The Internet Real Estate Glossary

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Damages - Monetary compensation recovered in Court by any person who has suffered a loss or injury because of the unlawful acts or negligence of another. 

Data Enhanced Lists - These are official tax delinquency lists with assessor information added, such as assessed values, land use codes, building descriptions such as year built, number of bedrooms, bathrooms, square feet or lot and structure. The cost will vary depending on our costs but will normally run between 5 cents a parcel and 10 cents a parcel. Please keep in mind that we can only get data that is available on the Assessor's public web site. Data enhanced lists are not available in all jurisdictions and should be ordered at least four business days before they are needed. They are sent as an email attachment.

Date-Down - A supplement to the on-going title search that's undertaken during the foreclosure process via a trustee's sale guaranty. A date-down is done preparatory to recording the Notice of Trustee's Sale and then again, just before the actual trustee's sale.

Dealer - one who holds real property primarily for sale to customers, merchandise is inventory and gain on sale is treated as ordinary income.

Debt Coverage Ratio (DCR) - A ratio used in underwriting loans for income producing property which is created by dividing net operating income by total debt service. Ratios of at least 1.10 are generally required with ratios of 1.20 and higher considered the norm. (See definition of "underwriting" below.).

Debt Ratio (DR, D -I) - Also known as debt to income. The ratio of the total of minimum monthly debt payments to gross monthly income. If minimum monthly payments on a credit card, auto lease, and mortgage (PITI) were $30, $220 and $750 respectively and the gross monthly income was $3000, the debt ratio would be 33.33% ($1000 / $3000). Only debt obligations that will be in place after the loan has funded are considered. Payments for food, utilities, entertainment, medical bills, etc. are not included in the calculation. Contractual obligations for rent (e.g., a lease) would be included in the calculation. The housing ratio in this example would be 25.0% ($750 / $3000). The preferred candidate for conventional loans typically would have debt ratios of 28% for housing and 36% for the total with the maximum ratios allowed (on a case by case basis with compensating factors; i.e., some other strong positive to offset the negative of the higher debt ratio) being around 30% / 40% (housing / total). FHA and VA loans allow a total of approximately 41.0%. Non-conforming loans may allow total debt ratios as high as 55% or so. True "hard money" loans seldom consider debt ratios. (see definitions of "PITI", "Housing Ratio", "Non-conforming Loan" below).

Debt Service - Annual amount to be paid by a debtor for money borrowed.

Debtor - A party that owes, such as the individual, partnership, corporation or limited liability company that files the bankruptcy.

Debtor-in-possession - In a Chapter 11 or 13 bankruptcy case, the Debtor remains in control of his/her assets during the pendency of the bankruptcy as opposed to a trustee taking control of assets.

Declaration - Sworn written form of testimony setting forth statements of fact. A non-notarized statement made under of penalty of perjury.

Declaration of Trust - A written document that delineates the powers of a named trustee who holds title to certain property for the benefit of others (beneficiaries). Commonly used by the famous or wealthy to keep their ownership of property confidential.

Decree - An Order issued by the court; an edict of law; a judicial decision.

Deed - A legal “instrument” that conveys the title to a property from seller to buyer. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the state where the property is located and should be delivered to the buyer at settlement. A written document that transfers ownership of land from one party to another. The seller is called the "grantor" and the buyer is called the "grantee". Deeds may be of many kinds. For example, there are grant deeds, quitclaim deeds, gift deeds, guardians' deeds, administrators' deeds, warranty deeds, etc. depending upon the language of the deed, the legal capacity of the grantor, and other circumstances.

Deed-in-lieu of foreclosure - The voluntary transfer of title (ownership) from the borrower to a lender in lieu of foreclosure. The advantage for the lender or its insurer is the cost of acquisition is less than a foreclosure sale and title is gained faster. The advantage for the borrower is the avoidance of a foreclosure and potential deficiency judgment. Used by owners to voluntarily convey the title of their property to the beneficiary (lender) to avoid the negative credit consequences of a foreclosure. Lenders are generally reluctant to accept a "deed in lieu" unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent.

Deed in trust - A deed by which real estate is conveyed to a trustee, usually to establish a land trust. A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the "trustor". The neutral third party to whom the bare legal title is conveyed (and who is called on to liquidate the property if need be) is the "trustee". The lender is the "beneficiary". When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the trustor, which extinguishes the trust deed lien.

Deed of Release - Given by lien holders, remainder-men or mortgages to relinquish their claims on the property.

Deed of Reconveyance - An instrument that releases and discharges a deed of trust.

Deed of Restriction - A restriction imposed in a deed to limit the use of the land. A deed might include clauses preventing the sale of liquor or defining the size, type, value, or placement of improvements.

Deed of Trust (DOT) - DOT's are similar to mortgages in that they serve as security for a loan by encumbering real estate. However, a mortgage is between two parties (borrower and lender) and a deed of trust involves three parties (borrower, lender and trustee). The trustee holds the property in trust as security for the payment of the debt and can sell the property if the borrower defaults.  In many states, this document is used in place of a mortgage to secure the payment of a note.

Deed restriction - A clause in a deed that limits the use of land.

Default - A breach or nonperformance of the terms of the note or the covenants of the security instrument. A loan is generally considered in monetary default the day two payments become due and unpaid; a monthly payment due January 1 is considered in default if not paid by February 1.

Default judgment - Under the Rules of Civil Procedures, when a party against whom a judgment for affirmative relief is sought has failed to file an answer or other responsive pleading, he is in default and a judgment by default may be entered.

Defeasible - Subject to being defeated, annulled, or revoked.

Defeasance - clause in mortgage that gives the borrower the right to redeem the property after default by paying the full indebtedness and fees incurred.

Deferred Maintenance - a type of physical depreciation due to lack of normal upkeep.

Deferred Payments - payments to be made at some future date.

Defective title - Any recorded instrument that would prevent a grantor and/or seller from giving a clear title. Or, title to real property that lacks some of the elements necessary to transfer good title. Tax or mechanics’ liens are common causes of defective title.

Deficiency - The amount of debt remaining unpaid after the application of funds derived from the forced sale of the security.

Deficiency judgment - A court order to pay the balance remaining on a loan if the proceeds from the forced sale of the property does not yield sufficient proceeds to pay off the mortgages, accrued interest or legal fees.

Delinquency - A delinquency exists if a borrower fails to make timely payment in accordance with the terms of the note. If the note declares the payment due date to be the 1^st of the month, the payment is considered delinquent if the payment is not received by the 1^st of the month.

Delinquency List - This is a list of properties that are currently delinquent but IS NOT a tax sale list. We offer these in a number of jurisdictions for those who are attempting to get prepared for an upcoming tax sale. Please be aware that a majority of the properties will pay the delinquent taxes and not be on the tax sale.

Delinquent loan - A loan in which payments are past due.

Demand - The payoff amount necessary to retire a secured debt.

Demurrer - A formal mode of disputing the need to respond to a question posed by another. In effect it is an assertion that even if the allegation posed by the question is true, it is not relevant to the matter being litigated. May also refer to an objection to the sufficiency of a pleading.

Density - the intensity of land use.

Density Test - An analysis of soil to determine if the surface can support the foundation of a house.

Department of Housing and Urban Development (HUD) - A federal agency that sponsors programs to assist homeowners and community development.

Department of Veterans Affairs (VA) - An independent agency of the federal government which guarantees long-term, low-or no-down payment mortgages to eligible veterans.

Deposition - A form of oral discovery under oath, outside of open court, where the testimony of a witness is taken. This testimony may be used in a later trial and/or is obtained in the course of discovering facts and information. The person being deposed is called the deponent.

Depreciation - Decline in the value of a house because of wear and tear, obsolescence, adverse changes in the neighborhood or a declining market in general.

Depreciation Recapture - when real property is sold at a gain and accelerated depreciation has been claimed, the owner may be required to pay tax at ordinary income rates to the extent of the excess accelerated depreciation.

Derivative - A financial instrument deriving its value from the value of underlying bonds, stocks, currencies, commodities, and so forth.

Descent - Refers to any passage of title to property, upon intestacy to those heirs, related by blood or marriage, whom the law designates.

Devise - Transferring title to real property by means of a will.

Direct conveyance - A form of conveyance associated with HUD loans wherein the property is deeded directly to the Secretary rather than taking title in the name of the lender first in order to save time and duplication of recording taxes and fees.

Direct-reduction mortgage - An amortized mortgage in which principal and interest are computed on the remaining balance.

Disbursements - Payments made during the course of an escrow or at closing.

Discharge - Under the Bankruptcy Code certain debts may be discharged (eliminated) provided, for example, the debtor complies with the terms of his plan and the conditions of the Bankruptcy Code. Once a debt has been discharged, the creditor is barred from any further efforts to collect the debt against the debtor personally.

Discharge of Indebtedness - A lender tells a borrower that a loan doesn¹t have to be paid back, also called discharge of debt.

Discharged - To be released from or have an obligation extinguished.

Disclosure - The information required by lender to provide a borrower prior to a contract signing.

Discount - In an ARM with an initial discount, the lender gives up a number of percentage points of interest to give the borrower a lower rate and lower payments for part of the mortgage term. After the discount period, the ARM rate probably will go up, depending on the index rate.

Discount points - Fees paid to a lender to lower the interest rate. One point equals one percent of the loan amount. Paying points has the effect of giving the lender a higher yield. Two points on a $100,000 mortgage would cost $2,000 ($100,000 x 0.02).

Discovery - A pre-trial device that can be used by one party to obtain facts and information relevant to a litigated matter and assist in preparation for trial, negotiation and other dispute resolution. Common forms of discovery are “Interrogatories” and “Depositions.”

Dismissal - An order terminating a case or bankruptcy prior to its normal conclusion. If a bankruptcy is dismissed, all debtors return to their pre-filing status.

Dismissal with prejudice - An adjudication on the merits, and final disposition, barring the right to bring or maintain an action on the same cause.

Dismissal without prejudice - Permits the parties to sue again on the same cause of action. The effect of the words “without prejudice” is to prevent the decree from barring a subsequent suit.

Docket - A list of cases and their status on a court’s calendar.

Document Preparation - this fee covers the expenses associated with this process of preparing some of the legal documents that you will be signing at the time of closing, such as the mortgage, note, and truth-in-lending statement.

Documentary tax stamps - Stamps affixed to a deed showing the amount of transfer tax.

Documentary Transfer Tax - A tax applicable to transfers of real property. Notice of payment is entered on the face of the deed or on a separate paper filed with the deed.

Dominant Estate - The tract of land in an easement appurtenant which benefits from the easement.

Double Sales - Weeks can pass between the filing of a property record and its appearance in computerized registries used by title-search companies. A swindler can record a deed, arrange a loan, and before those transactions show up in the computer, file another deed and arrange another loan.

Double Whammy - Some lenders refuse to permit assumptions, which is one blow, while at the same time insisting on a hefty prepayment penalty when the non assumable loan is paid off early, which is a second blow.

Dower - The rights that a wife acquires in her husband's fee simple property.

Down payment - The amount paid for the purchase of a property in addition to the mortgage, but not including any closing costs. The standard down payment at one time was 20 percent, but buyers today can put down as little as 3 percent.

Dragnet clause - A provision in a mortgage that pledges several properties as collateral. A default in the mortgage could lead to foreclosure proceedings on any of the properties in the dragnet.

Draw - a periodic advance of funds from a lender.

Due Date of Last Paid Installment (DDLPI) - A term used by Freddie Mac to define the due date of the last fully paid monthly installment. It is not the date on which the payment was applied.

Due Diligence - The act of carefully reviewing, checking and verifying all of the facts and issues before proceeding. In lending it is, among other things, verification of employment, income and savings; review of the appraisal; credit report; and status of the title.

Due-on-sale clause - A clause stating that the entire loan is due upon the sale of the property. (See also “acceleration clause” or “alienation clause.”)

Duplex - A building consisting of two separate living units.

Duress - Compulsion, pressure, or coercion under protest.

This real estate glossary is courtesy of the Internet Real Estate Center - Join the Online Real Estate Revolution.