CAPITAL GAINS
Profit earned from a sale of real estate. |
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CAPITALIZATION
A method used to estimate value of a property based on the rate of return on investment. |
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CAPS
A consumer safeguard of an Adjustable Rate Mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. |
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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.). |
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CAVEAT EMPTOR
Buyer beware. The buyer must inspect the property and satisfy himself that it is adequate for his needs. The seller is under no obligation to disclose defects but may not actively conceal a known defect or lie if asked. |
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CC&Rs
Covenants, Conditions, and Restrictions. The basic rules establishing the rights and obligations of owners of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners. |
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CERTIFICATE OF ELIGIBILITY
The document given to qualified veterans which entitles them to VA guaranteed loans for homes, business, and mobile homes. Certificates of eligibility may be obtained by sending DD-214 (Separation Paper) to the local VA office with VA form 1880 (request for Certificate of Eligibility). |
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CERTIFICATE OF OCCUPANCY
A certificate issued by a local governmental body stating that the building is in a condition to be occupied. |
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CERTIFICATE OF SATISFACTION
A document signed by the Note holder and recorded in the land records evidencing release of a DEED OF TRUST, MORTGAGE or other lien on the property. |
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CERTIFICATE OF TITLE
A written opinion by an attorney setting forth the status of title to the property as shown on the public records. The certificate does not certify as to matters not of record and affords no protection unless the author was negligent. |
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CHAIN OF TITLE
The series of transactions from GRANTOR to GRANTEE as evidenced in the land records. |
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CLASS ACTION
A claim brought up on behalf of a group of people. |
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CLOSING
The meeting between the buyer, seller and lender or their agents where the property and funds legally change hands. Also called settlement. Closing costs usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report and notary fees. |
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CLOSING COSTS
Expenses (over and above the price of the property) incurred by the buyers and usually include an origination fee, discount points, appraisal fee, title search and insurance, survey, taxes, deed recording fee, credit report charge and other costs assessed at the settlement. The average cost of closing is usually about 1 to 3 percent of the mortgage amount but varies depending on the area of the country. |
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CLOUD ON TITLE
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action. |
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COINSURANCE
When more than one insurance company shares the risk of a particular transaction or series of transactions. Lenders may require co-insurance on large commercial projects. |
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COLLATERAL
Property pledged as security to a debt. If the borrower fails to repay the loan, the lender may gain ownership of the collateral and sell it to recover the money. |
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COMMITMENT LETTER
A formal written offer by a lender stating the terms (such as amount, interest rate, etc.) under which it agrees to lend money to a borrower. Also known as a "loan commitment." |
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CONDEMNATION
Taking of private property for a public use through exercise of the power of EMINENT DOMAIN. The Constitution protects against taking without fair compensation. |
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CONDOMINIUM
A system of individual FEE SIMPLE ownership of portions (units) in a multi-unit structure, combined with joint ownership of common areas. Each individual may sell or encumber his own unit. |
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CONSERVATOR
Also called a Committee or Guardian, a person designated by the Court to protect and preserve the property of someone who is not able to manage their own affairs. Examples include the mentally incompetent, minors and incarcerated persons. |
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CONSTRUCTION LOAN
A short-term interim loan to pay for the construction of buildings or homes. These are usually designed to provide periodic disbursements to the builder as he progresses. These are generally done by lenders with offices local to the site of the construction. This enables the lender or their agent to monitor the progress of the construction. |
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CONTINGENCY
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector. |
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CONTRACT
A legally enforceable agreement between two parties |
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CONTRACT FOR DEED
Also known as a Land Contract or Land Installment Contract. A method of financing where title remains in the Seller's name until the Buyer has paid the full purchase price. A Contract for Deed will normally trigger the DUE ON SALE CLAUSE in a DEED OF TRUST or MORTGAGE but Veterans Administration regulations specifically allow Contracts for Deed without invoking the DUE ON SALE CLAUSE. |
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CONVENTIONAL MORTGAGE OR LOAN
Usually refers to a fixed-rate, 30-year mortgage that is not insured by the FHA, Farmers Home Administration (FmHA) or Veterans Administration. |
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COOPERATIVE
A type of multiple ownership in which a corporation owns property (usually an apartment building) and the occupants own shares in the corporation equal to their portion of the building. |
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COST APPROACH
A method used by an appraiser to estimate replacement costs of improvements less depreciation. |
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CO-TENANCY
Ownership in the same land by more than one person. |
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COVENANT
A clause in a mortgage that obligates or restricts the borrower on the use of land or promising certain acts and if violated, can result in foreclosure. For example, homeowners associations often enforce restrictive covenants governing the architectural controls (such as how the house is built and what the house can look like) and maintenance responsibilities. However, land could be subject to restrictive covenants even if there is no homeowner's association. |
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CREDIT REPORT
A report that contains information about your borrowing habits and money-managing skills. Lenders use it to determine whether to approve a loan and to set the terms. A person with a good credit report is likely to get a better interest rate than someone with a poor credit report. |
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CREDITOR
One who is owed money. |
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