTIONAL GROWTH:
A factor in the value of undeveloped land, the direction in which
an urban center tends to expand.
DISAFFIRM:
To refuse to accept a decision already made, to revoke consent,
assent or agreement already given.
DISBURSEMENT:
An expenditure of money.
DISCHARGE:
1. A document registered to remove a mortgage from title to a property.
2. To payout out a debt.
3. To meet one's obligations.
DISCLAIMER:
A statement of refusal of responsibility of a legal right etc.
DISCLOSED PRINCIPAL:
The person on whose behalf an agent is acting when that person's
identity is made know to the person with whom the agent is dealing.
DISCLOSURE:
Sometimes known as "Vendor's Disclosure", a legal requirement
in some jurisdictions in which the Vendor of a property must provide
a written statement to a prospective purchaser setting out defects
in the property known to the Vendor.
DISCLOSURE STATEMENT:
A document issued by a lender to a borrower in which the lender
sets out the terms and conditions of the loan. Often required under
legislation.
DISCOUNT:
A sum of money held back from a mortgage advance as prepaid interest.
DISCOUNT POINT:
See point. Each point is equal to 1% of the principal.
DISCOUNT RATE:
A benchmark for interest rates, the rate charged by the Federal
Reserve System on loans to banks.
DISCOUNT REAL ESTATE BROKER:
A licensed real estate broker who charges a commission at a lower
rate.
DISPOSSESS:
To remove a person from occupation of a property by a legal action.
DISPOSSESS PROCEEDINGS:
The legal action taken to dispossess a person of property.
DISTRAINT:
A landlord's action for recovering arrears in rent by taking possession
of and selling the tenant's personal property.
DISTRESS:
The right of a party to sell the real or personal property of another
party to pay for arrears in rent or loan payments.
DISTRESSED PROPERTY:
A property which is to be sold in order to pay arrears on a mortgage.
DISTRICT:
A terms used to classify neighborhoods according to their use: residential,
commercial, industrial, etc.
DOCUMENT:
1. Noun: a paper which establishes certain facts or attempts to
bring about a certain result.
2. Verb: to set out events, facts or beliefs in written form.
DOCUMENTARY STAMP:
A levy paid to the local government for registration of a document
(a deed or mortgage) in the public records, often calculated as
a percentage of the purchase price or the value of the mortgage.
DOG:
A slang term for a property that, as a result of factors such as
poor condition, poor location or poor design, is slow to sell.
DOMICILE:
The place where a person legally resides.
DOMINANT ESTATE:
The property which enjoys the benefit of an easement over another
property (known as the servient estate).
DONEE:
The person who receives a gift, bequest, or who is named an attorney
in a power of attorney.
DONOR:
The person who gives a gift, bequest, gives power of attorney or
who settles property in a trust for another person (the beneficiary).
DOUBTFUL TITLE:
Ownership of land which is questionable as a result of a possibly
valid competing claim.
DOWER:
The interest enjoyed by a wife in real property her husband acquired
during his life time. The right becomes exercisable upon the death
of the husband. Dower still exists in some jurisdictions but has
been abandoned in most.
DOWN PAYMENT:
The amount of money provided by the Purchaser toward the total price
of the property (not including legal fees or other acquisition costs).
In general, downpayment plus mortgage equals purchase price.
DOWNZONING:
The reduction of the density allowed for a certain property under
zoning by-laws, such as from high density (high rise apartment)
to medium density (low rise or individual homes).
DRAGNET CLAUSE:
A term of a mortgage which establishes the subject property as security
for the present and for all future debts of the owner to the lender.
DRAIN:
A means, whether natural or otherwise, by which water is allowed
to flow off a property.
DRY MORTGAGE:
Also known as "non-recourse loan" because the lender has
no personal right of action against the property owner in the event
of default. The lender may only sell the property to enforce the
loan obligation.
DUAL AGENCY:
A breach of agency rules which must be disclosed to the parties.
Where one agent (often a real estate broker or agent) represents
both sides in a contract (i.e. the Vendor and the Purchaser) such
that the agent has a conflict of interest.
DUE DATE:
The date established in the loan agreement upon which all moneys
then outstanding on the loan become due and payable in full.
DUE ON SALE CLAUSE:
A clause in a mortgage which requires that the mortgage be paid
out in full upon the sale of the property against which it is secured.
A mortgage with this clause may not be assumed by a purchaser.
DUMMY:
Slang term for the trustee in an undisclosed trust situation where
a nominee holds legal title of property for an unnamed principal.
DUPLEX:
A building which houses two separate dwelling units.
DURESS:
A state in which the improper, threatening or coercive actions of
another place a person in a disadvantage psychological position.
A person is not bound by a contract she enters while under duress.
DWELLING:
A house, home, living unit. Generally refers to a building designed
for use as a living space.
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