CAL-VET PROGRAM : A program administered by the State Department of Veterans Affairs for the direct financing of farm and home purchases by eligible California veterans of the armed forces.

CC&Rs : Covenants, conditions and restrictions. The basic rules establishing the rights and obligations of owners (and their successors in interest) of real property within a subdivision or other tract of land in relation to other owners within the same subdivision or tract and in relation to an association of owners organized for the purpose of operating and maintaining property commonly owned by the individual owners.

CCIM : Certified Commercial Investment Member.

CPM© : Certified Property Manager, a designation of the Institute of Real Estate Management.

CAPITAL ASSETS : Assets of a permanent nature used in the production of an income, such as land, buildings, machinery and equipment, etc. Under income tax law, it is usually distinguishable from :inventory: which comprises assets held for sale to customers in ordinary course of the taxpayer:s trade or business.

CAPITAL GAIN : At resale of a capital item, the amount by which the net sale proceeds exceed the adjusted cost basis (book value). Used for income tax computations. Gains are called short or long term based upon length of holding period after acquisition. Usually taxed at lower rates than ordinary income.

CAPITALIZATION : In appraising, determining value of property by considering net income and percentage of reasonable return on the investment. The value of an income property is determined by dividing annual net income by the Capitalization Rate.

CAPITALIZATION RATE : The rate of interest which is considered a reasonable return on the investment, and used in the process of determining value based upon net income. It may also be described as the yield rate that is necessary to attract the money of the average investor to a particular kind of investment. In the case of land improvements which depreciate, to this yield rate is added a factor to take into consideration the annual amortization factor necessary to recapture the initial investment in improvements. This amortization factor can be determined in various ways : (1) straight-line depreciation method, (2) Inwood Tables and (3) Hoskold Tables. (To explore this subject in greater depth, the student should refer to current real estate appraisal texts.)

CAP RATE : See LIFE OF LOAN CAP.

CASEMENT WINDOWS : Frames of wood or metal which swing outward.

CASH FLOW : The net income generated by a property before depreciation and other noncash expenses.

CAVEAT EMPTOR : Let the buyer beware. The buyer must examine the goods or property and buy at his or her own risk, absent misrepresentation.

CERTIFICATE OF ELIGIBILITY : Issued by Department of Veterans Affairs - evidence of individual:s eligibility to obtain VA loan. CERTIFICATE OF REASONABLE VALUE (CRV) : The Federal VA appraisal commitment of property value.

CERTIFICATE OF TAXES DUE : A written statement or guaranty of the condition of the taxes on a certain property made by the County Treasurer of the county wherein the property is located. Any loss resulting to any person from an error in a tax certificate shall be paid by the county which such treasurer represents.

CERTIFICATE OF TITLE : A written opinion by an attorney that ownership of the particular parcel of land is as stated in the certificate.

CHAIN : A unit of measurement used by surveyors. A chain consists of 100 links equal to 66 feet.

CHAIN OF TITLE : A history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available, used to determine how title came to be vested in current owner.

CHANGE, PRINCIPLE OF : Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely result of cause and effect.

CHARACTERISTICS : Distinguishing features of a (residential) property.

CHATTEL MORTGAGE : A claim on personal property (instead of real property) used to secure or guarantee a promissory note. (See definition of Security Agreement and Security Interest.)

CHATTEL REAL : An estate related to real estate, such as a lease on real property.

CHATTELS : Goods or every species of property movable or immovable which are not real property. Personal property.

CHOSE IN ACTION : A personal right to something not presently in the owner:s possession, but recoverable by a legal action for possession.

CIRCUIT BREAKER : (l) An electrical device which automatically interrupts an electric circuit when an overload occurs; may be used instead of a fuse to protect each circuit and can be reset. (2) In property taxation, a method for granting property tax relief to the elderly and disadvantaged qualified taxpayers by rebate, tax credits or cash payments. Usually limited to homeowners and renters.

CLOSING : (l) Process by which all the parties to a real estate transaction conclude the details of a sale or mortgage. The process includes the signing and transfer of documents and distribution of funds. (2) Condition in description of real property by courses and distances at the boundary lines where the lines meet to include all the tract of land.

CLOSING COSTS : The miscellaneous expenses buyers and sellers normally incur in the transfer of ownership of real property over and above the cost of the property.

CLOSING STATEMENT : An accounting of funds made to the buyer and seller separately. Required by law to be made at the completion of every real estate transaction.

CLOUD ON TITLE : A claim, encumbrance or condition which impairs the title to real property until disproved or eliminated as for example through a quitclaim deed or a quiet title legal action.

CODE OF ETHICS : A set of rules and principles expressing a standard of accepted conduct for a professional group and governing the relationship of members to each other and to the organization.

COLLATERAL : Marketable real or personal property which a borrower pledges as security for a loan. In mortgage transactions, specific land is the collateral. (See definition of Security Interest. )

COLLATERAL SECURITY : A separate obligation attached to contract to guarantee its performance; the transfer of property or of other contracts, or valuables, to insure the performance of a principal agreement.

COLLUSION : An agreement between two or more persons to defraud another of rights by the forms of law, or to obtain an object forbidden by law.

COLOR OF TITLE : That which appears to be good title but which is not title in fact.

COMMERCIAL ACRE : A term applied to the remainder of an acre of newly subdivided land after the area devoted to streets, sidewalks and curbs, etc., has been deducted from the acre.

COMMERCIAL LOAN : A personal loan from a commercial bank, usually unsecured and short term, for other than mortgage purposes.

COMMERCIAL PAPER : Negotiable instruments such as promissory notes, letters of credit and bills of lading. Instruments developed under the law of merchant.

COMMISSION : An agent:s compensation for performing the duties of the agency; in real estate practice, a percentage of the selling price of property, percentage of rentals, etc. A fee for services.

COMMITMENT : A pledge or a promise or firm agreement to do something in the future, such as a loan company giving a written commitment with specific terms of mortgage loan it will make.

COMMON AREA : An entire common interest subdivision except the separate interests therein.

COMMON INTEREST SUBDIVISION : Subdivided lands which include a separate interest in real property combined with an interest in common with other owners. The interest in common may be through membership in an association. Examples are condominiums and stock cooperatives.

COMMON LAW : The body of law that grew from customs and practices developed and used in England :since the memory of man runneth not to the contrary.:

COMMON STOCK : That class of corporate stock to which there is ordinarily attached no preference with respect to the receipt of dividends or the distribution of assets on corporate dissolution.

COMMUNITY PROPERTY : Property acquired by husband and/or wife during a marriage when not acquired as the separate property of either spouse. Each spouse has equal rights of management, alienation and testamentary disposition of community property.

COMPACTION : Whenever extra soil is added to a lot to fill in low places or to raise the level of the lot, the added soil is often too loose and soft to sustain the weight of the buildings. Therefore, it is necessary to compact the added soil so that it will carry the weight of buildings without the danger of their tilting, settling or cracking.

COMPARABLE SALES : Sales which have similar characteristics as the subject property and are used for analysis in the appraisal process. Commonly called :comparables:, they are recent selling prices of properties similarly situated in a similar market.

COMPARISON APPROACH : A real estate comparison method which compares a given property with similar or comparable surrounding properties; also called market comparison.

COMPETENT : Legally qualified.

COMPETITION, PRINCIPLE OF : Holds that profits tend to breed competition and excess profits tend to breed ruinous completion.

COMPOUND INTEREST : Interest paid on original principal and also on the accrued and unpaid interest which has accumulated as the debt matures.

CONCLUSION : The final estimate of value, realized from facts, data, experience and judgment, set out in an appraisal. Appraiser:s certified conclusion.

CONDEMNATION : The act of taking private property for public use by a political subdivision upon payment to owner of just compensation. Declaration that a structure is unfit for use.

CONDITION : In contracts, a future and uncertain event which must happen to create an obligation or which extinguishes an existent obligation. In conveyances of real property conditions in the conveyance may cause an interest to be vested or defeated.

CONDITION PRECEDENT : A qualification of a contract or transfer of property, providing that unless and until a given event occurs, the full effect of a contract or transfer will not take place.

CONDITION SUBSEQUENT : A condition attached to an already-vested estate or to a contract whereby the estate is defeated or the contract extinguished through the failure or non-performance of the condition.

CONDITIONAL COMMITMENT : A commitment of a definite loan amount for some future unknown purchaser of satisfactory credit standing.

CONDITIONAL ESTATE : Usually called, in California, Fee Simple Defeasible. An estate that is granted subject to a condition subsequent. The estate is terminable on happening of the condition.

CONDITIONAL SALE CONTRACT : A contract for the sale of property stating that delivery is to be made to the buyer, title to remain vested in the seller until the conditions of the contract have been fulfilled. (See definition of Security Interest.)

CONDOMINIUM : An estate in real property wherein there is an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map or condominium plan. The areas within the boundaries may be filled with air, earth, or water or any combination and need not be attached to land except by easements for access and support.

CONDOMINIUM DECLARATION : The document which establishes a condominium and describes the property rights of the unit owners.

CONFESSION OF JUDGMENT : An entry of judgment upon the debtor:s voluntary admission or confession.

CONFIRMATION OF SALE : A court approval of the sale of property by an executor, administrator, guardian or conservator.

CONFISCATION : The seizing of property without compensation.

CONFORMITY, PRINCIPLE OF : Holds that the maximum of value is realized when a reasonable degree of homogeneity of improvements is present. Use conformity is desirable, creating and maintaining higher values.

CONSERVATION : The process of utilizing resources in such a manner which minimizes their depletion.

CONSIDERATION : Anything given or promised by a party to induce another to enter into a contract, e.g., personal services or even love and affection. It may be a benefit conferred upon one party or a detriment suffered by the other.

CONSTANT : The percentage which, when applied directly to the face value of a debt, develops the annual amount of money necessary to pay a specified net rate of interest on the reducing balance and to liquidate the debt in a specified time period. For example, a 6% loan with a 20 year amortization has a constant of approximately 8 1/2%. Thus, a $10,000 loan amortized over 20 years requires an annual payment of approximately $850.00.

CONSTRUCTION LOAN : A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses.

CONSTRUCTIVE EVICTION : Breach of a covenant of warranty or quiet enjoyment, e.g., the inability of a lessee to obtain possession because of a paramount defect in title or a condition making occupancy hazardous.

CONSTRUCTIVE FRAUD : A breach of duty, as by a person in a fiduciary capacity, without an actual fraudulent intent, which gains an advantage to the person at fault by misleading another to the other:s prejudice. Any act of omission declared by law to be fraudulent, without respect to actual fraud.

CONSTRUCTIVE NOTICE : Notice of the condition of title to real property given by the official records of a government entity which does not require actual knowledge of the information.

CONTIGUOUS : In close proximity.

CONTOUR : The surface configuration of land. Shown on maps as a line through points of equal elevation.

CONTRACT : An agreement to do or not to do a certain thing. It must have four essential elements : parties capable of contracting, consent of the parties, a lawful object, and consideration. A contract for sale of real property must also be in writing and signed by the party or parties to be charged with performance.

CONTRIBUTION, PRINCIPLE OF : A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment.

CONVENTIONAL MORTGAGE : A mortgage securing a loan made by investors without governmental underwriting, i.e., which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association.

CONVERSION : (1) Change from one legal form or use to another, as converting an apartment building to condominium use. (2) The unlawful appropriation of another:s property, as in the conversion of trust funds.

CONVEYANCE : An instrument in writing used to transfer (convey) title to property from one person to another, such as a deed or a trust deed.

COOPERATIVE (apartment) : An apartment building, owned by a corporation and in which tenancy in an apartment unit is obtained by purchase of shares of the stock of the corporation and where the owner of such shares is entitled to occupy a specific apartment in the building. In California, this type of ownership is called a :stock cooperative.:

CORNER INFLUENCE TABLE : A statistical table that may be used to estimate the added value of a corner lot.

CORPORATION : An entity established and treated by law as an individual or unit with rights and liabilities, or both, distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person. Being created by law it may continue for any length of time the law prescribes.

CORPOREAL RIGHTS : Possessory rights in real property.

CORRECTION LINES : A system for compensating inaccuracies in the Government Rectangular Survey System due to the curvature of the earth. Every fourth township line, 24 mile intervals, is used as a correction line on which the intervals between the north and south range lines are remeasured and corrected to a full 6 miles.

CORRELATION : A step in the appraisal process involving the interpretation of data derived from the three approaches to value (cost, market and income) leading to a single determination of value. Also frequently referred to as :reconciliation.:

CO-SIGNER : A second party who signs a promissory note together with the primary borrower.

COST APPROACH : One of three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.

COTENANCY : Ownership of an interest in a particular parcel of land by more than one person; e.g. tenancy in common, joint tenancy.

COVENANT : An agreement or promise to do or not to do a particular act such as a promise to build a house of a particular architectural style or to use or not use property in a certain way.

CRAWL HOLE : Exterior or interior opening permitting access underneath building, as required by building codes.

CRE : Counselor of Real Estate, Member of American Society of Real Estate Counselors.

CREDIT : A bookkeeping entry on the right side of an account, recording the reduction or elimination of an asset or an expense, or the creation of or addition to a liability or item of equity or revenue.

CURABLE DEPRECIATION : Items of physical deterioration and functional obsolescence which are customarily repaired or replaced by a prudent property owner.

CURRENT INDEX : With regard to an adjustable rate mortgage, the current value of a recognized index as calculated and published nationally or regionally. The current index value changes periodically and is used in calculating the new note rate as of each rate adjustment date.

CURTAIL SCHEDULE : A listing of the amounts by which the principal sum of an obligation is to be reduced by partial payments and of the dates when each payment will become payable.

EARNEST MONEY : Down payment made by a purchaser of real estate as evidence of good faith. A deposit or partial payment.

EASEMENT : A right, privilege or interest limited to a specific purpose which one party has in the land of another.

ECONOMIC LIFE : The period over which a property will yield a return on the investment over and above the economic or ground rent due to land.

ECONOMIC OBSOLESCENCE : A loss in value due to factors away from the subject property but adversely affecting the value of the subject property.

ECONOMIC RENT : The reasonable rental expectancy if the property were available for renting at the time of its valuation.

EFFECTIVE AGE OF IMPROVEMENT : The number of years of age that is indicated by the condition of the structure, distinct from chronological age.

EFFECTIVE DATE OF VALUE : The specific day the conclusion of value applies.

EFFECTIVE INTEREST RATE : The percentage of interest that is actually being paid by the borrower for the use of the money, distinct from nominal interest.

EMINENT DOMAIN : The right of the government to acquire property for necessary public or quasi-public use by condition; the owner must be fairly compensated and the right of the private citizen to get paid is spelled out in the 5th Amendment to the United States Constitution.

ENCROACHMENT : An unlawful intrusion onto another:s adjacent property by improvements to real property, e.g. a swimming pool built across a property line.

ENCUMBRANCE : Anything which affects or limits the fee simple title to or value of property, e.g., mortgages or easements.

EQUITY : The interest or value which an owner has in real estate over and above the liens against it. Branch of remedial justice by and through which relief is afforded to suitors in courts of equity.

EQUITY BUILD-UP : The increase of owner:s equity in property due to mortgage principal reduction and value appreciation.

EQUITY PARTICIPATION : A mortgage transaction in which the lender, in addition to receiving a fixed rate of interest on the loan acquires an interest in the borrower:s real property, and shares in the profits derived from the real property.

EQUITY OF REDEMPTION : The right to redeem property during the foreclosure period, such as a mortgagor:s right to redeem within either 3 months or 1 year as may be permitted after foreclosure sale.

EROSION : The wearing away of land by the act of water, wind or glacial ice.

ESCALATION : The right reserved by the lender to increase the amount of the payments and/or interest upon the happening of a certain event.

ESCALATOR CLAUSE : A clause in a contract providing for the upward or downward adjustment of certain items to cover specified contingencies, usually tied to some index or event. Often used in long term leases to provide for rent adjustments, to cover tax and maintenance increases.

ESCHEAT : The reverting of property to the State when heirs capable of inheriting are lacking.

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

ESCROW AGENT : The neutral third party holding funds or something of value in trust for another or others.

ESTATE : As applied to real estate, the term signifies the quantity of interest, share, right, equity, of which riches or fortune may consist in real property. The degree, quantity, nature and extent of interest which a person has in real property.

ESTATE OF INHERITANCE : An estate which may descend to heirs. All freehold estates are estates of inheritance, except estates for life.

ESTATE FOR LIFE : A possessory, freehold estate in land held by a person only for the duration of his or her life or the life or lives of another.

ESTATE FROM PERIOD TO PERIOD : An interest in land where there is no definite termination date but the rental period is fixed at a certain sum per week, month, or year. Also called a periodic tenancy.

ESTATE AT SUFFERANCE : An estate arising when the tenant wrongfully holds over after the expiration of the term. The landlord has the choice of evicting the tenant as a trespasser or accepting such tenant for a similar term and under the conditions of the tenant:s previous holding. Also called a tenancy at sufferance.

ESTATE AT WILL : The occupation of lands and tenements by a tenant for an indefinite period, terminable by one or both parties.

ESTATE FOR YEARS : An interest in lands by virtue of a contract for the possession of them for a definite and limited period of time. May be for a year or less. A lease may be said to be an estate for years.

ESTIMATE : A preliminary opinion of value. Appraise, set a value.

ESTIMATED REMAINING LIFE : The period of time (years) it takes for the improvements to become valueless.

ESTOPPEL : A legal theory under which a person is barred from asserting or denying a fact because of the person:s previous acts or words.

ETHICS : That branch of moral science, idealism, justness, and fairness, which treats of the duties which a member of a profession or craft owes to the public, client or partner, and to professional brethren or members. Accepted standards of right and wrong. Moral conduct, behavior or duty.

ET UX : Abbreviation for :et uxor.: Means :and wife.:

EVICTION : Dispossession by process of law. The act of depriving a person of the possession of lands in pursuance of the judgment of a court.

EXCEPTIONS : Matters affecting title to a particular parcel of real property which are included from coverage of a title insurance policy.

EXCHANGE : A means of trading equities in two or more real properties, treated as a single transaction through a single escrow.

EXCLUSION : General matters affecting title to real property excluded from coverage of a title insurance policy.

EXCLUSIVE AGENCY LISTING : A listing agreement employing a broker as the sole agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold through any other broker, but not if a sale is negotiated by the owner without the services of an agent.

EXCLUSIVE RIGHT TO SELL LISTING : A listing agreement employing a broker to act as agent for the seller of real property under the terms of which the broker is entitled to a commission if the property is sold during the duration of the listing through another broker or by the owner without the services of an agent.

EXECUTE : To complete, to make, to perform, to do, to follow out; to execute a deed, to make a deed, including especially signing, sealing and delivery; to execute a contract is to perform the contract, to follow out to the end, to complete.

EXECUTOR : A man named in a will to carry out its provisions as to the disposition of the estate of a deceased person. (A woman is executrix.)

EXECUTORY CONTRACT : A contract in which something remains to be done by one or both of the parties.

EXPENSES : Certain items which appear on a closing statement in connection with a real estate sale.