The Internet Real Estate Glossary

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Immobility - Incapable of being moved; fixed in location, such as land. 

Implied Contract - contract formed through the acts or conduct of the parties. Involved (Ostensible).

Implied Warranty of Habitability - a legal doctrine that requires landlords to offer and maintain livable premises for their tenants. If a landlord fails to provide habitable housing, tenants in most states may legally withhold rent or take other measures, including hiring someone to fix the problem or moving out.

Impounds - funds used to pay annual real estate taxes and insurance premiums. Moneys collected monthly (from the owner by the lender) sufficient to pay the annual real estate taxes and insurance premiums on the secured property. Rarely collected any more in states that require lenders to pay interest to owners on their impound balances. Federal law exempts FHA and VA lenders from paying interest on impounds.

Impound account (also known as reserves or escrow) - That portion of a borrower’s monthly payments held by the lender to pay for taxes, hazard insurance, mortgage insurance, lease payments and other items as they become due. Some lenders will refer to this account as an escrow account (See “escrow”).

Improvements - Additions to raw land such as buildings, gardens, streets, etc., that add value to the land.

Incidents of Ownership - any control over property. If you give away property but keep an incident of ownership--for example, you give away an apartment building but retain the right to receive rent--then legally, no gift has been made. This distinction can be important if you\'re making large gifts to reduce your eventual estate tax.

Income approach - A method of valuation based on the present value of the future rights to income. It assumes that the income derived from a property will, to a large extent, control the value of that property.

Income producing property (also called income property) - Real estate that generates rental income, such as apartment buildings, office buildings and shopping centers.

Income property - Real estate that generates rental income, such as apartment buildings, office buildings and shopping centers.

Incurable Depreciation - Elements of a structure which are neither physically possible nor economically feasible to correct.

Indebtedness - The unpaid principal and interest plus any other amounts allowable under the terms of the loan including those sums authorized by statute.

Indemnify - to protect another person against loss or damage.

Independent Contractor - One whose time and effort are regulated by the individual and are not under the direction or control of others.

Index - (See Market index) The measure of interest-rate changes a lender uses to decide how much the interest rate on an ARM will change over time. A borrower should ask the lender how the index for any ARM being considered has changed in (MORE) recent years and where it is reported. (See also “margin.”)

The published cost of money that serves as the minimum basis for determining the interest rate for an adjustable rate mortgage. Among the commonly used indices are the Prime Rate (Prime), the London Interbank Offering Rate (LIBOR), the Cost of Funds (COF) and the 1 year Treasury Bill (1 year T). The particular index is generally, though not always, selected based on how often an interest rate is supposed to adjust. Loans which allow monthly interest rate adjustments commonly use the Prime Rate. Loans that adjust semi-annually may use LIBOR. The 1 year Treasury and the Cost of Funds are often used for loans which adjust on an annual basis. There are other Treasury instruments which are used for 3 and 5 year adjustment periods. The interest rate of the loan is determined by adding a margin to the index. The size of the margin is typically a function of the index used and the credit worthiness of the borrower. Typical margins on a Prime Rate based loan would be 0.0 to 5.0 so that if the Prime Rate were 8.25% and the margin were 2.0 (typical for an "average" borrower), the interest rate would be 10.25% (8.25 + 2.0).

Index Lease - The rental is tied to some commonly agreed to price index such as the Consumer Price Index or the Wholesale Price Index.

Inheritable - An interest in land which can be passed to a relative upon the death of the owner.

Initial Note Rate - With regard to an adjustable rate mortgage, the note rate upon origination. This rate may differ from the fully indexed note rate.

Ingress and egress - The right to go in and out over a piece of property but not the right to park on it. (See also “easement.”)

Injunction - (Cease and Desist) A writ or court order issued under the seal of a court restraining one or more parties from proceeding with an action The filing of a bankruptcy is accompanied by an automatic injunction (automatic stay) restraining the lender from pursuing collection actions against the bankrupt borrower. Can be used to stop foreclosure with legal grounds.

In Personam - (Lat. for ‘person.”) Against the person. Actions seeking judgment against the person as opposed to the property (In Rem).

In Rem - (Lat. for ‘thing.’) When a court exercises in rem jurisdiction, it exercises authority over a thing, rather than a person. A proceeding against the realty directly, as distinguished from a proceeding against a person (In Personam).

Insolvent - The financial condition where the sum of an entity’s debts is greater than all of that entity’s assets, at a fair valuation.

Inspection clause - A written stipulation in an offer to buy that makes the sales contract contingent upon the findings of a professional home inspector.

Installment - The regularly scheduled periodic payment on a debt, such as those paid to the lender or mortgagee.

Installment contract (also called land contract or contract for deed) - A real estate installment selling arrangement whereby the buyer may use and occupy land, but no deed is given by the seller until the sales price has been fully paid. Until all installments have been made and all other obligations under the contract fulfilled, the seller holds the deed. Although the buyer has equitable title in this type of arrangement, the payments are forfeited upon default.

Installment sale - A tax term used to describe a sale that is accomplished by use of a land contract.

Instrument - A legal document. Any legal document such as a deed, trust deed, reconveyance, etc. Also referred to as a document.

Insurance Binder - a document that states that insurance is temporarily in effect. Because the coverage will expire by a specified date, a permanent policy must be obtained before the expiration date.

Insurable Interest - An interest in property substantial enough to cause the owner of it an actual loss if it were damaged or destroyed. The beneficiary of any insurance policy, even a title insurance policy, must show an "insurable interest" in order to be covered by it.

Insurance premium - The monthly amount paid to the insurance company for the policy.

Insured Mortgage - a mortgage that is protected by the Federal Housing Administration (FHA) or by private mortgage insurance (PMI). If the borrower defaults on the loan, the insurer must pay the lender the lesser of the loss incurred or the insured amount.

Inter Pleader - A court filing (by a third party holding contested funds) that petitions the court to take custody of a sum of money and distribute it amongst the disputants as it sees fit - absolving the third party from any liability therefrom. If the proposed division of a trustee's sale overbid is disputed between junior equity holders the trustee would probably file a Bill of Inter pleader with a local court, forcing the claimants to submit to a binding judicial allocation.

Inter Vivos - during one's life.

Interest Accrual Rate - the percentage rate at which interest accrues on the mortgage. In most cases, it is also the rate used to calculate the monthly payments.

Interest-only loan (also called term loan, straight term loan, form of balloon loan or straight note) - A loan allowing the borrower to make periodic payments of interest only for the term of the loan, usually from one to five years. Interest charged on the real estate loan is simple interest. At the end of the term the borrower must pay the entire principal amount plus the interest due. The final payment is called a balloon payment.

Interest rate - The compensation paid to a lender for the privilege of using the lender’s money for a specified time.

Interest Rate Buy down Plan - a temporary buy down gives a borrower a reduced monthly payment during the first few years of a home loan and is typically paid for in an initial lump sum made by the seller, lender, or borrower. A permanent buy down is paid the same way but reduces the interest rate over the entire life of a home loan.

Interim financing - Short-term financing generally associated with construction loans. At the close of construction the borrower arranges for a permanent loan.

Interrogatory - A form of discovery where a written set of questions is given to a party to litigation or a witness, and requires a written response. The answers to the Interrogatory are usually given under oath and are considered testimony.

Intestate - The legal status of a person who dies without a will.

Investor - The holder of a note secured by a mortgage or deed of trust, or the permanent lender, for whom the mortgage banker services the loan. Any person, or institution, that invests in mortgages. For example, Freddie Mac and Fannie Mae.

Involuntary Lien - A lien imposed against property without consent of the owner, e.g., taxes, special assessments. A lien imposed upon property by the operation of law rather than at the will of the owner. Property taxes, federal income taxes, bonded assessments and abstracts of judgment are examples of involuntary liens.

Irreparable injury - Injury to person or the person’s property that cannot be reasonably recovered in monetary damages, and which therefore must be received in some other form, such as specific performance or an injunction.

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