Philippine Real Estate Glossary

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Call Option
A provision in the mortgage that gives the mortgagee the right to call the mortgage due and payable at the end of a specified period for whatever reason.

Cap
A provision of an adjustable-rate mortgage (ARM) that limits how much the interest rate or mortgage payments may increase or decrease. See lifetime payment cap, lifetime rate cap, periodic payment cap, and periodic rate cap.

Capacity
Lenders will want to know if you can repay the mortgage debt you incur -- this is known as your capacity. Lenders will base their evaluation on employment information, how long you've worked, and how much you are paid. Lenders will also review your expenses and any other debt obligations you have. This means they'll want to know how many dependents you have and whether you have other debts.

Capital
(1) Money used to create income, either as an investment in a business or an income property. (2) The money or property comprising the wealth owned or used by a person or business enterprise. (3) The accumulated wealth of a person or business. (4) The net worth of a business represented by the amount by which its assets exceed liabilities.

Capitalization
In appraising, determining value of a property by considering net income and percentage or reasonable return on the investment.

Capitalization Rate
A reasonable percentage rate or return based on net income. The capitalization rate is used to determine value.

Capital Expenditure
The cost of an improvement made to extend the useful life of a property or to add to its value.

Capital Improvement
Any structure or component erected as a permanent improvement to real property that adds to its value and useful life.

Capital Property
Refers to property exclusively owned by the husband.

Cash-out Refinance
A refinance transaction in which the amount of money received from the new loan exceeds the total of the money needed to repay the existing first mortgage, closing costs, points, and the amount required to satisfy any outstanding subordinate mortgage liens. In other words, a refinance transaction in which the borrower receives additional cash that can be used for any purpose.

Caveat Emptor
Means "let the buyer beware." The buyer must examine the goods or property and buy at his own risk.

CD-Indexed (Certificate of Deposit) ARMs
The Certificate of Deposit index represents the weekly average of secondary market interest rates on six-month negotiable CDs. The initial interest rate and payments adjust every six months after an initial six-month period. ARMs with this index typically come with a per-adjustment cap of 1 percent and a lifetime rate cap of 6 percent.

Certificate of Deposit
A document written by a bank or other financial institution that is evidence of a deposit, with the issuer's promise to return the deposit plus earnings at a specified interest rate within a specified time period.

Certificate of Deposit Index
An index that is used to determine interest rate changes for certain ARM plans. It represents the weekly average of secondary market interest rates on six-month negotiable certificates of deposit.

Certificate of Title
A statement provided by an abstract company, title company, or attorney stating that the title to real estate is legally held by the current owner.

Chain of Title
The history of all of the documents that transfer title to a parcel of real property, starting with the earliest existing document and ending with the most recent.

Change Frequency
The frequency (in months) of payment and/or interest rate changes in an adjustable-rate mortgage.

Change Orders
After construction begins, you may discover that you need to make unplanned and necessary changes to the work. The contingency reserve covers unforeseen repairs or deficiencies found during renovation. Unnecessary additions or changes are treated differently. These change orders are considered discretionary and must first be approved by your lender. You must deposit additional funds to pay for the work in the escrow account before work on the changes begins. These change orders -- as well as any that result from unforeseen repairs -- must be added as amendments to your construction contract.

Chattel
Another name for personal property.

Chattel Mortgage
A personal property mortgage.

Chattel Real
An estate related to real estate such as lease on real property.

Clear Title
A title that is free of liens or legal questions as to ownership of the property.

Closed Mortgage
A mortgage which cannot be paid off until its maturity unless the creditor consents to earlier payment.

Closing
A meeting at which a sale of a property is finalized by the buyer signing the mortgage documents and paying closing costs. Also called "settlement."

Closing Agent
As a potential home buyer, you will need a closing (or "settlement") agent to coordinate the various closing activities. These can include but are not limited to preparing and recording the closing documents and disbursing funds. The types of services provided by a closing agent depend on the person you hire, but typically the closing is conducted by title companies, escrow companies or attorneys. It is usually held at the lender's or real estate sales professional's office.

Closing Cost Item
A fee or amount that a home buyer must pay at closing for a single service, tax, or product. Closing costs are made up of individual closing cost items such as origination fees and attorney's fees. Many closing cost items are included as numbered items on the HUD-1 statement.

Closing Costs
Expenses (over and above the price of the property) incurred by buyers and sellers in transferring ownership of a property. Closing costs normally include an origination fee, an attorney's fee, taxes, an amount placed in escrow, and charges for obtaining title insurance and a survey. Closing costs percentage will vary according to the area of the country; lenders or realtors® often provide estimates of closing costs to prospective homebuyers.

Closing Date
After your lender has approved your mortgage and you accept the commitment letter, the next step is to set a closing date. Many times, your real estate sales professional coordinates the setting of this date with you, the seller, the closing agent, and your lender. You may be able to move up the time frame for your closing by working with a lender who uses Desktop Underwriter® -- our advanced automated underwriting system -- because it can cut the time it takes to process your mortgage. Remember, you need to ensure that the closing occurs before your lender's commitment letter -- and the rate lock-in, if there is one -- expire. You can now finalize your moving plans.

Cloud on Title
Any conditions revealed by a title search that adversely affect the title to real estate. Usually clouds on title cannot be removed except by a quitclaim deed, release, or court action.

Coinsurance
A sharing of insurance risk between the insurer and the insured. Coinsurance depends on the relationship between the amount of the policy and a specified percentage of the actual value of the property insured at the time of the loss.

Coinsurance Clause
A provision in a hazard insurance policy that states the amount of coverage that must be maintained -- as a percentage of the total value of the property -- for the insured to collect the full amount of a loss.

Color of Title
That which appears to be a good title but which is not a title in fact.

Collateral
An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.

Collateral Security
A separate obligation attached to a contract to guarantee its performance; the transfer of property or of other contracts or valuables to ensure the performance of a principal agreement.

Collection
The efforts used to bring a delinquent mortgage current and to file the necessary notices to proceed with foreclosure when necessary.

Collusion
An agreement between two or more persons to defraud another of his rights by the forms of law or to obtain an object forbidden by law.

Commercial Banks
Commercial banks, like thrifts, originate and service mortgage loans. In some cases, commercial banks may have mortgage banking subsidiaries that perform this function. Banks may choose to hold a loan in their own portfolio or sell the loan to an investor.

Commerical Paper
Bills of exchange used in commercial title.

Commission
An agent's compensation for performing the duties of his agency; is real estate practice, a percentage of the selling price of property, percentage of rentals, etc.

Commitment
A pledge or promise or firm agreement.

Commitment Letter
A formal offer by a lender stating the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment."

Commom Area Assessments
Levies against individual unit owners in a condominium or planned unit development (PUD) project for additional capital to defray homeowners' association costs and expenses and to repair, replace, maintain, improve, or operate the common areas of the project.

Commom Areas
Those portions of a building, land, and amenities owned (or managed) by a planned unit development (PUD) or condominium project's homeowners' association (or a cooperative project's cooperative corporation) that are used by all of the unit owners, who share in the common expenses of their operation and maintenance. Common areas include swimming pools, tennis courts, and other recreational facilities, as well as common corridors of buildings, parking areas, means of ingress and egress, etc.

Community or Conjugal Property
Property accumulated through the joint effort of a husband and wife living together.

Community Seconds
An alternative financing option for low- and moderate-income households under which an investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit organization. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate at all). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.

Community Seconds
An alternative financing option for low- and moderate-income households under which an investor purchases a first mortgage that has a subsidized second mortgage behind it. The second mortgage may be issued by a state, county, or local housing agency, foundation, or nonprofit organization. Payment on the second mortgage is often deferred and carries a very low interest rate (or no interest rate at all). Part of the debt may be forgiven incrementally for each year the buyer remains in the home.

Compaction
Whenever extra soil is added to a lot to fill in low places or raise the level of the lot the added soil is often too loose and soft to sustain the weight of the building. Therefore, it is necessary to compact the added soil so that it will carry the weight of the building without the danger of their titling, settling or cracking.

Comparables
An abbreviation for "comparable properties"; used for comparative purposes in the appraisal process. Comparables are properties like the property under consideration; they have reasonably the same size, location, and amenities and have recently been sold. Comparables help the appraiser determine the approximate fair market value of the subject property.

Compound Interest
Interest paid or original principal and also on accrued and unpaid interest which has accumulated.

Co-maker
A person who signs a promissory note along with the borrower. A co-maker's signature guarantees that the loan will be repaid, because the borrower and the co-maker are equally responsible for the repayment.

Condemnation
This is the act of taking private property for public use by a political subdivision; a declaration that a structure is unfit for use.

Condition of the Home
Potential homeowners should know of major problems in a home before they make an offer. As a potential buyer, you should carefully examine all elements of the home. Ask questions to the seller and the real estate sales professional about any concerns you may have. Both the seller and the real estate agent can be held liable if they do not disclose any defects they know about in the home.

Conditional Sales Contract
A contract for the sale of property stating that delivery is to be made to the buyer, but the title remains vested in the seller until the condition of the contract has been fulfilled.

Condominium
A real estate project in which each unit owner has title to a unit in a building, an undivided interest in the common areas of the project, and sometimes the exclusive use of certain limited common areas.

Condominium Conversion
Changing the ownership of an existing building (usually a rental project) to the condominium form of ownership.

Condominium Hotel
A condominium project that has rental or registration desks, short-term occupancy, food and telephone services, and daily cleaning services and that is operated as a commercial hotel even though the units are individually owned.

Conformity
An appraisal principle which holds that the value of a property tends to be enhanced when there is reasonable homegeneity in utilization.

Consideration
Anything of value given to induce entering into a contract, it may be money, personal service, or even love and affection.

Construction Contract
The terms and conditions of any major renovation job should be part of a formal, legally binding contract between you and your contractor -- this is called the construction contract. The lender you choose will likely want to review this contract before you sign it.

Construction Loan
A short-term, interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.

Constructive Notice
Notice given by the public records.

Contingencies for Repairs
In your purchase offer, you may consider stating that the seller must make sure the electrical systems, heating and cooling, plumbing, and mechanical systems are functioning properly at the closing. You may also state that your purchase is contingent upon the satisfactory completion of a professional home inspection, which will check these systems and other elements more completely. These are both ways to ensure that surprises don't arise when your moving day arrives. If you do not include this clause in your contract, you are essentially accepting the house "as is."

Contingency
A condition that must be met before a contract is legally binding. For example, home purchasers often include a contingency that specifies that the contract is not binding until the purchaser obtains a satisfactory home inspection report from a qualified home inspector.

Contingency for Clear Title
Your purchase contract should include a contingency that the purchase is subject to your receiving clear title to the property. This process includes a title search and title insurance.

Contingency for Financing
When you make a formal offer on a house, your contract should include a financing contingency. It specifies if you don't get the money you need to purchase the house at the terms you want, the offer is void and you will be refunded your deposit. Don't be surprised if the seller includes a clause in the contract that states you must make a "good-faith effort" to get the mortgage. This is the seller's way to ensure that you explore all options to get a mortgage loan.

Contingency for Personal Property
Your purchase contract should specify appliances, fixtures, and other personal property that must remain in the home. You can avoid any surprises by listing in your contract everything that is to be left behind when the seller moves out.

Contingency Reserve
Most mortgages for purchase-renovation require an additional 10 percent of the total cost of the project to be put aside into a reserve account. This contingency reserve is only used when unforeseen repairs or deficiencies are found during renovation.

Contract
An oral or written agreement to do or not to do a certain thing.

Contractor
A general contractor is a person who oversees a construction project and handles aspects such as scheduling workers and ordering supplies.

Contract Rent
The rent for the lease of property as stimulated by the lessor and the lessee.

Conventional Mortgage
A mortgage that is not insured or guaranteed by the federal government. Contrast with government mortgage.

Convertibility Clause
A provision in some adjustable-rate mortgages (ARMs) that allows the borrower to change the ARM to a fixed-rate mortgage at specified timeframes after loan origination.

Convertible ARM
An adjustable-rate mortgage (ARM) that can be converted to a fixed-rate mortgage under specified conditions.

Conversion
A change from one character or use to another.

Convertion
A change from one character or use to another.

Conveyance
The transfer of the title of land from one to another. It denotes an instrument which carries from one person to another an interest in land.

Cooperative (co-op)
A type of multiple ownership in which the residents of a multiunit housing complex own shares in the cooperative corporation that owns the property, giving each resident the right to occupy a specific apartment or unit.

Cooperative Corporation
A business trust entity that holds title to a cooperative project and grants occupancy rights to particular apartments or units to shareholders through proprietary leases or similar arrangements.

Cooperative Mortgages
Mortgages related to a cooperative project. This usually refers to the multifamily mortgage covering the entire project but occasionally describes the share loans on the individual units.

Cooperative Project
A residential or mixed-use building wherein a corporation or trust holds title to the property and sells shares of stock representing the value of a single apartment unit to individuals who, in turn, receive a proprietary lease as evidence of title.

Corner Influence
The added desirability of utility of a lot due to its frontage parallel and perpendicular streets.

Corporate Relocation
Arrangements under which an employer moves an employee to another area as part of the employer's normal course of business or under which it transfers a substantial part or all of its operations and employees to another area because it is relocating its headquarters or expanding its office capacity.

Corporation
A group of body of persons established and treated by laws as an individual or unit with rights and liabilities of both distinct and apart from those of the persons composing it. A corporation is a creature of law having certain powers and duties of a natural person . Being created by law, it may continue for an length of time the law prescribes.

Corporeal
Tangible properties, such as land, buildings, cars, tables, etc.

Cost Approach
A method of estimating the fair market value of an improvement by estimating present reproduction cost and deducting depreciation.

Costs for Settling Into Your Home
When figuring out how much home you can afford, you need to account for the costs associated with getting into your home. These can include the cost for repairs that need to be made before you can occupy your residence. There may also be the cost of purchasing appliances, such as a washer and dryer, refrigerator, or stove. The bottom line is you do not want to spend all your money on purchasing the home and not have any left to pay these types of costs.

Convenant
A clause in a mortgage that obligates or restricts the borrower and that, if violated, can result in foreclosure.

Credit
An agreement in which a borrower receives something of value in exchange for a promise to repay the lender at a later date.

Credit History
A record of an individual's open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.

Credit Life Insurance
A type of insurance often bought by mortgagors because it will pay off the mortgage debt if the mortgagor dies while the policy is in force.

Credit Profile
There are several ways to ensure you have a good credit report and credit score. One of the most effective is to manage your existing credit in a positive way. Ask your lender for suggestions about ways to control the amount of money you owe. Or, you can choose a credit counselor from the list provided on this site. Some lenders may view consumers as a greater risk if they have used most or all of their available credit. Consumers who are considered "overextended" may be viewed this way even if they have made all their debt payments on time. Missing a payment on a bill should be avoided, as should late payments on any of your credit obligations. Experiencing a mortgage foreclosure, filing for bankruptcy, or having your vehicle repossessed can also affect your credit score and credit report, limiting your ability to get new credit at a reasonable rate.

Credit Report
A report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness.

Credit Report Fee
The credit report fee covers the lender's cost for ordering your credit report from a credit bureau. This report will verify some of the information you provided on your loan application as well as additional information from the credit agency's files and from public records. When a credit report is received, your lender will check it against your application and look for any discrepancies. You may be asked to explain information in your credit report.

Credit Reporting Agency (or bureau)
An organization that prepares reports that are used by lenders to determine a potential borrower's credit history. The agency obtains data for these reports from a credit repository as well as from other sources.

Credit Repository
An organization that gathers, records, updates, and stores financial and public records information about the payment records of individuals who are being considered for credit.

Credit Scoring
Your credit score is based on all the information in your credit report. This information is converted into a number -- a credit score -- that the lender uses to determine whether you are likely to repay your loan in a timely manner. The scores used in mortgage lending are typically in the 300 to 900 range. A general guide is that the higher your score the better. But you should keep in mind that your credit score is just one of several factors that will be used to evaluate your mortgage loan application.

Credit Unions
A credit union is a financial institution that is owned and run by its members. It is a nonprofit, cooperative institution that offers members a place to save and borrow. A credit union often works by having its members pool their funds so additional loans can be made to other members.

Creditor
A person to whom money is owed.

Cul De Sac
A passageway with one outlet; a blind alley.

Curtail Schedule
A listing of the amounts by which the principal sum of an obligation is to be reduced by partial payments and of the dates when each payment will become payable.

Curtesy Rights
The rights the husband has in his wife's estate, provided a child was born to them alive.