Real Estate Glossary - I thru J

Implied - Not expressed in words, but understood from actions or circumstances.

Impound Account - A bank account maintained by a lender for payment of property taxes and insurance premiums on the security property; the lender requires the borrower to make regular deposits, and pays the expenses out of the account. Also called a reserve account.

Improvements - Manmade additions to real property.

Improvements, Misplaced - Improvements that do not fit the most profitable use of the site; they can be overimprovements or underimprovements.

Imputed Knowledge - A legal doctrine stating that a principal is considered to have notice of information that the agent has, even if the agent never passed that information on to the principal.

Inchoate - Partial, incomplete, unfinished; begun but not completed, as in the case of contract that has not been executed by all the parties.

Inchoate Interest - A future interest in real estate, such as an interest a minor will receive when he or she comes of age.

Income, Disposable - Income remaining after income taxes have been paid.

Income, Effective Gross - A measure of a rental property's capacity to generate income; calculated by subtracting a bad debt/vacancy factor from the economic rent (potential gross income).

Income, Gross - A property's total income before making any deductions (for bad debts, vacancies, operating expenses, etc.).

Income, Net - The income that is capitalized to estimate the property's value; calculated by subtracting the property's operating expenses (fixed expenses, maintenance expenses, and reserves for replacement) from the effective gross income.

Income, Potential Gross - A property's economic rent; the income it could earn if it were available for lease in the current market.

Income, Residual - The amount of income that an applicant for a VA loan has left over after taxes, recurring obligations, and the proposed housing expense have been deducted from his or her gross monthly income.

Income, Spendable - The income that remains after deduction operating expenses, debt service, and income taxes from a property's gross income. Also called net Spendable income or cash flow.

Income Approach to Value - One of the three main methods of appraisal, in which an estimate of the subject property's value is based on the net income it produces; also called the capitalization method or investor's method of appraisal.

Income Property - Property that generates rent or other income for the owner, such as an apartment building. In the federal income tax code, it is referred to as property held for the production of income.

Income Ratio - A standard used in qualifying a buyer for a loan, to determine whether he or she has sufficient income; the buyer's debts and proposed housing expense should not exceed a specified percentage of his or her income.

Incompetent - Not legally competent; not of sound mind.

Independent Contractor - A person who contracts to do a job for another, but retains controls over how he or she will carry out the task, rather than following detailed instructions.

Index - A published statistical report that indicates changes in the cost of money; used as the basis for interest rate adjustments in an ARM.

Index, Tract - An index of recorded documents in which all documents that carry a particular legal description are grouped together.

Indexes, Grantor/Grantee - Indexes of recorded documents maintained by the recorder, with each document listed in alphabetical order according to the last name of the grantor (in the grantor index) and grantee (in the grantee index); the indexes list the recording number of each document, so that it can be located in the public record.

Ingress - A means of entering a property; the opposite of egress. The terms ingress and egress are most commonly used in reference to an access easement.

In-House Sale - A sale in which the buyer and the seller are brought together by salespeople working for the same broker.

Injunction - A court order prohibiting someone from performing an act, or commanding performance of an act.

Innocent Improver - Someone who makes an improvement on land in the mistaken belief that he or she owns the land. Also called a good faith improver.

Installment Sale - Under the federal income tax code, a sale in which less than 100% of the sales price is received in the year the sale takes place.

Instrument - A legal document, usually one that transfers title (such as a deed), creates a lien (such as a mortgage), or establishes a right to payment (such as a promissory note or contract).

Insurance, Hazard - Insurance against damage to real property caused by fire, flood, theft, or other mishap. Also called casualty insurance.

Insurance, Homeowner's - Insurance against damage to real property and the homeowner's personal property.

Insurance, Mortgage - Insurance that protects a lender against losses resulting from the borrower's default.

Insurance, Mutual Mortgage - The mortgage insurance provided by the FHA to lenders who make loans through FHA programs.

Insurance, Private Mortgage (PMI) - Insurance provided by private companies to conventional lenders for loans with loan-to-value ratios over 80%.

Insurance, Title - Insurance that protects against losses resulting form undiscovered title defects. An owner's policy protects the buyer, while a mortgagee's policy protects the lien position of the buyer's lender.

Insurance, Title, Extended Coverage - Title insurance that covers problems that should be discovered by an inspection of the property (such as encroachments and adverse possession), in addition to the problems covered by standard coverage policies. An extended coverage policy is sometimes referred to as an ALTA (American Land Title Association) policy.

Insurance, Title, Standard Coverage - Title insurance that protects against latent title defects (such as forged deeds) and undiscovered recorded encumbrances, but does not protect against problems that would only be discovered by an inspections of the property.

Integration - In a property's life cycle, the earliest stage, when the property is being developed. Also called development.

Interest - 1.A right or share in something (such as a piece of real estate). 2. A charge a borrower pays to a lender for the use of the lender's money.

Interest, Compound - Interest in property that will or may become possessory at some point in the future, such as a remainder or reversion.

Interest, Future - An interest in property that will or may become possessory at some point in the future, such as a remainder or reversion.

Interest, Prepaid - Interest on a new loan that must be paid at the time of closing; covers the interest due for the first month of the loan term. Also called interim interest.

Interest, Simple - Interest that is computed on the principal amount of the loan only, which is the type of interest charged in connection with real estate loans.

Interest, Undivided - A co-owner's interest, giving him or her the right to possession of the whole property, rather than to a particular section of it.

Interpleader - A court action filed by someone who is holding funds that two or more people are claiming. The holder turns the funds over to the court; the court resolves the dispute and delivers the money to the party who is entitled to it.

Interstate Land Sales Full disclosure Act - A federal law requiring subdivision developers to make certain disclosures concerning the property to potential buyers.

Intestate - Without a valid will.

Intestate Succession - Distribution of the property of a person who died intestate to his or her heirs.

Invalid - Not legally binding or legally effective; not valid.

Inventory - A detailed list of the stock-in-trade of a business.

Inverse Condemnation Action - A court action by a private landowner against the government, seeking compensation for damage to property caused by government action.

Investment Property - Unimproved property held as an investment in the expectation that it will appreciate in value.

Inverted Pyramid - A way of visualizing ownership of real property; in theory, a property owner owns all the earth, water and air enclosed by a pyramid that has its tip at the center of the earth and extends up though the property boundaries out into the sky.

Involuntary Conversion - For income tax purposes, when an asset is converted into cash without the voluntary action of the owner, such as through a condemnation award or insurance proceeds.

J

Joint Venture - Two or more individuals or companies joining together for one project or a related series of projects, but not as an ongoing business.

Judgment - 1.A court's binding determination of the rights and duties of the parties in a lawsuit. 2. A court order requiring one party to pay the other damages.

Judgment, Default - A court judgment in favor of the plaintiff due to the defendant's failure to answer the complaint or appear at the hearing.

Judgment, Deficiency - A personal judgment entered against a borrower in favor of the lender in the proceeds from a foreclosure sale of the security property are not enough to pay off the debt.

Judgment Creditor - A person who is owed money as a result of a judgment in a lawsuit.

Judgment Debtor - A person who owes money as a result of a judgment in a lawsuit.

Just Compensation - the compensation that the Constitution requires the government to pay a property owner when the property is taken under the power of eminent domain.

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