Gordon/Clifford Realty, Inc

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Adjustable Rate Mortgage (ARM) - Finance instrument whose interest rate will vary according to the change in an identified index or rate.  

Administrator - Personal representative of the estate of a decedent, appointed by the probate court.  See also, executor.  

Agency Disclosure Form - Written statement required for a residential transaction involving property of one to four residential units, using the wording required by the California Civil Code, and signed by both buyer and seller in a transaction, that explains the various relationships of those involved in a residential property sale.  

Amortized Loan - The payment of a financial obligation in installments; recovery over a period of time of cost or value.  A loan has a negative amortization when the loan payments do not cover all of the interest due, which then is added to the remaining loan balance.  

Anchor Bolts - Bolts that fasten the sill plate of a wood-frame house to the house's foundation, required in California since 1931 for all new construction as an earthquake safety measure.  

Annual Percentage Rate (APR) - The relative cost of credits as determined in accordance with the Regulation Z of the Board of Governors of the Federal Reserve System for implementing the federal Truth-in Lending Act.  

Appraisal - An estimate of a property's monetary value on the open market; an estimate of a property's type and condition, its utility for a given purpose, or its highest and best use.  

Asbestos - Naturally occurring fibrous silicate mineral linked with various forms of cancer if inhaled and which, until the mid-1970s, was used for its insulating properties in spray-on and batting applications in homes and commercial structures; remediation can be by containment of removal and requires following strict procedures.  

Assessed Value - A valuation placed on a piece of property by a public authority as a basis for levying taxes on that property.  

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Balloon Payment - An installment payment on a promissory note - usually the final payment - that is significantly larger than the other installment payments.  

Bankruptcy - A federal court proceeding in which the court takes possession of the assets of an insolvent debtor and sells the nonexempt assets to pay off creditors on a pro rata basis; title the the debtor's assets is held by a trustee in bankruptcy.  

Beneficiary - One on whose behalf a trustee holds property conveyed by a trustor; the lender under a deed of trust.  

Bill of Sale - Written instrument that conveys title to personal property.  

Broker's Price Opinion (BPO) - An estimate of property value that is not an appraisal but is developed by a real estate broker  based on comparable sales in the area.  

Building Code - Standards for building, planning, and construction established by state law and local ordinance.  

Building Permit - Approval granted by the appropriate municipal, county, or other governing authority to begin construction of an improvement to real estate following review of the building plan submitted by the permit applicant and revision of the plan as required.  

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Capitalization Rate - The rate of interest that is considered a reasonable return on an investment, used in the process of determining value based on net operating income; the yield necessary to attract investment. 

Capital Improvement - A permanent improvement to real estate, usually extending the useful life and value of a property.  

Cash Flow - The net income generated by a property before depreciation and other noncash expenses. 

CC&Rs - Covenants, conditions, and restrictions; limitations on land use imposed by deed, usually when land is subdivided, as a means of regulating building construction, density, and use for the benefit of other property owners; may be referred to simply as restrictions.  

Certificate of Occupancy (CO) - Issued by the applicable building department of the municipal, county, or other jurisdiction in which the property is located when a structure has met all requirements and can be placed into service.  

Close of Escrow - Date on which all requirements of a real estate transaction have been fulfilled , documents are transmitted, and funds are transferred.  

Commitment Letter - The letter issued by a lending bank which legally binds it to provide funds as specified subject to written terms and conditions.  

Compound Interest - Interest paid on original principal and also on the accrued and unpaid interest that has accumulated as the debt matures.  

Comps - Comparable properties that are used in an appraisal to determine the value of the property that is the subject of the appraisal.  

Condominium - A subdivision providing an exclusive ownership (fee) interest in the airspace of a particular portion of real property, as well as an interest in common in a portion of that property.

Conventional Loans - A loan secured by a mortgage or trust deed that is made without governmental underwriting (FHA-insured or VA-guaranteed).  

Contract - A written or oral agreement to do or not to do certain things.  A contract is executory when a contract obligation is to be performed in the future, and executed when all obligations have been performed and the contract transaction has been completed.  A real estate contract must be a signed writing made by competent parties, for valuable consideration, with an offer by one party that is accepted by the other.  

Costa-Hawkins Rental Housing Act - California law that preempts rent control for new construction, single-family residences, and multiunit buildings in jurisdictions with vacancy control ordinances.  

Covenant - An agreement or a promise to do or not to do a particular act, usually imposed by a deed.  See also CC&Rs.  

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Deductions - Amounts on which income tax need not be paid; the home mortgage interest deduction from taxable income benefits homeowners.  

Deed - Written instrument that, when properly executed and delivered, conveys title to real property from a grantor to a grantee.  

Deed Restriction - Provision placed in a deed by the grantor that limits the property's use or requires the grantee to fulfill requirements of subdivision covenants, conditions, and restrictions (CC&Rs).  

Default - Failure by one of the parties to a contract to fulfill one o more of the obligations imposed by the contract.  

Depreciation - Decrease in value of an asset that is allowed in computing property value for tax purposes; in appraising, a loss in the value of a property improvement from any cause; depreciation is curable when it can be remedied by a repair or an addition to the property, and it is incurable when there is no easy or economic way to cure the loss.  

Discount Rate - Interest rate charged member banks by Federal Reserve Banks.  

Dual Agency - An agency relationship in which the agent represents two principals in their dealings with each other.  

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Earthquake Fault Zone - The area in such close proximity to an earthquake fault that movement of the fault presents a property hazard; location within an earthquake fault zone must by disclosed to a prospective purchases by the seller (or seller's agent, if there is one).  

Easement - The right to a specific use of or the right to travel over the land of another.  

Escrow - The deposit of instruments and/or funds (with instructions) with a neutral third party to carry out the provisions of an agreement or a contract.  

Escrow Agent/Officer/Holder - Neutral third party who holds in trust the funds and documents necessary to complete a transaction until all of the terms of the underlying agreement have been fulfilled, at which time the funds are disbursed and documents transferred as required.  

Escrow Instructions - Written instructions to the escrow holder specifying the terms under which the escrow is to be conducted, including the contract or other requirements that are to be fulfilled as part of the escrow proceeding; change in the escrow instructions requires agreement of both parties to the underlying contract.   

Estate - The interest held by the owner of the property.  

Estate Tax - Federal or state tax on the value of property owned by a decedent at the time of death.  

Estoppel - A bar against future conduct.  By acting as if an agency relationship exists, a principal is prevented by estoppel from denying it in future.  

Exclusive Authorization and Right to sell Listing - A listing agreement employing a broker as agent for a seller of real property under the terms of which the broker is entitled to compensation if the listed property is sold during the duration of the listing, whether by the listing agent, another agent, or the owner acting without the services of an agent.  

Executor - Personal representative of the estate of a decedent, named in the decedent's will.  See also administrators.  

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Fannie Mae - Formerly the Federal National Mortgage Association; created in 1938 to provide a secondary mortgage market for federally related mortgage loans; now also purchases conventional mortgage loans.  

Federal Reserve System (the Fed) - Central banking system of the United States.  

Fixed Rate Mortgage - Loan secured by mortgage or deed of trust on real estate that carries an interest rate that does not change over the life of a loan.  

Fixture - Anything permanently attached to the land or improvements so as to become real property.  

Flashing - Metal strips intended to prevent water entry at openings in a roof for chimneys, vents, dormers, and changes in roof line.  

Foreclosure - Sale of real property by mortgagee, trustee, or other lien holder on default by the borrower.

Foundation - Base of building, typically of poured concrete consisting of walls or footings.  

Frame - Support posts, beams, and roof members, typically wood in residential construction; steel-frame construction is common for commercial structures and is also used for homes.  

Freddie Mac - Formerly the Federal Home Loan Mortgage Association; private corporation under federal supervision created by Congress in 1970 to provide a secondary mortgage loans.

Full Disclosure of Material Facts - Obligation of real estate licensee to make known to the licensee's client as well as prospective purchasers all facts concerning the property and likely to affect its value that are known to the licensee and that the licensee is not otherwise prohibited by law from disclosing.  

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Good Faith Estimate - Statement of transaction closing costs provided by lender to borrower as required by the Real Estate Settlement Procedures Act (RESPA).  

Grantee - A person to whom property is transferred by grant.  

Grantor - A person conveying property to another by grant.  

Grant  - A conveyance of real estate.  

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Joists  - Beams used to support flooring.  

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Lease  - A contract between a property owner, called lessor or landlord, and another, called lessee or tenant, conveying and setting forth the conditions of occupancy and use of the property by the tenant. 

Lease Assignment - Transfer of leasehold interest by tenant to another party, with first tenant secondarily liable for lease obligations unless landlord agrees to a release of first tenant from those responsibilities.  

Lease Option - A lease accompanied by the right to purchase the leased property within a specified period for a specified or determinable price.  

Lien - An encumbrance that makes property security for the payment of a debt or discharge of an obligation. 

Liquidated Damages - An amount agreed upon by the parties to be full damages if a certain event occurs.  

Listing Agreement - Authorization by the owner of property, acting as principal, for a real estate broker to act as the agent of the principal in finding a person t buy, lease, or rent property; may be used to employ a real estate broker to act as agent for a person seeking property to buy, lease, or rent.  

Living Trust - Inter vivos trust; established during the lifetime of trustor/benefiiciary to hold title to real property and/or other assets and, on death of trustor, to pass title to contingent beneficiary without need for probate.  

Loan to Value Ratio - Amount of loan divided by purchase or market value of property.  

Lot and Block System - Subdivision system; method of legal description of land using parcel maps identified by tract, block and lot numbers.  

Liquefaction - Describes a phenomenon whereby a saturated or partially saturated soil substantially loses strength and stiffness in response to applied stress, usually earthquake shaking or other sudden change in stress condition, causing it to behave like a liquid.  

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Mortgage - Legal Instrument by which property is pledged by a borrower, the mortgagor, as security for the payment of a debt or an obligation owed to a lender, the mortgagee.  

Mortgage Loan Brokerage - Individual or company that brings borrowers and lender together.  

Multiple Listing Service (MLS) - An organization of real estate agents providing for a pooling of listings and the sharing of commissions on transactions involving more than one agent.

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Pocket Listing - Property listing that the listing agent markets privately before entering it in the multiple listing service (MLS).  

Points - One point represents one percentage point of a loan amount; may be charged by lenders at the time of loan funding to increase the loan's effective interest rate.  

Power of Attorney - A written instrument authorizing an agent to act in the capacity of the principal; a general power of attorney provides authority to carry out all of the business dealings of the principal; a special power of attorney provides authority to carry out a specific act or acts.  

Preliminary Report (the Prelim) - Title Company's initial review of the status of a property's title, that is, the existence of liens or other encumbrances that could affect its marketability.  

Probate - Court proceedings by which the property of a decedent is distributed according to the decedent's will or, if the decedent died instate (without a will), according to the state law of intestate succession.  

Property Management - A branch of the real estate business involving the marketing, operating, maintenance, and other day to day requirements of rental properties by an individual or a firm acting as agent of the owner.  

Proration - Adjustment of interest, taxes, insurance, and other costs of property ownership on a pro rata basis as of the closing or agreed on date; usually apportions those costs based on seller's and buyer's respective periods of ownership.  

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Real Estate Transfer Disclosure Statement (TDS) - Information on property mechanical and structural conditions that must be disclosed by a seller of California residential property of one to four units to a prospective buyer.  

Regulation Z - Federal Reserve Board requirements that implement the Truth-in-Lending Act.  

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Sale-Leaseback - A transaction in which at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchaser.  

Secondary Financing - A loan secured by a second (or subsequent) mortgage or trust deed on real property.  

Section 1031 -  A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business for or investment purposes.  Taxes on capital gains are note charged on the sale of property if the money is being used to purchase another property - the payment of tax is deferred until property is sold with no re-investment.  

Secondary Mortgage Market - Investment opportunities involving real property securities, other than direct loans from lender to borrower; loans may be bought, sold, or pooled to form the basis for mortgage-backed securities.  

Security Deposit - An amount paid at the start of a lease term and retained by the landlord until the tenant vacates the premises, all or part of which may be kept by the landlord at that time to cover costs of any default in rent payments or reasonable costs of repairs or cleaning necessitated by the tenant's use of the premises.  

Seismic Hazards Zone - Area specified by the California Department of Conservation as being at high risk of sever earth movement.  

Set-Back Ordinance - An ordinance requiring improvements built on property to be a specified distance from the property line, street, or curb.  

Settlement Statement (HUD-1) - A document provided to buyer and seller at closing that indicates all of the income and expenses of the transaction.  

Sheathing - Insulating and bracing material, such as plywood, applied to exterior walls of wood frame structure, to which exterior finishing material, such as siding or masonry, is applied.  

Siding - Exterior wall finishing, applied in horizontal boards that can be wood, aluminum, vinyl, or a composite material.  

Sill - Wood member placed directly on foundation; in California, state law requires anchor bolts to fasten sill to foundation for earthquake safety.  

Single Agency - Representation of only one party to a transaction; for example, a seller's agent or buyer's agent.  

Soffit - Encloses opening between outside wall of structure and end of room overhang.  

Special Power of Attorney - Authorization to act for someone else for a specific purpose, such as a real estate transaction.  

Special Studies Zone - one of the areas, typically within a quarter-mile of more of an active earthquake fault, requiring a geologic report for any new project involving improvements or structures initiated after May 4, 1975; the report may be waived by city or county if the state geologist approves.  

Standard Policy - Policy of title insurance that protects against fraud or other challenges to the owner's title that would not be discovered by an examination of the property or title records.  

Statute of Limitations - Law that stipulates the specific time period during which a legal action must be brought following the act that gives rise to it.  

Straight Note - A note in which a borrower repays the principal in a lump sum at maturity, with interest due in installments or at maturity.  

Stucco - Type of plaster used for exterior finishing of walls. 

Studs - Vertical wall supports; wood studs are used in a wood-frame structure and steel studs are used in a steel-frame structure.  

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Tenancy in Common (TIC) - Co-ownership of property in equal or unequal shares by two or more persons, each holding an undivided interest without right of survivorship.  

Tenant - Lessee under a lease; one who has the legal right to possession and use of property belonging to another.  

Testamentary Trust - A trust established by will and funded with proceeds from the estate of the decedent.  

Title Insurance - Insurance to protect a real property owner or lender up to a specified amount against certain types of loss affecting title or marketability.  

Title Insurance Company - Business licenses by the state to insure buyers and lenders against losses due to defects in title to real estate.  

Trust deed - A deed issued by a borrower of funds (the trustor) conveying title to a trustee on behalf of a lender, the beneficiary of the trust; the trust deed authorizes the trustee to sell the property to pay the remaining indebtedness to the beneficiary if the trustor defaults on the underlying obligation.  

Trustee's Sale - Sale of property held as security for payment of a loan on default of the trustor.  

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Waiver - The giving up of a right or privilege voluntarily.  

Will - A written, legal description of a person called a testator, expressing the testator's desires for the disposition of his or her property after death.