Dictionary of Terms - C

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Caliche: A layer of hard subsoil or clay, usually used to describe a road bed; also called hardpan.
Call Option: A loan clause allowing a lender to ask for repayment of the entire balance at any time.
Cap: A limit on the amount the interest rate or monthly payment can increase in an adjustable rate mortgage.
Capital Gain: Profit earned from the sale of an asset.
Capital Recapture: The return of an investment; the right of the investor to get back the amount invested at the end of the term of ownership or over the productive life of the improvements.
Capital: Money and/or property comprising the wealth owned or used by a person or business enterprise to acquire other money or goods.
Capitalization Rate: The percentage rate applied to the income a property is expected to produce to derive an estimate of the property's value; includes both an acceptable rate of return on the amount invested (yield) and return of the actual amount invested (recapture).
Capitalization: A mathematical process for estimating the value of a property using a proper rate of return on the investment and the annual net operating income expected to be produced by the property. The formula is expressed as: Income + Rate = Value.
Capitalized Value Method Of Depreciation: A method of computing depreciation by determining loss in rental value attributable to a depreciated item and applying a gross rent multiplier to that figure.
Caps (Interest Rate Caps): Consumer safeguards which limit the amount the interest rate on an adjustable rate mortgage which may change per year and/or the life of the loan.
Carryback Financing: Financing in which a seller agrees to hold back a note for a set amount of the sales price.
Casement Windows: Windows with a hinged sash and an opening pattern similar to a door. Older models had metal frames and the screens were on the inside. Opening mechanism is typically a crank type handle.
Cash Basis: A system of recognizing revenue and expense items only at the time cash is received or paid out.
Cash Equivalency Technique: Method of adjusting a sales price downward to reflect the increase in value due to assumption or procurement by buyer of a loan at an interest rate lower than the prevailing market rate.
Cash Flow Rate: (See equity capitalization rate.) cash on cash rate. (See equity capitalization rate.)
Cash Flow: The net spendable income from an investment determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income a negative cash flow results.
Cash Rent: In an agricultural lease the amount of money given as rent to the landowner at the outset of the lease as opposed to sharecropping.
Cashier's Check: A check the bank draws on itself rather than on a depositor's account.
Cash-out Refinance: The refinancing of a mortgage in which the money received from the new loan is greater than the amount due on the old loan.
Casing: The frame of a window or door.
Caveat Emptor: A Latin phrase meaning, "Let the buyer beware."
Central Appraisal District (CAD): The organization that compiles an inventory of property within the county, including real property, business personal property and minerals, and values it periodically using mass appraisal. . The central appraisal district keeps detailed information for the properties and administers exemptions. Their activities are limited to determining market values and appraised values, which are submitted to tax entities who prepare and mail tax bills.
Certificate Of Deposit Index (CODI): An index based on interest rates of six-month CDs. Commonly used to determine interest rates for some adjustable rate mortgages.
Certificate Of Eligibility: A document issued by the Veterans Administration that verifies the eligibility of a veteran for a loan program.
Certificate Of Occupancy (CO): A document stating that a home or other building has met all building codes and is suitable for habitation.
Certificate Of Reasonable Value (CRV): A form indicating the appraised value of a property being financed with a VA loan.
Certificate Of Reasonable Value (CRV): A certificate issued by the Veterans Administration that states an estimate of the property value for the purposes of making a loan guaranteed by the Veterans Administration.
Certificate Of Sale: The document generally given to the purchaser at a tax foreclosure sale. It does not convey title; normally it certifies that the holder received title to the property after the redemption period passed and paid the property taxes for that interim period.
Certificate Of Title: A statement of opinion on the status of the title to a parcel of real property based on an examination of specified public records.
Certificate Of Veteran Status: The document given to veterans or reservists who have served 90 days of continuous active duty (including training time).
Chain Of Title: The succession of conveyances from some accepted starting point whereby the present holder of real property derives title.
Chain: A surveyor's unit of measurement equal to four rods or 66 feet, consisting of 100 links of 7.92 inches each; ten square chains of land are equal to one acre.
Change: The appraisal principle that holds that no physical or economic condition remains constant.
Change The Principle Of: The appraisal principle that states that the cause and effect of economic and social forces are constantly causing property values to change. Also the principle that directs the dating of the appraisal.
Channeling: The illegal practice of directing people to or away from certain areas or neighborhoods because of minority status; also known as "steering."
Chattel: Property other than real property.
Chief Appraiser: Chief administrative officer of a central appraisal district.
Chronological Age: The age of a structure in years counting from the year of construction to the present.
CIP: Construction in Progress (or Process).
Circuit Breaker: Tax relief for the elderly or low-income constituents. Limits property tax due when certain thresholds are met.
Clapboard: A horizontal siding of thin boards, thicker at one edge to allow them to be overlapped.
Classification Of Assessment: Assessment of different classes of property within the same taxing jurisdiction.
Classification Of Property: The distinction between types of property (i.e., real property vs. personal property).
Clear Title: A title to property that does not have liens, defects or other legal encumbrances.
Client: One who hires another person as a representative or agent for a fee.
Closing Costs: Expenses related to the sale of real estate including loan, title, and appraisal fees. These costs are above and beyond the price of the property and are paid at closing. Most closing costs are one-time expenses however a few are recurring.
Closing Statement: A detailed cash accounting of a real estate transaction showing all cash received all charges and credits made and all cash paid out in the transaction.
Closing: An event where promises made in a sales contract are fulfilled and mortgage loan funds (if any) are distributed to the buyer.
Closing: The final procedure in which loan and title documents are signed between the buyer and seller and their respective representation.
Cloud On Title: Any document claim unreleased lien or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title.
Clustering: The grouping of home sites within a subdivision on smaller lots than normal with the remaining land used as common areas.
Code Of Ethics: Rules of ethical conduct, such as those that govern the actions of members of a professional group.
Codicil: A supplement or an addition to a will executed with the same formalities as a will that normally does not revoke the entire will.
COFI Index (Cost Of Funds Index): This index reflects the weighted-average interest rate paid by 11th Federal Home Loan Bank District savings institutions for savings and checking accounts, advances from the FHLB, and other sources of funds. The 11th District represents the savings institutions (savings & loan associations and savings banks) headquartered in Arizona, California and Nevada. The COFI index is a popular index used for determining interest rates on adjustable rate mortgages.
Coinsurance Clause: A clause in insurance policies covering real property that requires the policyholder to maintain fire insurance coverage generally equal to at least 80 percent of the property's actual replacement cost.
Commercial Mortgage Broker: A mortgage broker who specializes in commercial mortgage applications.
Commercial Mortgage Lender: A mortgage lender who specializes in the funding of commercial mortgage loans.
Commercial Mortgage: A mortgage used to buy a commercial piece of property or commercial building.
Commingling: The illegal act by a real estate broker of placing client or customer funds with personal funds. By law brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker.
Commission: Payment to a broker for services rendered such as in the sale or purchase of real property; usually a percentage of the selling price of the property.
Commitment Fee: A fee charged by the lender to guarantee a specific set of loan terms to be honored at some future date.
Commitment: A promise by a lender to make a loan with specific terms for a specified period.
Common Elements: Parts of a property that are necessary or convenient to the existence maintenance and safety of a condominium or are normally in common use by all of the condominium residents. Each condominium owner has an undivided ownership interest in the common elements.
Common Law: The body of law based on custom, usage and court decisions.
Community Association Management: Provides a team of property managers accounting staff office staff and property consultants to manage property.
Community Property: A form of property ownership in which husband and wife have an equal interest in property acquired by either spouse during the time of their marriage. Community property does not include property that each spouse owned prior to marriage or property received by gift or inheritance or as the proceeds of separate property.
Community Reinvestment Act (CRA): The federal law that requires federally regulated lenders to describe the geographical market area they serve.
Community Reinvestment Act Of 1977 (CRA): Under the Act financial institutions are expected to meet the deposit and credit needs of their communities; participate and invest in local community development and rehabilitation projects; and participate in loan programs for housing small businesses and small forms.
Compaction: The compressing of disturbed soil added to a site. The purpose is to prepare the soil so that its load bearing characteristics are improved.
Comparables (Comps): (i) Properties used to compare and establish a value for the subject property in an appraisal. (ii) Information on properties which are similar with regard to factors such as property type, location, size, year built and condition. For property tax matters, comparables are used both for the sales comparison approach and unequal appraisal.
Comparables: Properties which are similar enough to the subject property to be used for purposes of comparison.
Comparative Unit Method: A method by which installed construction costs are combined on a unit basis. This combination of costs results in a unit price which can then be applied to the gross floor area or cubic foot of a building to produce a reproduction or replacement cost new.
Comparative Unit: Buyers and sellers in a specific market tend to buy or sell property by a unit of measure. Land typically sells per square foot, front foot or per site. Buildings may sell based upon the square footage, cubic feet or per economic unit such as seat, room or bed. This comparison unit is sometimes called a selling unit, value unit or market unit. One of the first steps in evaluation processes is the identification of this unit. (see unit of comparison)
Comparative-Unit Method: Sometimes called the square foot method, it is a method used to estimate building costs in which components of the building are totaled on a per unit basis, such as dollars per square foot or cubic foot of area, and are based on known costs of similar structures adjusted for time and physical differences.
Competition: The appraisal principle that states that excess profits generate competition.
Competition Principle Of: An appraisal principle that states that competition is a function of supply and demand.
Competitive Market Analysis (CMA): A comparison of the prices of recently sold homes that are similar to a listing seller's home in terms of location style and amenities.
Complete Appraisal: See "appraisal, complete."
Compound Interest: The interest paid on the principal balance of a mortgage plus accrued interest.
Comprehensive Environmental Response Compensation And Liability Act (CERCLA): A federal law administered by the Environmental Protection Agency that establishes a process for identifying parties responsible for creating hazardous waste sites forcing liable parties to clean up toxic sites bringing legal action against responsible parties and funding the abatement of toxic sites. See Superfund.
Comprehensive Plan: See master plan.
Computerized Loan Origination (CLO): system An electronic network for handling loan applications through remote computer terminals linked to various lenders' computers.
Concessions: An atypical offering to induce a purchaser to buy a property. Something extra offered to a prospective tenant to induce him/her to lease a property.
Condemnation: A judicial or administrative proceeding to exercise the power of eminent domain through which a government agency takes private property for public use and compensates the owner.
Conditional Commitment: A promise by a lender to make a loan if the borrower meets certain conditions.
Conditional Sale: A contract for property sale stating that the title will remain invested in the seller until all the conditions of the contract have been fulfilled.
Conditional Use Permit: Approval of a property use inconsistent with present zoning because it is in the public interest. For example, a church or hospital may be allowed in a residential district.
Conditions Covenants And Restrictions (CC&Rs): Private limitations on property use placed in the deed received by a property owner, typically by reference to a Declaration of Restrictions.
Condominium: The absolute ownership of a unit in a multiunit building based on a legal description of the airspace the unit actually occupies plus an undivided interest in the ownership of the common elements which are owned jointly with the other condominium unit owners.
Condominium: A form of real estate ownership, usually a dwelling with individual ownership of separate portions of the building plus shared ownership of the common areas.
Conforming Loan: A home loan that meets qualifications to be purchased by Fannie Mae or Freddie Mac.
Conformity: The appraisal principle that holds that the greater the similarity among properties in an area the better they will hold their value.
Conformity The Principle Of: An appraisal principle that holds that the maximum value is realized when a reasonable degree of social and economic homogeneity (sameness) exists in a neighborhood.
Consideration: (1) That received by the grantor in exchange for his or her deed. (2) Something of value that induces a person to enter into a contract
Consistent Use The Principle Of: The concept that land and the improvements upon the land must be valued upon the basis of one use. The USPAP requires they both be valued in the highest and best use of the land.
Construction Cost: The cost to build improvements including direct costs (labor, materials, contractor's overhead and profit) and indirect costs (holding costs such as taxes, insurance and construction interest.)
Construction Documents: Drawings and specifications from an architect and/or engineer providing detailed requirements for the construction of a project.
Construction Loan: A short term loan for construction. Lenders usually disburse funds from construction loans in draws according to completion of defined stages throughout the construction process.
Construction-to-permanent Loan: A construction loan that is converted to a longer term traditional mortgage after construction has been completed.
Constructive Eviction: Actions of a landlord that so materially disturb or impair a tenant's enjoyment of the leased premises that the tenant is effectively forced to move out and terminate the lease without liability for any further rent.
Constructive Notice: Notice given to the world by recorded documents. All people are charged with knowledge of such documents and their contents whether or not they have actually examined them. Possession of property is also considered constructive notice that the person in possession has an interest in the property.
Consulting: The act or process of providing information, analysis of real estate data, and recommendations or conclusions about diverse problems in real estate, other than estimating value. (USPAP)
Contiguous: Adjacent; in actual contact; touching.
Contingency: A provision in a contract that requires a certain act to be done or a certain event to occur before the contract becomes binding.
Contour Map: A topographical map that uses lines to connect points of equal elevation.
Contract Rent: The actual rent now being paid or as specified in a lease.
Contract Rent: (See scheduled rent.)
Contract: An agreement entered into by two or more legally competent parties who, for a consideration, undertake to do or to refrain from doing some legal act or acts.
Contribution: The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from that value.
Contribution The Principle Of: The appraisal principle that states that the value of a property component is related to the value it contributes to the whole property, not necessarily the actual cost of the component.
Contributory Value: The dollar amount that a building adds to the market value of of Improvements all forms of property as based on the building replacement cost less accrued depreciation.
Controlled Business Arrangement: An arrangement where a package of services (such as a real estate firm title insurance company mortgage broker and home inspection company) is offered to consumers.
Conventional Loan: A mortgage loan, made with real estate as security, that is neither insured by the FHA nor guaranteed by the VA.
Convertible Adjustable-rate Mortgage: A mortgage which starts as an adjustable rate loan, but contains a provision that allows the borrower to convert the loan to a fixed-rate mortgage during a specified period of time.
Conveyance: A term used to refer to any document that transfers title to real property. The term is also used in describing the act of transferring.
Cooperating Broker: See listing broker.
Cooperative Mortgage: Any loan related to a cooperative residential project.
Cooperative Ownership: A form of ownership in which each resident of a project has purchased shares in a corporation that holds title to the building. Those shares entitle the share owner to occupy a unit.
Cooperative: A residential multiunit building whose title is held by a trust or corporation that is owned by and operated for the benefit of persons living within the building who are the beneficial owners of the trust or stockholders of the corporation each possessing a proprietary lease.
Co-ownership: Title ownership held by two or more persons.
Corner Influence: The value effect of location at or in proximity to the intersection of two streets.
Cornice: A projection of molding at the top of the exterior wall under the eaves. It may be decorative and is often added to enhance drainage from the roof.
Corporation: An entity or organization created by operation of law whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.
Correction Lines: Provisions in the rectangular survey (government survey) system made to compensate for the
Co-signer: A second party who also signs a promissory note and takes responsibility for the debt.
Cost Approach: An appraisal procedure based on the proposition that an informed buyer will pay no more than the cost of producing a substitute property which has the same usefulness as the original property.
Cost Approach To Value: One of the three traditional approaches to value, it is an estimate of value based upon present construction costs minus the accrued depreciation plus land value.
Cost Approach: The process of estimating the value of a property by adding to the estimated land value the appraiser's estimate of the reproduction or replacement cost of the building less depreciation.
Cost Estimating: A process by which a property is broken down into its various parts and estimating the value of each part. The estimated value is the total of all such costs plus the cost of the estimated land value.
Cost Index: Figure representing construction cost at a particular time in relation to construction cost at an earlier time, prepared by a cost reporting or indexing service.
Cost Recovery: An Internal Revenue Service term for depreciation.
Cost Service Index Method: (See index method.)
Cost To Cure: The dollar amount needed to replace or repair an item of deferred maintenance to an acceptable condition.
Cost: In real estate appraisal, cost is the expense associated with the construction of improvements. See "construction cost," "reproduction cost," "replacement cost," "development cost," "direct cost," and "indirect cost."
Counteroffer: A new offer made in response to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.
Courier Fee: Fee charged at closing to cover the delivery of documents between lenders, escrow companies, and other third parties during a real estate transaction.
Cove Molding: Concave face molding used as a trim and/or finish around interior corners.
Covenant Of Quiet Enjoyment: The covenant implied by law by which a landlord guarantees that a tenant may take possession of leased premises and that the landlord will not interfere in the tenant's possession or use of the property.
Covenant: A written agreement between two or more parties in which a party or parties pledge to perform or not perform specified acts with regard to property; usually found in such real estate documents as deeds mortgages leases and contracts for deed.
Credit History: A file detailing an individual's current and past debt payments and financial obligations.
Credit Life Insurance: Insurance that pays off a mortgage in the event of the borrower's death.
Credit Rating: The degree of creditworthiness assigned to a person based on their credit history and financial status.
Credit Report: A detailed account of an individual's credit, employment, and residence history. A lender uses this report to determine a loan applicant's creditworthiness. The three largest credit bureaus are Trans Union, Equifax and Experian.
Credit Repository: Large companies that gather financial and credit information from various sources about individuals who have applied for credit.
Credit Risk Score: A credit risk score is a statistical summary of the information contained in a consumer's credit report. The most well known type of credit risk score is the Fair Isaac or FICO score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in a credit report.
Credit Score: A credit score is a statistical summary of the information contained in a consumer's credit report. The most well known type of credit score is the Fair Isaac or FICO score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in a credit report.
Credit: On a closing statement an amount entered in a person's favor-either an amount the party has paid or an amount for which the party must be reimbursed.
Crown Molding: A molding that is installed between the top of the wall the edge of the ceiling.
Cubic-foot Method: A method, of estimating reproduction cost by multiplying the number of cubic feet of space a building encloses by the construction cost per cubic foot.
Cul-de-sac: A dead end street with a circular turnaround at the end that allows a vehicle to make a turn to exit the dead end.
Curable Depreciation: Those items of physical deterioration and functional obsolescence which are economically feasible to cure and hence are customarily repaired or replaced by a prudent property owner.
Curable Depreciation: A depreciated item that can be restored or replaced economically. (See also functional obsolescence-curable and physical deterioration-curable.)
Curable Functional Obsolescence: A defect caused by a flaw in the structure, material or design in which the cost to cure the flaw is less than or the same as the anticipated increase in value after the flaw is cured.
Curable Physical Deterioration: An item in need of immediate repair; deferred maintenance. To be curable, the cost of repairing or replacing the item must be less than or equal to the corresponding increase in value.
Curable: As an appraisal term, the circumstance in which the cost to cure the depreciation of a particular item is less than or the same as the anticipated increase in value after the depreciation is corrected.
Curtesy: A life estate usually a fractional interest given by some states to the surviving husband in real estate owned by his deceased wife. Most states have abolished curtesy.
Customer: The third party for whom some level of service is provided.
CWIP: Construction Work in Progress (or Process).
Cyclical Reappraisal System: A system of reappraisal which allows a district to divide its total geographical area into sections and appraise, on a rotating basis, one specific zone each year. If conducted properly, this system does not violate the constitutional requirement of uniformity and equality.

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