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Mortgage / Loan Terms

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

D

Declaration Of Trust

A written acknowledgement by one holding legal title to property that the property is held in trust for the benefit of another.

Declining Balance Method Of Depreciation

Depreciation by a fixed annual percentage of the balance after deducting each yearly depreciation amount.

Deed

Actually, any one of many conveyancing or financing instruments, but generally a conveyancing instrument, given to pass fee title to property upon sale.

Deed Of Trust

An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor) in favor of the lender (beneficiary), and re-conveyed upon payment in full.

De-feasible Title

Title, which is not absolute but possibly, may be annulled or voided at a later date. For example: Title conveyed to A with condition that if A marries before age 30, title will go to B. A's title may be good (doesn't marry) or may be defeated (marries before 30).

Deficiency Judgment

Commonly the amount for which the borrower is personally liable on a note and mortgage if the foreclosure sale does not bring enough to cover the debt. Actually the judgment is for the total amount and not for the deficiency, the recovery from the foreclosure sale being deducted from this amount.

Delivery

In conveyancing, the placing of the property in the actual or constructive possession of the grantee. Usually accomplished by delivery of a deed to the buyer, or by recording said deed.

Demand

The lender's statement of the amount due to pay of a loan.

Demand Note

A note having no date for repayment, but due on demand of the lender.

Deposit

(1) Money given by the buyer with an offer to purchase. Shows good faith. Also called earnest money. (2) A natural accumulation of resources (oil, gold, etc.) which may be commercially recovered and marketed.

Depreciation

(1) Decrease in value to real property improvements caused by deterioration or obsolescence. (2) A loss in value as an accounting procedure to use as a deduction for income tax purposes.

Direct Reduction Mortgage

An amortized mortgage. One on which principal and interest payments are paid at the same time (usually monthly) with interest being computed on the remaining balance.

Discount Points

The fee associated with the note rate for your loan, the more discount points you pay the lower the rate you can buy, the fewer you pay, the higher your rate. If the rate is high enough, the loan is priced above par and these premium points are available to pay closing costs creating a no or low fee loan.

Disposition of Real Estate Statement

A statement that the buyer will occupy the property being purchased even though the buyer owns other property. The buyer states that the other property will be sold or rented. Particulars must be given as to any loan on the property and the equity or rent to payment amounts.

Documentary Transfer Tax

The tax, based on sales price, less loans which are being assumed, which is charged by the city and/or county on the transfer of real property.

Double Declining Balance Method Of Depreciation

A use of the declining balance method, but with double the depreciation allowable by straight line. An accelerated method.

Double Escrow

Two concurrent escrows on the same property, having the same party as buyer and seller of the property. Example: Escrow 1 -A buys from B. Escrow 2 -A sells the same property to C. A is using C's money to buy B's property. The process is illegal in many states unless full disclosure is made.

Dual Agency

The representation of opposing principals (buyer and seller) at the same time. In brokerage many states get around this by saying that the agent aids the buyer but is the agent of the seller only. A problem arises if both buyer and seller pay the broker. Then full disclosure must be made. An escrow agent is the agent of buyer and seller and usually paid by both. This is why an escrow agent must be neutral.

Due on-Sale-Clause

A clause in a mortgage loan, which gives the lender the right to demand payment in full when the property changes ownership. Not applicable to FHA or VA loans.

E

Easement

A right created by grant, reservation, agreement, prescription, or necessary implication, which one has in the land of another. It is either for the benefit of land (appurtenant), such as right to cross A to get to B. or "in gross," such as a public utility easement.

Easement of Necessity

An easement granted by a court when it is determined that said easement is absolutely necessary for the use and enjoyment of the land. Commonly given to landlocked parcels.

Egress

A term concerning a right to come and go across the land (public or private) of another. Usually part of the term ingress and egress.

Encumbrance

A claim, lien, charge, or liability attached to and binding real property. Any right to, or interest in, land which may exist in one other than the owner, but which will not prevent the transfer of fee title.

Equitable Conversion

A legal fiction applied to a land contract, which treats the vendee's (buyer's) interest as a real property interest even though the seller holds legal title, and the seller's interest as a security interest (personal property). This enables the buyer to act as the "owner" of the property without having "legal" title.

Equitable Mortgage

(1) A lien against real property (mortgage) which is enforceable in a court of equity, but does not legally constitute a mortgage. (2) A deed given, as security for a debt will be held to be a mortgage rather than a transfer of title. Also called a constructive mortgage.

Equity

The value of a person's interest in real property after all liens and charges have been deducted.

Equity Line Of Credit

A combination of a line of credit and equity loan. A maximum loan amount is established based on credit and equity. A mortgage (deed of trust) is recorded against the potential borrower's property for said maximum loan amount. The potential borrower has the right to borrow, as needed, up to the amount of the mortgage.

Escalation Clause

A clause in a lease providing for an increased rental at a future time. May be accomplished by several types of clauses, such as (1) Fixed increase - A clause that calls for a definite, periodic rental increase. (2) Cost of living - A clause which ties the rent to a government cost of living index, with periodic adjustments as the index changes. (3) Direct expense - The rent is adjusted according to changes in the expenses of the property paid by the lessor, such as tax increases, increased maintenance costs, etc.

Escrow

Delivery of a deed by a grantor to a third party for delivery to the grantee upon the happening of a contingent event, Modernly, in some states, all instruments necessary to the sale (including funds) are delivered to a third (neutral) party, with instructions as to their use.

Excess Condemnation

Taking by right of eminent domain, more property than actually necessary for the intended purpose. This happens frequently, the excess property being sold at auction after completion of the project.

Exception

A provision in a title insurance binder or policy excludes liability for a specified title defect or an outstanding encumbrance.

Exclusive Listing

A written contract between a property owner and a real estate broker, whereby the owner promises to pay a fee or commission to the broker it certain real property of the owner is sold during a stated period, regardless of whether the broker is or is not the cause of the sale. The broker promises to put forth his or her best efforts to sell the property, and may make specific promises as to advertising or other promotion in certain instances.

Exemplary Damages

Damages to punish (make an example of) the offender. This is done when the wrong is deliberate or grossly negligent and compensatory damages do not appear to be sufficient.

Expert Testimony

Testimony by one acknowledged having special training and knowledge in a particular subject. Only testimony on the subject in which the witness is "expert" is considered expert testimony.

Exposure

(1) The degree to which a property for sale, lease, etc., is made noticeable (exposed) to potential buyers, tenants, etc., through advertising, multiple listing groups, etc. (2) The direction in which a property faces. For example: Does a store depending on walk-in trade face the sun in the morning when people walk in the sun to get warm (eastern exposure), or face the sun in the afternoon when people walk in the shade to keep cool (western exposure).

 
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