Industry Definitions

Disclaimer: The information contained here is intended to provide information and insight to industry practitioners and does not constitute advice or recommendations. Royal Commercial Corp. disclaims any liability for action taken as a result of this publication.
The definitions given here explain how the listings terms are used in the real estate field. Some of the terms may have additional meanings, which can be found in a standard dictionary).
Acceptance – Agreeing to the terms of an offer to enter into a contract, thereby creating a binding contract.
 
Acknowledgement – When a person who has signed a document formally declares to be an authorized official (usually a notary of the public) that he signed voluntarily. The official can then attest that the signature is voluntary and genuine.
 
ADA  - Americans with Disabilities Act. A federal law requiring facilities that are open to the public to ensure accessibility to disabled persons, even if that access requires making architectural modifications. The ADA also requires employers to make reasonable accommodations for disabled employees.
 
Addendum – An attachment to a contract that contains additional provisions that apply to that transaction.
 
Affiliated Licensee – An individual licensee (either broker or managing broker) who is licensed to work for or represent a particular real estate firm.
 
Agency – a relationship of trust created when one person (the principal) grants another (the agent) authority to represent the principal in dealings with third parties.
 
Amendment – A written modification to a contract that occurs after both parties have signed the document.
 
Amenities – Features of a property that contribute to the pleasure or convenience of owning it, such as a fireplace, a beautiful view, or its proximity to an ideal location.
 
Assign – To transfer rights (especially contract rights) or interests to another.
 
Assignee – One to whom rights or interests have been assigned.
 
Assignment – 1. A transfer of contract rights from one person to another 2. In the case of a lease, when the original tenant transfers her entire leasehold estate to another. Compare: Sublease.
 
Assignor – One who has assigned his rights or interest to another.
 
Auditing – Verification and examination of records particularly the financial accounts of a business or other organization.
 
Authority, Actual – Authority actually given to an agent by the principal, either expressly or by implication.
 
Authority Implied – An agent’s authority to do everything reasonably necessary to carry out the principal’s express orders.
 
Bifurcate - To divide into two branches or parts. As in someone who bifurcates their property to build a second home.
Bike Score – Measures measures whether an area is good for biking.  Scores are calculated by measuring bike infrastructure (lanes, trails, etc.), hills destinations and road connectivity and the number of bike commuters. Data is compiled from the USGS, Open Street Map, and the U.S. Census.
Scores are based on scale of 0 - 100 (100 is a biker's paradise!).
Check out this link for detailed score ranges:    https://www.walkscore.com/methodology.shtml
 
Blind Ad – an advertisement placed by a real estate licensee that does not include the brokerage’s name.
 
Breach – Violation of an obligation, duty or law; especially an unexcused failure to perform a contractual obligation.
 
Broker – An individual licensed to act on behalf of a real estate firm in performing real estate brokerage services.
 
Broker, Designated – A person who is licensed as a managing broker, has a designated broker endorsement added to his license by the DOL, and serves as the designated broker for one or more firms, bearing ultimate responsibility for all firm activities.
 
Brokerage Fee – The commission or other compensation charged for a real estate brokerage’s services.
 
Capacity – The legal ability or competency 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 inventory and depreciable 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 investment.
 
Certificate of occupancy – A statement issued by the local government agency such as the building department, verifying that a newly constructed building is in compliance with all codes and may be occupied.
 
Chattel – An article of personal property.
 
Chattel Real – Personal property that is closely associated with real property; the primary example is a lease.
 
Client – One who employs a real estate agent, lawyer, or appraised. A real estate agent’s client can be a seller, a buyer, a landlord or a tenant.
 
Commercial Property – Property zoned and used for business purposes such as a restaurant or an office building; as distinguished from residential or agricultural property.
 
Commission – The compensation paid to a broker for services in connection with a real estate transaction (usually a percentage of the lease or sales price).
 
Common Areas – In a building with leased units or spaces, the areas that are available for use by all of the tenants.
 
Confidential Information – Information from or concerning a principal that was acquired during the course of an agency relationship, that the principal reasonably expects to be kept confidential, that the principal has not disclosed to third parties, that would operate to the detriment of the principal, and the principal would not be legally obligated to disclose to the other party.
 
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.
 
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, Brokerage and Affiliated Licensee – An employment contract between a brokerage firm and an affiliated licensee, outlining their mutual obligations.
 
Contract, Valid – a binding, legally enforceable contract.
 
Contract, Void – An agreement that is not a valid contract, because it lacks a required element (such as consideration) or is defective in some other respect.
 
Cooperating Agent – A member of a multiple listing service who attempts to find a buyer for a listing.
 
Credit History – An applicant’s record of accruing debts and repaying loans, usually expressed in the form of a personal credit report.
 
Default – Failure to fulfill an obligation, duty, or promise, as when a borrower fails to make payments or a tenant fails to pay rent.
 
Defeasance Clause – a clause in a mortgage, deed of trust, or lease that cancels or defeats a certain right upon the occurrence of a particular event.
 
Deposit – Money offered as an indication of commitment or as a protection, and which may be refunded under certain circumstances, such as an earnest money deposit or a tenant’s security deposit.
 
Estoppel – A legal doctrine that prevents a person from asserting rights or facts that are inconsistent with his earlier actions or statements.
 
Estoppel certificate – A document that prevents a person who signs it from later asserting facts different from those stated in the document. 
 
Eviction – Dispossession or expulsion of someone from real property.
 
Fiduciary Relationship – A relationship of trust and confidence, where one party owes the other party (or both parties owe each other) loyalty and a higher standard of good faith than is owed to third parties. For example, an agent is a fiduciary in relation to the principal; spouses are fiduciaries in relation to one another.
 
Financial Statement – A summary of facts showing the financial condition of an individual or a business, including a detailed list of assets and liabilities. Also called a balance sheet.
 
Fixed Term – A period of time that has a definite beginning and ending.
 
Forfeiture – Loss of a right or something else of value as a result of failure to perform an obligation of fulfill a condition.
 
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 or as entrances and exits of a building.
 
Certificate of Insurance – A document issued by an insurance company/broker that is used to verify the existence of insurance coverage under specific conditions granted to listed individuals.
 
Lease – A conveyance of a leasehold estate from the fee owner to a tenant; a contract in which one party pays the other rent in exchange fort he possession of real estate. Also called a rental agreement.
 
Lease, Fixed / Gross – A lease in which the rent is set at a fixed amount, and the landlord pays all or nearly all of the operating expenses; in some cases the tenants pays for utilities. Also called a fixed lease, flat lease or straight lease.
Lease, Graduated – A lease in which it is agreed that the rental payments will increase at intervals by a specified amount or according to a specified formula.
 
Lease, Ground – A lease of the land only, usually for long term, to a tenant who intends to construct a building on the property.
 
Lease, Net (Triple Net or NNN) – A lease requiring the tenant to pay some or all of the operational expenses (such as taxes, insurance, and repairs), in addition to the rent paid to the landlord.
 
Lease, Percentage – A lease in which the rent is based on a percentage of the tenant’s monthly or annual gross sales.
Legal Description – A precise description of a parcel of real property; may be a lot and block description, a metes and bounds description, or a government survey description.
 
Lessee – One who leases property form another; a tenant.
 
Lessor – One who leases property to another; a landlord.
Letter of Intent (LOI) – A written document between brokerage firms, on behalf of the tenant and landlord, to communicate the intent to lease or purchase real property from a landlord. The LOI typically contains items that will provide a framework to for the terms of the lease agreement between the tenant and landlord.
 
Liability – A debt or obligation; legal responsibility.
 
Liable – Legally responsible.
 
Listing – A written agency contract between a seller and a real estate brokerage, stipulating that the brokerage will be paid a commission for finding (or attempting to find) a buyer for the seller’s property.
 
Listing, Exclusive – Either an exclusive agency listing or exclusive right to sell listing.
 
Listing, Exclusive Right to Sell – A listing agreement that entitles the brokerage to a commission if anyone, including the seller, find a buyer for the property during the listing term.
 
Listing, Multiple – A listing (usually an exclusive right to sell listing) that includes a provision allowing the brokerage to submit the listing to its multiple listing service for dissemination to cooperating agents.
 
Listing, Net – A listing agreement in which the seller sets a net amount he is willing to accept for the property; if the actual selling price exceeds that amount, the real estate firm is entitled to keep the excess as its commission.
 
Listing, Open – A non-exclusive listing, given by a seller to as many brokerages as he chooses. If the property is sold, a brokerage is only entitled to a commission if it was the procuring cause of the sale.
 
Listing Brokerage – The brokerage that takes a listing, and thus represents the seller.
 
Material Fact – Information that has a substantial negative impact on the value of the property, on a party’s ability to perform, or on the purpose of the transaction.
 
Multiple Listing Service – An organization of brokerages and agents that facilitates sharing of information about listed properties among its members and offers them a variety of other services.
 
National Association of Realtors – (NAR) a trade association of real estate agents. Only members of NAR may use this.
 
Non-Agency – When a real estate licensee assist the buyer and seller in a transaction but does not represent either party.
 
Notarize – To have the signatures on a legal document verified and certified by a notary of the public.
 
Notary Public – Someone who is officially authorized to witness and certify the acknowledgement made by someone signing a legal document.
 
Novation – 1. When one party to a contract withdraws and a new party if substituted, relieving the withdrawing party of liability. 2. The substitution of a new obligation for an old one.
 
Offer – When one person (the offeror) proposes to contract to another (the offeree); if the offeree accepts the offer, a binding contact is formed.
 
Ownership – Title to property, dominion over property; the rights of possession and control.
 
Per Diem – Daily.
 
Procuring Cause – The real estate agent who is primarily responsible for bringing about a sale; for example, by negotiating the agreement between the buyer and seller.
Real Estate Brokerage Relationships Act – A Washington s5tate law that significantly changed traditional agency law in regard to real estate transactions. It governs when and how real estate agency relationships are created and terminated, the duties owed by real estate licensees to the parties to a real estate transaction, and when and how agency disclosures are to be made.
 
Real Estate Commission – A commission appointed by the Governor, consisting of the Director of the Department of Licensing and six commissioners; responsible for preparing and conducting real estate licensing examinations.
 
Real Estate Firm – A business entity licensed to offer real estate brokerage services under the supervision and control of its designated broker; also known as a brokerage.
 
Recapture– A condition set by the seller of an asset that gives him/her the right to purchase back some or all of the assets wihtin a certain amount of time.
 
Rent – Compensation paid by a tenant to the landlord in exchange for the possession and use of property.
 
Security Deposit – Money a tenant gives to a landlord at the beginning of the tenancy to protect the landlord in case the tenant defaults; the landlord may retain all or part of the deposit to cover unpaid rent or repair costs at the end of the tenancy.
 
Statute of Frauds – A law that requires certain types of contracts to be in writing and signed in order to be enforceable.
 
Sublease – When a tenant transfers less than her entire leasehold estate to another person (subtenant); the subtenant might share possession with the tenant, or have the right to possess only a portion of the leased premises, or have the right to possess the entire premises for only a portion of the remainder of the lease term. Also called a sandwich lease.
TI's - Tenant Improvements
 
Tenancy – Lawful possession of real property; an estate.
Tenancy, Term – Estate for years.
 
Tenancy, Periodic – A leasehold estate that continues for successive periods of equal length (such as from week to week or month to month), until terminated by property notice from either party. Also called a month-to-month tenancy.
 
Tenant – Someone in lawful possession of real property; especially someone who has leased property from the owner.
 
Term – A prescribed period of time; especially the duration of a lease.
 
Third Party – 1. A person seeking to deal with a principal through an agent. 2. In a transaction, someone who is not one of the principals.
 
Time is of the Essence – A clause in a contract that means performance on the exact dates specified is an essential element of the contract; failure to form on time is a material breach.
 
Title – Lawful ownership of real property. Also, the deed or other document that is evidence of that ownership.
 
Trade fixtures – Articles of personal property annexed to real property by a tenant for use in his trade or business, which the tenant is allowed to remove at the end of the lease.
Transit Score – Measures measures how well a location is served by a public transit system using a patented system.  Scores are based on data released in a standard format by public transit agencies. Scores are based on a a scale of 0 - 100 (100 is a rider's paradise!).
Check out this link for detailed score ranges:https://www.redfin.com/how-walk-score-works
 
Unauthorized Practice of Law – Tasks undertaken by a real estate licensee that can be done legally only by a licensed attorney; for example, drafting special contract language for a client.
 
Unlawful Detainer – A summary legal action to regain possession of real property; especially, a suit filed by a landlord to evict a defaulting tenant.
Walk Score – Measures the "walkability" of any address using a patented system. Analyzing hundreds of walking routes to nearby amenities, points are awarded on a scale of 0 - 100 (100 is a walker;s paradise!) based on distance to the amenities in each category.
Check out this link for detailed score ranges:    https://www.redfin.com/how-walk-score-works
Write of Restitution – A court order issued after an unlawful detainer action, informing the tenant that he must vacate the landlord’s property within a specified period or be forcibly removed by the sheriff. Also called a writ of possession.

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