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DEFINITIONS OF REAL ESTATE TERMS |
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Abstract of Title - A past history
of ownership of a particular property examined by an attorney to determine
if there are any defects which would prevent passage or transfer of clear
title to the next owner.
Adjustable Rate Mortgage (ARM)
- A type of real estate loan in which either the interest rate charged
or the length of the loan, or both, can change. Adjustable rate mortgages
became very popular during the 1980s due primarily to the reluctance of
lenders to quote a fixed interest rate loan to potential borrowers. By using
an ARM, a lender is able to pass on the uncertainty of changes in interest
rates to the borrower if rates change during the life of the loan. ARMs are
normally tied to some index such as the
Prime
Rate, LIBOR or government securities.
If you are only going to occupy a home for a short time, an ARM is probably
your best bet. If you are planning to say in a home indefinitely, a fixed
rate mortgage may be your best bet. Even if rates are high, you can
refinance when they go down.
Agency - The relationship resulting from mutual consent between
the principal and his or her agent that the agent will act on the
principal’s behalf and subject to his or her control.
Agent - a licensee who has agreed to act on behalf of his or
her principal and subject to that principal’s control. An agent is the
person who acts for and represents you. In a real estate transaction an
agent will work to negotiate the best price and terms for their client. An
agent owes utmost loyalty to the client and must provide the client with any
information the agent knows which might influence the client’s decision to
buy or sell. See also Buyer's Agent
Amortization
- Gradual reduction of the mortgage debt through periodic scheduled
payments over the term of the loan.
Appraised
Value - The estimated value of a home, established by a professional
who has a knowledge of real estate price and markets.
APR
(Annual
Percentage Rate) - The actual annual interest
rate paid on a loan as opposed to the nominal or stated interest rate on the
loan agreement. Disclosure is a requirement under federal truth-in-lending
laws.
There a number of ways to calculate an APR, as a result you may have to
calculate your own APR to truly compare loan offers.
Association Fees -
Fees that cover common costs of all homes
in a condominium, townhouse or single family home association, such as trash
removal, lawn maintenance, sewer and water fees, etc.
Assessment
(Special) -
A special tax imposed on property, individual
lots or all property in the immediate area, for road construction,
sidewalks, sewers, street lights, etc.
Assessments -
Connecticut law requires all real estate,
motor vehicles, and certain types of personal property to be assessed at 70%
of fair market value. Fair market value is defined as the price established
between a willing buyer and a willing seller taking into consideration all
the uses to which a property is adapted. Connecticut courts have established
criteria, which
assessors must use to establish fair market value. Assessments
notices are mailed in November and can be
appealed.
By law, the Assessor must
physically review each property at least once every 10 years. See
Revaluation.
Assumability
- The ability of a mortgage to be taken over by a new borrower.
Binder
- Purchaser deposits 1% of the purchase price with the real estate
agent or broker when a memorandum of sale or written offer to purchase is
made. This 1% is subtracted from the 10% of the purchase price paid on
signing of contracts. Binders are typically only good faith deposits and
will be returned if contracts are not signed. Binders are rarely used in
Greenwich.
Blanket Unilateral
Offer of Subagency - an offer that may be made by a listing
agent to all other members of the MLS when he or she submits his or her
seller’s listing to a traditional MLS; the offer is accepted whenever an
agent shows the listed property without rejecting the offer. In Connecticut
subagency has been replaced by Buyer Agency. This provides better protection
to both the buyer and the seller.
Broker
-
A broker is someone licensed by the
state to represent a buyer or seller as their agent. Salespeople, even
though licensed, must work for a broker. A broker has real estate training
and credentials in addition to those required for salespeople.
Buyer Agency - is an extremely
important concept. To be represented costs you nothing, but you must sign an
agreement with the real estate company of your choosing. If you have
questions, please read the article
What You Should Know about Agency
(PDF) and/or the
Connecticut Pamphlet on Agency (PDF) and/or the
Connecticut Policy on Agency.
(PDF)
Buyers Agent
-
A Buyer’s Agent is a Realtor
who is employed by and represents the buyer in a real estate transaction,
regardless of whether the Realtor is paid by the buyer, seller or through a
commission split with the listing broker. This is sometimes called
Buyer Brokerage. See also
Agent.
Ask us for
Why Every Home Buyer Needs
a Buyer's Agent
- a free publication.
Certificate
of Title -
A certificate issued by a title company or
a written opinion rendered by an attorney that the seller has good
marketable and insurable title to the property which he is offering for
sale. A certificate of title offers no protection against any hidden defects
in the title which an examination of the records could not reveal. The
issuer of a certificate of title is liable only for damages due to
negligence. The protection offered a homeowner under a certificate of title
is not as great as that offered in a title insurance policy.
Client
- A client is the
person who is represented by an agent in a transaction and who is subject to
that buyer’s or seller’s control. A seller becomes a client by signing a
listing agreement with a broker. A buyer becomes a client by signing a buyer
agency agreement with a broker. Connecticut state law specifies these
agreements must be in writing; also called a principal.
Ask us for a free publication on
Connecticut's Agency Law.
Closing
- The act of transferring ownership of a property from Seller to Buyer
in accordance with a sales contract.
Closing Costs - The
miscellaneous expenses involved in closing a real estate transaction that
are over and above the purchase price. Examples of closing costs are title
insurance, appraisal fee and credit report.
Cloud
(On Title) -
An outstanding claim or encumbrance which
adversely affects the marketability of title.
Community Property - In community
property states, what you can leave by will consists of your own separate
property and one half (1/2) of the community property. The system of
community property derived from Spanish law, which viewed both partners in a
marriage as contributing equally, no matter whose name was on a paycheck,
deed, bank account or other legal document. In community property states,
community property is owned in equal shares by a married couple, i.e., each
spouse owns 50%. Connecticut is not a community property state.
Condominium -
The owner of a condominium unit owns the
unit and has the right, along with other unit owners, to use the common
areas, which are owned by the condominium association. Condominium laws vary
greatly from state to state, but typically include an association that
maintains the building, pays taxes and insurance, and maintains the reserves
for improvements.
Condominium Resale Package -
Information for condominium buyers that
includes by-laws of the condominium association and the association's
current financial statement. Buyers have five business days after receiving
this package from the seller to legally rescind the purchase offer.
Confidentiality - the fiduciary duty that requires the
agent to keep secret any information that his or her principal considers to
be private.
Conflict of Interest -
the situation in which an agent’s interests may be adverse to those of his
or her principal; immediate disclosure is required.
Contingent Fee - any fee that is conditional upon some
event, usually a closing, occurring.
Conventional Mortgage -
A mortgage loan not insured by HUD or
guaranteed by the Veterans' Administration. It is subject to conditions
established by the lending institution and State statutes.
Conveyance Taxes -
This tax is paid to the State and the Town
of Greenwich. The State Tax has
two parts:
½ percent up to $800,000 in sales price, and;
1 percent above $800,000 (nicknamed the mansion or Fairfield county tax)
The Greenwich Municipal Tax
0.0011% (just over a 1/10 of a percent or about $1 per thousand)
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.
Covenants -
Private restrictions limiting the use of
real property. Restrictive covenants are created by deed and may "run with
the land," binding all subsequent purchasers of the land, or may be
"personal" and binding only between the original seller and buyer. The
determination whether a covenant runs with the land or is personal is
governed by the language of the covenant, the intent of the parties, and the
law in the State where the land is situated. Restrictive covenants that run
with the land are encumbrances and may affect the value and marketability of
title. Restrictive covenants may limit the density of buildings per acre,
regulate size, style or price range of buildings to be erected, or prevent
particular businesses from operating or minority groups from owning or
occupying homes in a given area. (This latter discriminatory covenant is
unconstitutional and has been declared unenforceable by the U.S. Supreme
Court.)
Customer
- A customer
is a person who purchases or rents real estate, but is NOT represented in
the transaction. A customer is traditionally a buyer who is buying a product
or service from a salesperson. You would expect the salesperson to provide
honest information, but you would not expect the salesperson to represent
you or to negotiate the best price in the purchase for you. A Realtor is
obligated by law to treat customers honestly and fairly. A Realtor can
provide valuable market information and services to assist buyers (as
customers) during the decision-making process, but is not allowed by law or
ethics to provide the customer with the same level of help that they
expected to give a client. A customer can also be the seller of an unlisted
property that is being sold to a buyer represented by a buyer’s agent.
Debt ratio - the ratio between gross monthly income and
monthly long-term debt; used to determine financial qualification of a
buyer.
Deed
- A written instrument, usually under seal, conveying some property
interest from a grantor to a grantee. The grantor is the person who conveys
the property interest (usually the Seller); the grantee is the person to
whom the grant is conveyed (usually the Buyer). In order for a deed to be
effective in transferring title, it must be in proper legal form and
executed as specified by the law in the state in which the property is
located. The title is actually transferred the moment the deed is properly
delivered to and accepted by the grantee. In order to protect the validity
of the title from subsequent innocent third parties purchasing the same
property from the original grantor, the deed must be recorded as required by
the particular state's recording statute. This also gives assurance to third
parties that no one else has good title unless the title has been recorded.
This gives constructive notice to third parties. When a deed is delivered,
all prior oral and written agreements are merged into the deed and are
collateral. This means that when a deed is delivered and accepted, all prior
agreements which are inconsistent with the deed are superseded and have no
legal effect. An exception to this rule occurs in cases of fraud and mutual
mistake. Another exception exists when the contract specifically provides
that the obligations will survive the closing. This type of deed is commonly
used to transfer real estate between spouses who are divorcing.
Deed, Quitclaim - A deed without
warrants; passes a grantor's interest only.
Deed Restrictions - A deed which
binds all future owners of a property to abide by its restrictions for use
of the property.
Deed, Warranty - A deed in which a grantor insures a grantee that
title is free to pass.
Deffered Interest - Accrued but unpaid
interest, occurring with Adjustable Rate Mortgage (ARM) loans, when a
payment remittance does not cover the full amount of interest due for a
given period.
Down payment -
The amount of money to be paid by the
buyer to the seller upon the signing of the agreement of sale (Contract).
The agreement of sale will refer to the down payment amount and will
acknowledge receipt of the down payment. Down payment is the difference
between the sales price and maximum mortgage amount. The down payment may not
be refundable if the buyer fails to buy the property without good cause. If
the buyer wants the down payment to be refundable, he should insert a clause
in the agreement of sale specifying the conditions under which the deposit
will be refunded, if the agreement does not already contain such clause. If
the seller cannot deliver good title, the agreement of sale usually requires
the seller to return the down payment and to pay interest and expenses
incurred by the purchaser. The down payment is normally 10% of the purchase
price. The down payment is typically held in escrow by the seller’s attorney,
although the seller can bargain to hold the down payment.
Dry
Closing (Tender Closing) - A Dry Closing is one that is
complete in all of the contract requirements except for the final fund
disbursement and delivery of documents. Sometimes a closing is dry because
the Seller or Buyer refuses to close and the other party wants to call their
hand. More often a Dry Closing occurs because an out-of-state mortgage
company gets their funds later than scheduled. If the funds are delayed,
usually the documents are held in escrow pending their receipt.
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 Agent
- If a Realtor lists a property which their
buyer client wishes to buy, the Realtor will be the agent for both the buyer
and the seller. This is called Dual Agency. If this situation
were to occur, the buyer would be informed and asked to sign a Dual Agency
Consent Agreement. This Agreement provides that the agent will not disclose
either client’s personal, financial or confidential information. To best
protect the interests of our clients, when negotiating on a property listed
by our company, the Realtor representing the buyer will not be the same
Realtor that represents the seller.
Earnest Money
(Binder) -
The deposit money given to the seller or his
agent by the potential buyer upon the signing of the offer to purchase to show
that he is serious about buying the house. Earnest money is not normally
used in Greenwich.
Easement -
A right-of-way given a person to make use
of another person's property. For example, one property owner may need to
use a neighbor's property as a driveway to gain access to his or her own
driveway. To gain this access, the first property owner would request an
easement from the second. Buyers should always check for easements before
signing any purchase agreements on a property. See Encumbrance.
Encumbrance -
A legal right or interest in land that
affects a good or clear title, and diminishes the land's value. It can take
numerous forms, such as zoning ordinances, easement rights, claims,
mortgages, liens, charges, a pending legal action, unpaid taxes, or
restrictive covenants. An encumbrance does not legally prevent transfer of
the property to another. A title search is all that is usually done to
reveal the existence of such encumbrances, and it is up to the buyer to
determine whether he wants to purchase with the encumbrance, or what can be
done to remove it.
Equity - The
value of a property, minus outstanding mortgage debt and other liens. Equity
is the portion of the value of your property that you have already paid for,
plus the appreciation or less the decline if any, in the value of the
property since you acquired it, and less the amount if any additional liens
on the property.
Escrow -
Funds paid by one party to another to hold
until the occurrence of a specified event, after which the funds are
released to a designated individual. In FHA mortgage transactions an escrow
account usually refers to the funds a mortgagor pays the lender at the time
of the periodic mortgage payments. The money is held in a trust fund,
provided by the lender for the buyer. Such funds should be adequate to cover
yearly anticipated expenditures for mortgage insurance premiums, taxes,
hazard insurance premiums, and special assessments.
FHA Loan - A
loan insured by the Department of Housing and Urban Development of the
Federal Housing Administration (FHA).
Fixed Rate
Mortgage - A mortgage loan with a constant interest rate and payment
schedule throughout the life of the loan. The interest rate and payment
amount are established at the time of funding.
Fixture
- A fixture is personal property that has become real estate because it
is permanently attached or fixed to the building. Custom as to what is a
fixture varies in different jurisdictions. In Greenwich it is the custom to
assume that the washer and dryer are fixtures as well as lighting and even
mirrors attached to a wall.
Grand List -
After individual property assessments have
been determined, the assessor compiles a complete listing of all property.
The total assessments of all listed property is called the
grand list.
Grantee -
That party in the deed who is the buyer or
recipient.
Grantor -
That party in the deed who is the seller
or giver.
Homestead Exemption - Homestead is
real estate occupied by a person as his or her home or dwelling place.
Homesteads often are exempt from levy or liens, at least to a certain
extent. This is referred to as the homestead exemption. State law defines
the extent of the homestead exemption. For Connecticut, the homestead
exemption is limited to $75,000 in value. Connecticut Code §52-352.
Hubbard Clause -
A "Hubbard" clause is a provision in a
purchase contract which makes the buyer's obligation to close contingent on
the buyer selling a property which the buyer currently owns. Usually, that
property is the buyer's current home. There is no set language for a Hubbard
clause, and the devil in these provisions is usually in the details.
HUD -
U.S. Department of Housing and
Urban Development. Office of
Housing/Federal Housing Administration within HUD insures home mortgage
loans made by lenders and sets minimum standards for such homes.
HUD-1
(Uniform Settlement Statement) - A closing statement or
settlement sheet that outlines closing costs on a real estate
transaction or refinancing.
Implied Agency - any agency relationship that is
indicated by the words and/or actions of the agent rather than by written
agreement; also called accidental or undisclosed agency.
Index - An
economic indicator lenders use to calculate interest rates on Adjustable
Rate Mortgages (ARMs).
Initial
Interest Rate - The introductory interest rate on an Adjustable Rate
Mortage (ARM), which usually changes at the first rate adjustment.
Informed Consent - any consent in which the party
(buyer or seller) clearly understands what he or she is signing and why; it
is obtained when the agent makes his or her explanation commensurate with
the education and understanding of the party.
Joint Tenants with
Right of Survivorship - Any two (or more) people can own property
- typically real estate or a bank account - in joint tenancy with rights of
survivorship. When one of them dies, his or her share automatically goes to
the surviving owner. The phrase “as joint tenants with full rights of
survivorship” or similar wording must appear in the deed. A deceased owner's
interest does not ''pass through'' the decedent's estate. A joint tenant
cannot use a will to leave his or her share of joint tenancy property to
someone else. If all joint tenants die simultaneously, no one owner has
survived any of the others, each joint tenant’s interest in the property
passes by their will. Sometimes owners decide to change ownership of
property from joint tenancy to tenancy in common in order to leave their
interests to someone other than the surviving joint tenant(s).
Jumbo Mortgage - A Jumbo Mortgage is a mortgage with a loan amount
larger than the legislated purchase limits of Fannie Mae and Freddie Mac.
Fannie Mae (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase
the bulk of residential mortgages in the U.S. They set a limit on the
maximum dollar value of any mortgage which they will purchase from an
individual lender. Currently, this limit is $417,000. This leaves a portion
of the market to look elsewhere for placement. Other large investors, such
as insurance companies and banks, step in to fill the need. The average
interest rates are typically greater than normal for conforming mortgages,
and vary depending on property types and mortgage amount.
Lead-Based Paint Hazards -
If you buy a home built before 1978, you
should receive an EPA Pamphlet “Protect
Your Family from Lead in your Home” and the Seller must give you a
Lead
Base Paint Disclosure.
LIBOR
(London Interbank Offered Rate) -
LIBOR is the rate of interest at which banks offer to lend money
to each other. LIBOR is among the most common interest rate benchmarks for
adjustable rate mortgages.
Lien -
A claim by one person on the property of
another as security for money owed. Such claims may include obligations not
met or satisfied, judgments, unpaid taxes, materials, or labor.
Lifetime Cap
- The maximum allowable interest rate over the life of the loan.
Listing agent - an agent of the seller who markets the
seller’s property and represents the seller during the sale and closing of
his or her property.
Loan
Origination Fee - A one-time fee that covers a portion of the
lender's administrative costs in processing a loan.
Loan-to-Value (LTV) - The ratio of the principal amount of the loan
to the lesser of the purchase price of the property or the property's
appraised value. If the loan balance equals 80% of the value of the
property, you may see this expressed as an 80% loan, or 80% LTV.
Marketable Title -
A title that is free and clear of
objectionable liens, clouds, or other title defects. A title which enables
an owner to sell his property freely to others and which others will accept
without objection.
Margin - The
Adjustable Rate Mortgages (ARMs), a margin or spread, is the difference
between the interest rate charged on the loan and the index. Generally, the
margin remains fixed over the life of the loan.
Mill Rate - The tax rate for real estate is usually
expressed in mills. A mill is equivalent to dollars of tax per thousand
dollars ($.001)of taxable value. Each municipality sets its own mill rate.
Some municipalities also have different mill rates for different districts,
as well as for school, water and sewer taxes. To obtain the tax for a
property, divide the taxable value by one thousand and multiple this by the
mill rate. In Greenwich the mill rate is set by the
BET (Board of Estimate & Taxation.)
MLS (Multiple Listing
Service) - an organized system by which Realtor members share
information about properties for sale and offer cooperation and compensation
to buyers’ agent. In Greenwich all Brokers list their properties with
the Greenwich MLS. In Fairfield County the towns of Greenwich, New Canaan
and Darien have their own MLS, the rest of the county is covered by the consolidated MLS.
Mortgagee - A bank or other financial institution that lends money
to the borrower. The borrower is considered the mortgagor.
Mortgage Loan -
A mortgage loan is a loan that is secured
with a lien on real property. Forms of mortgages include fixed rate,
adjustable-rate, and balloon mortgages.
Mortgage Note -
A written agreement to repay a mortgage
loan. The agreement is secured by a mortgage, serves as proof of an
indebtedness, and states the manner in which it shall be paid. The note
states the actual amount of the debt that the mortgage secures and renders
the mortgagor personally responsible for repayment.
Mortgage
(Open-End) -
A mortgage with a provision that permits
borrowing additional money in the future without refinancing the loan or
paying additional financing charges. Open-end provisions often limit such
borrowing to no more than would raise the balance to the original loan
figure.
Mortgage Origination - The making
of a new mortgage. It includes all steps taken by a lender to process the
mortgage loan application, legally bind the parties and place the loan on
the lender's books.
Mortgage Insurance - Often required
when making a down payment less than 20%. It protects the lender against
payment default by the homeowner. This insurance does not relieve the
borrower of the obligation to repay the loan, nor should it be confused with
various forms of life or disability insurance designed to pay off a mortgage
in the event of the disability or death of the borrower.
Mortgagor - The person who borrows money to purchase a house. The
lender is called the mortgagee.
NAR (National Association
of Realtors®) - an organization of licensees in which all
members swear to uphold the Realtors®’ code of Ethics; NAR also provides
education and legislative cooperation for the benefit of its members.
Nominal Interest Rate - The
stated, or contractual, interest rate in a loan agreement, bond or other
security, which may differ from the effective or actual interest rate. See
APR.
Owner-Occupied - A residence lived in by the borrower.
Payment Cap - The limit to how much the monthly payment can change
from one adjustment period to another. Also referred to as a Payment Change
Cap.
Planned Unit Developments (PUDs)
- A subdivision of five or more individually owned lots with one or more
other parcels owned in common or with reciprocal rights in one or more other
parcels.
PITI
(Principal, Interest, Taxes, Insurance) - When a buyer applies
for a loan, the lender will calculate the principal, interest, taxes &
insurance. The figure is designed to represent the borrower's actual monthly
mortgage-related expenses.
P.M.I
(Private Mortgage Insurance) - Covers part of the first mortgage on
90-100% loans, enabling the lender to loan a greater percentage of the sales
price; paid for by borrower.
(POC)
Paid Outside Of Closing
-
Some fees may be listed on the HUD-1 to the
left of the borrower’s column and marked "P.O.C." Fees such as those for
credit reports and appraisals are usually paid by the borrower before
closing/settlement. They are additional costs to you. Other fees such as
those paid by the lender to a mortgage broker or other settlement service
providers may be paid after closing/settlement. These fees are usually
included in the interest rate or other settlement charge. They are not an
additional cost to you. These types of fees will not be added into the total
on Line 1400.
Pocket Listing - A listing which is not multiple listed
immediately. It is withheld from other Realtors so that the listing agent or
broker has the first opportunity to sell the property. This practice is not
illegal, but is certainly not in the best interest of the Seller Client.
Points
(sometimes called Discount Points or Origination Fee) - A fee
charged by lenders at the time a loan is originated. A point is equal to 1
percent of the total loan amount.
Pre-Approved for a Mortgage -
Pre-approval takes pre-qualification one step further. The lender will
verify the Buyer’s income, assets, debts and credit history, and then issue
a letter stating that the mortgage is approved for a certain amount within a
certain time frame, subject to an appraisal of the property. Many times a
buyer can use this pre-approved status as leverage during the negotiation
process.
Prepaid Interest - Interest paid before
it is due. For example, at the close of a real estate transaction borrowers
usually pay for the interest on their loan that falls between the closing
period and the first monthly payment.
Prepayment Penalty - A fee charged to a
borrower who pays a loan before it is due.
Pre-Qualified for a Mortgage
- This is the first step in which the lender collects income, debts and
repayment capability information from the borrower to determine credit
worthiness and financial ability to qualify for a loan. The lender does not
verify any of the information. Pre-qualification" is non-binding to the
lender and only serves as an indication the buyer might be qualified to get
a mortgage.
Prime Rate - The
Prime Rate is the lowest rate charged by banks on short-term loans
to their most creditworthy commercial customers.
Principal - The
remaining amount or balance of a mortgage loan.
Private Client
-
A Private Client signs a buyer agency agreement with a real estate broker.
Connecticut state law specifies these agreements must be in writing.
The Realtor therefore represents their Client and not the
Customer.
See Buying Real Estate.
Ask us for
Anderson Associates Private Client Group
- a free publication.
Property
Appraisal - A written analysis of or opinion about the estimated
value of a property, prepared by a qualified appraiser.
Purchase
Contract - A written promise to purchase and sell a property at a
specified time.
Purchase Money Mortgage (Seller
Financing) - A loan made by the owner of property to the purchaser
to cover part or all of the sales price. While common with both residential
and commercial real estate, seller financing, or owner financing as it is
also called, becomes a very popular means of "making the deal work" when
interest rates are high. During such times, the purchaser who is unable to
qualify for a loan from a traditional lender often turns to the seller and
makes an offer to purchase contingent upon seller financing.
Purchase Price - The total sale price of a home.
Radon
- A ground-generated radioactive gas that seeps into some homes through
sump pumps, cracks in the foundation and other inlets. A leading cause of
lung cancer,
Radon is found in mostly the northern half of the country. The EPA
recommends radon reduction if the radon level is 4pCo/L or more. Even high
levels of Radon can usually be easily and inexpensively reduced. The average
cost or a radon reduction system is about $1,200.
Real Estate
Taxes -
Real Estate Taxes are paid twice a year;
July 1 and January 1. The tax is determined by multiplying your Assessment
times the Mill Rate. There is no separate tax for Schools. Because of
Greenwich’s pay as you go policy, taxes are lower in Greenwich than other CT
towns and in New York towns.
Realtor A designation given in to a real estate agent who has
subscribed to the code of ethics of the National Association of Realtors.
Not all brokers or real estate salespeople are realtors. See
Anderson Associates.
RESPA
(Real
Estate Settlement Procedures Act) -
A federal law designed to make sellers and
buyers aware of settlement fees and other transaction-related costs. RESPA
also outlaws kickbacks in the real estate business.
Revaluation -
Connecticut law requires all real estate
to be revalued for assessment purposes every five years. Towns and cities
that do not adhere to the revaluation requirements will be penalized 10% of
their state grants. Revaluations are required to ensure uniformity in
property valuations. A complete revaluation program includes modernizing the
assessment system, taking a complete description and inventory of all
property, and setting new assessed values on a current basis. By law, the
Assessor must physically review each property at least once every 10 years.
The Assessor views several hundred properties each year. Because regular
assessment work must be carried on along with the revaluation program, most
assessors find it necessary to seek the assistance of a private appraisal
company in conducting a complete revaluation. Responsibility for final
determination of value, however, remains with the
assessor.
Reverse Mortgage - A special type of
loan available to equity-rich, older owners. The interest and money used is
taken out of the equity in the house. Repayment is not necessary until the
borrower sells the property or moves into a retirement community. Beware -
many reverse mortgages have stealth provisions entitling the mortgage
company, for instance, to all increases in the value of the house from the
time of the loan in addition to interest and repayment of money loaned.
Seller Agency - All Realtors at a real estate brokerage firm
represent sellers who have listed their property with that firm. They are
all agents of and owe their allegiance to that seller.
Seller's
Disclosure Form -
Connecticut law requires that a buyer
receive a
seller's disclosure form describing the characteristics of the
dwelling, including whether the seller knows of the existence of any lead
paint, asbestos or hazardous substances on the property.
Seller's Market - An economic situation in which demand is greater
than supply. The result is often greater opportunities for owners who may
find someone willing to offer the asking price or even a figure greater than
the asking price. During times of high demand, stories appear regarding the
owner who had "five offers above the asking price”. In contrast, a
Buyer's Market refers to a situation in which demand is less than supply
at which time the advantages shift to the buyer. When there is more than 5
months of inventory on the market in a particular price range, it is
considered to be a Buyer’s Market for that price range.
Selling agent - any agent who sells a property; he or
she may be a subagent or listing agent of the seller, a buyer’s agent or a
dual agent. Also called a "co-op" agent.
Single Ownership - This type
of ownership, also referred to as One Name Ownership, is primarily used when
there is a single homeowner living alone. Ownership is very simple, your
name would be the only one on the deed. For the purpose of making your will,
you are the sole owner, even if a lender has some legal ownership in the
property until you pay off the mortgage(s). These days, one of the concerns
of married couples when considering property ownership is liability for
court judgments. The Homestead Exemption is not very large in Connecticut.
For this reason, some couples choose to put the property in the name of the
wife, LLC or trust.
Smart Mortgage - Smart Mortgage allows mortgagers to pay off their
mortgages more rapidly. Instead of paying monthly, you authorize a draft
from your checking account every week or every two weeks. The result is more
payments going to principal. This arrangement enables Smart Mortgagers to
payoff their home loan much more quickly than a conventional mortgage
arrangement.
Sub-Agency - Sub-agency is legal in Connecticut, but is not
practiced in Greenwich. Under sub-agency, a Realtor showing a property not
listed by their firm, represents the seller as sub-agent of the seller’s
agent. It is that sub-agent’s duty to protect the seller’s interests at all
times. Before Connecticut enacted Buyer Agency law in 1996, all Realtors
showing properties to buyers were sub-agents and represented only the
interests of the seller. Sub-agency is still the standard for most of the
USA.
Subagent - a selling agent who has accepted a listing agent’s
blanket offer of subagency and is, therefore, an agent of the seller who is
working with a buyer as a customer.
Survey -
A measure to determine the exact location of
the house, lot lines, easements and rights-of-way.
Tax Free
Exchange -
Also known as a "Like Kind Exchange or
1031
Exchange". Under Internal Revenue Code 1031, certain real estate
properties may be sold and the seller can avoid paying taxes on any gain if
a new similar property is purchased. This "exchange" must conducted under
very specific guidelines.
Tenancy by the Entirety - This
form of ownership is basically the same as joint tenancy with right of
survivorship but is limited to married couples. The phrase “tenancy by the
entirety” or “as tenants by the entirety” must appear in the deed. When one
spouse dies, the entire interest in the property automatically goes to the
other. Before tenancy by the entirety property can be changed to some other
form of property ownership, both spouses must agree to the change. This form
of ownership is not recognized in Connecticut.
Tenants in Common - In a tenancy in
common, all owners have equal rights to use the property. Ownership shares
may be equal, however, unequal shares may be arranged by deed or other
written contract. An advantage of tenancy in common ownership is that each
co-owner is free to transfer or bequeath his/her interest to anyone he/she
chooses. Tenancy in common is the most common way for unmarried people to
own property together. For that reason it is often wise to have a written
agreement when purchasing property with someone other than a spouse. For
example, it usually makes sense for both parties to agree to a ''right of
first refusal'' whereby an ownership interest cannot be sold without the
interest first being offered to the co-owner. Unless there is a specific
agreement to the contrary, or unless the parties have taken title as a legal
partnership, the law presumes that any owner has an absolute right to do
whatever he or she wants with an interest in real estate. Married couples
can use this form of co-ownership, but more often choose joint tenancy.
Title Company - Firms that ensure that the title to a piece of
property is clear and provide title insurance.
Title Insurance - A policy
issued to lenders and buyers to protect any losses because of a dispute over
the ownership of a piece of property.
Title Search - A check of public title records to ascertain that
the seller is the legal owner and that there are no claims or liens against
the property. See
Abstract of Title.
Truth in
Lending Act -
Requires lenders to provide an estimate of
the total financing charges over the entire life of the loan, including the
method of calculating the finance charge - the total dollar amount the buyer
will pay for the loan - and when those finance charges begin. See
Mortgage Process for more
information.
Undisclosed Dual Agency
- a dual agency relationship that occurs when a listing agent or subagent
acts and speaks as though he or she also represents the buyer but without
either written or oral disclosure; see "implied agency."
Unrepresented Buyer (customer)
- A customer is a buyer who is not represented in the transaction. A
customer is traditionally a buyer who is buying a product from a
salesperson. You should expect the salesperson to provide honest
information, but you would not expect the salesperson to negotiate the best
price for you. Realtors are obligated by law to treat customers honestly and
fairly and to disclose material facts about a property, but are not allowed
by law or ethics to provide a customer with advice in the transaction or to
keep the customer’s conversations confidential.
VA Loan
- A loan that is partially guaranteed by the U.S. Department of Veterans
Affairs (VA) and made by a private lender.
Walk-through inspection -
Typically done within 48 hours of closing,
the buyer and their real-estate agent do a final inspection of the property
the buyer is purchasing to ensure it is in essentially the same condition it
was when the buyer made the purchase offer.
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