Legal Terms

HIGHEST AND BEST USE — An appraisal phrase meaning that use which at the time of an appraisal is most likely to produce the greatest net return to the land and/or buildings over a given period of time; that use which will produce the greatest amount of amenities or profit. This is the starting point for appraisal.

INCORPOREAL RIGHTS — Nonpossessory rights in real estate, a rising out of ownership, such as rents.

INJUNCTION — A writ or order issued under the seal of a court to restrain one or more parties to a suit or proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding.

INSTRUMENT — A written legal document; created to effect the rights of the parties, giving formal expression to a legal act or agreement for the purpose of creating, modifying or terminating a right. Real estate lenders’ basic instruments are — promissory notes, deeds of trust, mortgages, installment sales contracts, leases, assignments.

INTESTATE — A person who dies having made no will, or one which is defective in form, is said to have died intestate, in which case the estate descends to the heirs at law or next of kin.

JOINT TENANCY — Undivided ownership of a property interest by two or more persons each of whom has a right to an equal share in the interest and a right of survivorship, i.e., the right to share equally with other surviving joint tenants in the interest of a deceased joint tenant.

JOINT VENTURE — Two or more individuals or firms joining together on a single project as partners.

JUDGMENT — The final determination of a court of competent jurisdiction of a matter presented to it; money judgments provide for the payment of claims presented to the court, or are awarded as damages, etc.

LAND CONTRACT — A contract used in a sale of real property whereby the seller retains title to the property until all or a prescribed part of the purchase price has been paid. Also commonly called a conditional sales contract, installment sales contract or real property sales contract. (See REAL PROPERTY SALES CONTRACT for statutory definition.)

LEGAL DESCRIPTION — A land description recognized by law; a description by which property can be definitely located by reference to government surveys or approved recorded maps.

LESSEE — One who contracts to rent, occupy, and use property under a lease agreement; a tenant.

LESSOR — An owner who enters into a lease agreement with a tenant; a landlord.

LIEN — A form of encumbrance which usually makes specific property security for the payment of a debt or discharge of an obligation. Example — judgments, taxes, mortgages, deeds of trust, etc.

LIFE ESTATE — An estate or interest in real property, which is held for the duration of the life of some certain person. It may be limited by the life of the person holding it or by the life of some other person.

LIS PENDENS — A notice filed or recorded for the purpose of warning all persons that the title or right to the possession of certain real property is in litigation; literally “suit pending;” usually recorded so as to give constructive notice of pending litigation.

MARKETABLE TITLE — Title which a reasonable purchaser, informed as to the facts and their legal importance and acting with reasonable care, would be willing and ought to accept.

METES AND BOUNDS — A term used in describing the boundary lines of land, setting forth all the boundary lines together with their terminal points and angles. Metes (length or measurements) and Bounds (boundaries) description is often used when a great deal of accuracy is required.

MORTGAGE — An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; a procedure for foreclosure in event of default is established by statute.

MORTGAGEE — One to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; a lender or creditor. (See definition of secured party.)

MORTGAGOR — One who gives a mortgage on his or her property to secure a loan or assure performance of an obligation; a borrower.