Understanding Real Property Ownership and Transactions, Exams of Marketing Business-to-business (B2B)

Download Understanding Real Property Ownership and Transactions and more Exams Marketing Business-to-business (B2B) in PDF only on Docsity! REAL ESTATE PRINCIPLES FINAL EXAM Questions and Answers Latest Updates 2024 encroachment - ANSWER intrusion on a person's territory, rights, etc. Affordability Index - ANSWER Shows how many households will be able to afford a median-priced home in California. median home price - ANSWER The price that is middle value of a sample of sales, with one-half of the sales below and one-half of the sales above. California Association of Realtors (CAR) - ANSWER A trade association that is dedicated to the advancement of professionalism in real estate salesperson license - ANSWER authority granted by a state to engage in the real estate brokerage business as an employee or agent of a real estate broker Broker's License - ANSWER A license that when active authorizes a licensee to represent clients by performing real estate services. appreciation - ANSWER to increase in value Inflation - ANSWER A continuous rise in the price of goods and services housing inventory - ANSWER Housing units that are available for sale or in the process of being made ready for sale. ownership - ANSWER the state or fact of owning something property rights - ANSWER The rights of an individual to own, use, rent, invest in, buy, and sell property. Bundle of Rights (UPTEE) - ANSWER Use, Possess, Transfer, Encumber, Enjoy Property - ANSWER anything of value that is owned or controlled. And can be also be considered real or personal. Personal Property - ANSWER All property not classified as real property. Movable items. Chattel - ANSWER personal property Bill of Sale - ANSWER A document used to transfer ownership of personal property. Real Property - ANSWER Land and everything permanently attached to it Land - ANSWER Comes with Air Space, Surface, And Subsurface rights.Surface Rights - ANSWER include both land and water rights Percolating Water - ANSWER Underground water not confined to a specific waterway, channel, or stream. Surface Water Rights - ANSWER Depend on whether or not the water is flowing or in a defined channel Correlative Rights Doctrine - ANSWER Rules that govern water use and force landowners to share water. Riparian Rights - ANSWER An owner's rights in land that borders on or includes a stream, or river. These rights include access to and use of the water. Littoral Rights - ANSWER The right of a property owner whose land borders on a body of water, such as a lake, ocean or sea, to reasonable use and enjoyment of the shore and water the property borders on. high tide mark - ANSWER the boundary line of land touching the ocean Appropriation - ANSWER The right to use water for a beneficial use by diverting surface water. If the government needs to divert water. Air Rights - ANSWER The right to use, control and occupy the space above a particular parcel of land. Subsurface Rights - ANSWER Ownership rights in a parcel of real estate to the water, minerals, gas, oil, and so forth that lie beneath the surface of the property. migratory minerals - ANSWER oil and gas may not be owned until taken from the ground, at which time they become the personal property of whoever removed them. attachments - ANSWER are items permanently attached to the land are real property and belong to the owner. Improvements to the land - ANSWER any fixed structures such as buildings, fences, walls, and decks fixture - ANSWER An item of personal property that has been converted to real property by being permanently affixed to the realty. Emblements (fructus industriales) - ANSWER Personal property consisting of annual plantings or crops of wheat, corn, vegetables, and fruit. Five test of a fixture (MARIA) - ANSWER Method of Attachment, Adaptation, lease - ANSWER to rent tenancy - ANSWER period of a tenant's temporary holding of real estate Tenancy of Years - ANSWER Fixed period of time. Written leases complying with SOF if longer than one year. Termination: (i) Automatically terminates at end of fixed period. (ii) If landlord has reserved right of re-entry upon breach of convenants. (iii) Failure to pay rent. (iv) Tenant surrenders tenancy and landlord accepts. Must be in writing if longer than one year. Periodic Tenancy - ANSWER A lease, which has the original terms automatically renewed for successive periods, until proper notice to terminate is given by either the landlord or tenant. Month to month rental. Tenancy at Will - ANSWER An occupation of space for an indefinite period which can be terminated by either the lessor or lessee at any time. Ex: having a nanny Tenancy at Sufferance - ANSWER A tenancy that occurs when a tenant that is supposed to vacate does not, but continues to pay rent, and the landlord accepts it. title - ANSWER ownership deed - ANSWER A document that transfers ownership of property from one party to another. Proof of ownership Title Vesting - ANSWER The evidence that the owner of land is in lawful possession; it is the proof of ownership. Concurrent Ownership - ANSWER Ownership by two or more persons at the same time, such as joint tenants, tenants by the entirety, or tenants in common. Tenancy in Common - ANSWER Co-ownership of property in which each party owns an undivided interest that passes to his or her heirs at death. The title may be taken at any time, in different deeds, may have unequal interest, and have an undivided interest or equal rights of position. Joint Tenancy - ANSWER The joint ownership of property by two or more co-owners in which each co-owner owns an undivided portion of the property. On the death of one of the joint tenants, his or her interest automatically passes to the surviving joint tenants. Anybody joining after in a joint tenancy does not have the right of survivorship, becoming a tenancy in common. Four Unities of Joint Tenancy - ANSWER time, title, equal undivided interest, equal right of possession (TTIP) must be obtained at the same time. Community Property - ANSWER property acquired during the marriage and owned equally by both spouses. (Can be will) community property with right of survivorship - ANSWER Method of property ownership by a married couple that specifically provides for transfer of the interest of the first to die to the spouse, instead of the interest being willed or passed by intestate succession. Property Excluded from Community Property - ANSWER Property owned before marriage, property acquired by either of the parties during marriage by gift or inheritance, and income diverted from separate property. Tenancy in Partnership - ANSWER A form of concurrent ownership in which title is held by either a general or limited partnership in a registered trade name. The rights of each partners are subject to a partnership agreement and are described therein. abstract of judgment - ANSWER A statement from the court of the judgment. When recorded, it becomes a general lien on all of the debtor's property in the county where recorded acknowledgement - ANSWER recognition for a notable deed notary public - ANSWER verifies a person's identity, witnesses the person's signature on a legal document, and then "notarizes" the signature as valid prima facie - ANSWER based on the first impression; accepted as correct until proved otherwise Constructive Notice - ANSWER The legal presumption that information has been obtained by an individual through due diligence. Actual Notice - ANSWER The actual knowledge that a person has about the existence of a particular fact. Sole Ownership - ANSWER Ownership by one person, one corporation, one partnership encumbrance - ANSWER burden Financial Encumbrances - Liens - ANSWER Liens are non-possessory financial interests in property. Voluntary liens: mortgages. Involuntary Liens: general attaches to all prop. or specific lien attaches to specific property. non-financial encumbrances - ANSWER Easement/License/Encroachments/Covenants are all examples of . lien - ANSWER a right to keep possession of property belonging to another person until a debt owed by that person is discharged. mechanic lien - ANSWER -Can be claimed by any person who has supplied labor and/or material for improvements, repairs, or maintenance on real estate and who has not been paid -specific or involuntary. The four steps to be taken include preliminary notice, Notice of completion, No notice of completion, Foreclosure Action. Preliminary Notice - ANSWER A notice that informs or warns owners, lenders, and general contractors that subcontractors have been hired, or materials have been supplied to a particular job site. Notice of Completion - ANSWER A legal notice required in some states in order to perfect a mechanic's lien. The notice lets the property owner know that certain contracted work has been completed and/or materials ordered have been supplied No Notice of Completion - ANSWER If the owner does not record a notice of completion when work is finished, all claimants have a maximum of 90 days from the day work was finished to record a mechanic's lien. Foreclosure Action - ANSWER After a mechanic's lien is recorded, the claimant has 90 days to bring foreclosure action to enforce the lien. If he or she does not bring action, the lien will be terminated and the claimant loses the right to foreclose. notice of nonresponsibility - ANSWER A notice provided by law designed to relieve property owner from responsibility for the cost of unauthorized work done on the property or materials furnished therefor; notice must be verified, recorded and posted. Report within 10 days. Tax Lien - ANSWER A legal claim by a government entity to take an individual's property or income when their taxes are not paid in full Special Assessment - ANSWER An assessment made against a property to pay for a Private Restrictions - ANSWER Created in the deed at the time of sale or in the general plan of a subdivision by the developer. For example, a developer may use a height restriction to ensure views from each parcel in a subdivision. Zoning (Public Restrictions) - ANSWER governmental limitations on the owner's ability to use a property CC&Rs - ANSWER covenants, conditions, and restrictions Covenant - ANSWER is a promise to do or not do certain things. injunction - ANSWER is a court order forcing a person to do or not do an act , such as violating a private restriction. condition - ANSWER a promise to do or not do something but if violated, the penalty would be the return of the property to the grantor. condition subsequent - ANSWER is a restriction, placed in a deed at the time of the conveyance. condition precedent - ANSWER a certain event, or condition must occur before title can pass to the new owner. Homestead property - ANSWER Home, occupied by a family, exempt from the claims of unsecured creditors homestead exemption - ANSWER a state law that gives homeowners a tax break for property that is their primary residence. Does not stop the sale of the property, its purpose is to ensure that the homeowner receives the amount of exemption before the creditors are paid from the sale proceeds. A secured creditor is one who: - ANSWER can take a debtor's property to try to satisfy the debt will - ANSWER A legally enforceable declaration of how a person wishes his or her property to be distributed after death Testator - ANSWER maker of a will Testate - ANSWER to die with a valid will Intestate - ANSWER dying without a will Witnessed Will - ANSWER One prepared by an attorney, that is typed and signed by the maker and two witnesses statutory form will - ANSWER a "fill-in-the-blanks" will created to meet the requirements of Probate Code 6240 Holographic Will - ANSWER A will written entirely by the testator with his own hand. Probate - ANSWER The process of proving in court that the will of someone who has died is valid, and of administering the estate of a dead person. executor - ANSWER a man appointed by the will of a deceased person to carry out the provisions thereof and settle the estate adminastrator - ANSWER the title of the person entrusted to handle the estate of someone who died intestate (no will). succession - ANSWER is the legal transfer of a person's interest in real and personal property under the laws of descent and distribution. Intestate Succession - ANSWER the method used to distribute property owned by a person who dies without a valid will laws of descent - ANSWER refers to the body of law that determines who is entitled to the property from the estate under the rules of inheritance. accession - ANSWER is the process by which there is an addition or reduction of land. Ex: flood accretion - ANSWER is the gradual and imperceptible addition of land to a parcel by the natural deposition and accumulation of alluvium (or alluvion) upon the bank of a stream or river. Avulsion - ANSWER is the process by which the action of water causes a sudden, perceptible loss of or addition to land. Adverse Possession - ANSWER A person takes possession & use of a property belonging to another. Possession must be open (having control), notorious, hostile & uninterrupted for a continuous period of 5 years. Quiet Title - ANSWER A court action brought to establish title; to remove a cloud on the title. property to satisfy a judgment. Partition Action - ANSWER A court action to divide a property held by co-owners (joint tenants or tenants in common) Escheat - ANSWER The state takes property upon an owners death if there is no will & no heirs exist. eminent domain - ANSWER Power of a government to take private property for public use. Just Compensation - ANSWER payment to an owner for property taken in condemnation proceedings, usually the market value of the property taken by the government in its exercise of eminent domain condemnation - ANSWER is the process by which the government acquires private property for publics use, under its right of eminent domain. Inverse Condemnation - ANSWER The taking of private property by the government without payment of just compensation as required by the U.S. Constitution. The owner must sue the government to recover just compensation. Bequests - ANSWER Gifts made in a will. contract - ANSWER a binding agreement between two or more persons that is enforceable by law Express Contract - ANSWER A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written. Implied Contract - ANSWER A contract formed in whole or in part from the conduct of the parties. Bilateral Contract - ANSWER promise for a promise Unilateral Contract - ANSWER promise for an act executory contract - ANSWER A contract that has not yet been fully performed. (in process) Executed Contract - ANSWER A contract that has been completely performed by both parties. Void Contract - ANSWER A contract having no legal force or binding effect. Voidable Contract - ANSWER A contract that may be legally avoided (canceled, or annulled) at the option of one of the parties. Induced by fraud, menace, or duress. Uneforceable contract - ANSWER A contract in which the essential elements to create a valid contract are met but there is some legal defense to the enforcement of the contract. Valid Contract - ANSWER A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present. legal capacity - ANSWER Requirement that a party to a contract be of legal age and have requisite mental capacity to enter into contract power of attorney - ANSWER a legal document authorizing someone to act on your behalf Meeting of the minds - ANSWER Agreement between the parties on all terms of the contract Genuine Assent - ANSWER the knowing, voluntary, and mutual approval of the terms of a contract by each party; required for a contract to be enforceable. Negative genuine assent fraud, innocent misrepresentation, mistake, duress, menace, or undue influence. fraud - ANSWER wrongful or criminal deception intended to result in financial or personal gain Consideration - ANSWER something of value exchanged for something else of value acceptable consideration - ANSWER valuable, adequate, good, or sufficient consideration Statute of Frauds - ANSWER A state statute under which certain types of contracts must be in writing to be enforceable. Parol Evidence Rule - ANSWER rule that prohibits the introduction into evidence of oral or written statements made prior to or contemporaneously with the execution of a complete written contract, deed, or instrument, in the absence of clear proof of fraud, accident, or mistake causing the omission of the statement in question Discharge of Contract - ANSWER The cancellation or termination of a contract. Tender of Performance - ANSWER An offer or attempt to perform what is required under a contract. Subagent - ANSWER agent of an agent (seller to buyer) Buyer's Agent - ANSWER A broker who represents a buyer in a real estate transaction. (buyer to seller) Dual Agent (Limited Agent) - ANSWER When the agent is representing both principles in the transaction with their informed consent. (Seller & Buyer) selling agent - ANSWER Is the broker who finds a buyer and obtains an offer for the real property Multiple Listing Service (MLS) - ANSWER A listing service whereby local members of the Board of REALTORS agree to share listings and commissions on properties sold jointly. Members of the public may have access to the MLS, but not to all of the features and content. Agency Relationship Disclosure Form - ANSWER A written explanation by a buyer or seller of real estate explaining the agents role in the transactions (first document submitted to all potential clients) Listing Agreement - ANSWER A contract between an owner (as Principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission ready, willing, and able buyer - ANSWER One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction. Ratification - ANSWER Formal approval Estoppel - ANSWER A legal impediment to denying a fact or restoring a right that has been previously waived. terminate agency relationship - ANSWER * Full Performance * Expiration of its terms * Agreement of its parties * Acts of the parties * Destruction of the property * Death, incapacity, or insanity of the broker or principal * Bankruptcy of the Principal Exclusive Right to Sell Listing - ANSWER 1) Only one broker is authorized to sell 2) the broker receives a commission no matter who finds the buyer within the length of the term Exclusive Agency Listing - ANSWER 1) Only one broker is authorized to sell 2) If the owner finds a buyer, no commission is owed Open Listing - ANSWER Listing given to any number of brokers; only selling broker is paid Net Listing - ANSWER The broker agrees to sell the property in order to achieve a net price to the owner, and anything which is received above the net price is the broker's commission. A net listing is prohibited by the licensing law in many states. Option Listing - ANSWER Listing with a provision that gives the listing sponsoring broker the right to purchase the listed property. Procuring Cause of Sale - ANSWER The actions of a real estate broker that are the direct and primary cause of a real estate sale. Common law of agency - ANSWER The traditional law governing the principal-agent relationship. (Federal Law) Statutory law agency - ANSWER the laws, rules, and regulations enacted by legislature and other governing bodies. (State Laws) Commingling - ANSWER mixing broker's money with that of others material fact - ANSWER A fact that, if known, might have caused a buyer or seller of real estate to make a different decision Misrepresentation - ANSWER A false statement or lie that can render the contract void. innocent misrepresentation - ANSWER A false statement of fact or an act made in good faith that deceives and causes harm or injury to another. Negligent Misrepresentation - ANSWER misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidable Puffing - ANSWER exaggeration of a property's benefits tort - ANSWER a wrongful act or an infringement of a right (other than under contract) leading to civil legal liability. Safety Clause - ANSWER Clause that protects the listing broker's commission, if the owner personally sells the property to someone who was shown the property or made eviction - ANSWER The legal process of removing a tenant from rental property. Retaliatory Eviction - ANSWER Is one whereby the landlord evicts a tenant because of a complaint made by the tenant. assignment - ANSWER is the transfer of the entire leasehold estate to a new person. assignee - ANSWER the party to whom the assignment is made ( Who receive s the lease after being transferred) sublease - ANSWER The transfer of part of the term of a lease, but not the remainder of it, to someone else. (Airbnb) Sandwich Lease - ANSWER A lease agreement created when a tenant sublets the property to another person, thus creating a sublessor-sublessee relationship. The person in the "sandwich" is a lessee to one party and a lessor to another Constructive Eviction - ANSWER Occurs when the tenant's use of the premises is substantially disturbed or interfered with by the landlord's actions or failure to act where there is a duty to act. The tenant is effectively forced to move out and terminate the lease without further liability for further rent. surrender - ANSWER When a tenant voluntarily gives up a lease before the expiration of its term Unlawful Detainer Action - ANSWER A lawsuit filed with the court against a tenant who remains in unlawful possession of rental property after breaching the terms of a lawful lease Action of Ejectment - ANSWER A legal action brought about to regain possession of real property; used when there is no relationship of landlord and tenant, such as re-entry by the actual owner against a claimant under adverse possession eviction notice - ANSWER Written notice from the landlord to the tenant requesting that he or she move out of the property within three days or meeting the landlord's requirements. 3-Day Notice to Pay Rent or Quit - ANSWER If tenant fails to pay rent Writ of Possession - ANSWER A court order directing the sheriff to remove the tenant and his or her possessions within five days terminations of lease - ANSWER 1) expirations of the terms 2) Mutual Agreement 3) Violation of the terms and conditions 4) Destruction of the premises 5) Eviction Eviction Process - ANSWER Provide paper notice to the tenant 3 days for failure to pay 7 days for other violatins caveat emptor - ANSWER let the buyer beware Easton v. Strassburger - ANSWER As a result real estate agents must perform a visual inspection of the property and sellers must complete a TDS. Red Flags - ANSWER The warning signs that alert us to unsafe situations Real Estate Transfer Disclosure Statement (TDS) - ANSWER This statement identifies items of value attached to the structure or land and states whether these items are operational. Material Facts - ANSWER Any fact that is important or relevant to the issue at hand; mandatory disclosure by all agents in a transaction to all parties of the transaction. environmental hazards - ANSWER potentially dangerous conditions in the physical surroundings Latent Defect - ANSWER a hidden structural defect that would not be discovered by ordinary inspection Asbestos - ANSWER A long, thin, fibrous silicate mineral with insulating properties, which can cause cancer when inhaled. (Popcorn Ceilings) radon gas - ANSWER Radioactive material that comes up from the ground and can penatrate basements, causing indoor pollution. Lead - ANSWER a highly toxic metal that causes major health problems. Mostly found in houses that have been painted before 1978. Formaldehyde - ANSWER An air pollutant that is a colorless chemical used to manufacture building materials and many household products, such as particleboard, hardwood plywood paneling, and urea-formaldehyde foam insulation. AKA (Methanal) Hazadous Waste - ANSWER Toxic Waste Regulation Z (Truth in Lending) - ANSWER Requires lenders to disclose to buyers the true cost of obtaining credit so that the borrower can compare the costs of various lenders. APR - ANSWER Annual Percentage Rate Standards for advertisement - ANSWER If the annual percentage rate (APR) is disclosed, no more disclosures are required (House Loan) Triggering Terms - ANSWER If these terms are used in Advertising, full disclosure is required. (House Loan) 1- Down Payment 2- Number of payments or terms 3- The amount of the payments 4- The finance charge RESPA - ANSWER IS a federal loan disclosure that protects buyers or borrowers who obtain federally related loans. (Real Estate Settlement Procedures Act) - requires special information booklet, requires good faith estimate, requires uniform settlement statement Special Information Booklet - ANSWER A booklet containing consumer information regarding closing costs the borrower may incur at closing. RESPA requires lenders to give the booklet to loan applicants. GFE - ANSWER Good Faith Estimate. A GFE is a document that the lender is required to give a prospective borrower when they apply for a loan. The GFE is an estimate of all closing costs and fees required for the proposed mortgage loan. Closing Disclosure (CD) - ANSWER This document is provide to borrowers no fewer than 3 business days prior to consummation on refinance and purchase transactions. This will include all the final cost of closing the loan. Mortgage Servicing Disclosure Statement - ANSWER a statement that tells the borrower whether the lender intends to service the loan or to transfer it to another lender. Equal Credit Opportunity Act (ECOA) - ANSWER The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status. Redlining - ANSWER A process by which banks draw lines on a map and refuse to lend money to purchase or improve property within the boundaries. consumer loans - ANSWER loans made for specific purposes using formally negotiated contracts that specify the borrowing terms and repayment. They carry a three-day right of rescission (cancel) a real estate loan does not. Escrow - ANSWER The deposit of funds with a neutral third party who is instructed to carry out the provisions of an agreement. It is a small and short-lived trust agreement. "Going to Escrow" - ANSWER It is a period during which the paperwork required for the sale of real property is processed. Escrow Agent - ANSWER A person with fiduciary responsibility to the buyer and seller, or the borrower and lender, to ensure that the terms of the purchase/sale or loan are carried out. Escrow Holder (Escrow Company) - ANSWER The one who receives a deed or other item from a grantor to be delivered to the grantee upon the performance of a condition or the occurrence of a contingency. Escrow Instructions - ANSWER Written directions, signed by a buyer and seller, detailing the procedures necessary to close a transaction and directs the escrow agent in how to proceed purchase agreement - ANSWER A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold. A purchase agreement is the original agreement between the buyer and seller, it will reflect the manual and agreed-upon desires of the parties when it becomes the actual escrow instructions. Valid Escrow Requirements - ANSWER Two basic requirements to be valid: a binding contract between the buyers and seller and conditional delivery of transfer documents and funds to a neutral third party. (Escrow) binding contract - ANSWER An agreement that can be enforced in a court of law if one of the parties to the agreement fails to fulfill any of its terms. Such as a residential purchase agreement, exchange agreement, option agreement, or jointly executed bilateral or individual executed unilateral escrow instructions evidencing a mutual agreement of the buyer and seller. addendum to the contract - ANSWER is an attachment that adds or further describes the rights and duties of the parties. Any changes made to the original contract. (modify, alter, or totally change) Conditional Delivery - ANSWER Transfer of documents and funds to escrow agent or settlement officer to be held until the transaction is closed, at which time they are transferred to the designated party trust deed - ANSWER An instrument held by a third party as security for the payment of a note. Unlike a mortgage, a trust deed has a power of sale, allowing the trustee to foreclose non-judiciary. ALSO CALLED: Deed of Trust. Bounds refer to direction. It starts at a well-marked point of beginning (POB) recorded Plat - ANSWER Is a map based on a survey of a parcel of land indicating where roads and lots are located Public Land Survey System (PLSS) - ANSWER Method traditionally used over the largest part of the United States to survey and classify land parcels. Occasionally referred to as the rectangular survey. It uses imaginary lines to form a grid to locate land. North South Longitude lines called meridians, and east-west latitude lines called baselines, intersect to form a starting point in which distances are measured. lot and block system - ANSWER Subdivision system; method of legal description of land using parcel maps identified by tract, block, and lot numbers. It is the most convenient and easily understood method of land description. promissory note - ANSWER Is an IOU, a promise to repay, and the evidence of the debt. It is a negotiable instrument. Is a written agreement between one party (you, the borrower) to pay back a loan given by another party (often a bank or other financial institution). Usury - ANSWER the illegal action or practice of lending money at unreasonably high rates of interest. simple interest - ANSWER interest paid on the principal alone compound interest - ANSWER Interest paid on interest previously earned. banks if you leave your money for a long time prime rate - ANSWER the lowest rate of interest at which money may be borrowed commercially. discount rate - ANSWER the minimum interest rate set by the Federal Reserve for lending to other banks. straight loan or term loan - ANSWER A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment. effective interest rate - ANSWER Interest rate that a borrower actually pays on a loan. Amortization - ANSWER the reduction of a loan balance through payments made over a period of time partially amortized loan - ANSWER a loan with a series of amortized payments followed by a balloon payment at maturity ballon payment - ANSWER A final payment of a mortgage loan that is considerably larger than the required periodic payments because the loan amount was not fully amortized. fully amortized note - ANSWER A loan where the payments apply to principal and interest; the entire principal loan balance is totally paid off over the term Fully Amortized - ANSWER you will have a 0 balance at end of term Adjustable Rate Mortgage (ARM) - ANSWER A loan characterized by a fluctuating interest rate, usually one tied to a bank or savings and loan association cost-of-funds index. margin - ANSWER the difference between the value that an activity generates and the cost of the activity Periodic Cap - ANSWER A limit on how much a payment or interest can increase in a stated period of time lifetime cap - ANSWER The maximum interest rate adjustment permitted over the life of the loan. payment cap - ANSWER a limit on the payment increases for an adjustable-rate mortgage Negative Amortization - ANSWER Occurs when the loan payment is not sufficient to cover the interest cost and results in the unpaid interest being added to the original balance, causing the loan amount to increase. Collateral - ANSWER something pledged as security for repayment of a loan, to be forfeited in the event of a default. Hypothecation - ANSWER To pledge property as security for an obligation or loan without giving up possession of it. Security Instrument - ANSWER An instrument that gives a creditor the right to sell the collateral to satisfy a debt if the debtor fails to pay according to the terms of the agreement. (deed of Trust, mortgage, and contract for deed.) mortgage - ANSWER A loan to purchase a home or other real estate Satisfaction of Mortgage - ANSWER A document acknowledging the payment of a mortgage debt. Lien Theory - ANSWER