Abandonment - The relinquishment of all rights and title to a property with no intention of reclaiming ownership.

Abstract - A disclosure statement to initial condo purchasers.

Abstract Of Title - A condensed history or digest of the title to a parcel of land consisting of a summary of every recorded  instrument, together with a statement of all liens, charges or encumbrances affecting title to that land.

Abutting Owner - An owner whose land touches a highway or other public place.

Acceleration Clause - A clause in a mortgage or agreement of sale stating that upon default of a payment due, immediate and  full payment of the balance of the obligation becomes due and payable.

Access Right - The right of a property owner to have ingress and egress to and from his property.

Accession - Acquisition of property by its joining or union with other property.

Accretion - Gradual additions to land by deposits of sand or soil by bordering waters through natural causes.

Acknowledgment - A formal declaration made before a notary public or other authorized person, by a person who has  executed an instrument, that such execution is his free act and deed.

Acre - A measure of land equal to 160 square rods, 4,840 square yards, or 43,560 square feet

Accrued Depreciation - In appraisal, any loss of utility that causes the actual value of a property to be less than the  reproduction cost new.

Accrued Items - On a closing statement, items of expense that are incurred but not yet payable, such as interest on a mortgage loan.

Actual Authority - Such authority that a principal intentionally gives his agent.

Adjoining Owner - One whose property is contiguous; to be next to.

Adjusted Basis – Value of property used to determine the amount of gain or loss realized by owner upon sale of the property; equals acquisition cost plus capital improvements minus depreciation taken.

Administrator - A person appointed by the court to administer the estate of a deceased person who died intestate, or left no  will;

Administrator's Deed - A deed given by an administrator.

Ad Valorem - Tax according to valuation.

Adverse Possession - The means of acquiring title to land against the real owner, where possession has been actual, open,  hostile, exclusive, continuous, and under claim of right for the statutory period of 20 years.

Affidavit - A statement reduced to writing and sworn to before a notary public or some other authorized of officer.

Affirm - To confirm or to ratify.

Agency - The legal relationship resulting from an agreement that the agent if authorized by a principal to perform certain acts on behalf of the principal in dealing with a third party.

Agency by Ratification - An agency created "after the fact" by a principal expressly or impliedly affirming the conduct of a party claiming to act as his or her agent.  There must be some proof that the principal was aware of the act or acts and either accepted the benefits or elected to be bound by the agent's conduct.

Agreement of Sale - A written agreement in which the buyer agrees to buy certain realty and the seller agrees to sell upon  terms and conditions set forth therein. Title remains with the seller until terms and conditions are fulfilled; buyer has  equitable title; there are two closings.

Air Rights - The rights vested by a grant of an estate in real property to all or any portion of the space above the property

Alienation - The transferring of real property from one person to another.

Alienation Clause - A statement in a mortgage or deed of trust entitling the lender to declare the entire principal balance of the debt immediately due and payable if the borrower sells the property during the mortgage term.  Also know as due-on-sale clause.

Allegation - The assertion or declaration of a party setting out what he expects to prove.

Allodial System - The free and full ownership of rights in land by individuals, which is the basis of real property law in the United States.  By contrast, under the feudal system, ownership of land was vested in the king or sovereign.

Alluvion - That increase of soil on a shore or bank or a river as the result of accretion.

American Land Title Association (ALTA) - An extended coverage title insurance policy usually protecting the mortgagee  against loss due to errors in the public records.

Amortization - The gradual paying off of a debt on an installment basis.

Anchor Tenant - Major tenant in a shopping center that serves as a magnet to attract customers to the center.

Annexation - The act of attaching, adding, joining, or uniting one thing to another.

Annual Percentage Rate (APR) - The effective annual cost of credit calculated on the basis of procedures specified by  Regulation Z (Truth-in-Lending).

Annuity - A sum of money that constitutes one of a series of periodic payments.

Anti-Trust Laws - Federal and state laws prohibiting conduct which interferes with business competition, such as price fixing,  group boycotts and tying agreements.

Appraisal - An estimate of value of real estate; the report stating and supporting the estimated value of realty.

4-3-2-1 Appraisal Method - This method of Appraisal is used particularly in commercial property, where street frontage is important.  The concept is that the front 25% of the property facing the street is worth 40% of the total value of the property; the next 25% behind is worth 30% of the total value; the next 25% is worth 20% of the total value; and the back 25% is worth only 10% of the total value of the lot.  Therefore 40% + 30% + 20% + 10% = 100% of the total value.

Appraisal By Capitalization - Determine the value of property by dividing net annual income by the capitalization rate.  Used on income producing properties.

Appraisal By Cost Approach - Estimating the value of a piece of property by adding to the estimated land value  the estimate of  the replacement cost or reproduction cost of the building less depreciation. Also called summation or reproduction cost approach.

Appraisal By Market Comparison - An appraisal of property through the examination and comparison of actual sales of   comparable properties. Also called a "comparable." 

Appreciation - An increased value of property due to economic or related causes which may prove to be either temporary or  permanent.

Appurtenance - That which has been added to a property, which becomes an inherent part of the property, and will pass with it when conveyed; includes improvements.

Association of Real Estate License Law Officials (ARELLO) – Founded in 1929, a group of real estate license law officials that regulates more than two million real estate licensees.

As Is - A phrase indicating the property is sold in its present conditions with no warranties.

Assemblage - Putting together two or more lots to form a large parcel. To be distinguished from plottage, which is the resulting value. 

Assessed Value – The dollar amount of worth to which a local tax rate is applied to calculate the amount of real property tax.

Assessment - A charge against real estate made by a unit of government or a condo association to cover the proportionate cost of improvement. 

Assignee - The person to whom an agreement or contract is transferred.

Assignor - A party who assigns or transfers an agreement or contract to another.

Assignment - The method or manner by which a right, or contract is transferred from one person to another. 

Associate-Broker -  A real estate license classification to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-associate, broker-salesperson.

Assumption Of Mortgage - Taking of title to property by assuming liability for payment of an existing note secured by a mortgage.

Attachment - The act of taking realty by judicial order and placing it within the custody of the court. 

Attestation - The act of witnessing in writing another's execution of an instrument; to affirm to be true or genuine. 

Attorney In Fact - One who is authorized to perform certain acts for another under a power of attorney. 

Attractive Nuisance - A doctrine of tort law stating that a person who maintains on his or her property a condition that is both dangerous and conceivably inviting to children owes a duty to exercise reasonable care to protect children from danger.  Thus, an owner who maintains a swimming pool, or unmarked open pit, or discards a refrigerator or freezer may be liable for injuries to trespassing children.

Avulsion - The sudden removal of land of one owner and depositing on the land of another when a stream changes its



Balloon Mortgage - A mortgage in which the scheduled payment will not fully amortize the loan over the mortgage term; therefore, to fully satisfy the debt, it requires a final payment called a balloon payment, larger than the uniform payments.

Balloon Payment - The final installment payment on a note which is greater than the preceding installment payments and pays the note in full. 

Bankruptcy - A condition of financial insolvency in which a person's liabilities exceed his assets, and he is unable to pay his debts. 

Bargain And Sale Deed - A deed used to convey title to real property, which usually does not include warranties; if any, they are generally an assertion by the grantor that he has possession of the property

Baseline And Meridian - Imaginary lines used by surveyors in locating and describing land under the rectangular survey method. The north-south line is the meridian, the east-west line is the base line. Used mostly in Midwestern states.

Basis - Original cost of property plus value of any improvement put on by the seller and minus the depreciation taken by him.

Before And After Method - An appraisal method used in condemnation cases where there has been a partial taking of the property. 

Benchmark - A natural or unnatural permanent reference mark or point established for use in measuring differences in elevation. 

Beneficiary - A person who receives and benefits from the gifts or acts of another; one who receives the proceeds from a will, insurance policy, or trust; the lender in a deed of trust.

Bequeath - The giving of personal property by will.

Biannual - Happening twice each year; semi-annual.  

Biennial - Happening once every two years.

Bilateral Contract - A contract in which both parties have reciprocal obligations toward each other.

Bill Of Sale - A written instrument which passes title of personal property from seller to buyer.

Binder - An agreement to cover a down payment for the purchase of real estate as evidence of good faith on the part of the purchaser; shows the receipt of a deposit and outlines the basic terms of the transaction.

Blanket Mortgage - One mortgage covering two or more specific parcels or realty.

Blind Ad - An advertisement that does not include the name and address of the person placing the ad, only the phone number or post office box address.  Licensed real estate agents are generally prohibited by state license laws from using blind ads.

Blockbusting - The discriminatory practice of encouraging members of one race or creed to move into a neighbor-hood, and then exploiting the situation by persuading residents to sell their houses at deflated  prices because of the alleged social deterioration of the neighborhood.

Block Interest - Interest computed on the original face amount and which remains the same as the principal declines.

Blue-Sky Laws - State securities laws designed to protect the public from fraudulent practices in the promotion and sale of securities. ("promising the sky")

Board Foot - A piece of wood of any shape that contains 144 cubic inches of wood (12 inches X 12 inches X 1 inch, 6 inches X 6 inches X 4 inches, etc.).

Bona Fide - In good faith, without fraud; genuine; real.

Book Value
 – Dollar worth as it appears on the owner’s books, usually for tax purposes; also known as historic value.

Boot - The payment to satisfy the difference in equities in an exchange, which may be in cash, personal  property, note, financing, or anything of agreed upon value.

Breach Of Contract - Violation of any of the terms or conditions of a contract; default; non-performance.

Broker - A licensed person who negotiates the purchase and sale of real estate of another.  To qualify as a real estate broker in Hawaii, one must be licensed as a salesperson for a minimum of three years; meet educational requirements; pass a written test; pay the required fees.

Broker-Associate -  A real estate license classification to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-salesperson, associate-broker.

Broker In Charge (BIC) - A broker designated by the principal broker of a real estate brokerage company and registered with the state real estate license commission as the person directly in charge of, and responsible to the principal broker for the real estate operations conducted at a real estate office.

Broker-Salesperson - A real estate license classification to describe a person who has qualified as a real estate broker but still works for and is supervised by another broker; also called a broker-associate, associate-broker.

Budget Mortgage - A mortgage with payment that covers principal and interest, plus taxes, fire insurance,  lease rent, etc.

Building Codes - Rules established by local governments to regulate construction standards.

Building Restrictions - Limitations on the use of property or the size and location of improvements established by legislation or by covenants in deeds.

Bulk Transfer - Any transfer of a major part of the materials, inventory or supplies of an enterprise not in the ordinary course of the seller's business.

Bundle Of Rights - Ownership concept in real estate which embraces the rights of possession, use, enjoyment,  and disposition.

Bureau Of Conveyance - The Hawaii state office which houses all legal documents relative to title to both land court and regular system property recorded since 1848; located in Honolulu.

Business Opportunity - The assets for an existing business enterprise including its goodwill.

Buy-down - The one-time, nonrefundable prepayment of a portion of the interest of a loan to subsidize reduced monthly payments during the initial years.  For example; if the eventual note rate on a 4-3-2-1 buy down loan is 8%; the first year's interest rate would be 8% - 4% so the borrower's first year monthly payments would be calculated as if it were a 4% loan.  the second year's interest rate would be 8% - 3% so the borrowers monthly payments would be calculated as if it were a 5% loan.  the third year's interest rate would be 8% - 2% so the borrowers monthly payments would be calculated as if it were a 6% loan.  the fourth year's interest rate would be 8% - 1% so the borrower's payments would be calculated as if it were a 7% loan.  For the remaining years the borrower's payments would be calculated at 8%.

Buyer's Agent / Broker - A real estate broker who represents the buyer in a fiduciary capacity.  Also known as the selling broker.  The broker who sells the property often represents the buyer.


Capital Improvement - An item that adds value to the property, adapts the property to new uses, or prolongs the life of the property; maintenance is not a capital improvement.

Capitalization - The act of converting future income into current equivalent value.

Capitalization Rate - The relationship or ratio between the net income from a real estate investment and the value of the investment, usually expressed as a percentage; the rate of interest which is considered a reasonable return on the investment, plus the recapture rate which computes a return of the investment.

Cash Flow – Income produced by an investment property after deducting operating expenses and debt service.

Caveat Emptor - Let the buyer beware; the buyer must examine the goods or property and buy at his own risk.

CC&R's - Covenants, conditions and restrictions.

Certificate of Occupancy - A document issued by a local government agency, after satisfactory inspection of a structure, authorizing that the structure can be occupied.

Certificate or No Defense - An instrument executed by the mortgagor and attesting to its validity; estoppel certificate.

Certificate of Reasonable Value (CRV) – A document setting fourth the value of a property as the basis for a loan guarantee by the Veteran’s Administration to the lender.

Chain of Title - A sequential history of the conveyances, encumbrances, and records of ownership to a piece of property through the years from the original grant to present; the succession of owners as revealed through the public records.

Chattel - Personal property which is tangible and movable; personalty.

Chattel Mortgage - A personal property mortgage.

Chattel Real - Chattels real are annexed to real estate, whereas chattels personal are moveable.  A lease is an example  of a chattel real.

Cite - To quote as authority or an example; to call to attention or enumerate.

Civil Rights Act of 1866 - A federal law that prohibits all discrimination on the basis of race.

Client - The person who employs an agent to perform a service for a fee; also called a principal.  The client is owed the duty of care and diligence, fiduciary duties in common-law states and statutory duties where the common law has been abrogated.  In traditional real estate brokerage, the client is the seller, and the buyer is the prospect of customer.

Closed Mortgage – A mortgage that imposes a prepayment penalty.

Closing - The time when a transaction is consummated, or the actual signing over of the documents and  delivery of the deed; the time after signing when the documents are recorded.

Closing Statement - A statement of settlement made by a broker or an escrow company that reflects the financial position of the buyer or seller in that particular real estate transaction. 

Cloud On Title - Any conditions revealed by a title search which may affect or impair the owner's title to property because of their apparent or probable validity.

Coastal Zone Management Act - A federal law passed in 1972 recognizing the national interest in the effective planning, management, beneficial use, protection and development of the saltwater and Great Lakes coastal zones.  The act calls for states to plan and develop management programs for the land and water resources of their coastal zones.

Codicil - A supplement or addition to a will which adds to, subtracts from, alters, revokes, or qualifies the provisions of a will.

Coinsurance - A common provision in building insurance policies under which the insured agrees to maintain insurance on his or her property in an amount equal to at least 80 percent of the replacement cost.  If the property is not insured to that amount and a loss is incurred, the insurance company will make the insured share in the loss on a pro rata basis.  Example: If the building is insured for only 60 percent of its value and there is a $10,000 loss, the insurance company will pay only $7,500. (i.e. 60% divided by 80% times $10,000 = $7,500)

Collateralized Loan - A loan secured by property; unlike a debenture.

Color Of Title - That which appears to be good title but which is not in fact good title, such as title held under a defective deed.

Commingling - Mixing money belonging to clients with personal funds.

Commission - An agent's compensation for performance of the duties of his agency; in real estate practice, a percentage of  the selling price of the property, or percentage of rentals, etc.

Commitment - A pledge or a promise; an agreement.

Common Element - In a condominium, land and all parts of a building normally used by all of the owners for their mutual convenience or safety.

Common Expense - In a condominium, the expenses of operation; all sums designated as such by the declaration or by-laws.

Common Interest - The percentage of undivided interest in the common elements of a building appertaining to each apartment in a condominium.

Common Law - Laws which have evolved from general usage and legally established through court decision.

Common Profit - The balance of all income, rent, profits and revenues from the common elements remaining after the deduction of the common expenses in a condominium.  

Community-Based Planning - A form of land use control originating in the grassroots of a community.

Community Property - Property accumulated and owned in common through joint efforts of husband and wife during their marriage. Hawaii is not a community property state.

Compound Interest - Interest paid both on the original principal and on interest accrued from the time it fell due.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) - A federal law enacted in 1980 and reauthorized by the Superfund Amendments and Reauthorization Act of 1986 (SARA), which imposes on owners, lenders, occupants and operators liability for correcting environmental problems discovered on a property.  Superfund, as the statutes are known collectively, establishes a fund to clean hazardous waste sites and respond to spills and releases on property.

Condemnation - The process by which property of a private owner is taken for public use, with just compensation to the owner, under the right of eminent domain.

Condemnee - One whose property is condemned.

Conditional Fee - A fee estate based upon a condition.

Condominium Ownership - The individual outright ownership of a single unit in a multi-unit property together with an interest in the common elements of that property.

Consideration - Valuable consideration, a promise or an act of legal value bargained for and received in return for a promise;  good consideration, love and affection.

Constructive Eviction - Breach of the covenant warranting quiet enjoyment in a lease; when a landlord performs an act depriving the tenant of quiet enjoyment of the premises thereby causing the tenant to move.

Constructive Notice - Notice given by the public records; legal presumption of notice given by the public records. Also called legal notice.

Consummate - To bring to completion, perfection, or fulfillment.

Contiguous - In close proximity; adjoining.

Contingent - Dependent upon an uncertain future event.

Continuation - An update of a title search, covering the period from the preliminary title report to the time of the recording of the documents.

Contract - A legal agreement between competent parties for a consideration to perform or refrain from performing certain acts.

Conventional Mortgage - A mortgage which is not FHA insured, or VA guaranteed.

Conversion - Transforming an apartment building into a condo.

Conveyance - The transfer of the title of land from one to another; an instrument which carries from one person to another an interest in land.

Conveyance Tax - Tax paid by seller upon transfer of deed, based upon $.10 per $100.00 valuation 

Cooperating Broker - A broker who joins with another broker in the sale of real property; usually, one who represents the buyer of property listed with another broker, the selling broker.

Cooperative Ownership - Ownership that usually takes the form of shares of stock in a corporation owning the entire building and a proprietary lease giving the stockholder/tenant the right to occupy a unit for which he pays a proportionate share of the maintenance and operating expenses.

Corporation - A vehicle used to carry on business with its owners having liability only to the extent of their stock ownership; considered to be an individual or separate entity.

Corporeal - Pertaining to a right or rights of a visible and tangible nature.

Correction Deed - A deed used to correct a prior erroneous deed; a deed of confirmation; a reformation deed.

Correlating - A step in the appraisal process in which the appraiser weights the appraisal approaches to real a rational conclusion as to the value of the subject property; also known as reconciliation.

Counteroffer - A new offer made by an offeror rejecting an offer.

Courtesy To Broker - The practice of sharing commissions with cooperating brokers; also, where a selling owner states he will give a commission to the buyer's broker.

Covenant - An agreement written into deeds and other instruments which promises or guarantees that something shall or shall not be done; an agreement stipulating certain uses or non uses of property.

Credit - In closing statements, the acknowledgment of payment; the opposite of a charge or debit.

CRV - Certificate of Reasonable Value (VA).  A document setting forth the value of a property as the basis for the loan guarantee by the Veteran's Administration to the lender.

Cul-De-Sac - A passage way or street with only one outlet; a blind alley; a turn- around.

Cumulative Use Zoning - A type of zoning permitting a higher priority use even though it is different from the type of use designated for the area.

Curtesy - The right which a husband may have in his wife's estate at her death.

Curtilage - The enclosed ground space surrounding a dwelling, such as the lawn area or patio.

Customer - A prospective buyer of real estate.  Not to be confused with a property seller, who typically is the listing agent's client.  Also the unrepresented seller of a property that is being sold to a buyer represented by a buyer's agent. (see client)


Damages - The indemnity recoverable by an injured party to compensate him for the loss suffered through an act of default of another.

Datum - A level surface to which heights and depths are referred; the datum plane.

Debenture - A note or bond given as evidence of a debt; an unsecured note; that is, there is no collateral security.

Debit - A charge on a closing statement; opposite of a credit.

Debt Service - The amount needed for payment of principal and interest on an amortized debt.

Declaration - To make known openly and in definite terms; that which, along with by-laws, defines the rules by which a condominium will exist.

Dedication - An appropriation of land by its owner for some public use. and acceptance for such use by authorized public officials on behalf of the public. In certain cases five years of uninterrupted public use will be considered an acceptance.

Deed - An instrument in writing, duly executed and delivered by the grantor that conveys to the grantee some right, or interest in or to real estate.

Deed in Lieu of Foreclosure – Conveyance of title to the mortgagee by a mortgagor in default to avoid a record of foreclosure; also called a friendly foreclosure.

Deed of Release - A deed executed by a mortgage lender to release a title from the line of a mortgage when the debt has been satisfied, also used to release a dower right.

Deed Of Trust - Similar to a mortgage but title is transferred to a trustee pending payment of the debt

Deed Restriction - Limitation on land use appearing in deeds.

Default - Failure to meet an obligation or promise when due.

Defeasance Clause - The clause in a mortgage that gives the mortgagor the right to redeem his property upon the  payment of his obligation to the mortgagee, and declares the instrument null and void upon payment of debt when due;  also found in leases.

Defeasible Fee Simple - A fee estate subject to being divested or voided. (see Conditional Fee)

Deficiency Judgment - A judgment for the balance of a debt issued when the net proceeds from the foreclosure sale are less than the indebtedness sued upon.

Delivery - The act or intent of transferring an instrument from one person to another in such a way that it cannot be recalled.

De Minimus Structure Position Discrepancies - Amendments in 1997 to Hawaii statutes attempted to limit problems arising from encroachments of improvements that were the subject of older, less accurate surveys.  The new law gives minor allowable tolerances for different types of properties.

Demise - A conveyance of an estate to another for life, for years, or at will; to lease; "the demised premises.

Deposit - Money given by one to another as evidence of his good faith; evidence or security for performance of a contract.

Deposit Receipt - Upper section of contract used by Hawaii Association of Realtors when accepting earnest money to bind an offer for property; also includes terms of the contract.

Depreciation - Loss of value brought about by physical deterioration or functional or economic obsolescence.

Depreciation - Straight Line - A depreciation method where the depreciable cost of the asset is spread evenly over the estimated useful life of the asset. The logic for this method of depreciation comes from the assumption that an asset's depreciation is caused by the passage of time. To calculate the amount of depreciation that should be charged against the asset each year, the cost of the asset, minus its salvage value, is divided by the estimated life of the asset. The resulting amount is the amount of depreciation that should be deducted from the value of the asset each year.

Depth Table - Tables which provide uniform measurement of additional value to lots because of added depth of the lot.

Derivative Title - Any title other than original title. 

Descent - Ownership transferred by means of inheritance.

 - Loss in value brought about by wear and tear.

Devise - A gift of realty by will.

Devisee - One who receives a gift of real estate by will.

Direct  Comparison Approach - A means of estimating value by comparing recent sales of comparable properties to the subject property after making appropriate adjustments for any differences. Also called market data approach.

Discount Points - A fee based on a percentage of a loan, charged by a lender, as a service charge, or as an Amount needed to produce the same yield on a VA loan that he would receive in the conventional mortgage market: each point charged represents I percent of the loan amount and increases the interest rate by 1/8 of one percent; paid by seller.

Disintermediation - The process of individuals investing their funds directly instead of placing their savings with banks for investment by such banks.  This bypassing of financial institutions occurs when proportionately higher yields are available  on secure investments (such as high grade corporate bonds, money market funds and government securities) than can be obtained on savings deposits.  Disintermediation has a direct influence on the scarcity of mortgage money, in that diverted savings rarely find their way into mortgages.

Dispossess Proceedings - A legal process by a landlord to remove a tenant and regain possession of real property due to some breach of lease agreement by the tenant.

Distraint - The right of a landlord to seize and hold possessions of a tenant, for rent in arrears, pursuant to a court order.

Dominant Estate - An estate attached to and benefiting from the servient estate, e.g., an easement runs over the servient estate and serves the dominant estate; also called dominant tenement.

Donee - A person to whom a gift is made.

Donor - A person who makes a gift.

Dower - The one-third interest a wife may have in the property of her husband acquired prior to July 1, 1977; a life estate in 1/3 of the land the husband owns during the continuance of the marriage relationship and an absolute interest in 1/3 personal property.

Dower Consummate - The completed dower; the right a wife may have in her husband's property upon his death.

Dower Inchoate - The right a wife may have in her husband's property during his life.

Down Payment - The amount of cash paid by a buyer which, added to the mortgage amount, equals the total sales price. At the time of closing this is referred to as equity.

DROA - Deposit Receipt, Offer and Acceptance, a three-section contract previously used by a Hawaii Association of Realtors member when accepting earnest money (Deposit Receipt) to bind an offer for property; also includes terms of the contract (Offer); and a section for seller's to accept the offer; (Acceptance).  Now called Purchase Contract.

Dual Agency - A relationship which one owes fiduciary duties to both buyer and seller in real estate transaction.

Due on Sale - A mortgage clause permitting acceleration of the loan if the mortgagor attempts to transfer title or interest to the secured property.

Duress - Unlawful constraint or action against a person forcing him to perform some act against his will.


​Earnest Money - Initial payment made by a purchaser of real estate as evidence of good faith.

Easement - A right, privilege or interest which one party has in the land of another.

Easement Appurtenant - An easement that is attached to and runs with the land, it cannot exist apart from the particular land to which it is attached.

Easement In Gross - An easement which encumbers the land, and is usually given to a quasi-public corporation, such as the electric or phone company.

Easement By Prescription - A method of acquiring a right to a portion of property by lapse of time, in the manner of  adverse possession.

Economic Life - The period of time over which a property may be profitably used.

Economic Obsolescence - See Obsolescence, referred to as External Obsolescence.

Ejectment - A form of action to regain possession of real property, with damages for the unlawful retention; generally used when there is no landlord/tenant relationship.

Emblements - Trees or crops that are cultivated annually; the rights of a tenant to harvest the annual crop even after his tenancy has ended.

Eminent Domain - The right of a government to take private property for public use upon the payment of just compensation.

Enabling Acts & Enabling Powers - Laws passed by state legislatures authorizing cities and counties to regulate land use in their jurisdictions.

Encroachment - A building or fixture which intrudes partly or wholly upon the property of another

Encumbrance - A claim, lien, charge or liability attached to and binding upon real property which affects or limits the title or use thereof, e.g., mortgage, lien, easement.

Endorsement - The placing of one's signature on a document, to make it negotiable or transferable.

Environmental Impact Statement (EIS) – A requirement of the National Environmental Policy Act prior to initiating or changing a land use that may have an adverse effect on the environment.

Equal Credit Opportunity Act (ECOA) - A federal law prohibiting discrimination in consumer loans.

Equitable Title - Title of a purchaser under a contract of sale, or agreement of sale.

Equity - The interest or value which an owner has in real estate over and above the debts against it.  Branch of remedial justice by and through which relief is afforded to parties in courts of  equity.

Equity Of Redemption - The right of an owner to reclaim property before it is sold through foreclosure proceedings by payment of the debt, interest and cost.

Erosion - The gradual wearing away of land due to natural causes of wind and water.

Escalation Clause - A clause in a contract permitting an adjustment of certain payments up or down to cover certain contingencies; mostly found in agreements of sale, mortgages and leases.

Escheat - The reverting of property to the state when heirs capable of inheriting are lacking; or the property is abandoned.

Escrow - The deposit of instruments and funds with instructions to a third neutral party to carry out the provisions of an agreement or contract.

Escrow Account – (a) An account maintained by a real estate broker in an insured bank for the deposit of other people’s money; also called a trust account;  (b) An account maintained by the borrower with the lender in certain mortgage loans to accumulate the funds to pay an annual insurance premium, a real property tax, or homeowner’s associations assessment.

Escrow Holder - The one who receives a deed or other item from a grantor to be delivered to the grantee upon the performance of a condition or the occurrence of a contingency.

Estate - The degree, quantity, nature, and extent of interest a person has in real property.

Estate For Years - A lease; an interest in land by virtue of a contract for the possession for a definite and limited period of time.

Estoppel - A doctrine which bars one from asserting rights which are inconsistent with a previous position or representation. e.g. the seller of an apartment building may ask the tenants to sign lease estoppel agreements stating  the amount of rent and security deposits.

Estoppel Certificate - An instrument executed by the mortgagor and attesting to its validity; estoppel certificate.

Estovers - The right of a life tenant or lessee to cut timber on the property for fuel or to use in making repairs.

Et Al - Latin for "and others."

Et Ux - Latin for "and wife."

Eviction - A legal proceeding by a landlord to recover possession of leased premises from a tenant due to some breach of lease contract.

Exchange - A method of conveying real property by trading with another property.

Exchange Agent - A person who operates an exchange program in time sharing projects.

Exclusive Agency - A written instrument giving one agent the right to sell property for a specified time, but reserving the right of the owner to sell the property himself without the payment of a commission.

Exclusive Right To Sell - A written agreement between owner and agent giving agent the right to collect a commission if the property is sold by anyone during the term of his agreement.

Exclusive Use Zoning – A type of zoning in which only the specified use may be made of property within the zoned district.

Execute - To complete, to perform, to make, to do, to follow out; to execute a deed, to make a deed, including especially signing; to execute a contract, to perform the contract, to follow out to the end, to complete.

Executed Contract - A contract that is fully performed.

Executor - A person named in a will to carry out its provisions as to the disposition of the estate of a deceased person; a  personal representative.

Executory Contract - A contract not yet fully performed; e.g., DROA.

Express Authority - Clearly stated duties of an agent as set forth by his principal.

Express Contract - A contract created verbally or in writing by the parties.

External Obsolescence - Loss in value due to factors outside of the property (such as near airport).


Face Amount - Amount of insurance coverage shown on the declaration page.

Fair Housing Act of 1968 – A federal prohibition on discrimination in the sale, rental, or financing of housing on the basis of race, color, religion, sex, or national origin.

Fair Housing Act of 1988 – A federal prohibition on discrimination in the sale, rental, financing, or appraisal of housing on the basis of race, color, religion, sex, national origin, handicap, or familial status.

Fair Market Value - A price for property agreed upon between buyer and seller in a competitive market with neither party being under undue pressure.

Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") - A Federal agency which buys mortgages in the secondary money market from commercial banks and federally insured savings and loan associations.

Federal Housing Administration (FHA) - An agency of the Federal Government which insures certain real estate loans.

Federal National Mortgage Association (FNMA or "Fannie Mae") - An agency formerly of the Federal Government that buys and sells mortgages in the secondary money market.

Federal Reserve System – The U.S. agency that regulates monetary policy and, thereby, the money supply and interest rates.

Fee Determinable - A fee estate which exists only until a specified event does or does not occur. Upon the happening of such event, the fee automatically ends and reverts back to the original grantor, or to his estate.

Fee Simple - An estate in real property, by which the owner has the greatest power over the title which it is possible to have, being an absolute estate; an estate of inheritance belonging to the owner, that he may dispose of, trade, or will, as he chooses.

Fee Tail - An estate which is inheritable by particular lineal heirs. Upon lack of such heirs the estate reverts back to the grantor or his heirs.

Feudal System - A type of land ownership whereby only the king can hold absolute title to real property.

Fiduciary - A person in a position of great trust and confidence, as the relationship between principal and real estate broker or an attorney to client.

Fiduciary Deed - The fiduciary deed is used to transfer real estate from a grantor who is a fiduciary – one who is put in a position of trust – to include executor, administrator, trustee, guardian, receiver or commissioner. Generally, the fiduciary warrants only that he or she is duly appointed and acting within his or her authority. 

Finders Fee - A fee paid to a person for the services of putting together the two parties in a real estate transaction.

First Right of Refusal - a right, usually given by an owner to a lessee, which gives the lessee the first chance to buy the property if the owner decides to sell. The owner must have a legitimate offer which the lessee can then match or refuse.

Fiscal Year - A year, used for tax, corporate and accounting purposes which begins on a date other than January 1.

Fixed Rate Mortgage - A mortgage in which the interest rate does not change over the term of the loan.

Fixture - An article of personal property which has been installed in or attached to land or a building thereon, in such a manner, that it is now considered to be a part of the real estate.

Flat Lease - A lease in which the rental amount does not change during the lease term.

Foreclosure - Procedure whereby property pledged as security for a debt is sold to pay the debt in event of default in payments or terms.

Forfeiture - Loss of money or anything of value, due to failure to perform; a right expressly given in an installment contract whereby the seller terminates the contract for non-payment, and retains all of the payments previously made by the buyer

Forfeiture Clause - A clause in an agreement of sale or contract for deed providing for giving up all payments by a buyer in default.

Fraud - The intentional and successful employment of deception in order to cheat or deceive another person and to thereby gain some dishonest advantage.

Freehold - An estate in real property for an indefinite and uncertain time, such as a fee simple or a life estate.

Friendly Foreclosure - Conveyance of title to the mortgagee by a mortgagor in default to avoid a record of foreclosure; also called a deed in lieu of foreclosure.

Front Foot - Property measurement by the front foot on its street line or waterfront line with each front foot extending the depth of the lot.

Functional Obsolescence - Loss in value resulting from things such as faulty design, inadequacies, over adequacies, and equipment being out of date.


Gap Loan - Any loan filling the deficiency created when the permanent financing and the equity are unable to cover the total cost of a project.

General Agent – An agent with full authority over one property of the principal, such as a property manager.

General Lien - A lien which attaches to all property owned by the debtor.

G.I. Loan - See Veterans Administration.

Good Faith Estimate - A lender's estimate of borrower's settlement costs, required by Real Estate Settlement Procedures Act to be furnished to the borrower within 3 days of the loan application.

Good Funds Act - A state law requiring assurance by escrow companies of receipt of loan funds (deposit or electronic wiring) prior to closing a transaction, thus eliminating a practice in which lenders obtained several days of float on loan proceeds.

Good Will - An intangible asset arising from the reputation of a business.

Government National Mortgage Association (GNMA or "Ginne Mae") - A federal agency which provides special assistance for federally aided housing programs; active in the secondary money market for government subsidized housing programs.

Government Survey System - A type of land description utilizing townships and sections.

Graduated Lease - A lease that provides for periodic increases of rent at regular intervals.

Grant - A transfer of real property.

Grantee - The purchaser; the person to whom an interest in realty is conveyed.

Grantor - The seller; the person who conveys an interest in realty by deed.

Great Mahele - A division of Hawaiian lands which occurred in 1848 during reign of King Kamehameha III.

GRI - The professional designation of Graduate Realtors Institute, earned by completion of prescribed courses of  study conducted by state boards of Realtors.

Gross Effective Income – Total potential income less deductions for vacancy and credit losses plus other income.

Gross Income - Total income derived from a business or income property before expenses are deducted. 

Gross Income Multiplier - A numerical factor that expresses the relationship of gross income to sales price or value.  It is calculated by dividing price by gross annual income.  A rule of thumb for estimating the market value of industrial and commercial properties.

Gross Lease - A lease of property in which the lessor meets all property charges incurred through ownership.

Gross Potential Income - The amount of rental income that would be received if all units were rented 100 percent of the time and there were no credit losses.

Gross Rent Multiplier - A useful rule of thumb for estimating the market value of income producing residential property.  The multiplier is derived by using comparable sales divided by the actual or estimated rental income to arrive at an acceptable average.

Ground Lease - A lease for the use of the land, usually providing for improvements to be placed on the land by the user. 

Ground Rent - The net rent paid for a parcel of unimproved land; that portion of the total rental is considered to represent a return upon the land only. 

Growing Equity Mortgage (GEM) – Mortgage loan for which the monthly payments increase annually, with the increased amount applied directly to the loan’s principal, thus shortening the term of the loan.


Habendum Clause - The portion of a deed beginning "to have and to hold," which usually follows the granting clause, and explains or limits the estate granted. 

Heir - One who succeeds to the estate.

Hereditaments - Every sort of inheritable property whether corporeal, incorporeal, real, personal or mixed.

Highest And Best Use - That use of land, which at the time of an appraisal is most likely to produce the greatest net return over a given period of time. 

Holding Escrow - An arrangement whereby escrow holds the final title documents pursuant to an agreement of sale. 

Holdover Tenant - A tenant who remains in possession of a property after expiration of lease term. 

Holographic Will - A will written in hand by the person leaving the will and not witnessed. 

Home Buyer’s Guide – A booklet explaining aspects of loan settlement required by the Real Estate Settlement Procedures Act.

Homeowner's Policy - An insurance policy protecting against a variety of hazards.

Homeowner’s Warranty (HOW)  – An insurance policy protecting against loss caused by structural and other defects in a dwelling and including appliances.

Homestead Exemption - A right given to a householder or head of a family to designate real estate as his homestead and said homestead is exempt, up to a stated amount, from execution by his creditors; a tract of land whose ownership has been established under the provisions of the Homestead Act.

Homogeneous - The same or similar kind, as used in appraising; homogeneity tends to stabilize values in an area.

Horizontal Property Regime - The name once given to the laws pertaining to condominiums in the State of Hawaii; horizontal layers of ownership, now called the Condominium Property Regime. 

Housing and Urban Development (HUD) – An agency of the federal government concerned with housing programs and laws.

"Hula Mae" - The Hawaii Housing Authority issued tax-exempt revenue bonds to fund a mortgage loan program, offering first-time home buyers interest rates below conventional rates by way of the Housing and Loan Mortgage Act.

Hypothecate - To place property as security; to mortgage. 


Implied Agency - Agency that exists as a result of actions of the parties.

Implied Authority - The authority an agent is assumed to have because of a course of conduct or which is inferred from the fact that he has been authorized to perform certain acts. 

Implied Contract - A contract created by deduction from the conduct of the parties rather than from the direct words of the parties; opposite of an express contract.

Impounds - A reserve account often required by lenders to cover future payments of taxes, lease rent, insurance, etc.

Improvements - All real estate except land. Includes buildings, fixtures, fences, curbs, sewers, etc.

Imputed Notice - An agent's knowledge that is binding on the principal because of the agency relationship between them.  If, for example, the buyer's agent is notified of the seller's acceptance of the buyer's offer, the buyer could not thereafter withdraw the offer even though the buyer had no actual notice yet of the acceptance of the contract.

Incapacity - The lack of legal qualifications making a person incapable of performing some act; Mental lack minors, etc.  lacking capacity to perform certain acts.

Inchoate - Incomplete; not perfected. 

Inclusionary Zoning - A land-use concept in which local zoning ordinances require residential developers to include a certain percentage of dwelling units for low-income and moderate-income households as a condition to government approval of development of the project.

Incorporeal - Intangible; without physical existence. 

Indefeasible - Not capable of being annulled or voided; irrevocable. 

Independent Contractor - One who is retained to perform a certain act, but who is not under the control or direction of the hiring person as to how he performs the act, just the end result. 

Index Lease – A lease in which the rental amount changes in proportion to changes in the Consumer Price Index.

Initiate - To begin; to set in motion or originate. 

Injunction - A writ or order issued under the seal of a court to restrain one or more parties from performing an act which is deemed to be inequitable or unjust in regard to the rights of some other party. 

Installment Contract - A contract which provides for payment of a purchase price in installments; an agreement of sale. 

Instrument - A written legal document. 

Insurable Interest - The degree of interest qualifying for insurance.

Inter Vivos - During one's life; between living persons; from one living person to another. 

Interim Financing - A short-term loan obtained to cover financing of the construction of a building. 

Interpleader - A legal proceeding whereby an innocent third party, such as an escrow agent or broker, can deposit with the court property or money that he or she holds and that is subject to adverse claims so that the court can distribute it to the rightful claimant.

Intestate - A person who dies without a will, or with one which is defective in form.  

Intestate Succession – Distribution of property by descent as provided by statute.

Inverse Condemnation - An action for just compensation brought by a person whose property has been effectively taken, substantially interfered with or taken without just compensation.

Involuntary Lien - A lien imposed against property without consent of an owner. e.&, taxes, special assessments, federal income tax liens, etc.

Irrevocable - Incapable of being recalled or revoked; unchangeable.


Joint Tenancy - Ownership by two or more persons with rights of survivorship; ail joint tenants own equal interests and have equal rights in the property; each owner is possessed of an undivided part of the-whole.

Joint Venture - A joining of two or more people in a specific business enterprise; similar to a partnership, and generally with no intention of a continuing relationship beyond the original purpose.

Judgment - The final determination of the rights and liabilities of the parties by a court in an action before it.

Judicial Foreclosure - A court proceeding to require that property be sold to satisfy a mortgage lien.

Junior Lien - A subordinate lien.

Junior Mortgage - A mortgage which is subordinate to prior existing mortgage on the same realty.


Key Money – Payment made to secure a leasehold interest.  The prospective tenant in essence is buying the key to the premises.


Laches - Delay or negligence in asserting one's legal rights.

Land Court - A court designated to preside over the registration of land under the Torrens system; the court which is used to verify title.

Landlocked - Property with no access to a public road.

Land Patent - An instrument conveying government owned lands to individuals.

Land Trust - A device to hold title to land in a trust with the beneficial ownership held by the landowner.

Land Use Ordinance - County code which sets forth zoning regulations for the county.

Landlord Tenant Code (LTC) - A Hawaii state law outlining the rights, obligations and remedies of a residential landlord and a tenant.

Landmark - A monument or object used to establish the boundary line of a property.

Latent Defect - A hidden structural defect in real estate, known to the seller but not the buyer and not discoverable by mere observation.

Lateral Support - The support which the soil of an adjoining owner gives to his neighbor's land.

Lease - A contract the lawful owner of the whereby property transfers his rights of use and possession to another for a specified term.

Leased Fee - The landlord-owners interest in the demised premises; valued as the rent plus the reversionary interest.

Leasehold - An estate or right in real property held under a lease by the lessee.

Legacy - A gift of personal property, usually money in a will.

Legal Description - A description, recognized by law, that will definitely locate and identify the property.

Lessee - One who rents property under a lease contract.

Lessor - An owner who enters into a lease with a tenant.

Less Than Freehold - A lease-, a leasehold estate.

Leverage - The use of borrowed funds in financing, with the anticipation that the property acquired will increase in return so that the investor will realize a profit, not only on his own investment, but on the borrowed funds as well.

Liber - Books which contain public records such as copies of deeds.

License - A personal privilege to perform some act on the land of another.

Lien - A right, given by law, whereby a creditor may satisfy a debt out of the proceeds of the sale of real or personal property belonging to the debtor; an encumbrance, usually naming property as security for payment of a debt or for  the discharge of an obligation.

Lien Letter - A limited title search issued to cover Land Court property in Hawaii.

Lien Theory - The legal tenet holding that a mortgage creates a lien against the real property pledged in the mortgage to secure payment of a debt.

Life Estate - An estate or interest in real property held for the duration of the life of a certain person. Upon the expiration of that life, the estate will automatically be vested in a remainderman or reversioner.

Limited Common Element - In a condominium, those common elements reserved for the use of a certain apartment, or certain apartments to the exclusion of other apartments.

Limited Partnership - A partnership composed of general and limited partners whose contribution and liability are limited and specifically defined.

Liquidated Damages - An amount pre-determined by the parties to an agreement that will be forfeited as compensation for breach of contract.

Liquidity - The attribute of an asset's being readily convertible to cash.

Lis Pendens - A legal document giving constructive notice that an action at law is pending; a notice of pendency.

Listing - A written employment agreement between a property owner and a broker authorizing the listing broker to sell, lease or exchange the realty.

Listing Agent / Broker - The agent or broker who obtains the listing; from the seller of the property.

Littoral - Land bordering on the shore of a sea or ocean and thus affected by the tide currents.

Loan Commitment - A commitment by a lender as to the amount he will loan to a qualified borrower on a particular piece of real estate.

Loan To Value (LTV) - The relationship between the amount of a mortgage loan and the lender’s opinion of the value of the property pledged to secure payment of the loan.


M.A.I. - Designates a person who is a member of a professional appraisal organization.

Management Agreement - A contract wherein an owner employs a property manager.

Management Plan – A long range program prepared by a property manager indicating to the owner how he or she will manage a property.

Management Proposal – A program for operating a property submitted to the owner by a property manager.

Marginal Land - Land which barely pays the cost of working or using.

Marketable Title - Title free and clear of objectionable liens or encumbrances; title which is free from reasonable doubts or defects, which can be readily sold or mortgaged.

Market Data Approach - The primary method of estimating the value of vacant land and single family owner occupied dwellings.  Also called the market comparison approach.

Market Value - The highest price a ready, willing and able buyer, not forced to buy, Will pay to a ready, willing and able seller, not forced to sell, allowing a reasonable time for exposure in the open market.

Material Fact - A fact is material if it is  one which the agent should realize would be likely to affect the judgment of the principal in giving his or her consent to the agent to enter into the particular transaction on the specified terms.

Mechanic's Lien - A lien which exists against real property in favor of persons who have performed work or furnished materials for the improvement of real estate.

Merger Of Title - The absorption of one estate into another.

Metes And Bounds - A method of describing or locating real property; metes are measures of length and bounds are boundaries; a description starting with a well-marked point of beginning and following the boundaries of the land until it returns once more to the point of beginning.

Mile - A linear measurement of distance equal to 1,760 yards, 5,280 feet, or 1,608 meters.

Military Clause - A clause inserted in some leases to allow the military tenant to terminate the lease in case of transfer, discharge or other circumstances.

Mill - One-tenth of one cent. Used in some states to compute property taxes.

Minor - A person who is under the legal age of competence; one under 18 years of age.

Misrepresentation - A false statement of a material fact made with the intent to induce some action by another party.

Monument - A fixed object and point established by surveyors to establish land locations; includes not only artificial objects such as posts and fences, but natural objects such as trees, mountains and water courses.

Mortgage - An instrument in writing which, when recorded, creates a lien upon property pledged as security for the repayment of a debt or obligation.

Mortgage Banker - A corporation or firm which makes, delivers and services mortgage loans.

Mortgage Broker - A person or firm which acts as an intermediary between borrower and lender.

Mortgagee - The party who lends money and accepts a mortgage to secure the payment of the debt.

Mortgagor - The party who borrows money and gives a mortgage on the property as security for his obligation to repay the debt.

Mud Tunnel - Passageway for subterranean termites.

Multiple Listing Service (MLS) - An arrangement among brokers whereby they share their listings.

Mutual Assent -  The voluntary agreement of all parties to an executory contract to a contract as evidenced by an offer and acceptance.

Mutual Rescission - The agreement of all parties to an executory contract to release each other.


National Association of REALTORS (NAR) - Only brokers who are members of local real estate boards are entitled to use the trademark name "REALTOR", salespeople are called "REALTOR-ASSOCIATES".

Navigable Waters - Those bodies of water which are capable of being used for public transportation.

Negative Easement - A right in the land of another prohibiting the servient owner from doing something on the servient land because it will affect the dominant land.

Negotiable Instrument - A written instrument signed by its maker or drawer, containing an unconditional promise to pay a certain sum of money; can be passed freely from one person to another.

Negotiate - To transact business; to arrange terms of a contract.

Net Income - With reference to property, the sum derived after a vacancy allowance and expenses have been deducted from the gross income; generally described as net income before depreciation, and usually defining the income a property will earn in a normal year's operation (net operating income).

Net Lease - A lease in which the tenant pays rent for occupancy, plus maintenance and operation expenses, and usually including taxes and insurance.

Net Listing - A listing which provides that the agent may retain all sums received over and above a net price to the owner as compensation for his services.

Net Operating Income (NOI) – Gross operating income minus operating expenses.

Nominal Consideration - One bearing no relation to the real value of the contract. An example is a property which is deeded for $10.00

Nonconforming Use - A use which is contrary to zoning laws, but which is permitted because the use was allowed before the zoning law came into effect; a grandfather clause.

Nonhomogeneic - The fact that all properties are unique, even similar houses in a tract subdivision, each with its own "bundle of rights."  All buyers, all sellers, and all transactions are also nonhomogeneic, thus explaining why property has value and all deals are different.

Nonjudicial Foreclosure - A form of foreclosure that does not require court action to conduct a foreclosure sale; also called foreclosure under power of sale.

Nonrecourse Loan - A loan in which the borrower is not held personally liable on the note.  The lender of a nonrecourse loan generally feels confident that the property used as collateral will be adequate security for the loan.  Also called a "dry mortgage".

Note - A written instrument acknowledging a debt and promising payment.

Notice Of Nonresponsibility - A notice provided by law designed to relieve a property owner from responsibility for the cost of work done on the property or materials furnished therein; usually applicable when a lessee contracts to have work performed. Not applicable in Hawaii.

Notice To Quit - Notice to a tenant to vacate.

Novation - The substituting of a new obligation for an old one (as in a VA Substitution).

Nuisance, Attractive - A doctrine of tort law stating that a person who maintains on his or her property a condition that is both dangerous and conceivably inviting to children owes a duty to exercise reasonable care to protect children from danger.  Thus, an owner who maintains a swimming pool, or unmarked open pit, or discards a refrigerator or freezer may be liable for injuries to trespassing children.


Obsolescence - Functional obsolescence or lack of desirability in terms of layout, style and design as compared with that of a new property serving the same function; economic obsolescence or a loss in value from causes in the neighborhood, but outside the property itself.

Offer - A promise by one party to act in a certain manner provided the other party will act in the manner requested. In a real estate sales contract, the offer to purchase realty according to certain stipulated terms and conditions.

Ohana Zoning - Amends the Comprehensive Zoning Code by permitting a second dwelling unit on certain residentially zoned lots, thus providing immediate and less expensive housing alternatives.

Open-End Mortgage - A mortgage containing a clause which permits the mortgagor to borrow additional money up to the original amount of the loan after the loan has been reduced, without  the mortgage.

Open Listing - A listing given to any number of agents without liability to compensate any except the one who first procures a buyer ready, willing and able to meet the terms of the listing.

Option - A right given for consideration to purchase or lease a property upon specified terms within a specific time. Purchaser is the optionee.

Ordinance - A legislative enactment of a city or county, such as zoning.

Origination Fee – A service charge by a lending institution for making a mortgage loan.

Over Improvement - An improvement which is not the highest and best use for the site on which it is placed, usually by reason of excess size or cost.


Package Mortgage - A mortgage commonly used in subdivision developments whereby chattels such as appliances are "packaged" into the mortgage along with the real property.

Panic Peddling - Creating an atmosphere of fear in persuading owners to sell; a discriminatory act.

Parol - Oral; verbal.

Parol Evidence - Verbal or written testimony which precedes a written contract.

Partial Taking - The taking of a portion of a piece of property through condemnation.

Parties (Party) - Those entities taking part in a transaction as a principal, e.g., seller, buyer, or lender in a real estate transaction.

Partition - Court proceedings by which co-owners of commonly owned property seek to sever their common ownership; not with tenancy by entirety.

Partnership - A contract between two or more persons to carry on as co-owners of a business, and to share the profits in certain proportions.

Party Wall - A wall erected on the line between adjoining properties which are under separate ownership, for the use of both owners.

Patent - A conveyance for the transfer of title to land owned by the government; land patent.

Payment Bond - The pan of a performance bond which assures the owner that material and labor furnished in the construction of the building will be fully paid for and no mechanic's liens will be filed.

Percentage Lease - A lease of property in which the rental is based upon the volume of gross sales made on the leased premises.

Performance Bond - A bond which provides assurance of the completion of an undertaking in accordance with an agreement, such as that supplied by a contractor guaranteeing the completion of a building project.

Periodic Tenancy - A lease running from period to period, such as week to week, or month to month.

Personal Property - Any property not real property; personalty

Pertinent- Relevant, applicable.

Plain Language - Hawaii law requiring certain contracts (under $25,000) and leases to be written in ordinary, everyday, non-legal language.

Plan Manager - A person who undertakes the duties, responsibilities and obligations of managing a time share plan.

Planned Unit Development - A development and zoning concept which is designed to produce a high density of dwelling units with maximum utilization of open spaces.

Plat - A plan or map of a certain piece or pieces of land.

Plat Field Book - A public record containing facts pertaining to land.

Plottage - The land increment produced by combining smaller individually owned plots into a large tract under a single ownership; see Assemblage.

Points - A percentage of the loan amount the lender requires for making a mortgage loan.

Police Power - The inherent right of a government to enact such legislation as may be deemed necessary to protect and promote the health, safety and general welfare of the public, such as zoning.

Polychlorinated Biphenyls (PCBs) - Were often used in insulating material in dielectric oil.  PCBs may be present in electrical equipment, such as transformers, fluorescent light ballasts, and hydraulic oil in older equipment.  PCBs are suspected of causing health problems and are known to linger in the environment for long periods of time.

Power Of Attorney - A written instrument authorizing a person (an attorney in fact) to act as the agent on behalf of another to the extent indicated in the instrument.

Power Of Sale - A provision in a mortgage permitting the lender, upon borrower's default, to sell the secured property at public auction without need to have a court foreclose.

Prepayment Clause - The clause in a mortgage or note stating the penalty, if any, for payment before it actually becomes due.

Prescription - An easement or title obtained by possession for a prescribed period; prescriptive rights.

Prima Facie Evidence - Evidence which is good and sufficient on its face ("at first view") to establish a given fact or case, unless rebutted or contradicted.

Primary Money Market - The source of loan funds available directly to borrowers, whether for first or second mortgages; loan originations.

Prime Rate - The minimum interest rate charged by a bank on short term loans to its best clients.

Principal - The employer of an agent or broker; a sum of money owed as a debt upon which interest is calculated, not spelled Principle.

Principal Broker (PB) - The licensed broker directly in charge of and responsible for the real estate operations conducted by a real estate brokerage firm.

Private Mortgage Insurance (PMI) – A form of insurance coverage required in high loan to value ratio conventional loans to protect the lender in case the borrower defaults in loan payment.

Probate - An action of the court to determine the validity and legality of a last will and testament.

Procuring Cause - The cause of a series of events which leads to the consummation of a sale.

Progression - A principle of appraisal, which states that the worth of a lesser object is increased by being located among better objects.  The opposite of regression.

Promissory Note - A written promise to pay a debt as set forth in the writing.

Promulgate - To publish, announce or declare.

Proprietary Lease - A lease in a cooperative apartment between the owner-corporation and the tenant stockholder.

Proprietorship - A business held by a person who has legal title or exclusive right thereto.

Prorate - To divide or distribute proportionately; to divide monies, usually at time of closing, proportionately between seller and buyer.

Prospectus - A printed statement distributed to describe and to advertise a new business venture, a real estate project or stock issue.

Pur Autre Vie - Latin meaning "for the life of another"; a life estate measured by the life of someone other than the life tenant.

Purchase Money Mortgage - A mortgage on property given by a buyer, either to the seller or to a third party in order to secure a portion of the purchase price.


Qualified Fee - An estate in fee simple bound by limitations imposed by the grantor.

Quiet Enjoyment - The right of an owner or tenant legally in possession to the use of property without interference from the landlord, or grantor, or anyone claiming through him.

Quiet Title - A court action brought to establish title or to remove a cloud on the title; an action clearing tax titles or titles based upon adverse possession.

Quitclaim Deed - A deed containing no warranties or covenants, which relinquishes any interest, title or claim In property the grantor may have, if any.

Quorum - A majority of the entire body; minimum needed to legally conduct a meeting.


Ratification - The approval or confirmation by one person, of an act or contract performed or entered into on his behalf by another, who at the time lacked authority to act as his agent.

Ready, Willing And Able - A person who is prepared, financially able, and willing to enter into a binding contract.

Real Estate Investment Trust (REIT) – A form of business trust owned by shareholders making mortgage loans.

Real Estate Settlement Procedures Act (RESPA) - A federal law regulating activities of lending institutions in making loans for housing.

Reality of Assent - Mutual agreement between the parties to a contract; a meeting of the minds; to exist and be free of duress, fraud, undue influence, and misrepresentation.

Realized Gain - Actual profit resulting from a sale.

Realtist - A member of a national organization, generally composed of minority real estate brokers, known as the National Association of Real Estate Brokers (NAREB).

Realtor (R) - A broker who belongs to the National Association of Realtors (NAR).

Realtor-Associate (RA) - A salesperson who works for a Realtor and belongs to the local Board of Realtors.

Recapture Rate - A factor used in the capitalization approach to value to estimate the return OF the investment.

Receiver - A court appointed custodian who holds property for the court, pending final disposition of the matter before the Court.

Reciprocal Beneficiaries - Hawaii law defines a reciprocal beneficiary as an adult who is party to a registered reciprocal beneficiary relationship, has a valid certificate showing that such relationship has not been terminated, and thus may hold title to property as joint tenants, tenants in common, and tenants by the entirety.  The purpose of this law was to extend certain rights and benefits that are presently only available to married couples, to couples composed of two individuals who are legally prohibited from marrying under state law.  This law includes, but are not limited to relationships such as brother and sister, uncle and niece, widowed parent with unmarried son or daughter, and two persons of the same sex/gender.

Recognized Gain - The amount of profit that is taxable.

Reconciliation - The adjustment process in appraising, whereby comparables are adjusted to the subject property.

Reconveyance - A conveyance to the land owner of the title held by a trustee under a deed of trust.

Recording - The act of writing or entering an instrument into a book of public records, which constitutes notice to all persons of the rights or claims contained in the instrument; often called constructive notice.

Redemption - The right of an owner to redeem or reclaim property by paying the debt after default, together with interest  and costs, and before sale at foreclosure. Equity of redemption refers to the right to redeem the property after default but before foreclosure. Statutory right of redemption refers to the right in some states (but not Hawaii), to redeem the property after foreclosure or other enforcement action, during a certain period of time specified by statute.

Redlining - A practice by lending institutions restricting the number of loans that will be underwritten in a given community. The practice is illegal if based on the racial composition of a community.

Reduction Certificate - A certificate showing the unpaid balance of a mortgage, the interest, and the maturity date. Used when a prospective purchaser is going to assume a mortgage or take title subject to an existing mortgage. It is given by the mortgagee.

Referral Fee – A percentage of a broker’s commission paid to another broker for sending a buyer or seller to him or her.

Refinance - To obtain a new loan to pay off an existing mortgage or agreement of sale.

Reformation - An action to correct a mistake in a deed or other document.

Regression - A principle of appraisal, which states that, between dissimilar properties, the worth of the better property is adversely affected by the presence of the lesser-quality property.  Thus, in a neighborhood where the homes average $500,000 range, a better built structure, which in another neighborhood would be worth at least $700,000, would tend to be closer to $500,000.  The principle of progression is the opposite.

Release - The relinquishment or surrender of a right claim, or interest.

Release Clause - A clause in a blanket mortgage which gives the property owner the right to pay off a portion of the indebtedness, thereby freeing a portion of his property from the mortgage.

Release Of Mortgage - The instrument given by the mortgagee to the mortgagor indicating discharge of the mortgage, stating that the obligation has been fulfilled and the debt paid off.

Reliction - Gradual recession of water from the usual watermark.

Remainder Estate - An estate created by single grant simultaneously with another which vests with a third party after termination of the prior estate; such as a life estate.

Remainderman - The one in whom an estate vests after termination of a prior estate.

Replacement Cost - The amount of money required to replace a structure with another structure of comparable utility.

Reproduction Cost - The amount of money required to build an exact duplicate of a structure.

Rendered - Furnished, presented; performed; made.

Rescind - To annul; cancel.

Rescission - The annulling, revocation, or repealing of a contract by mutual consent of the parties, or for cause by either party to the contract, and returning the parties to their original position (the "status quo").

Rescission Clause - A clause occasionally found in an agreement of sale which requires the seller to return all of the buyer's payments less costs and a fair rental value in the event the buyer defaults. 

Reservation - A right retained by a grantor in conveying property.

Resident Manager – A person employed to manage a building who typically lives on the premises.

Restriction - A clause in a deed or other written instrument limiting the use to which the property may be put.

Restrictive Covenant - A limitation on the use of a property placed in a deed; a private restriction.

Reverse Annuity Mortgage (RAM) - A mortgage allowing elderly homeowners to borrow against the equity in their homes to help meet living expenses.

Reversion - The residue of an estate left to the grantor or his heirs after termination of all prior estates and interests; the right of a lessor to recover possession of leased property upon the termination of the lease, with all subsequent rights to use and enjoy the property.

Reversionary Interest - A present right to future possession of an estate.

Revocation - The act of recalling some agreement, power or interest previously given.

Rider - An addition, addendum or endorsement annexed to a document; it should be signed or initialed.

Right Of Elections - The right of a surviving spouse to 1/3 of the net probate estate of the deceased spouse.

Right of First Refusal – The right of a person to have the first opportunity either to purchase or lease real property.  Unlike an option, however, the holder of a right of first refusal has no right to purchase until the owner actually offers the property for sale or entertains an offer to purchase from some third party.

Right Of Survivorship - The right of an owner to receive the title to a co-owner's share upon death of the co-owner, as in the case of joint tenancy and tenancy by the entirety.

Right Of Way - An easement or right of passage over another's land.

Riparian Rights - The right of a landowner to the use of water on or adjacent to his land.

Royal Patent - The instrument of original grant of sovereign lands in Hawaii to individuals.

Running With The Land - A covenant which extends beyond the original parties to an agreement and binds all subsequent parties.


Sale And Leaseback - The sale and subsequent leasing back by the seller-lessee.

Salvage Value - (1.)  The taxpayer's estimate of the amount, made a the time of acquisition of the property, that will be realized at the time of its disposition.  The salvage value of an asset (improvement) limits the total amount of depreciation that may be claimed because it provides a floor below which the improvement cannot be depreciated.  
(2.) The value of a structure to be relocated to another site.  Normally used in highway condemnations where large areas must be cleared.

Sandwich Lease - A leasehold interest of a sublessor which lies between the primary lease (owner) and the operating lease (user).

Satisfaction Of Mortgage - An instrument used when a lien is paid off and satisfied on the records; also called satisfaction piece.

Seal - An impression made to attest to the execution of an instrument.

Secondary Mortgage Market - The marketplace for the sale and purchase of existing mortgages.

Section - A section of land established by government survey containing 640 acres, or I square mile. Also, a portion of a tax map description.

Security Deposit - A deposit made to assure performance of an obligation, usually by a lessee.

Seisin - Possession of real property by one entitled thereto; a warranty that at the time of delivery of a deed, the grantor actually has the right and capacity to convey good legal title; also seizen.

Seller's Agent / Broker - The agent/broker who represents the seller; also called the listing agent/broker

Selling Agent / Broker - The agent/broker who procures the buyer and 'sells' the property.

Septic Tank - An underground tank in which sewage from the house is reduced to liquid by bacterial action and drained off.

Servient Estate - An estate of land over which an easement exists in favor of the dominant estate; servient tenement.

Setback - An ordinance prohibiting the erection of a building or structure between the curb or other established line and the setback line; the distance a house must be set back from the street in accordance with local zoning rules.

Settlement – Consummation of a real estate contract, also called closing.

Severalty - Sole or independent ownership.

Severance Damages - Damages paid to an owner when his property has been partially taken by condemnation, thus reducing the highest and best use of the remaining land.

Shared Appreciation Mortgage (SAM) - A mortgage in which the lender shares in the appreciation in property in value in return for making the loan at a rate lower than the rate in effect at the time the loan is made.

Sheriff's Deed - A deed used when property is sold to satisfy a judgment.

Simple Interest - Interest computed upon the declining balance of a particular amount; as principal declines so does the interest payment.

Single Agency - The brokerage practice of representing only one party to a real estate transaction whether the buyer or the seller, never both.

Sinking Fund - Periodic deposits of money into an account that, with its interest earnings, will be used to replace assets or to retire loans.

Site Office - A temporary place of business other than the principal place of business or branch office.

Situs - The preference by people for a certain location.  The place where something exists or originates; the place where something (as a right) is held to be located in law.

Sky Lease - A lease of space above a piece of real estate.

Special Agent - A person who is authorized to perform only certain specified functions on behalf of his principal, such as a broker.

Special Assessment - An assessment generally made against only those specific parcels of realty directly benefiting therefrom.

Special Warranty Deed - A deed in which the grantor warrants or guarantees the title only against defects arising during his ownership of the property and not against defects existing before the time of his ownership.

Specific Lien - A lien that attaches to one particular property only.

Specific Performance - A remedy which the court will grant in certain cases, compelling the defendant to perform or carry out the terms of a valid, existing agreement or contract.

Spot Zoning - A change in the local zoning ordinance permitting a particular use inconsistent with the zoning classification of the area; a permissible spot zone might allow a small grocery store to give easy access to surrounding residential areas.

Stabilized Budget - A forecast of income and expense as may be reasonably projected over several years, prepared by a property manager.

Starker Exchange - Exchange of like kind property in which the exchange property is not identified at the time of the exchange.  Internal Revenue Code 1031

Statute - A law established by an act of the legislature.

Statute of Frauds - State law requires among other things that certain contracts relating to real estate must be in writing to be enforceable at law.

Statute Of Limitations - Laws setting forth the period of time in which suit can be brought for a particular act.

Statutory Foreclosure – A foreclosure proceeding allowing a statutory time period after a foreclosure sale during which the borrower may still redeem the title.

Steering - Directing prospective buyers or tenants into or away from certain areas on discrimination grounds.

Step-Up Lease - A lease with fixed increases at stated intervals, or increases based upon periodic appraisals at stated times; graduated lease, graded lease.

Straight Line Depreciation - A depreciation method where the depreciable cost of the asset is spread evenly over the estimated useful life of the asset. The logic for this method of depreciation comes from the assumption that an asset's depreciation is caused by the passage of time. To calculate the amount of depreciation that should be charged against the asset each year, the cost of the asset, minus its salvage value, is divided by the estimated life of the asset. The resulting amount is the amount of depreciation that should be deducted from the value of the asset each year.

Straight Note - A promissory note evidencing a loan in which payments of interest only are made periodically during the term of the note, with the principal payment due in one lump sum upon maturity.

Straw Man - One who purchases property for another to conceal the identity of the real purchaser; a dummy purchaser; a nominee.

Sub-agent - An agent working under the main agent, such as a salesperson for a listing broker.

Sublease - A lease given by a lessee for a portion of the unexpired balance of his term.

Subordination Clause - A clause in a mortgage or lease stating that the rights of the holder shall be secondary or subordinate to a subsequent encumbrance.

Subrogation - The substitution of one person in place of another with reference to a lawful claim, demand or right, so that he succeeds to such rights of the other.

Summary Possession - A process whereby the landlord may terminate a lease for good reason and the tenant must appear and show cause why he should not be evicted. Also called Dispossess Proceeding or Unlawful Detainer.

Superfund - The nickname of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980.   Superfund focuses on the cleanup of releases of hazardous substances on property.  It creates significant legal exposure based on strict liability for owners, landlords and, sometimes lenders.

Surety - One who becomes a guarantor for another.

Surrender - The cancellation of a lease by an act of mutual consent of lessor and lessee.

Survey - The process by which a parcel of land is measured and its area ascertained.

Survivorship - The right of the surviving co-owner to automatically receive the title of a deceased co-owner immediately without probate.

Syndication - Multiple ownership of an investment, usually in the form of a limited partnership.


Take-Out Financing - Permanent or long-term financing of individual condominium units for their respective buyers.

Tax Deed - A deed for property sold by a government unit for non-payment of taxes.

Tax Sale - A sale of property, usually at auction, for non-payment of assessed taxes.

Tenancy At Sufferance - A tenancy arising when the tenant wrongfully holds over after the expiration of his term. The landlord has the choice of evicting the tenant or accepting him for a similar term and under the conditions of  the previous holding.

Tenancy At Will - Possession and occupancy of land terminable at the will of either party.

Tenancy By The Entirety - A tenancy held by husband and wife giving each the equal right to possession and enjoyment during their joint lives, along with the right to sole ownership upon the death of either partner.

Tenancy For Years - Leasing of a property for a fixed period of time.

Tenancy In Common - Ownership by two or more persons who hold undivided interest, without right of survivorship.  Upon the death of one tenant, his interest goes to his heirs. Interests need not be equal, and each owner is possessed of the whole of an undivided part.

Tender - To offer; to present.

Tenements - All rights in land which pass with a conveyance of the land.

Term Loan / Term Mortgage - A short-term mortgage securing a loan that requires interest-only payment until the maturity date, at which time the entire principal is due and payable. (see Straight Note)

Testament - The written declaration of one's last will.

Testate – To have died leaving a valid will.

Testator - One who leaves a will in force at his death.

Third Parties - One not a party to a contract but who may be affected by it.

Time Is Of The Essence - In a contract, a requirement of punctual performance.

Time Sharing - A form of multiple ownership in which purchasers buy specific time periods for use of the property represented by tenancy in common interest.

Title - Evidence that an owner of land is in lawful possession thereof; an instrument evidencing such ownership.

Title Insurance - A policy of insurance which indemnifies the holder for loss sustained by reason of a defect in the title, provided the loss does not result from a defect excluded by the policy provisions.

Title Theory - The legal theory followed in some states, holding that a mortgage conveys title to real property to secure payment of a debt.

Topography - The nature of the surface of land.

Torrens System - A system for the registration of land under state law indicating the status of the title, including ownership and encumbrances, without the necessity of additional search of the public records; Land Court.

Tort - A negligent or intentional wrong; a wrongful act; violation of a legal right.

Trade Fixture - Articles of personal property annexed to real property, but which are necessary to the carrying on of a trade and are removable by the owner or tenant when he leaves.

Transact - To conduct business affairs; to carry out, perform or manage.

Transfer Certificate Of Title - The TCT is the Land Court registration document assigned to a registered property.

Trespass - Wrongful invasion of land by one having no lawful right to enter.

Trigger Terms - Specific credit terms, such as down payment, monthly payment, and amount of finance charge or term of loan.

Trust Deed - A deed given by borrower to trustee to be held pending fulfillment of an obligation.

Trustee - One who holds property in trust for another to secure the performance of an obligation.

Truth-In-Lending - A federal law designed to let borrowers know the exact cost of obtaining credit; a disclosure device.


Undivided Interest - Title to property owned by two or more persons, none of whom are entitled to claim or possess any specific part.

Uniform Commercial Code (UCC) - A standardized and comprehensive set of commercial laws regulation security interests in personal property.

Unilateral Contract - A contract whereby only one party is obligated to perform his obligation to another.

United States Government Survey System - A method of describing or locating real property by reference to the governmental survey; rectangular survey system.

Unit-In-Place Method - An appraisal method of computing replacement cost; also called the segregated cost method, which uses prices for various building components, as installed, based on specific units of use such as square footage or cubic footage.  These costs include the cost of labor, materials, overhead and profit.

Universal Agent - A general agent; one authorized to act on behalf of another.  For example, an attorney-in-fact under a general power of attorney.

Unmarketable Title - A title containing substantial defects which might cause a prospective purchaser to suffer title litigation and possible loss.

Upset Price - The minimum price at a foreclosure sale below which the property cannot be sold.

Usury - Charging a rate of interest on a loan greater than that permitted by law. It is presently 12% on personal loans.


Valid - Having binding force; legally sufficient and authorized by law.

Valuation - The estimated worth of property.

Variable Rate Mortgage - Mortgage in which the rate will fluctuate depending on terms of mortgage.

Variance - Permission obtained from zoning authorities permitting the construction of a building or structure that is forbidden by present zoning ordinances; a departure from the current zoning regulation.

Vendee - The purchaser; buyer.

Vendor - The seller.

Venue - The geographic area in which a court has legal jurisdiction.

Verify - To confirm or substantiate by oath.

Vested Interest - A present right or title to realty, but with possession delayed to some uncertain time in the future.

Veterans Administration (VA) - Also, Department of Veterans Affairs (DVA). An agency of the Federal Government, whose activities include guaranteed repayment of certain loans in the event of default.

Void - To have no force or effect; that which is unenforceable.

Voidable - That which is capable of being adjudged void, but is not void unless action is taken to make it so. Able to be voided.

Voluntary Alienation – The transfer of title freely by the owner.

Voluntary Lien - Any lien placed on property with consent of, or as a result of, the voluntary act of the owner, e.g. a mortgagee.


Waive - To relinquish. or abandon; the abandonment of some claim or right.

Warranty Deed - A deed in which the grantor fully warrants a good clear title to the property; a deed that contains covenants of title.

Waste - Improper use or damage by one in possession such as tenant or vendee.

Wrap-Around Mortgage - Method of financing in which a new mortgage is placed in a secondary position; an all-inclusive mortgage.

Writ of Execution - A writ or court order authorizing and directing an officer of the court to carry out the judgment or decree of the court.


Yield - The return on an investment; the amount of profit made as a percentage of the amount invested.


Zone - An area set aside for specific use, subject to certain restrictions or restraints; also part of tax map description.

Zoning - An act of the city or county authorities by exercise of police power in regulating, controlling or specifying the type of use to which the property may be put in specific areas.

Seiler School of Real Estate


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