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C

CAPITAL GAIN - The gain (profit) on the sale of an appreciated asset.

CAPITALIZE - To convert future income to current value

CAPITALIZATION - CAPITALIZATION RATE - The valuation process that utilizes the net income from a property and a desired rate of return on the property.

CARRYBACK FINANCING - When a seller accepts a note instead of cash.

CASH FLOW - The number of dollars remaining each year after collecting rents and paying operating expenses and mortgage payments.

CASH-ON-CASH - The cash flow produced by a property divided by the amount of cash necessary to purchase it.

CAVEAT EMPTOR - Let the buyer beware. Buyers must take steps to protect their own interests before purchasing.

CC&Rs - Conditions, Covenants and Restrictions, as to a Home Owner's Association. See Deed Restrictions.

CERTIFICATE OF REASONABLE VALUE (CRV) - An appraisal for a VA guaranteed loan.

CERTIFICATE OF TITLE - A certificate issued by a title company or a written opinion rendered by an attorney that the seller has good marketable and insurable title to the property which he is offering for sale. A certificate of title offers no protection against any hidden defects in the title which an examination of the records could not reveal. The issuer of a certificate of title is liable only for damages due to negligence. The protection offered a homeowner under a certificate of title is not as great as that offered in a title insurance policy.

CIVIL RIGHTS ACT - 1866, A federal law prohibiting discrimination based on race.

CLIENT - The principal of an agent in an agency relationship.

CLOUD ON TITLE - Any type of claim or encumbrance that negatively affects the quality of title.

CLUE REPORT - Comprehensive Loss Underwriting Exchange.  A history of claims on the subject property through insurance companies.

CLUSTER ZONING - A special zoning allowance by which the developer must respect density use limits but may scatter or group the improvements in the development.

CLOSING COSTS  - The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to price of the property and are items prepaid at the closing day. This is a typical list:

Buyer's Expenses

• Documentary Stamps on Notes
• Recording Deed and Mortgage
• Escrow Fees
• Attorney's Fee
• Title Insurance
• Appraisal and Inspection
• Survey Charge

Seller's Expenses

• Cost of Abstract
• Documentary Stamps on Deed
• Real Estate Commission
• Recording Mortgage
• Survey Charge
• Escrow Fees
• Attorney's Fee

The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs.

CLOSING DAY - The day on which the formalities of a real estate sale are concluded. The certificate of title,

 abstract, and deed are generally prepared for the closing by an attorney and this cost charged to the buyer. The 

buyer signs the mortgage, and closing costs are paid. The final closing merely confirms the original agreement 

reached in the agreement of sale. 

CLOSING STATEMENT - The final accounting showing all debits and credits in the sale of real property. Also known as a settlement statement.

COALD - Acronym for Care, Obedience, Accountability, Loyalty and Disclosure (or notice), summarizing the fiduciary duty of an agent to the principal.

CODICIL - An amendment or clarification of an existing will.

COLLECTION ACCOUNT - Established with a title company or a bank, which collects the payments, does the accounting, and forwards the funds to the creditor.

COLOR OF TITLE - Appearance of ownership without perfect, valid title because of some defect.

COMMISSION - Money paid to a real estate agent or broker by the seller as compensation for finding a buyer and completing the sale. Usually it is a percentage of the sale price.  

COMMUNITY PROPERTY - Recognition in several states that all property acquired by either spouse's effort during marriage is owned equally by both spouses.

COMPARABLES - In appraisal, the recently sold, similar properties used by the appraiser to estimate the value of a property under the market data approach.

COMPARATIVE MARKET ANALYSIS (CMA) - Done by real estate licensees when negotiating listing and sales contracts to determine the appropriate listing and offering prices.

CONDEMNATION - The taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building is unsafe or unfit for use.

CONDITIONAL COMMITMENT - An appraisal for an FHA insured loan.

CONDITIONAL USE PERMIT - A zoning allowance providing the user meets certain conditions.

CONDITIONS, COVENANTS AND RESTRICTIONS (CC&Rs) - The rules and regulations of a homeowners association.

CONDOMINIUM - Individual ownership of a dwelling unit and an individual interest in the common areas and facilities which serve the multi- unit project.

CONFORMING - A loan which is originated under the standards and guide lines of the secondary market warehouses, FNMA, GNMA, and FHLMC.

CONFORMITY - General consistency with surrounding uses, usually resulting in the highest and best use of the property.

CONSIDERATION - Something given to induce another party to engage in a contract.

CONSTRUCTION LOAN - Money borrowed for the purpose of improving the real estate that is offered as collateral for the debt.

CONSTRUCTIVE NOTICE - To make facts readily available to the public regarding one's interest in real estate either through possessory interest or public recording.

CONSUMER CREDIT PROTECTION ACT - A federal law requiring disclosures and consistency in the reporting of the cost of financing for consumer transactions.

CONTRACT FOR DEED (or Installment Contract or Land Contract) - A financing contract in which the seller will retain legal title to the property until the price is paid in full (or other required level of performance). This is one of several forms of seller financing.

CONTRIBUTION - In appraisal, the valuing of an improvement according to what the market would pay, regardless of the actual cost.

CONTRACTOR - In the construction industry, a contractor is one who contracts to erect buildings or portions of them. There are also contractors for each phase of construction: heating, electrical, plumbing, air conditioning, road building, bridge and dam erection, and others.

CONVENTIONAL LIFE ESTATE - A life estate established voluntarily by the parties either in a deed or in a will, as opposed to a legal life estate.

CONVENTIONAL LOAN - A  residential loan made by a conventional lender, usually by savings and loan institutions, without government guarantee or insurance.  . It is subject to conditions established by the lending institution and State statutes. The mortgage rates may vary with different institutions and between States. (States have various interest limits.)

COOPERATIVE - A form of residential ownership in which a resident owns stock in a corporation that owns the building in that members of the cooperative reside.

COOPERATIVE HOUSING - An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.

CORPORATION - A legal person under the law but not a natural person. Usually with perpetual existence.

CORPOREAL - Tangible. Having physical substance.

CORRECTION LINE - Due to the narrowing of range lines (guide meridians) as they progress north, an adjustment is made to bring the distance between them to six miles.

COST APPROACH - In appraisal, the valuation approach that estimates the total cost to replace the subject property with an equally desirable property.

COVENANT - A promise or agreement made between parties. Also called warranties.

COVENANT AGAINST UNDISCLOSED ENCUMBRANCES - Warranty that the grantor has disclosed any existing (or newly created) encumbrances and there are no other claims against the property except those disclosed or referenced on the face of the deed.

COVENANT OF FURTHER ASSURANCE - A guarantee by the grantor that if there are any defects in title, the grantor will correct these defects.

COVENANT OF QUIET ENJOYMENT - A guarantee by the grantor that there will be no successful challenges to the grantee's right to use the property.

COVENANT OF SEISIN - Warranty that the grantor owns the property and has the right to convey the property.

COVENANT OF WARRANTY FOREVER - A guarantee by the grantor that if there are any successful title challenges defeating the grantee's interest, the grantor will make monetary amends.

CURABLE DEPRECIATION - Deficiencies in property that may be physically and cost-effectively corrected.

CURTESY - A husband's right to an estate in his deceased wife's inheritable property. Similar to dower for women.

CUSTOMER - A third party with whom an agent comes in contact on behalf of a client/principal.


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