Dictionary of Terms - E

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Earnest Money: Money deposited by a buyer under the terms of a contract to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed.
Earthquake Insurance: An insurance policy that provides coverage against damage to a home from an earthquake.
Easement By Condemnation: An easement created by the government or government agency that has exercised its right under eminent domain.
Easement By Necessity: An easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land.
Easement By Prescription: An easement acquired by continuous open and hostile use of the property for the period of time prescribed by state law.
Easement In Gross: An easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner. For example a right granted by Eleanor Franks to Joe Fish to use a portion of her property for the rest of his life would be an easement in gross.
Easement: A right to use the land of another for a specific purpose such as for a right-of-way or utilities; an incorporeal interest in land.
Eaves: The portion of the roof that extends beyond the vertical plane of the exterior wall.
Economic Age-Life Method: A method of estimating accrued depreciation. The estimated effective age is divided by the typical total economic life to arrive at the percentage of depreciation.
Economic Base: The level of business activity in a community-particularly activity that brings income into the community from surrounding areas.
Economic Life: The period of time in which improvements can be used profitably for their original intended purpose. The period of time that improvements feasibly contribute to value.
Economic Obsolescence: The loss in value of a property due to regional, national or global economic conditions.
Economic Rent: The rent that a property would command if vacant and available for rent on a specific date. Usually synonymous with market rent.
Effective Age (Observed Age): The age of a property based on its present condition and utility. It may not be the same as actual age.
Effective Demand: The desire to buy coupled with the ability to pay.
Effective Gross Income: Estimated potential gross income of a rental property from all sources, less anticipated vacancy and collection losses.
Effective Tax Rate: (i) The ratio of the annual property tax on a property to the market value of the property. (ii) Rate times assessed value divided by the market value. (iii) Tax rate times assessment ratio.
Egress: The right to leave or exit, or the physical means used to leave or exit a property.
Elements Of Comparison: The criteria used in comparing sales transactions of real properties. Comparison is made between the property rights, the conditions of sale, the date of sale, financing, site characteristics and locations and the quality and condition of the improvements.
Emblements: Growing crops such as grapes and corn, that are produced annually through labor and industry; also called fructus industriales.
Eminent Domain: The right of a government or municipal quasi-public body to acquire property for public use
Employee: Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees. See also independent contractor.
Employment Contract: A document evidencing formal employment between employer and employee or between principal and agent. In the real estate business this generally takes the form of a listing agreement or management agreement.
Enabling Acts: State legislation that confers zoning powers on municipal governments.
Encapsulation: A method of controlling environmental contamination by sealing off a dangerous substance.
Encroachment: A building or some portion of it-a wall or fence for instance-that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley.
Encumbrance: Anything, such as a mortgage, tax or judgment lien, an easement, a restriction on the use of the land or an outstanding dower right, that may diminish the value or use and enjoyment of a property.
End Loan: The conversion from a construction loan to permanent financing.
Entitlement: The VA home loan benefit is called an entitlement and often referred to as eligibility.
Entrepreneurial Profit: The amount of profit attributable to the development function.
Environmental Impact Study: A report about the probable effects of a development upon the environment.
Environmental Obsolescence: (See external obsolescence.)
Equal Credit Opportunity Act (ECOA): Federal law that prohibits a lender or other creditor from refusing to grant credit based on the applicant's sex, marital status, race, religion, national origin or age.
Equal Treatmentl/Different Impact: It is possible to be guilty of discrimination even by treating two individuals the same. If the results of the treatment are discriminatory or tend to exclude or otherwise harm members of a minority group or have discriminatory impact, they are against the law.
Equalization: Adjustment of assessed values for tax purposes in a particular county or taxing district to make them equal to assessments in other counties or districts.
Equalization Factor: The factor (or number) is multiplied by the assessed value of property as a means of establishing a value for the subject property that is equalized or uniform with state-wide property tax assessments.
Equalization: In order to assure uniform tax assessments, the government authorizes a mass appraisal or reappraisal of all property within its jurisdiction. The goal is to assure that each taxpayer a fair share of the tax burden.
Equifax: One of the main credit-reporting bureaus.
Equilibrium: Properties undergo little change; also called stability.
Equitable Lien: See statutory lien.
Equitable Right Of Redemption: The right of a defaulted property owner to recover the property prior to its sale by paying the appropriate fees and charges.
Equitable Title: The interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name.
Equity: Net value of a property obtained by subtracting all liens or other charges against it from its total value.
Equity Capitalization Rate: The relationship between a single year's before-tax cash flow and the equity investment in the property. The before-tax cash flow is the net operating income minus the annual debt service payment. The equity is the property value minus any outstanding loan balance. The equity capitalization rate, when divided into the before-tax cash flow, indicates the value of the equity. Also called cash on cash rate, cash flow rate or equity dividend rate.
Equity Dividend Rate: (See equity capitalization rate.)
Equity Investors: Investors making use of what is termed venture capital to take an unsecured and thus relatively risky part in an investment.
Equity Ratio: (i) Fairness or equality of assessments between properties. Similar properties should be assessed at equivalent or equitable levels. (ii) The ratio of down payment to total price; (iii) The percentage of an investment unencumbered by debt.
Equity: Meaning One: The value one has in a property after debts are subtracted.. Meaning Two: A body of law devoted to the concept of fairness.
Erosion: The gradual wearing away of land by water wind and general weather conditions; the diminishing of property by the elements.
Errors And Omissions Insurance: A policy that insures against mistakes made by a builder or architect.
Escalator Clause: A clause in a contract, lease or mortgage providing for increases in wages, rent or interest, based on fluctuations in economic indexes, costs or taxes.
Escape Assessment: An assessment (and tax bill) levied for a prior year, usually because of an assessee or assessor error.
Escheat: The reversion of property of a decedent who died intestate (without a will) and without heirs to the state or county as provided by state law.
Escrow Account: The trust account established by a broker under the provisions of the license law for the purpose of holding funds on behalf of the broker's principal or some other person until the consummation or termination of a transaction.
Escrow Agent: A neutral third party who ensures that all conditions of a real estate transaction are met before any transfer of funds or property is recorded.
Escrow Closing: Escrow closes when all conditions of a real estate transaction are met and the title of the property is transferred to the buyer.
Escrow Company: A firm that acts as a neutral third party to ensure that all conditions established by the buyer, seller and lender in a real estate transaction are met.
Escrow Contract: An agreement between a buyer seller and escrow holder setting forth rights and responsibilities of each. An escrow contract is entered into when earnest money is deposited in a broker's escrow account.
Escrow Disbursements: The use of escrow funds to pay taxes, hazard insurance, mortgage insurance and other property expenses as they become due.
Escrow Instructions: A document that sets forth the duties of the escrow agent as well as the requirements and obligations of the parties when a transaction is closed through an escrow.
Escrow Payment: Funds withdrawn by a mortgage servicer from a borrower's escrow account to pay taxes and insurance.
Escrow: The closing of a transaction through a neutral third party called an escrow agent or escrowee who receives certain funds and/or documents to be delivered upon the performance of certain conditions outlined in the escrow instructions.
Estate (tenancy) At Sufferance: The tenancy of a lessee who lawfully comes into possession of a landlord's real estate but who continues to occupy the premises improperly after his or her lease rights have expired.
Estate (tenancy) At Will: An estate that gives the lessee the right to possession until the estate is terminated by either party; the term of this estate is indefinite.
Estate (tenancy) For Years: An interest for a certain exact period of time in property leased for a specified consideration.
Estate (tenancy) From Period To Period: An interest in leased property that continues from period to period week to week, month to month or year to year.
Estate In Land: The degree quantity nature and extent of interest a person has in real property.
Estate In Remainder: The remnant of an estate that has been conveyed to take effect and be enjoyed after the termination of a prior estate; for instance, when an owner conveys a life estate to one party and the remainder to another. (For a case in which the owner retains the residual estate, see estate in reversion.)
Estate In Reversion: An estate that comes back to the original holder, as when an owner conveys a life estate to someone else, with the estate to return to the original owner on termination of the life estate.
Estate Taxes: Federal taxes on a decedent's real and personal property
Estate: The total assets of a person, including real property, at the time of death.
Estimated Closing Costs: An estimate of expenses related to the sale of real estate including title and appraisal fees.
Estimated Hazard Insurance: An estimate of hazard insurance, also known as homeowners insurance, to cover physical risks such as fire and wind damage.
Estimated Property Taxes: An estimate based on the property's assessed value.
Estoppel Certificate: A document in which a borrower certifies the amount owed on a mortgage loan and the rate of interest.
Estoppel: Method of creating an agency relationship in which someone states incorrectly that another person is his or her agent and a third person relies on that representation.
Ethics: The system of moral principles and rules that becomes standards for professional conduct.
Eviction: A legal process to oust a person from possession of real estate.
Evidence Of Title: Proof of ownership of property; commonly a certificate of title an abstract of title with lawyer's opinion title insurance or a Torrens registration certificate.
Examination Of Title: An inspection by a title company of public records and other documents to determine the chain of ownership of a property.
Exception: As used in the conveyance of real estate, an exception is the exclusion of some part of the property conveyed with the title of that excepted part remaining with the grantor.
Excess Income: (See excess rent.)
Excess Rent: The amount by which scheduled rent exceeds market rent.
Exchange: A transaction in which all or part of the consideration is the transfer of like-kind property (such as real estate for real estate).
Exclusive-agency Listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owner's stated terms for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker.
Exclusive-right-to-sell Listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property on the owner's stated terms and agrees to pay the broker a commission when the property is sold whether by the broker the owner or another broker.
Executed Contract: A contract in which all parties have fulfilled their promises and thus performed the contract.
Execution: The signing and delivery of an instrument. Also a legal order directing an official to enforce a judgment against the property of a debtor.
Executor Contract: A contract under which something remains to be done by one or more of the parties.
Exemption: Partial or total relief from tax granted by the taxing authority.
Expected Life: The number of years in which an asset should perform adequately the economic function for which it was intended.
Expense: The cost of goods and services required to produce income.
Expense-stop Clause: Lease provision to pass increases in building maintenance expenses on to tenants on a pro rata basis.
Experian: Experian is one of the main credit reporting bureaus.
Express Agency: An agency relationship based on a formal agreement between the parties.
Express Agreement: An oral or written contract in which the parties state the contract's terms and express their intentions in words.
Express Contract: See express agreement.
External Depreciation: Reduction in a property's value caused by outside factors (those that are off the property).
External Obsolescence: Loss of value from forces outside the building or property, such as changes in optimum land use, legislative enactments that restrict or impair property rights and changes in supply-demand relationships.
Externalities: The principle that outside influences may have a positive or negative effect on property value.
Extraordinary Assumption: An assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser's opinions or conclusions. (USPAP)

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