REAL ESTATE - J -

   KEY LOT
A lot shaped similar to a key shaft and bounded by five or more lots.   

   KICKBACK
A return of part of a sum of money received, which could result from a confidential agreement or coercion.Generally, the term infers an illegal or improper act, which could result in disciplinary action by the Commission if it involves a real estate licensee. 

   LAISSEZ-FAIRE
A philosophy opposing governmental interference in economic affairs beyond the minimum necessary for the maintenance of peace and property rights.   

   LAND
>>_ real estate.   

   LAND SALES CONTRACT
>>_ contract for deed.   

   LAND SURVEYOR
>>_ surveyor.   

   LAND USE STUDY
A study undertaken by a government agency as a part of the planning process for land use and zoning, which analyzes and examines the existing land uses in a given area.   

   LARCENY
Taking and carrying away the property of another without the owner's consent, and with the felonious intent to appropriate the property or to deprive the owner the use of it.   

   LATENT (LATENT DEFECT)
Concealed, hidden, or not apparent (e.g., a latent defect in a building which a reasonable inspection would not reveal).   

   LEAD-BASED PAINT
Banned in 1978, an environmental contaminant that if disturbed can create dust or chips that are harmful if ingested.   

   LEASE CONTRACT
An agreement whereby the owner of a parcel of real estate gives to another party (the tenant) the rights of possession, occupancy, use, enjoyment, and possible profit from the use of the property for a specified period of time.   

   LEASEHOLD ESTATE
A less-than-freehold or nonfreehold estate which grants mere possession of the real property of another to a tenant for either a definite or indefinite period of time. It is an estate in real property held under a lease or rental agreement that does not convey title to the property. >>_ nonfreehold estate.   

   LEASE OPTION
A clause in a lease contract that gives the lessee the right to purchase the real property held under the lease at a specific price for a specified period of time under specified terms and conditions.   

   LEGAL AGE
The statutory age at which a person acquires full legal capacity to transactbusiness (e.g., executing his own contracts, deeds, mortgages).   

   LEGAL CAPACITY
Being mentally competent and of legal age 18 years of age in Florida.   

   LEGAL DESCRIPTION
A description of land recognized by law that identifies the real estate and locates its boundaries. >>_ metes and bounds method, monuments method, government survey system, and lot and block.   

   LEGAL TITLE
In a contract for deed, the seller retains the legal title to the property until performance by the buyer. Since the seller has the legal title, there are potential problems - judgment liens and probate claims against the seller may be attached to the property, in the event of the death of the seller. The seller also retains the right to sell his interest in the property and to place a mortgage on it. >>_ equitable title.   

   LEGALLY SUFFICIENT
A complaint that alleges that a violation of Florida statute or FREC or DBPR rule has occurred. If the complaint is legally sufficient it must be investigated. If not, no further action will be taken.   

   LEGISLATIVE
Pertaining to the process of making or enacting laws by the legislative branch of government.   

   LEGISLATIVE RISK
Risk that legislative changes that require additional costs for future investments could actually decrease the value of investments that were made prior to the legislative changes.   

   LESSEE (TENANT)
One who rents or leases the property of another. As applied to real estate, the lessee is also known as the tenant.   

   LESSOR (LANDLORD)
One who rents or leases his property to another. As applied to real estate, the lessor is also known as the landlord.   

   LEVEL PAYMENT PLAN
An amortized mortgage with periodic payments of principal and interest. When all the scheduled payments have been made,the balance is zero and no further interest is due. >>_ amortized mortgage.   

   LEVERAGE
The use of borrowed money to acquire assets.   

   LICENSE
1) A written instrument issued by the Department of Business and Professional Regulation that certifies that the person or entity named thereon was duly licensed on the effective date shown; 2) as applied to real property, a privilege to go onto land for a specified purpose, which does not confer any estate, title, or interest in such property.   

   LICENSED APPRAISER
A person licensed by the department as qualified to issue appraisal reports for residential real property of one to four family residential units or on such real estate or real property as may be authorized by federal regulation. After July 1, 2003, the DBPR stopped issuing licenses for the category of licensed appraiser.   

   LICENSEE
As applied to real estate, anyone who holds a broker's or sales associate's license issued by the Department of Business and Professional Regulation.   

   LICENSE REACTIVATION
A licensee who has been involuntarily inactive for more than 12 months but less than 24 months may reactivate their license by successfully completing a 28 hour Commission-prescribed education course.Students who fail the end of course exam must wait at least 30 days from the date of the exam to retest and have up to one year to retest one time or they can retake the course to avoid the 30 day wait. >>_ involuntarily inactive.   

   LICENSURE
The DBPR shall license any applicant whom the FREC certifies to be qualified to practice as a broker or sales associate. The DBPR may not license any applicant currently under investigation in any other state, territory, or jurisdiction of the United States or any foreign national jurisdiction for any act that would constitute a Chapter 475 F.S. or Chapter 455 F.S. violation until theinvestigation is complete and disciplinary proceedings have been terminated.   

   LIEN
A claim or liability attached to property which 1) affects the title to the property; and2) provides security for a debt collectable against the property that can be enforced by court action (e.g., real estate tax liens, special assessment liens, mortgage liens, mechanic's liens, and vendor's liens which are encumbrances on real property).   

   LIEN HOLDER (LIENOR)
A person who owns a lien or has a right of lien upon the property of another.   

   LIEN THEORY
A view that a recorded mortgage on real property creates a lien or claim on the mortgaged property in favor of the lender until the loan is paid off. Florida is a lien theory state. >>_ title theory.   

   LIFE ESTATE
A freehold estate in real property of indeterminate duration that is limited to the life of the person holding it (i.e., the life tenant), or the life of some other person.Upon the death of the life tenant, or the other person as the case may be, the property passes to the holder of the remainder interest or to the grantor by reversion. >>_ remainderman and reversion estate.   

   LIFETIME CAP
Limits the interest rate increase over the life of an adjustable-rate mortgage.   

   LIKE-KIND EXCHANGE
An exchange of real estate for real estate used in a tax-deferred exchange. While it does not matter where the real estate is located, the properties must have a similar use, such as a four-unit residential rental property in exchange for an eight-unit residential property. limitations, statute of >>_ statute of limitations. limited liability company or LLC A business entity that may broker real estate and has the best characteristics of a corporation and a partnership.   

   AN LLC
offers personal liability protection like a corporation but treated as a partnership for income tax purposes.   
   LIMITED LIABILITY PARTNERSHIP OR LLP A BUSINESS ENTITY THAT MAY BROKER REAL ESTATE AND HAS CHARACTERISTICS SIMILAR TO THAT OF A LIMITED PARTNERSHIP.
An LLP offers the partners protection from personal liability like a limited partnership.   

   LIMITED PARTNERSHIP
A type of business organization formed by two or more persons who must have one or more general partners and one or more limited partners. In Florida, at least one of the general partners must be currently licensed as an active broker in order for the limited partnership to be registered to broker real estate. The limited partners cannot manage. They can only make an investment of cash or property, never services.   

   LIMITED REPRESENTATION
Occurs when fiduciary duties are not owed to either party, although limited confidentiality is owed to the party represented. The broker is not permitted to represent one party to the detriment of the other.   

   LINE OF CREDIT
The maximum borrowing power of a person or business entity from a financial institution, such as a commercial bank.   

   LINEAL
Being in a direct line of descent from an ancestor (e.g., from a father or mother to a son, or from a father or mother to a daughter).   

   LINEAL DESCENDENT
A person in the direct line of descent from an ancestor (e.g., a child or grandchild, as contrasted with a niece or nephew).   

   LIQUIDATED DAMAGES
The monetary penalty for breach of contract that is specified in the contract. Normally the earnest money.   

   LIQUIDATION VALUE
The amount for which a property is most likely to sell in a forced sale. Sometimes used in valuing foreclosed properties and those properties having a tax lien. It does not include any intangible assets. >>_ going concern value.   

   LIQUIDATION ANALYSIS (LIQUIDATION VALUE APPROACH)
For appraisal purposes, involves an analysis of the business based on the premise that the assets of the business will be sold for market value and the proceeds used to satisfy any liabilities of the business.   

   LIQUIDITY
The ability of a person or business entity to convert assets into cash or its equivalent.   

   LIS PENDENS, NOTICE OF
A notice filed on public record that serves as a warning that the title to certain property is involved in a lawsuit and subject to the court's decision.   

   LISTING (LISTING CONTRACT)
A broker's employment contract with his principal or customer that 1) creates the agency relationship between the parties or nonagency relationship; and 2) establishes the broker's right to compensation if he performs as stated in the agreement.   
   LITTORAL RIGHTS
The legal rights of real estate owners whose land abuts non-flowing water (e.g., an ocean, sea, or lake) to use and enjoy the water and shore abutting their property. loan origination fee >>_ origination fee.   

   LOAN SERVICING
In residential financing, when the lender collects the monthly payments, disburses the funds to pay property taxes and insurance, supervises the loan, and handles delinquencies, early payoffs, and mortgage releases.   

   LOAN-TO-VALUE RATIO
A ratio that represents the lender's investment in mortgaged property as compared to the value (or purchase price) of the property.   

   LOCUS SIGILLI (L.S.)
The place occupied by the seal of written instruments, which is usually abbreviated by the letters L.S. In accordance with Florida statutes, a seal is not necessary on any document that conveys an interest in real property.   

   LOT
Measured section of land, often a particular parcel of land on a registered plan.   

   LOT AND BLOCK
A method of legally describing real property that is normally used in conjunction with the government survey system or a metes and bounds description of a parcel being subdivided. The parcel will first be divided into areas called blocks and each block will be further subdivided into smaller areas called lots. >>_ government survey system and plat (plat map).   

REAL ESTATE - M -

   MAILING ADDRESS
The current residential address used by the licensee to receive mail through the U.S.Postal Service. A post office box is an acceptable mailing address.   

   MAJORITY
The legal age at which a person is entitled to the management of his own affairs and to the enjoyment of civil rights. >>_ legal age.   

   MANDAMUS, WRIT OF
A writ issued from a court of competent jurisdiction that orders an inferior court, board, agency, corporation, or person to perform a particular duty imposed by law.   

   MANDATORY
An order or command requiring strict obedience.   

   MANSARD
A type of roof named after a French architect that has two slopes on all four sides. The lower slope is steeper than the upper slope.   

   MARGIN
A percent added to the lending institution's index rate to determine the rate the borrower is to pay. The margin is really a profit margin (i.e., usually 1 to 2% added to the index rate to increase the lender's profit).   

   MARKETABILITY
The ability to sell an asset for market value.   

   MARKETABLE (MERCHANTABLE) TITLE
A good and marketable title to real property in fee simple, which can be held without reasonable fear of being challenged, and is readily transferable in the market.   

   MARKET DATA APPROACH
>>_ sales comparison approach.   

   MARKET PRICE
An amount actually paid by a buyer to a seller for property in a real estate transaction.   

   MARKET RENT
Also called economic rent; the rent the property commands in the open market.   

   MARKET VALUE
The most probable price in terms of money that a property should sell for in a competitive and open market under all conditions requisite to a fair sale. This definition assumes that both the buyer and seller act prudently, knowledgeably, and that the price is not affected by undue stimulus.   

   MASSACHUSETTS TRUST
>>_ business trust.   

   MASTER DEED
An enabling declaration (document) that conveys a parcel of real property held under a single deed into a number of individual condominium estates plus an estate for the common areas and elements of a condominium.   

   MATERIAL FACTS
Those issues that affect the value of the property. Information is considered material if its existence substantially affects property value, to the extent that if the information had been disclosed, the sales contract would not have been signed.   

   MECHANIC'S LIEN
A statutory lien created for the purpose of securing priority payment for labor or materials furnished to construct or improve real property. It is enforced by foreclosure, but such action must be taken within one year or the lien becomes void.   

   MEDIATION
The settlement of a dispute between two contending parties by action of a neutral third party. One of the settlementprocedures available to a broker in an escrow dispute.   

   MEETING OF THE MINDS
The mutual agreement or assent of parties to a contract regarding the substance, terms, and conditions of the agreement.Meeting of the minds is one of the essential elements of a valid and enforceable contract.   

   MERCHANTABLE TITLE
A good and marketable title to real property that is free from material defects, encumbrances, and any reasonable doubt as to who is the owner.   

   MERIDIANS
>>_ principal meridian.   

   METES AND BOUNDS METHOD
A method used to legally describe regular or irregularly shaped tracts of land. A metes and bounds description starts at a point of beginning and follows the boundaries of the property and returns to the point of beginning. It is often used in conjunction with the government survey system when accuracy is important and the property is more valuable. The services of a qualified land surveyor are required to prepare a metes and bounds legal description. >>_ government survey system, point of beginning, and surveyor.   

   MIDDLEMAN
An intermediary who merely brings two parties together to enable them to make their own contract. A broker may act as a middleman to bring a seller and buyer together if he does not have an agency relationship with either, and if each party is aware of and agrees to the arrangement.   

   MILL
One tenth of one cent. There are 1000 mills in one dollar. In Florida, a millage rate is used to compute real property taxes; the maximum levy by any unit of local government is 10 mills.   

   MILLAGE RATE
>>_ tax rate.   

   MINERAL RIGHT
An interest in minerals in land, which permits the holder to extract the minerals or otherwise derive a profit from them.   

   MINOR
An infant or person who is under the legal age of majority or legal competence.   

   MINORITY
1) As defined in the Civil Rights Act of1968, a minority is any group or individual member of a group that can be identified by race, color, religion, sex, or national origin;2) the state or condition of a minor as defined by law.   

   MISREPRESENTATION
An untrue, incorrect, or deceptive statement of fact made by one person to deceive or mislead another, which is a form of fraud.   

   MISTAKE
An unintentional act, omission, or error resulting from ignorance, surprise, or misplaced confidence.   

   MODIFY (MODIFIED)
To alter, enlarge, reduce, change, or limit in degree or extent.   

   MONUMENT
A physical and topographical feature such as a tree or fence that is used as a point of reference.   

   MONUMENTS METHOD
A rather imprecise method of legally describing real property that uses physical features as points of reference to locate the boundaries or corners of the property (e.g., trees, fences, rivers, bridges, roads).   

   MORAL(S)
Relating to character, conduct, social behavior, conscience, or the general principles of right conduct.   

   MORAL TURPITUDE
Any premeditated act or behavior that is morally wrong and gravely violates accepted moral standards (e.g., embezzlement, larceny, rape, robbery, kidnapping).   

   MORATORIUM
The suspension of activity such as a building moratorium.   

   MORTGAGE
A written instrument executed by a borrower that pledges his property as security for repayment of a debt. In Florida, it does not convey legal title of the mortgaged property to the lender. >>_ lien theory.   

   MORTGAGE BANKER
A person or business entity that originates and sells mortgage loans into the secondary market; sometimes called a bridge between the primary and secondary mortgage markets.   

   MORTGAGE BROKER
One who functions as an intermediary. middleman, or loan arranger who brings borrowers and lenders together for the purpose of obtaining a mortgage loan for the borrower. Effective October 1, 2010, a mortgage broker refers to a business entity and a licensed individual is a mortgage loan originator. >>_ mortgage loan originator.   

   MORTGAGE INSURANCE PREMIUM (MIP)
Charged to FHA borrowers annually and collected monthly with the mortgage payment.   

   MORTGAGE LOAN ORIGINATOR (MLO)
A person licensed by a state and registered with the Nationwide Mortgage Licensing System (NMLS).   

   SEE NATIONWIDE MORTGAGE
Licensing System.   

   MORTGAGE MODIFICATION
Granted by the lender to the mortgagor, a change in the original terms of the mortgage.   

   SEVERAL METHODS INCLUDE LOWERING THE INTEREST RATE, GRANTING A PAYMENT ABATEMENT, LOWERING THE MONTHLY PAYMENT, OR REDUCING THE PRINCIPAL BALANCE.
A modification could utilize one method or combine all of the methods.   

   MORTGAGE NOTE (BOND)
>>_ promissory note.   

   MORTGAGE UNDERWRITING
The process by which a lender estimates the risk involved with originating a mortgage loan by analyzing the real property as security tor the debt and the borrower's ability to repay the debt.   

   MORTGAGE WAREHOUSING
The process whereby a lender originates and retains a number of mortgage loans in-house until they are assembled into a package which is salable in the secondary mortgage market.   

   MORTGAGEE
The one who receives the mortgage from the borrower and to whom the mortgaged property is pledged as security for repayment of the debt; the lender.   

   MORTGAGEE'S (LENDER'S) TITLE POLICY INDEMNIFIES THE LENDER ONLY UP TO THE AMOUNT OWED ON THE MORTGAGE LOAN FOR ANY LOSS (NOT EXEMPTED IN THE POLICY) SUSTAINED BY REASON OF DEFECTIVE TITLE.
If the mortgagee sells (assigns) (transfers) the mortgage to another party, the mortgagee's policy may be transferred to the new owner of the mortgage. >>_ title insurance.   

   MORTGAGOR
The one who gives the mortgage to the lender and pledges his real property as security for repayment of the debt; the borrower.   

   MULTIPLE LICENSES
Issued only to active brokers if it is clearly shown that such additional licenses are necessary to the conduct of legitimate business, and that there is no opportunity for such licenses to be used in a manner harmful to the public or to the business associates of the license holder.   

   MULTIPLE LISTING
A listing available only to real estate brokers and their sales associates who are members of a multiple listing service (MLS).It usually consists of an exclusive right to sell listing contract which authorizes and obligates the listing broker to place the listing in the MLS.   

   MULTIPLE LISTING SERVICE (MLS)
An organization that distributes the real property listings of its REALTOR® member brokers to REALTOR® member-cooperating brokers.   

   MUTUAL RECOGNITION
Allows the Florida Real Estate Commission to enter into written agreements regarding licensing with similar licensing authorities.The mutual recognition agreements recognize the experience and education of individuals licensed in another state to obtain a Florida real estate license or vice versa. However, the agreements only apply to nonresidents who are licensed in theother state.   

   MUTUAL RECOGNITION_2011
As of 2011, FREC has agreements with nine states including Alabama, Arkansas, Connecticut, Georgia, Indiana, Mississippi, Nebraska, and Oklahoma. An applicant under mutual recognition is not required to take a pre-license course. They are required to take a state license law exam with 40 questions and they must score at least a 75% (30 questions correct). The successful applicant will still need to complete the applicable post-license and continuing education. >>_ continuing education, Florida resident, and post-license education.   

   MUTUAL SAVINGS BANK
Lending institutions regulated by the FDIC that are mutually owned and operated for the benefit of the depositors who have rights to earnings based on their share of the deposits.   

REAL ESTATE - N -

   NATIONAL ASSOCIATION OF REALTORS® (NAR)
The national trade organization of the real estate profession whose membership is comprised of REALTORS® andREALTOR®- Associates. The NAR functions through the various state associations and the local boards of REALTORS®, whose members operate under a strict code of ethics. >>_ code of ethics.   

   NATIONAL FLOOD INSURANCE ACT (REGULATION H)

PROTECTS AGAINST LOSSES FROM DAMAGE CAUSED TO REAL AND PERSONAL PROPERTY BY FLOODS OR TIDAL WAVES IF THE COMMUNITY IN WHICH THE PROPERTY IS LOCATED PARTICIPATES IN THE NATIONAL FLOOD INSURANCE PROGRAM. Flood insurance is offered by private insurance companies and subsidized by the federal government with the insurance companies participating on a risk-sharing basis.   

   NATIONWIDE MORTGAGE LICENSING SYSTEM (NMLS)
The legal system of record for licensing in all participating states (including Florida), the District of Columbia, and all U.S.Territories.   

   NMLS
The NMLS was created by theConference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. The NMLS does not grant or deny license authority. The NIMLS streamlines the licensing process by providing a centralized and standardized system for mortgage licensing.   

   NATURAL PERSON
In general usage, a human being.   

   NEGATIVE AMORTIZATION
The type of amortization that results when the mortgage payment is less than the interest due on the principal balance of the loan. Consequently, the borrower owes more than he did before making the payment, because the unpaid interest is added to the remaining principal balance of the loan.   

   NEGATIVE LEVERAGE
The rate of return from the investment is lower than the interest rate paid on borrowed funds.   

   NEGOTIABLE
Legally capable of being transferred or assigned.   

   NEGOTIABLE INSTRUMENT
A written document that promises to pay on demand a sum of money to the bearer (e.g., a personal or cashier's check, or negotiable bond).   

   NET LEASE (TRIPLE-NET LEASE)
A lease agreement in which the tenant pays a specified rental amount to the landlord, plus operating expenses (e.g., maintenance, property taxes, and utilities) as agreed between the parties.   

   THE MORE
'nets' means that the tenant pays more expenses (e.g., net lease, net-net lease, or net-net-net lease).   

   NET LISTING
A listing contract in which the owner specifies the minimum amount that he will accept for his property after all closing costs, liens (if any), and the broker's commission have been paid.   

   NET OPERATING INCOME (NOI)
As used in the income capitalization approach, the effective gross income minus allapplicable operating expenses. >>_ income capitalization approach.   

   NEUTRAL LEVERAGE
The rate of return from the investment is equal to the interest rate paid on borrowed funds.   

   NO BROKERAGE
Occurs when a broker is not acting as an agent for others or as a transaction broker in a residential sale transaction. The broker still must deal honestly and fairly, disclose all known facts that materially affect the value of residential real property and are not observable by the buyer, and account for all funds entrusted to the broker.   

   NOLO CONTENDERE
A type of plea by a defendant to the court meaning "I do not contest the charge." If a licensee is charged with a crime and enters a plea of nolo contendere, such plea is considered to be a conviction for the purposes of Chapter 475, F.S.   

   NOMINEE
A person designated to act for or represent another in his or her place.   

   NONCONFORMING LOAN
A loan that does not conform to Fannie Mae and Freddie Mac standards (e.g., a jumbo loan). >>_ jumbo loan.   

   NONCONFORMING USE
A land use that was lawful prior to the adoption, revision, or amendment of a zoning ordinance, but which fails to comply with present zoning provisions as designated in the ordinance.   

   NONFREEHOLD ESTATE
Provides possession and use but not ownership. >>_ leasehold estate.   

   NONREPRESENTATION
A buyer and/or seller can choose not to be represented by a real estate broker since Florida law does not require prospective buyers and sellers to be represented.  A REAL ESTATE LICENSEE WHO DOES NOT REPRESENT THEIR PARTY TO THE RESIDENTIAL TRANSACTION IS OPERATING IN A NO BROKERAGE RELATIONSHIP.
>>_ No Brokerage.   

   NONRESIDENT
Person who has not resided in Florida for four calendar months or more within the preceding one year; or a person who currently resides in Florida but does not intend to reside in Florida for four calendar months or more within the preceding one year.   

   NONTRADITIONAL MORTGAGE
As defined by the SAFE Act, any mortgage other than a 30-year fixed rate mortgage.>>_ SAFE Act.   

   NOTARY PUBLIC (NOTARY)
One who is authorized by the state to administer oaths and to attest to the authenticity of signatures on certain classes of documents. In Florida, a notary is considered to be an officer of the state.   

   NOTE (BOND)
>>_ promissory note.   

   NOTICE OF IRREVOCABLE CONSENT
This notice must be signed by nonresident Florida real estate applicants and licensees stating that they will defend any suit brought against them in Florida.   

   NOTICE OF NONCOMPLIANCE
Administrative penalty used for first time minor violations.   

   NOVATION
The substitution of a new borrower for another; and a new mortgage for an existing mortgage. Generally, novation occurs when a buyer assumes a seller's mortgage and the seller is released from liability by the lender, which relieves the seller of all personal liability under the mortgage and note.   

   NULL AND VOID
Without legal validity or effect.   

REAL ESTATE - O -

   OCCUPANCY RATIO
The percentage of rental units occupied.Determined by dividing the number of occupied units by the total number of units.   

   OCCUPATIONAL LICENSE
A license issued by a city or county government that authorizes a person or business entity to conduct a particular occupation or business enterprise.   

   OFFER
In real estate contracts, the proposal of a potential buyer to purchase the realproperty of another under stated terms, conditions, and so on. >>_ counteroffer.   

   OFFEREE
The person to whom the offer is made (e.g., an owner who wishes to sell his real property).   

   OFFEROR
The person who makes the offer (e.g., a potential buyer of real property).   

   OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)
Effective July 1, 2011, federal savings associations are supervised by the OCC.   

   OFFICE OF FAIR HOUSING AND EQUAL
Opportunity (FHEO)Investigates complaints filed with HUD.   

   OFFICE OF THRIFT SUPERVISION (OTS)
A part of the U.S. Treasury Department that regulated all federally chartered savings associations. The OTS transferred this supervisory responsibility to the OCC on July 21, 2011.   

   OMISSION
The intentional or unintentional failure to act, or neglect to perform as required by law.   

   OPEN-END CLAUSE
A clause in a mortgage contract that permits the mortgagor to borrow additional funds whenever the initial loan amount has been substantially reduced. It may be used only at the option of the mortgagee who normally reserves the right to adjust the interest rate. >>_ mortgagor and mortgagee.   

   OPEN LISTING
A listing contract in which the owner agrees to list his property with a broker, but reserves the right to also list with other brokers or sell the property himself. The owner is not obligated to any broker for a commission if 1) he sells the property to a party not procured by any of the brokers; and 2) the sales contract is executed before any broker procures a purchaser for his property.   

   OPERATING BUSINESS RISK
The risk that actual income may be lower than projected and expenses may be higher.   

   OPERATING FINANCIAL RISK
The risk that available resources such as equity investment and financing may be insufficient to fund the operations.   

   OPINION OF TITLE
An opinion of the condition or status of title in a specific parcel of land, which is based upon facts revealed in an abstract of title. It is an opinion rendered by an attorney-at-law or other person competent to examine titles that does not guarantee that the documents in the abstract are genuine or that the owner has a good and marketable title in the property. >>_ abstract of title and marketable (merchantable) title.   

   OPTION CONTRACT
A unilateral contract where the optionor must perform if required by the optionee. A written agreement in which a property owner grants to a potential buyer the right to purchase his property at a specified price for a given period of time, or to nominate another purchaser within the same time period but only when substantial, valuable consideration is given. >>_ optionee, optionor, and unilateral contract.   

   OPTIONEE
The potential buyer who receives an option to purchase the property of another.   

   OPTIONOR
The property owner who gives a potential buyer the right to purchase his property.   

   ORAL CONTRACT
A contract that is not in writing, or one that is partly in writing and partly in spoken words. Also called a parol contract.   

   ORDINANCES
The equivalent of a city or county statute which governs matters not already covered by state or federal law (e.g., zoning, building codes, safety).   

   ORIGINATION FEE
A fee charged by lenders for services related to originating a mortgage loan; usually computed as a percentage of the loan amount. >>_ points (discount points).   

   OSTENSIBLE (QUASI-) PARTNERSHIP
A partnership created when two or more parties act, or do business, in such a manner that the public is deceived into believing that a partnership exists when, in fact, it does not. Since it is a partnership that merely appears to exist without any legal basis, it cannot be registered as a real estate broker.   

   OVERAGE (SECRET PROFIT)
The act of a broker receiving more than the compensation agreed to (i.e., a secret profit) in a real estate transaction without the knowledge and consent of the parties-a form of fraud.   

   OVER-IMPROVEMENT
An improvement that does not contribute to the highest and best use of the parcel of land on which it is located.   

   OWNER-DEVELOPER
A business entity that sells, exchanges, and leases its own property and therefore is not required to be licensed. However, any agents working for the owner-developer that are paid commissions must be licensed as an active sales associate or broker.   

   OWNER-INVESTOR
Usually holds property for the production of income and long-term benefits such as appreciation, tax shelter, and income from the eventual sale of the property.   

   OWNER'S TITLE POLICY
Insurance that indemnifies the property owner only up to the amount of the policy for any loss (not exempted in the policy) sustained by reason of defective title. If the owner sells the property, the policy is not assignable (transferable) to future owners.   

   OWNER-USER
Usually holds property as a necessity or convenience for residential, personal, or business use. In addition, the property is usually being held for long-term benefits such as appreciation and tax shelter.