VA Real Estate Glossary Terms Flashcards

VA Real Estate Glossary Terms Flashcards

Collateral: Money or property pledged to a lender by a borrower as

security for the payment of debt. Mortgagelenders minimize the risk of loaning money by requiring borrowers to pledge collateral. Should the buyer fail topay the loan, the lender may recoup the loss by exercising its right to force the sale of the pledged collateral (theproperty). See also Foreclosure.Agency, Creation by Estoppel:Agency relationships may also be established by estoppel.Judgesapply estoppel on a case-by-case basis, which makes things difficult to predict. However, once applied,estoppel prevents (or stops) a person from asserting that there was no agency relationship. Estoppel ofteninvolves misleading conduct, or conduct that would otherwise lead any reasonable person to rely on agiven set of assumptions.

Ad Valorem Process:Process by which many state and local governments

assess real estate taxes for operatingrevenue. "Ad valorem" is Latin for "according to value." Ad valorem taxes are based on the unique assessed valueof the subject property.Agency, Creation by Ratification:Agency relationships may arise by ratification. To ratify meansto approve, sanction, or validate. Through ratification, a principal may create an agency relationshipwhere an agent performs for the principal without the principal's consent, but the principal subsequentlyapproves or ratifies the agent's conduct.

Acceleration Clause:A clause that may appear in a Mortgage or Deed of Trust,

which specifies that if theborrower violates the covenants of the mortgage or DOT, the entire loan balance becomes due and payable upondemand. In other words, the life of the loan is shortened, or accelerated, to its end. The lender may only acceleratethe note if this clause is expressly included in the loan document. Also, the lender must give the debtor adequatenotice (usually prescribed by law) and specify a time period to allow the debtor to cure the default.

Chain of Title:Record of historical ownership and competing interests in

real estate. See also Title Search.

Buydown: Financing technique used in times of high interest rates.

In a buydown, the lender is "prepaid" aportion of the interest rate in order to reduce the buyer's monthly payments during the initial years of the loan. Intimes of very

high interest rates, builders sometimes use a buydown to qualify buyers for loans. At the end of thebought down time period, the interest rate reverts to the original amount.Buyer-Broker Agreements, Open Buyer Agreement: Agency relationship between a prospectivebuyer and a real estate broker which, like an open listing agency, permits any number of agents to becompensated depending upon

who first brings suitable property to the buyer's attention. In this case, thebuyer is only obligated to compensate that broker who produces property that the buyer actually purchases.

Concurrent Ownership:Method of real property ownership by two or more persons

at the same time(concurrently). Co-ownership or

co-tenancy exists in one of the following three forms: joint

tenancy, tenancy incommon, and tenancy by the entireties.