Investment Real Estate Financing,

APR
See Annual Percentage Rate.

FIDUCIARY
A relationship which implies a position of trust or confidence wherein one is usually entrusted to hold or manage property or money for another. Among the obligations a fiduciary owes to the principal are duties of loyalty; obedience; full disclosure; the duty to use skill, care and diligence; and the duty to account for all monies.

INTESTATE
To die without a valid will.

FORECLOSURE (OR REPOSSESSION)
Legal process by which a mortgaged property may be sold to pay off a mortgage loan that is in default.

REVERSION
A future estate in real property created by operation of law when a grantor conveys a lesser estate than he has. The residue left in the grantor is called a reversion which commences in possession in the future upon the end of a particular estate granted or devised, whether it be freehold or less-than-freehold.

LAW DAY
The date an obligation becomes due; sometimes refers to the closing date.

DEED
Legal document by which title to real property is transferred from one owner to another. The deed contains a description of the property, and is signed, witnessed, and delivered to the buyer at closing.

FLOOR DUTY
A frequent practice in real estate brokerage offices of assigning one sales agent the responsibility for handling all telephone calls and office visitors for a specified period of time.

NON-ASSUMPTION CLAUSE
A statement in a mortgage contract forbidding the assumption of the mortgage by another borrower without the prior approval of the lender.

NOTICE OF COMPLETION
Document filed to give public notice that a construction job has been completed and that mechanics' liens must be filed within ,say, 45 days to be valid.

OFFER
A promise by one party to act or perform in a specified manner provided the other party will act or perform in the manner requested.

PRO FORMA STATEMENT
A projection of future income and expenses.

DEVELOPER
One who attempts to put land to its most profitable use by the construction of improvements.

CAPITAL IMPROVEMENT
Any structure which is erected as a permanent improvement to real property; any improvement which is made to extend the useful life of a property, or to add to the value of the property.

SPECIFIC PERFORMANCE
A legal action brought in a court of equity to compel a party to carry out the terms of a contract.

COMMITMENT
A pledge or promise to do a certain act, such as the promise of a lending institution to loan a certain amount of money at a fixed rate of interest to a qualified buyer, provided the loan is obtained on or before a certain date.

LAND CONTRACT
Another name for an installment purchase contract, by which the buyer obtains equitable title (the right to use the property) while the seller retains legal title (recorded title)as security for payment of the balance of the purchase price.

JUDICIAL FORECLOSURE
A method of foreclosing upon real property by means of a court supervised sale. After an appraisal, the court determines an upset price below which no bids to purchase will be accepted.

DEPOSIT
Money offered by a prospective buyer as an indication of good faith in entering into a contract to purchase; earnest money; security for the buyer's performance of a contract.

EXECUTIVE
The act of making a document legally valid, such as formalizing a contract by signing, or acknowledging and delivering a deed.

FLOOD INSURANCE
Insurance that compensates for physical damage to a property by flood. Typically not covered under standard hazard insurance.

DISCOUNT POINTS (OR POINTS)
Points are an up-front fee paid to the lender at the time that you get your loan. Each point equals one percent of your total loan amount. Points and interest rates are inherently connected: in general, the more points you pay, the lower the interest rate you get. However, the more points you pay, the more cash you need up front since points are paid in cash at closing.

RESIDUAL PROCESS
An appraisal process used in the income approach to estimate the value of the land and/or the building, as indicated by the capitalization of the residual net income attributable to it.

NOVATION
The substitution of a new obligation for an old one; substitution of new parties to an existing obligation, as where the parties to an agreement accept a new debtor in place of an old one.

LAND LEASEBACK
A creative financing device often used with raw land which a developer wants to improve, in which the developer sells the land to an investor who leases the land back to the developer under a long-term net lease and subordinates his fee ownership to the lender providing development financing.

ACCELERATION CLAUSE
A common provision of a mortgage or note providing the holder with the right to demand that the entire outstanding balance is immediately due and usually payable in the event of default.