Real Estate Glossary - C

Call - In a metes and bounds description, a specification that describes a segment of the boundary; for example, "south 15 degree west 120 feet" is a call.

Call Provision - Acceleration Clause

Cancellation - 1. Termination of a contract without undoing acts that have been already performed under the contract. Compare: Rescission. 2. Termination of a license that has not been renewed in the year following its expiration date.

Capacity - The legal ability or competence to perform some act, such as enter into a contract or execute a deed or will.

Capital - Money (or other forms of wealth) available for use in the production of more money.

Capital Assets - Assets held by a taxpayer other than: 1) Property held for sale to customers in the ordinary course of the taxpayer's business; and 2) Depreciable property or real property used in the taxpayer's trade or business. Thus, real property is a capital asset if it is owned for personal use or for profit.

Capital Expenditures - Money spent on improvements and alterations that add to the value of the property and/or prolong its life.

Capital Gain - Profit realized from the sale of a capital asset If the asset was held for more than one year, it is a long-term capital gain; if the asset was held for one year or less, it is a short-term capital gain.

Capital Improvement - Any improvement that is designed to become a permanent part of the real property or that will have the effect or significantly prolonging the property's life.

Capitalization - A method of appraising real property by converting the anticipated net income from the property into the present value. Also called the income approach to value.

Capitalization Rate - A percentage used in capitalization (Net Income = Capitalization Rate x Value). It is the rate believed to represent the proper relationship between the value of the property and the income it produces; the rate that would be a reasonable return on an investment of the type in question, or the yield necessary to attract investment of capital in property like the subject property.

Capitalize - 1. To provide with cash, or capital. 2. To determine the present value of an asset using capitalization.

Capital Loss - A loss resulting from the sale of a capital asset; it may be long-term or short-term, depending on whether the asset was held for more than one year or for one year or less.

Capture, Rule of - A legal rule that grants a landowner the right to all oil and gas produced from wells on his or her land, even if it migrated from underneath land belonging to someone else.

Cash Flow - The residual income after deducting from gross income all operating expenses and debt service. Also called spendable income.

Cash on Cash - The ratio between the cash flow received from an investment in the first year and amount of the cash initially invested.

Caveat Emptor - A Latin phrase meaning "Let the buyer beware"; it expressed the idea that a buyer is expected to examine property carefully before buying, instead of relying on the seller to disclose problems. This was once a firm rule of law, but it has lost most of its force, especially in residential real estate transactions.

CC&Rs - A declaration of covenants, conditions, and restrictions; usually recorded by a developer to place restrictions; usually recorded by a developer to place restrictions on all lots within a new subdivision.

Cease and Desist Order - An order issued by the Director of the Department of Licensing in a disciplinary action, to stop a violation of the license law.

CERCLA - The Comprehensive Environmental Response, Compensation and Liability Act; a federal law concerning liability for cleanup of contaminated property.

Certificate of Eligibility - A document issued by the Veterans Administration as evidence of a veteran's eligibility for a VA-guaranteed loan.

Certificate of Occupancy - A statement issued by a local government agency (such as the building department) verifying that a newly constructed building is in compliance with all codes and may be occupied.

Certificate of Reasonable Value - A document issued by the Veterans Administration, setting forth the current market value of a property, based on a VA-approved appraisal.

Certificate of Sale - The documents given to the purchaser at a mortgage foreclosure sale, instead of a deed; replaced with a sheriff's deed only after the redemption period expires.

Change, Principle of - An appraisal principle which holds that property values are in a sate of flux, increasing and decreasing in response to social, economic, and governmental forces.

Charter - A written instrument granting a power or a right of franchise.

Chattel - An article of personal property.

Chattel Real - Personal property that is closely associated with real property; the primary example is a lease.

Civil Law - The body of law concerned with the rights and liabilities of one individual in relation to another; includes contract law, tort law, and property law. Compare: Criminal Law.

Civil Rights - Fundamental rights guaranteed to individuals by the law. The term is primarily used in reference to constitutional and statutory protections against discrimination or government interference.

Civil Rights Act of 1866 - A federal law guaranteeing all citizens the right to purchase, lease, sell, convey and inherit property, regardless of race or ancestry.

Civil Rights Act of 1964 - A federal law prohibiting discrimination on the basis of race, color, national origin, or religion in many programs for which the government provides financial assistance.

Civil Suit - A lawsuit in which one private party sues another private party (as opposed to a criminal suit, in which an individual is sued-prosecuted-by the government).

Client - One who employs a broker, lawyer, or appraiser. A real estate broker's client can be the seller, the buyer, or both, but is usually the seller.

Closing - The final stage in a real estate transaction, when the seller receives the purchase money, the buyer receives the deed, and title is transferred. Also called settlement.

Closing Cost - Expenses incurred in the transfer of real estate in addition to the purchase price; for example, the appraisal fee, title insurance premium, broker's commission, and excise tax.

Closing Date - The date on which all the terms of a purchase and sale agreement must be met, or the contract is terminated.

Cloud on Title - A claim, encumbrance, or apparent defect that makes the title to a property unmarketable.

Code of Ethics - A body of rules setting forth accepted standards of conduct, reflecting principles of fairness and morality; especially one that the members of an organization are expected to follow.

Codicil - An addition to or revision of a will.

Collateral - Anything of value used as security for a debt or obligation.

Collusion - An agreement between two or more person to defraud another.

Commercial Acre - The remainder of an acre of newly subdivided land after deducting the amount of land dedicated for streets and sidewalks.

Commercial bank - A type of financial institution that has traditionally emphasized commercial lending (loans to business), but which also makes many residential mortgage loans.

Commercial Paper - Negotiable instruments, such as promissory notes, sold to meet the short-term capital needs of a business.

Commercial Property - Property zoned and used for business purposes, such as restaurant or an office building; as distinguished from residential, industrial, or agricultural property.

Commingled Funds - Funds from different sources that are deposited in the same account and thereby lose their separate character; for example, if a spouse deposit cash that is his or her separate property in an account with funds that are community property, the entire amount may be treated as community property.

Commingling - Illegally mixing trust funds held on behalf of a client with personal funds.

Commission - 1. The compensation paid to a broker for services in connection with a real estate transaction (usually a percentage of the sales price). 2. A group of people organized for a particular purpose or function; usually a governmental body, such as the Real Estate Commission.

Commitment - In real estate finance, a lender's promise to make a loan. A loan commitment may be "firm" or "conditional"; a conditional commitment is contingent on something, such as a satisfactory credit report on the borrower.

Common Areas - 1. The land and improvements in a condominium, planned unit development, or other housing development that are owned and used collectively by all of the residents, such as parking lots, hallways, and recreational facilities available for common use. Also called common elements. 2. In a building with leased units or spaces, the areas that available for use by all of the tenants.

Common Elements, Limited - In a condominium, areas outside of the units (such as balconies or assigned parking spaces) that are designated for the use of particular unit owners, rather than all of the residents.

Common Law - 1. Early English law. 2. Long established rules of law based on early English law. 3. Rules of law developed through court decisions, as opposed to statutory law.

Community Property - Property owned jointly by a married couple in Washington and other community property states, as distinguished from each spouse's separate property; generally, any property acquired through the labor or skill of either spouse during marriage.

Co-Mortgagor - Someone (usually a family member) who accepts responsibility for the repayment of a mortgage loan along with the primary borrower, to help the borrower qualify for the loan.

Comparable - A recently sold and similarly situated property that is used as a point of comparison by an appraiser using the sales comparison approach.

Competent - 1. Of sound mind, for the purposes of entering a contractor executing an instrument. 2. /both of sound mind and having reached the age of majority.

Competition, Principle of - An appraisal principle which holds that profits tend to encourage competition, and excess profits ten to result in ruinous competition.

Competitive Market Analysis - A comparison of homes that are similar in location, style, and amenities to the subject property, in order to set a realistic listing price. Similar to the sales comparison approach to value.

Compliance Inspection - A building inspection to determine, for the benefit of a lender, whether building codes, specifications, or conditions established after a prior inspection have been met before a loan is made.

Condemnation - 1. Taking private property for public use through the government's power of eminent domain. 2. A declaration that a structure is unfit for occupancy and must be closed or demolished.

Condemnation Appraisal - An estimate of the value of condemned property to determine the just compensation to be paid to the owner.

Condition - 1. A provision in a contract that makes the parties' rights and obligations depend on the occurrence (or nonoccurrence) of a particular even. Also called a contingency clause. 2. A provision in a deed that makes title depends on compliance with a particular restriction.

Conditional Use Permit - A permit that allows a special use, such as a school or hospital, to operate in a neighborhood where it would otherwise be prohibited by the zoning. Also called a special exception permit.

Condition Precedent - An event that must occur before a right or interest will be gained.

Condition Subsequent - An event that will cause a right or interest to be lost if it occurs.

Condominium - Property developed for concurrent ownership, where each co-owner has a separate interest in an individual unit, combined with an undivided interest in the common areas of the property.

Confidential Information - Information from or concerning a principal that was acquired during the course of an agency relationship, that the principal reasonable expect to be kept confidential, that the principal has not disclosed to third parties, that would operate the detriment of the principal, and that the principal would mot be legally obligated to disclose the other party.

Confirmation of Sale - Court approval of sale of property by an executor, administrator, or guardian.

Conformity, Principle of - An appraisal principle which holds that the maximum value of property is realized when there is a reasonable degree of social and economic homogeneity in the neighborhood.

Conservation - 1. Preservation of structures or neighborhoods in a sound condition. 2. Preservation or controlled use of natural resources for long-term benefits.

Consideration - Anything of value given to induce another to enter into a contract, such as money, goods, services, or a promise. Sometimes called valuable consideration.

Conspiracy - An agreement or plan between two or more persons to perform an unlawful act.

Constructive - Held to be so in the eyes of the law, even if not so in fact.

Consumer Price Index - An index that tracks changes in the cost of goods and services for a typical consumer. Formerly called the cost of living index.

Contour - The shape of configuration of a surface. A contour map depicts the topography of a piece of land by means of lines (contour lines) that connect points of equal elevation.

Contract - An agreement between two or more persons to do or not do a certain thing, for consideration.

Contract, Bilateral - A contract in which each party has made a binding promise to perform (as distinguished from a unilateral contract).

Contract, Broker and Salesperson - An employment contract between a broker and an affiliated salesperson, outlining their mutual obligations.

Contract, Executed - A contract in which both parties have completely performed their contractual obligations.

Contract, Executory - A contract A contract in which one or both parties have not yet completed performance of their obligations.

Contract, Express - A contract that has not been put info words, but is implied by the actions of the parties.

Contract, Implied - A contract that has not been put into words, but is implied by the actions of the parties.

Contract, Land - A contract for the sale of real property in which the buyer (the vendee) pays in installments; the buyer takes possession of the property immediately, but the seller (the vendor) retains legal title until the full price has been paid. Also called a conditional sales contract, installment sales contract, real estate contract, or contract for deed.

Contract, Oral - A spoken agreement that has not been written down. Also called a parol contract.

Contract, Unenforceable - An agreement that a court would refuse to enforce; for example, because its contents can't be proven or the statue of limitations has run out.

Contract, Unilateral - Contract that is accepted by performance; the offeror has promised to perform his or her side of the bargain if the other party performs, but the other party has not promised to do so.

Contract, Valid - A binding, legal enforceable contract.

Contract, Void - An agreement that is not an enforceable contract, because it lacks a required element (such as consideration) or is defective in some other respect.

Contract, Voidable - A contract that one of the parties can disaffirm without liability, because of lack of capacity or a negative factor such as fraud or duress.

Contract of Adhesion - A contract that is one-sided and unfair to one of the parties; a "take it or leave it" contract, in which the offeror had much grater bargaining power than the offeree.

Contractor - One who contracts to perform labor or supply materials for a construction project, or to do other work for a specified price.

Contribution, Principle of - An appraisal principle which holds that the value of real property is greatest when the improvements produce the highest return commensurate with their cost (the investment).

Conversion - 1. Misappropriating property or funds belonging to another; for example, converting trust funds to one's own use. 2. The process of changing an apartment complex into a condominium or cooperative.

Conveyance - The transfer of title to real property from one person to another by means of a written document, especially a deed.

Cooperating Agent - A member of a multiple listing service who attempts to find a buyer for a listing.

Cooperative - A building owned by a corporation, where the residents are shareholders in the corporation; each shareholder receives a proprietary lease on an individual unit and the right to use the common areas.

Cooperative Sale - A sale in which the buyer and the seller are brought together by salespeople working for different brokers.

Corner Influence - The increase in a property's value that results from its location on or near a corner, with access and exposure on two streets.

Corporation - An association organized according to certain laws, in which individuals may purchase ownership shards; treated by the law as an artificial person, separate from the individual shareholders.

Corporation, Domestic - A corporation doing business in the state where it was created (incorporated).

Corporation, Foreign - A corporation doing business in one state, but created (incorporated) in another state, or in another country.

Correction Lines - In the rectangular survey system, adjustment lines used to compensate for the curvature of the earth; they occur at 24-mile intervals (every fourth township line), where the distance between range lines is corrected to six miles.

Corrective Maintenance - Ongoing repairs that are made to a building and its equipment in order to restore it to good operating condition.

Cost - The amount paid for anything in money, goods, or services.

Cost, Replacement - In appraisal, the current cost of constructing a building with the same utility as the subject property using modern materials and construction methods.

Cost Approach to Value - One of the three main methods of appraisal, in which an estimate of the subject property's value is arrived at by estimating the cost of replacing (or reproducing) the improvements, then deducting the estimated accrued depreciation and adding the estimated market value of the land.

Counteroffer - A response to a contract offer, changing some of the terms of the original offer; it operates as a rejection of the original offer (not as an acceptance). Also called qualified acceptance.

County - An administrative subdivision of the State, created by the State and deriving all of its powers from the State.

Course - In a metes and bounds description, a direction, stated in terms of a compass bearing.

Covenant - 1. A contract. 2. A promise. 3. A guarantee (express or implied) in a document such as a deed or lease. 4. A restrictive covenant.

Covenant, Restrictive - A promise to do or not do an act relating to real property, especially a promise that runs with the land; usually an owner's promise to not use property in a specified manner.

Covenant Against Encumbrances - In a warranty deed, a promise that the property is not burdened by any encumbrances other than those that are disclosed in the deed.

Covenant of Quiet Enjoyment - A promise that a buyer or tenant's possession will not be disturbed by the previous owner, the lessor, or anyone else making a lawful claim against the property.

Covenant of Right to Convey - In a warranty deed, a promise that the grantor has the legal ability to make a valid conveyance.

Covenant of Seisin - In a warranty deed, a promise that the grantor actually owns the interest he or she is conveying to the grantee.

Covenant of Warranty - In a warranty deed, a promise that the grantor will defend the grantee's title against claims superior to the grantor's that exist when the conveyance is made.

CPM - Certified Property Manager; a property manager who has satisfied the requirements set by the Institute of Real Estate Management of the National Association of Realtors.

Credit - A payment receivable (owed to you), as opposed to a debit, which is a payment due (owed by you).

Credit History - An applicant's record of accruing debts and repaying loans, usually expressed in the form of a personal credit report.

Creditor - One who is owed a debt.

Creditor, Secured - A creditor with a security interest in or a lien against specific property; if the debt is not repaid, the creditor can repossess the property or (in the case of real estate) foreclose on the property and collect the debt from the sale proceeds.

Credit Union - A depository institution that serves only member's of a particular group of profession, emphasizing small, short-term loans.

Criminal Law - The body of law under which the government can prosecute an individual for crimes, wrongs against society. Compare: Civil Law.

CRV - Certificate of Reasonable Value.

Customer - From the point of view of a real estate agent, a prospective property buyer.

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