Clear cutting involves felling all the timber within a designated area, in contrast to selectively cutting larger trees or specific species. This practice is often employed to prepare land for redevelopment or reforestation.
Clear span refers to the unobstructed, open area in a building or structure, typically measured height-wise, allowing for more efficient use of space for various applications such as storage, manufacturing, or events.
A clear title, also known as a marketable title, is one that is free of liens, encumbrances, or other legal questions about the ownership of the property. A clear title ensures that the seller actually owns the property and has the right to sell it, allowing the new owner to enjoy full ownership rights.
In the context of real estate, a client is an individual or entity that engages a broker, lawyer, accountant, appraiser, or other professional to represent their interests in a transaction.
A 'Closed Period' is a term in a mortgage agreement that prevents the borrower from prepaying the mortgage before the agreed-upon time period. This is commonly seen in commercial real estate mortgages but rarely in residential mortgages.
A closed-end mortgage is a type of mortgage loan whose principal amount cannot be increased during the payout period. This contrasts with an open-end mortgage, where the loan amount can be revised or increased.
Closing is the final step in executing a real estate transaction where ownership is officially transferred from the seller to the buyer.
A closing agent is a neutral third party who handles the closing of a real estate transaction, ensuring the details of the purchase agreement are fulfilled. They prepare the necessary documentation and may conduct the closing meeting.
Closing costs are the various fees and expenses payable by both the seller and buyer at the time of a real estate closing. These costs can vary widely and include items such as brokerage commissions, lender fees, and title insurance premiums.
The closing date is the date on which the seller delivers the deed and the buyer pays for the property. This is a critical day in real estate transactions as it finalizes the transfer of ownership.
A closing statement is an accounting of funds from a real estate sale, made to both the seller and the buyer separately. It details the financial transactions involved in finalizing a real estate transfer.
A closure document, issued by a state environmental agency, indicates the successful remediation of a contaminated site, ensuring no further action or legal liability is required for environmental cleanup.
A 'Cloud on the Title' refers to an outstanding claim, lien, or encumbrance that can potentially impair or affect the owner's title to a property. Resolving this issue is crucial for attaining a clear, marketable title when buying or selling real estate.
Cluster Housing is a subdivision technique where detached dwelling units are grouped closely together, leaving shared open spaces as common areas. This design promotes community interaction while preserving natural land and creating more efficient land use.
A CMO REIT is a type of Real Estate Investment Trust (REIT) that primarily invests in Collateralized Mortgage Obligations (CMOs), deriving its cash flow from interest and principal receipts on these securities.
A co-borrower is an additional person who signs a mortgage loan agreement, sharing responsibility for loan repayment and contributing to the household income used to qualify for the loan.
The terms 'Co-Broker' and 'Co-Broker Commission'—also known as 'Cooperating Broker' and 'Commission Split,' refer to the collaborative efforts between two or more real estate brokers to sell a property and the shared commission earned from the sale.
A co-maker, also known as a cosigner, is a person who jointly signs a loan agreement with the primary borrower, taking on equal responsibility for the loan repayment.
A co-mortgagor is an individual who signs a mortgage contract along with other parties, making them jointly responsible for repaying the loan and often granting them part ownership in the encumbered property.
A co-occupant arrangement is an agreement between two or more unrelated individuals to share a dwelling unit. This document typically delineates the financial responsibilities, rights, and obligations of each tenant to avoid disputes.
A 'CO-OP' (Cooperative) is a dual concept in real estate that can refer to a cooperative arrangement between agents for splitting commissions, or more commonly, a type of housing where residents own shares in a corporation that owns the property.
Co-ownership refers to any of several legal arrangements by which property is owned by more than one person. This includes forms such as Tenancy in Common, Joint Tenancy, Community Property, Partnership, LLP, and LLC.
A co-signer is a person who signs a credit application alongside another individual, agreeing to be equally responsible for the repayment of the loan. This involves providing additional assurance to the lender that the loan will be repaid.
A Code of Ethics in real estate is a set of guidelines designed to establish fair practice behavior between agents, clients, and other parties in the real estate transaction process.
The Cost of Funds Index (COFI) is a commonly used benchmark for adjusting interest rates on adjustable-rate mortgages (ARMs) in the United States. It reflects the average cost of funds deriving from savings institutions in Western 11th Federal Reserve District, including California, Arizona, and Nevada.
Coinsurance is a provision in an insurance policy that requires the policyholder to bear a portion of the risk. For property insurance, it is typically expressed as a percentage that the insured must maintain relative to the property's value in order to collect the full amount of compensation for any loss.
Cold canvassing in real estate involves the process of contacting homeowners who are previously unknown to the agent, with the aim of soliciting new property listings. This technique is employed to identify potential sellers and to generate more listing opportunities.
A collapsible corporation refers to a specific type of corporation that is dissolved typically within three years, with the IRS treating any gain from the sale or liquidation as ordinary income rather than capital gain for the stockholders.
In real estate, collateral refers to property or assets that a borrower offers to a lender as security for a loan. It reduces the lender’s risk by providing a way to recoup the loan amount if the borrower defaults.
Collateral Underwriter® (CU™) is a proprietary appraisal risk assessment application developed by Fannie Mae to enhance appraisal quality. CU™ provides automated risk assessment and supports proactive management of appraisal quality.
Collateralized Debt Obligation (CDO) is a complex financial product that is structured and sold to investors, leveraging various types of debt instruments like bonds, mortgages, and loans as collateral.
CMO, or Collateralized Mortgage Obligation, is a type of mortgage-backed security that pools together a large number of mortgages and issues several classes or tranches with varying degrees of risk and returns.
A collateralized mortgage obligation (CMO) is a type of security backed by a pool of mortgage loans that are structured into different classes, each with distinct maturities. CMOs, often using Real Estate Mortgage Investment Conduits (REMICs) as a standard investment vehicle, provide investors with specified periodic interest and principal payments.
Colonias are rural community settlements in the United States, particularly in the border regions of Texas, New Mexico, Arizona, and California, characterized often by substandard infrastructure and housing conditions.
Color of Title refers to a condition in which a claim to title appears on the surface to be valid but is fundamentally void due to some defect.
A Combined Statistical Area (CSA) as defined by the U.S. Census Bureau is a aggregation of adjacent metropolitan and micropolitan statistical areas that are economically and socially interconnected. CSAs are used for providing a more comprehensive view of the larger regions in which residents live and work, transcending administrative boundaries to better illustrate the multi-faceted nature of these urban clusters.
A commercial bank is a financial institution that offers a broad range of financial services such as business loans, consumer loans, checking and savings accounts, and credit cards. Most deposits at these banks are insured by the Federal Deposit Insurance Corporation (FDIC).
A commercial broker is a real estate professional specializing in listing and selling commercial properties, such as shopping centers, office buildings, industrial complexes, and apartment projects. They differ from residential brokers primarily in the type of properties they handle.
A commercial mortgage banker is a professional in the business of originating commercial mortgage loans, typically earning a commission based on a small percentage of the loan amount.
A Commercial Mortgage Loan is a loan secured by real estate that generates business or rental income, typically used in transactions involving commercial properties like office buildings, shopping centers, or warehouses.
Commercial Mortgage-Backed Securities (CMBS) are a type of mortgage-backed security that is secured by mortgages on commercial properties rather than residential real estate.
Commercial property refers to buildings or land intended to generate a profit, either from capital gain or rental income. This category includes a diverse array of properties such as shopping centers, office buildings, hotels, resorts, and restaurants.
The Commercial Real Estate Financial Council (CREFC) is an organization of professionals involved in commercial real estate finance that holds conferences, publishes newsletters, and provides advocacy for the industry.
Commingle refers to the act of mixing or blending, for example, combining client funds with a broker's personal funds. This practice is prohibited under most state laws, especially concerning earnest money deposits.
Commission is the amount earned by a real estate broker for services performed, typically calculated as a percentage of the property's sale price.
A Commission Split refers to the arrangement of sharing commissions earned between a sales agent and sponsoring broker, or between the selling broker and listing broker. This arrangement ensures that all parties involved in the transaction are compensated according to their contribution.
The Commissioner is the head administrator of the state Real Estate Commission, responsible for overseeing the real estate licensing process, enforcing real estate laws, and ensuring ethical standards are maintained in the real estate industry.
In the context of real estate, 'commitment' refers to a pledge or promise, particularly regarding financial arrangements or agreements, such as a firm's agreement to provide a loan or mortgage to a borrower, thus ensuring the progress and completion of a transaction.
A commitment fee is a charge required by a lender to lock in specific terms on a loan at the time of application, ensuring that the terms agreed upon will be honored and the funds will be available when needed.
A commitment letter is an official notification from a lender to a borrower indicating that the borrower’s loan application has been approved, detailing the terms of the prospective loan.
An advance commitment is a financial pledge or guarantee from a lender to a borrower, often used to ensure future funding for a project under specified conditions.
Common Area Maintenance (CAM) charges are fees paid by tenants to landlords for the upkeep of shared spaces such as hallways, restrooms, and parking lots. These charges are typically calculated on a pro-rata basis and are essential for the maintenance and functionality of commercial properties.
Common areas are portions of a property that are accessible and used by all owners or tenants. They play a crucial role in the overall functionality and value of residential, commercial, and mixed-use properties.
Common Areas Assessments (HOA Fees) are special fees assessed by a Homeowners' Association against its members for a one-time expense, such as the construction of a community facility.
In a condominium, 'common elements' refer to the portions of the property not owned individually by unit owners but in which an indivisible interest is held by all unit owners. These generally include the grounds, parking areas, recreational facilities, and external structure of the building.
Common law refers to a body of law that has developed based on judicial decisions and precedents established by courts, as opposed to legislative statues or statutory laws. Originating from England and forming a significant part of the legal framework in many Commonwealth countries, common law evolves based on the practices, customs, and judicial precedents over time.
Common Property refers to property owned equally by all members of a group, which can include areas within a cooperative apartment building or municipal parks.
A Community Association is an organization of property owners dedicated to managing common interests and elements within a residential community, such as condominiums or subdivisions.
The Community Associations Institute (CAI) is a not-for-profit educational and research organization dedicated to addressing the challenges of managing homeowners’ associations and other community associations, such as condominium owners' associations. CAI provides educational seminars, resources, and publications to promote effective community management.
Community Property refers to the principle under which property accumulated through the joint efforts of spouses is considered equally owned by both. This legal doctrine exists in several U.S. states and impacts how assets are divided in events such as divorce or death.
A federal law that mandates financial institutions to meet the credit needs of the communities they serve, particularly focusing on low- and moderate-income neighborhoods.
A community shopping center, also known as a community center, is a retail property designed to serve a larger area than a neighborhood center, providing a wider array of goods and services.
Comparables, or comparable sales, refer to properties that are similar to the one being sold or appraised. These properties are typically used in the sales comparison approach to estimate the value of the subject property.
An estimate of the value of property using select indicators from sales of comparable properties, usually provided by a broker or salesperson, to help clients set listing and selling prices.
A Comparative Market Analysis (CMA) is a crucial process in real estate that involves evaluating similar, recently sold properties ('comparables') to derive an estimated market value for a subject property. This aids in setting a realistic price for selling or buying real estate.
The Comparative Sales Approach, also known as the Sales Comparison Approach, is a real estate appraisal method that estimates the value of a property by comparing it to similar properties that have recently sold in the same area.
The Comparative Unit Method is an appraisal technique used to determine the value of a property by comparing it against standardized units.
The Comparison Method, also known as the Sales Comparison Approach, is a real estate appraisal method that bases the value of a property on the sales prices of similar properties in the same area.
Compensating factors are criteria used to enhance a borrower’s creditworthiness by considering elements beyond the standard qualifying ratios. These factors help lenders make informed decisions when traditional metrics don't tell the whole story.
Compensation in real estate refers to money or other property paid to individuals or entities in exchange for services rendered, goods provided, or contractual obligations fulfilled. It encompasses wages, commissions, payment for real estate contracts, and property exchanges.
Compensatory damages are awarded in legal cases to compensate for actual losses or damages suffered by the injured party, aiming to make them whole again. These damages cover measurable losses, such as medical expenses, lost wages, and repair costs, and do not include punitive or non-economic damages.
A key element for any valid contract in real estate, ensuring that individuals entering into legal agreements are legally capable and have the mental capacity to understand their actions.
A Completion Bond is a legal instrument designed to guarantee the completion of a development according to predefined specifications. It extends beyond a performance bond by ensuring the production of the entire development without reference to specific contracts and without requiring payment to the contractor.
A method of dividing real estate improvements into various parts such as the roof, plumbing, electrical system, and shell, and then depreciating each component separately for tax purposes.
The Compound Amount of One Per Period represents the final value of a series of $1.00 deposits made at each period, with interest compounded at each period.
The Compound Annual Growth Rate (CAGR) represents the mean annual growth rate of an investment over a specified period of time longer than one year.
The Compound Annual Growth Rate (CAGR) is a useful measure of the growth rate of an investment or value over a specific period of time, assuming the gain was compounded annually. It's an invaluable tool for comparing the historical performance of investments or predicting future growth.
Compound Interest refers to the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which is calculated only on the principal amount, compound interest grows at an accelerating rate due to its compounding effect.
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is a federal law aimed at the cleanup of sites contaminated with hazardous substances and pollutants. Also known as Superfund, it imposes strict joint and several liability on potentially responsible parties (PRPs) for site remediation.
A comprehensive plan is a set of guidelines developed, mapped, and adopted by a local government to steer public policy towards future development within the jurisdiction. It encompasses various aspects such as transportation, utilities, land use, recreation, and public services.
A compressed buy-down is a variant of the traditional buy-down mortgage where the extent of the rate reduction changes at 6-month intervals. This type of buy-down features accelerated rate adjustments compared to the more common annual adjustments seen in gradual buy-downs.
In real estate, 'COMPS' or 'Comparables' refer to properties similar in characteristics to the subject property that have recently sold and are used to help determine the market value of the subject property.
Computer-Aided Design (CAD) is the use of computer systems to assist in the creation, modification, analysis, or optimization of a design. This technology is widely used in various fields, including engineering, architecture, and industrial design, providing greater precision, speediness, and flexibility in the design process.
Computer-Assisted Mass Appraisal (CAMA) refers to the process of using computer software to value large sets of properties within a given area, often for the purpose of property tax assessments.
Computer-Assisted Mass Appraisal (CAMA) refers to proprietary software designed to rapidly appraise one or more real properties. This software varies in complexity, from simple percentage increases in property values to sophisticated statistical models that evaluate comparable properties.
A computer-based network of lenders that allows affiliated real estate brokers, builders, or advisors to originate loans at the site of the home. Provides a streamlined process whereby a person can buy a home and apply for a loan at the same place and time.
Concessions are agreements that offer complementary goods, services, or financial incentives like reduced rent or purchase prices to tenants or buyers.
Condemnation refers to the process by which private property is taken for public use with compensation provided to the property owner. This is often done under the legal right known as eminent domain. Alternatively, it can also refer to the declaration of a structure as unfit for use.
A condemnee is a property owner who is required to forfeit all or part of their property to the government or a governmental authority through the process of condemnation.
A condemnor is a government or agency with governmental authority that is empowered to take private property for public use upon payment of just compensation, typically in the process known as eminent domain.
Condition(s) provision(s) in a contract that specify certain events or circumstances that can alter or negate the terms of the contract. Common examples include events such as destruction of property or inability to secure financing.
A conditional commitment is an agreement by a lender to provide a loan to a qualified borrower, subject to specific conditions that must be met. It serves as a binding commitment from the lender, provided that all pre-stipulated criteria and terms are satisfied.
A Conditional Estate, also known as Fee Simple Defeasible, is a type of ownership where the owner's rights may be revoked upon the occurrence or non-occurrence of a particular event.
A conditional offer is a purchase contract tendered to the seller that stipulates one or more requirements to be satisfied before the purchaser is obligated to buy.
A Conditional Sales Contract is a legal agreement for the sale of property in which the seller retains the title until the buyer fulfills certain predefined conditions, typically the full payment.
A Conditional Use Permit (CUP) is a specialized form of zoning variance that allows a property owner to use their land in a way that is not typically permitted under the current zoning laws.
Conditions, Covenants, and Restrictions (CC&Rs) are documents that control the use, modifications, and appearance of properties within a particular real estate development or community.
Conditions, Covenants, and Restrictions (CCRs) are rules and guidelines that govern the use and appearance of properties within a community or municipality. They are designed to maintain a cohesive and appealing environment among property owners and to protect property values.
A condominium, often shortened to condo, refers to a private residential unit within a complex or building of multiple units. While individual condo units are separately owned, common areas are jointly owned by all condo owners.
Condo fees, also known as maintenance fees, are regular payments made by condominium residents to cover the upkeep and maintenance of common areas and facilities within the condominium complex.
