AGREEMENT, FORBEARANCE An agreement by which the mortgage lender provides additional time to a property owner, whose mortgage payments are in arrears, in which to make up missed mortgage payments. Alternatively, a forbearance agreement may provide other arrangements, which serve to correct the loan delinquency, instead of initiating a foreclosure. Typically, owners, who benefit from such arrangements, are those who are temporarily out of work due to layoffs or medical problems. The arrangements may include rewriting the loan to reduce the size of monthly payments during the short term, adding missed payments to the end of the note as a balloon, etc. See also FORBEARANCE; RESTRUCTURE; WORKOUT

BENCH MARK A permanent marker embedded in a sidewalk, cut into stone, or attached to an iron pole or other permanent feature. It is used by surveyors to mark elevations above sea level and to provide a reference point for calculating site elevations or as a starting point for surveys. Bench marks are left where they will most likely be discovered, used, and preserved. They are based on the official datum. Each bench mark has its own recognized official elevation. See also MONUMENT; NATURAL MONUMENT

BERM An earth embankment, which is similar to a mound, but which has been lengthened into a linear form. Earth berms and mounds are used to improve site drainage, to moderate wind and noise, and to control access to, or exit from, a site. They can be used to enclose a private space. A berm near a housing site can separate the houses from a busy road and therefore provide more privacy to residents. When used with fencing and planting, berms can emphasize spatial definition.

Berms are often created from excess soil excavated from the building site which, if not used, would need to be removed from the site. The slope of a berm should be gentle and have a gradient of less than 1:3. Berms should appear in visual scale with surrounding landforms, have smoothly rounded edges for easier maintenance, and be sufficiently covering with topsoil for plant growth. The term, berm, is sometimes used to denote earth packed against the walls of a home for extra insulation as in an "earth-bermed home". See also GRADING

BUY UP A technique by which lenders may enable borrowers, who have adequate and stable incomes, but insufficient cash, to purchase a home. The bank, or other mortgage lender, reduces the points, which it would normally require the borrower to pay at closing, in exchange for a higher interest rate. For example, a lender might waive three points at closing in exchange for an increase of one percent in the interest rate. Further, the lender might permit the seller to contribute to the transaction by paying the points. A seller may be motivated to do so in order to ensure that the purchaser is approved for the loan and purchases the property. Because higher interest rates cause monthly payments to be higher, borrowers with limited incomes do not qualify for buy-up programs. In addition, a borrower, who intends to hold the property for a long period, will lose the initial advantage in less than four years. However, if the borrower intends to hold the property only for a short time, the arrangement has more appeal, particularly if property values are rising. See also BUY DOWN; POINTS

CASH OUT The withdrawal of one's original cash investment in a property. This may be accomplished by selling the property, by refinancing its mortgage to a new one of greater value, by selling a partial interest in the property for cash at least equal to the original investment, or by other means. The term is also used occasionally to describe a sale of property in which the vendor wants cash only and is unwilling to provide a Purchase Money Mortgage. See also LEVERAGE

CERTIFICATE OF ELIGIBILITY A certificate, which is issued by the Department of Veterans Affairs to prove that a veteran is eligible for a DVA-guaranteed loan. A veteran begins the process of obtaining a DVA loan by applying for a Certificate of Eligibility from the Department of Veterans Affairs. DVA regulations control subsequent aspects of the lending process to ensure that the veteran can meet his commitments. See VA LOAN

CLAUSE, RECEIVERSHIP A clause included in many mortgages of income-producing property and requiring that the property's income be applied toward the monthly mortgage payments, if the mortgagor defaults on his mortgage loan. If foreclosure by the lender becomes necessary, the actual legal process could continue for months. If he has a receivership clause, the lender may appeal to the court to appoint a receiver to assume management of the property. The receiver would collect the rents, pay the bills, and make the mortgage payments until the property is sold by auction. See also RECEIVER; RECEIVERSHIP

CONDOMINIUM DECLARATION This is a key instrument in creating a condominium and must be recorded at the land titles or registry office. It contains the project's legal address, a legal description of the land, a description of each unit, a description of the common elements, a plan of survey, and the fractional share of each unit. Also included may be an engineering report, which describes what is to be sold. The condominium declaration outlines the rights and responsibilities of the unit owners toward the common elements. It describes the objectives and powers of the condominium corporation, how voting is to be conducted, and how bylaws and regulations may be amended.

The condominium declaration includes provisions concerning the association name, officers of the corporation, membership rights, bylaws, and easements, covenants and restrictions. It may stipulate that an owner, who wishes to sell, must offer his unit to the association on the same terms as offered to other buyers. See also CONDOMINIUM; CONDOMINIUM BYLAWS; CONDOMINIUM PROJECT DOCUMENTS; DECLARATION

COOPERATIVE FOR PROFIT A cooperative association formed to provide housing for its members. It differs from a Co-op Not For Profit in that it doesn't require departing members to sell their shares to the corporation or to anyone else at original cost or any other designated price. The potential for a return on their investment is an important benefit to the members of this form of cooperative. As property values rise, the shareholders can expect their equity to rise also. The shareholders' agreement lists any regulations or requirements concerning transfer of shares and the corporation's right of first refusal (if it exists) to buy a member's shares. In the absence of such regulations, the articles or bylaws of the corporation may contain provisions regarding the sale of members' shares. See COOPERATIVE

COVENANT AGAINST REMOVAL A covenant in a mortgage deed by which the mortgagor promises that he will not remove the buildings or other improvements or fixtures from the property. A loan appraisal is based on an appraisal of the value of land and the value of buildings, including improvements and fixtures. Consequently, the mortgagee seeks to ensure that the value of security, against which his loan was given, is not diminished. See MORTGAGE COVENANTS; MORTGAGOR

DESCENT The transfer of property by operation of law. Descent applies when an owner of real property dies intestate, with an invalid will, or with a will containing no provision for the disposition of real property. In these instances, the property is distributed according to the laws of the state. It descends (passes) to the legal descendants (heirs). Rights under laws of descent vary from state to state. They specify who inherits the property and the respective share of each inheritor. See also DEVOLUTION; INTESTATE; LINEAL SUCCESSION; TRANSFER BY INTESTACY

DEVELOPMENT COSTS, OFF SITE Expenses incurred by a developer for improvements, which are outside the parcel of land on which the development is sited, but which he may be required to make. Such improvements can include storm sewers, sewer connections, roads, street paving, curbs, water systems, sidewalks, and tree planting. A developer may also incur expenses for engineering and utilities. The costs of such improvements are often greater than the purchase price of the raw land.

The developer may be required to provide these off-site improvements as a result of negotiations with the municipality. Some municipalities negotiate the provision of needed public improvements, such as the upgrading of streets, installation of water mains to the project, expansion of sewer lines, and modernization of waste systems, before approving a developer's subdivision plat. This serves to conserve a municipality's budget for capital improvements and services for use in other needed projects. Off-site development costs are also known as off-site construction costs. See also OFF SITE IMPROVEMENTS

DORMER A gable which projects outward from the sloping surface of a roof and is separately roofed. The dormer's projecting face is vertical and often contains a window or vent. See also DORMER WINDOW; GABLE

DOUBLE-WIDE A home assembled at a site from two single-wides, which are transported separately to the site from the factory where they were manufactured. The two units are placed in parallel onto foundations at the site. There, they are joined to form one larger unit having a width double that of either single unit. A double-wide is similar to a modular home. It can be moved, but is not built to the higher specifications of the modular home. Double-wides range from 40 ft. to 70 ft. in length and 24 ft. to 28 ft. in width. See also MOBILE HOME; SINGLE WIDE

EASEMENT, FLOWAGE A legal right, which permits one to cause the flow of water across another's property either temporarily or permanently. Alternatively, a flowage easement may allow water in a stream, creek, or river flowing through one's land to stop and back up onto another's land. Frequently, this easement is obtained for temporary constructions or to operate drainage swales, reservoirs, etc. See also EASEMENT

ESCROW, DOUBLE The purchase of a property and its simultaneous resale to a third party, a new purchaser. One escrow account contains the first purchaser's funds for his purchase of the property. Another escrow account holds the funds to be used by the second purchaser on his subsequent purchase from the first buyer. Double closings are made possible if the original seller accepts an offer below the real value of his property and permits a longer than normal closing period. A double escrow sometimes is called a simultaneous closing or a back-to-back escrow. See also ESCROW

FENCE, POST AND RAIL This fence is constructed by attaching three or four rails to posts spaced about ten feet apart. The posts are round peeled lengths of timber of diameter six to eight inches and set 2 ½ feet into the ground. Large posts may be split or hand-hewn logs. Mortises are cut through the posts in order to hold the rails. The ends of the rails are tapered so as to fit into the mortises. The rails may be split from logs. More sophisticated versions of the fence use either round or square rails and posts. See also FENCE; POST; POST AND BOARD FENCE; RAIL; RAIL FENCE FIXTURE Buildings on a piece of land or items permanently attached to buildings or land. The term land includes everything fixed on it, such as trees, fences, and buildings, but the latter are distinguished from the land itself in that they are called fixtures. Therefore, office buildings and oil derricks are fixtures. However, the term also refers to objects affixed to fixtures. The criterion is that of attachment as separate from sitting, hooked, or rolled onto the premises or land. Therefore, there are two concepts called fixtures, One is buildings, The second is things attached to buildings.

The second category includes personal property, which has become real estate because it has been attached permanently to the real property or because of custom in the locality. Examples include built-in kitchen appliances, tracks for curtains, and heating ducts.

Items, which are fixtures, pass with the property when it is sold. Whether an article is a fixture usually depends on the intentions of the parties involved, how firmly the article is attached, and whether it can be removed at any time without damage to the premises. If one is uncertain whether an article is a fixture, the item should be listed in the offer to purchase and subsequent deed of sale. See also AFFIX; PERSONAL PROPERTY; REAL PROPERTY; TENANTS' FIXTURES

FRACTIONAL SHARE In most jurisdictions, all property of a condominium, excluding the living space owned by individual unit owners, belongs to what is known as common elements. These are owned in common with the other owners. A fractional share is any particular owner's share of ownership of the common elements. Each unit owner has an undivided right of ownership in the common portions. His fractional share is equal to the ratio of value of his exclusive portion (condominium unit) to the total value of all exclusive portions (units). Fractional share also is called unit entitlement. See also COMMON ELEMENTS; CONDOMINIUM; UNDIVIDED INTEREST; UNIT ENTITLEMENT; UNIT VALUE RATIO

GOVERNMENT LOT A government lot is a product of the original government land survey. It is an irregular parcel of land having an area less than a standard quarter section (a square measuring one half mile on each side). Typically, government lots were created when topographical features, such as lakes and streams or other bodies of water, were encountered during the survey. These interfered with the orderly division of land into quarter sections, which were the parcels commonly granted to homesteaders. Small parcels, termed government lots, sometimes remained. In addition, because of the curvature of the Earth, the inaccuracy of surveyor's instruments, and human carelessness and error, some measurements are imperfect, resulting in government lots. See GOVERNMENT RECTANGULAR SURVEY SYSTEM

HORIZONTAL PROPERTY ACT This generally refers to the Horizontal Property Act adopted by Puerto Rico in 1958. This was the first enabling legislation concerning condominiums adopted within the jurisdiction of the United States. It was patterned closely after the Cuban Horizontal Property Act. See also CONDOMINIUM; HORIZONTAL PROPERTY LAWS

INCOME, EFFECTIVE GROSS Gross income minus vacancies and collection losses plus any related income, such as rent for automobile parking, laundry machines, etc. When considering the purchase of an income property, it is necessary to adjust the stated income of the building in order to forecast Net Operating Income and, therefore, one's expected return. Even fully occupied buildings can lose some rent due to tenant turnover and uncollectible rents. See also NET OPERATING INCOME; POTENTIAL GROSS INCOME

INTEREST, EXACT Interest paid by a bank or other financial intermediary and calculated on the basis of a 365 day year. In contrast, Ordinary Interest (Boston Interest) is calculated on the basis of a 360 day year (twelve months of thirty days each). The difference in daily interest can be substantial when large sums are involved. Also termed New York Interest. See also ORDINARY INTEREST

LENDER, SUPERVISED Any lending institutions, which is subject to examination and supervision by a federal or state agency. Any supervised lender may sell VA (DVA) mortgages to FNMA. On the other hand, a non-supervised lender must secure permission from the DVA before it makes a loan advance, if a DVA guarantee is sought. In order to obtain FHA insurance, lenders must be mortgagees, who have been approved to originate FHA loans. Supervised lenders include insurance companies, national and state banks, savings & loan associations, credit unions, and mutual savings banks. See also APPROVED MORTGAGEE; NON-SUPERVISED LENDER; VA MORTGAGE

NOTICE, ACTUAL Notice, which informs the public or any interested party of a right, title, or interest in a property. It is notice, which has been directly and actually given and/or which is actually experienced by the person to whom it is given or notice provided by physical possession of the property.

Actual notice is also that which a reasonable and diligent inquiry would have disclosed. It includes notice which provides information less comprehensive, but sufficient to cause a prudent person to act or to inquire further for more information. In contrast, the recording of documents, which are accessible by any interested party, can provide Constructive Notice concerning title, liens or interests in property. See also CONSTRUCTIVE NOTICE

PERFECTED A term used in reference to a title, security interest, or legal proceeding which is complete and without flaw or imperfection. A perfected title is marketable and enforceable. See also PERFECT; PERFECTED INSTRUMENT; PERFECTING TITLE

PERMIT, SPECIAL USE A conditional use permit. A permit, which is granted by the local zoning authority and provides the right to undertake a specified activity within a designated zone. Such an activity would be termed a conditional use. Although not prohibited by zoning regulations, a conditional use is permitted only upon special approval of the planning commission or zoning authority. See BUILDING DEPARTMENT; CONDITIONAL USES; ZONE

PROCEEDINGS, DISPOSSESS A summary or dispossess proceeding is the common legal method used by a landlord to regain possession of leased premises from a tenant. It is used in instances involving a breach of conditions or covenants of the lease or when a tenant wrongfully continues to hold possession of the premises following expiry of the lease. The usual reasons for beginning such proceedings are nonpayment of rent, abandonment, holdover tenancy, and use of the premises for an activity which violates the lease or municipal ordinances. A summary proceeding initiated for nonpayment of rent must be preceded by a formal demand for rent.

A dispossess proceeding begins with the filing and serving of a precept and petition, which describe the tenancy and basis of the action and requests that the tenant be served with a writ of dispossess. The next step is an appearance by the tenant to answer the action. Should the lessor win a judgment (or if the tenant fails to appear) the court order is issued. The tenant must then vacate the premises or risk being forcibly evicted by a marshall or other public official. In cases of extreme distress or hardship, the court may stay the dispossess for a period of time. See EVICTION; SUMMARY PROCEEDINGS

PROFIT À PRENDRE A right to make use of the soil or the products of the land of another person as by logging, mining, drilling, pasturing, fishing, hunting, or harvesting of crops, fruit, etc. A profit is an interest in land and may be created only by written agreement or prescription. It is a right, which is similar to that provided by an easement. However, an easement enables one money to use the other person's land. In contrast, a profit bestows not only the right to use another's land, but also the right to remove the soil or products of the land. It differs from a mining lease or oil and gas lease, which a land owner provides to a developer in exchange for a royalty payment.

Profits, like easements, may be either personal or run with the land. They usually are assignable. An easement required for one to benefit fully from a profit à prendre is termed an ancillary easement. A profit à prendre is also called a Right of Common. See also MINERAL RIGHTS; PROFIT; TIMBER RIGHTS

QUALIFICATION A lender's review of a borrower's financial status in order to assess the risk before approving a loan. When assessing risk, the lender considers the nature and amount of the applicant's income, the value of his assets, his present financial obligations and his credit history. The lender's interest rate and the applicant's income are important factors when deciding on the mortgage loan amount to grant. A higher interest rate creates a higher monthly payment. Consequently, higher mortgage interest rates require that applicants earn greater incomes to qualify. For conventional financing, lenders generally require that the monthly mortgage payments not exceed 28 percent of the borrower's gross monthly income. Further, they insist that the borrower's monthly payments for all debts, including the mortgage, must not exceed 36 percent of his monthly gross income. The term, Qualification, is also used to denote a modification of terms within a contract or other document. See also ABILITY-TO-PAY; ABILITY-TO-PAY FORMULA; DEBT COVERAGE RATIO; FRONT AND BACK RATIOS; GROSS DEBT SERVICE RATIO; PRE-QUALIFICATION; PRE-QUALIFICATION PROGRAM; TOTAL DEBT SERVICE RATIO; UNDERWRITING GUIDELINES

RELEASE, PARTIAL A document which permits a part of the property, serving as security for a mortgage loan, to be released from the terms of the mortgage. A subdivider often obtains a partial release from the lender for each lot as each is sold. In exchange, he reimburses the lender for that portion of the loan amount attributable to the specific lot. Without a partial release, the subdivider would be unable to provide an unencumbered title to the purchaser of the lot. See also BLANKET MORTGAGE; RELEASE; RELEASE CLAUSE

RUN WITH THE LAND A term which refers to covenants or rights of restriction, such as easements, which are attached to the land and to both current and future owners of the property. Such restrictions or covenants pass with the transfer of land to the one, who succeeds to the interest of the former owner. They bind the owner of the property, to which they are attached, no matter who the owner may be. A covenant, which runs with the land, can be created only at the time of conveyance in some jurisdictions. See also COVENANT RUNNING WITH THE LAND DEED RESTRICTION

TIME-SHARING, RIGHT-TO-USE Purchasers of a right-to-use form of time-share receive one of three types of right-to-use leases. All provide for occupancy of one of the units for a designated time interval each year for a specified number of years. At the end of the agreed number of years, the contract expires and the unit reverts to the developer, resort owner, or club. Under this plan the purchaser pays to occupy a unit for a designated period (a week or more) each year for a designated number of years. No title or deed is conveyed. Consequently, a right-to-use time-share is usually less expensive than an ownership time-share. Right-to-use normally applies to a type of accommodation (e.g., a one-bedroom unit with a maximum occupancy of six persons) instead of a specific unit. It is popular in hotel or motel time-sharing and in countries where the land may be leased, but not sold. Each purchaser pays a pro rata share of maintenance. A right-to-use time-share carries some risk as members have no ownership interest in the property, but merely have a contract requiring the owner of the facility to provide accommodation for a specified period. See also RIGHT-TO-USE; RIGHT-TO-USE FORMS OF TIME-SHARING

TITLE, CLOUD ON Any vague, though possibly legitimate, claim, encumbrance, or condition appearing in the title record which, if valid, would impair the owner's rights in the property or his ability to convey it to another. Evidence, which is not in the title record, may prove a cloud to be invalid. Clouds on title may be removed by a legal action to quiet title. See also ACTION TO QUIET TITLE; CHAIN OF TITLE; CLOUD; TITLE DEFECT

UPZONING A change in the zoning classification of land from one of lower intensity of land use to one of higher intensity. Examples include the rezoning of land from agricultural use to residential use or from industrial use to commercial use. See also ZONE; ZONING; ZONING ORDINANCES

WALL, LOAD BEARING A load bearing wall within a building. Any wall which supports any of the weight of the building above, in addition to its own weight. A load bearing wall supports one or more joists or the ceiling or roof above. Its removal may cause the building to sag. A house has several load bearing walls. The main load bearing wall parallels the roof ridge in most houses. Its direction is perpendicular to that of the joists. A girder is found directly below the load bearing wall in the basement. A load bearing wall is sometimes termed a Bearing Wall. See also BEARING WALL CONSTRUCTION; LIVE LOAD; NON-BEARING/NON-LOAD BEARING WALL

WINDOW, AWNING A window frame containing one or more sashes, each of which is hinged at its top to let it swing outward or, in some cases, inward. An awning window prevents rain from entering when it is open. Awning windows are often installed in rows and columns containing several windows in each. Awning windows are excellent for ventilation. They are used frequently in enclosed porches and other instances where optimum ventilation is desired. An awning window resembles a casement window turned onto its side. See also AWNING WINDOW