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Capital Gain
Profit made by selling a real estate property that is subject to tax.
Capitol Improvement
A permanent structure erected to extend the useful life and value of a property. (The replacement of a roof would
be considered a capital improvement.)
Capitalization Rate (CAP)
Rate of return on an investment property on cash basis.
Cash Flow
Net disposable income from an investment property after deducting all fixed and operational expenses.
There is a negative cash flow if expenses exceed income.
Certificate of Sale
A document indicating that a property has been sold to a buyer at foreclosure, subject to a right of redemption for
a set period after the foreclosure sale. In an IRS, the redemption period is 180 days. The redemption period is
different in other types of foreclosure. Many foreclosures take place without any certificate sale. Instead, if the sale
is final, or near final, the buyer gets a deed rather than a certificate of sale.
Chain of Title
A history of the conveyances and encumbrances affecting a title from the time the original patent was granted, or
as far back as records are available.
Chapter 13
One of the bankruptcy chapters in the federal Bankruptcy Code. Under Chapter 13, a wage earner can reduce debt
payments through a bankruptcy court order according to the terms of a plan that will allow the debtor to pay much
or even all of the original amount.
Chapter 7
One of the chapters in the federal Bankruptcy Code. Chapter 7 is liquidation bankruptcy in which a debtor's
nonexempt assets are gathered together and given up or sold for the benefit of creditors in order of their priority.
Priority creditors get much of the cash, if any. Their debts are not discharged. Secured creditors receive continued
payments or the asset that served as collateral for the loan. Unsecured creditors are usually given little or nothing
in a Chapter 7 bankruptcy.
Chattel
Personal property, such as household goods or fixtures.
Chattel Mortgage
A mortgage on personal property.
Clear Title
Ownership rights to a piece of real estate that are not diminished by liens, leases or other types of encumbrances.
No other ownership claims exist.
Client
The one by whom a broker is employed (the principal) and by whom the broker will be compensated.
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Closing
Accounting of costs of buyer and seller in a real estate sale.
Closing Costs
All costs, excluding down payment incurred in buying a real estate property or obtaining a loan.
Closing Date
The date upon which the buyer takes over the property.
Cloud on the Title
An outstanding claim or encumbrance that, if valid, would affect or impair the owner's title.
Collateral
Additional security pledged for the payment of a debt.
Collections
An activity in which lenders or their agents employ various techniques to put pressure on borrowers to pay what
they owe.
Color of Title
An apparent, invalid, title.
Combination Loan
Conversion of a construction loan into a permanent loan.
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Commission
Fee paid to real estate agent/broker in selling and finding a property. Commissions are typically 6 percent of the property
value divided equally between listing and buyer’s agent.
Commitment Fee
A percentage of a new loan charged by the lender to make the funds available for a certain period.
Comparables
Properties in the same neighborhood that are equivalent or very similar to the property in question.
Compound Interest
Interest is calculated on the principal plus previously accrued interest.
Condemnation
The acquisition of private property for public use, with fair compensation to the owner.
Conditional Sales Contract
A contract for the sale of property stating that, although delivery is to be made to the buyer, the title is to remain
vested in the sell until the conditions of the contract have been fulfilled.
Condominium
A land ownership arrangement in which one owns an individual unit and a percentage of common acres.
Conforming Loans
Loans that meet FNMA standards.
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Conservatorship
A state of affairs in which a bank or savings and loan association has been taken over by the FDIC or RTC and is
being managed by these federal institutions, either directly or through hired managers. The institution will be
reserved in its existing form until it can be sold complete or broken down into its major components. The institution
is run on a caretaker basis until it can be sold.
Consideration
Something of value exchanged between the parties to a contract. It may consist of goods, services, or promises.
Constructive Notice
Information that a person is assumed, by law, to have simply because it could be ascertained by proper diligence
and inquiry, for example, information that is to be found in the public records.
Contingency Fee
An employment arrangement commonly used by attorneys in which the attorney is paid a percentage of whatever
money damages are awarded at the final judgment in a lawsuit.
Contract for Deed
A sales arrangement in which the seller holds title until the buyer finishes paying for the property. The terms of the
sale and the payments are set in a written contract signed by the buyer and the seller. At the end of the payment
period, the buyer gets title to the real estate by means of a deed.
Conventional Lender
A lender that makes conventional loans.
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Conventional Loan
A loan that is not insured or guaranteed by any agency of the federal government. It is a private loan.
Conversion
In terms of property, the exchange of personal real property of one character or use for another.
Conveyance
The process of transferring title or some interest in real estate to a new owner.
Correlation
The final state of the appraisal process in which the appraiser reviews the data and estimates the subject
property's value.
Covenants
Agreements written into deeds and other instruments promising performance or nonperformance of certain acts, or
stipulating certain uses or restrictions on the property.
Coverage
The amount of money an insurance company will pay in response to a claim.
Cram-down
A chapter 13 bankruptcy arrangement in which a plan to repay lenders and creditors, which was developed by the
debtor's attorney, is ordered into effect by the bankruptcy court. It is crammed down on the sometimes unwilling
creditors.
Credit
The willingness of a borrower to repay borrowed money. It is usually measured by a borrower's past record of
payments on loans and debts, which is kept in a credit report.
Cured Default
Correction of a borrower's failure to make payments or meet the terms of a loan to the lender's satisfaction.
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Current Value
The value at the time of an appraisal.
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