Real Estate Encyclopedia: Page 20
- The Real Estate Beginners Guide to Prepayment Penalty in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A prepayment penalty is a fee a lender charges when a borrower pays off a loan, in whole or large part, ahead of schedule.
- A hard prepayment penalty applies whether the borrower refinances or sells; a soft penalty applies only on refinancing.
- For a covered consumer mortgage, Regulation Z caps the penalty at 2% of the amount prepaid in the first two years and 1% in the third year, and bars it after three years.
- Investor and business-purpose loans are outside the consumer rules and can carry longer, larger penalties, so read the loan documents.
A prepayment penalty is a fee written into a loan agreement that applies when the borrower pays the loan off early.
- The Real Estate Beginners Guide to Predatory Lending in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- Predatory lending is the practice of imposing unfair, deceptive or abusive loan terms on borrowers.
- Common warning signs are very high interest rates, excessive or hidden fees, balloon payments, repeated refinancing (loan flipping) and misleading terms.
- Not every subprime loan is predatory, but subprime loans carry higher costs and risks.
- Borrowers who suspect predatory lending can contact a legal advisor or a consumer protection agency such as the CFPB.
Predatory lending is lending that uses unfair, deceptive or abusive terms or practices to take advantage of a borrower.
- The Real Estate Beginners Guide to Pre-Qualification Letter in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A pre-qualification letter is a lender's quick estimate of how much a buyer might borrow, based on self-reported income, debts and credit score.
- It is non-binding and does not guarantee a loan.
- Pre-qualification is less detailed than pre-approval, and it is usually weaker with sellers.
- Pre-qualification letters are generally valid for about 60 to 90 days, depending on the lender.
A pre-qualification letter is a lender's preliminary, non-binding estimate of the home loan amount a buyer could qualify for.
- The Real Estate Beginners Guide to Pre-Probate in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- Pre-probate is the period after a property owner dies and before a court opens probate and appoints an executor or administrator.
- During pre-probate, the family typically secures the property, locates the will and deeds, and inventories assets and debts.
- The federal estate tax basic exclusion amount is $15,000,000 for people dying in 2026, according to the IRS.
- Property that passes through probate generally cannot be sold by the estate until a court gives the personal representative authority.
Pre-probate is the stage between an owner's death and the opening of a formal probate case, when no one yet has court-appointed authority over the estate.
- The Real Estate Beginners Guide to Pre-Approval Letter in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A pre-approval letter is a lender's written estimate of how much a buyer can borrow, based on a review of the buyer's credit, income, debts and assets.
- Pre-approval letters are usually valid for 60 to 90 days and are conditional, not a loan commitment.
- Pre-approval involves a more thorough financial review than pre-qualification and typically a hard credit inquiry.
- A pre-approval letter strengthens an offer because it shows the seller the buyer is financially capable of closing.
A pre-approval letter is a document from a mortgage lender stating the loan amount the lender is preliminarily willing to extend to a buyer, subject to final verification.
- The Real Estate Beginners Guide to Power of Attorney in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A power of attorney (POA) is a legal document in which a principal authorizes an agent, also called an attorney-in-fact, to act on the principal's behalf.
- The four common types are general, special or limited, durable and springing; a durable POA stays in effect if the principal becomes incapacitated.
- A POA must be created while the principal is mentally competent, and the principal can revoke it in writing while still competent.
- A real estate POA lets an agent buy, sell or manage property for a principal who cannot attend, but the agent must act in the principal's best interest.
A power of attorney is a written legal authorization that lets one person act for another in specified legal, financial or real estate matters.
- The Real Estate Beginners Guide to Planned Unit Development (PUD) in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A Planned Unit Development (PUD) is a planned community, approved under flexible zoning, where an HOA typically owns and maintains the common areas.
- PUD homeowners usually own their individual lot and home, which is the main difference from a condominium, where owners hold their unit and share ownership of the building.
- Most PUDs have a homeowners' association (HOA), so buyers pay HOA fees and follow CC&Rs.
- PUDs need special zoning approvals, and some include commercial space while many are residential only.
A planned unit development (PUD) is a community designed as a whole, with flexible zoning, shared amenities and an HOA that manages the common areas.
- The Real Estate Beginners Guide to PITI Reserves in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- PITI reserves are liquid funds, measured in months of principal, interest, taxes and insurance, that a borrower must still hold after closing.
- Lenders typically require reserves equal to two to six months of PITI, depending on the borrower's profile and loan type.
- Reserves are separate from the down payment and closing costs, and the borrower must document them with statements such as bank statements.
- Investment properties and jumbo loans often carry higher reserve requirements than a primary-residence purchase.
PITI reserves are the savings a mortgage borrower must have left after closing to cover a set number of months of principal, interest, taxes and insurance payments.
- The Real Estate Beginners Guide to Pet Deposit in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A pet deposit is a one-time, typically refundable payment a tenant makes to a landlord to cover pet-related damage to a rental.
- The original guide puts a typical pet deposit at $200 to $500 per pet, but the amount depends on the property, the pet and local law.
- A pet deposit differs from pet rent (a monthly charge) and from a security deposit (which covers broader damage and unpaid rent).
- Landlords deduct only documented pet damage, not normal wear and tear, before returning the balance at lease end.
A pet deposit is a refundable sum a tenant pays a landlord at the start of a lease to cover damage caused by a pet.
- The Real Estate Beginners Guide to Personal Property in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- Personal property is movable property that is not permanently attached to real estate, such as furniture, vehicles and appliances.
- Real property is land and buildings; personal property can change hands without changing ownership of the real property.
- Real estate contracts should list the personal property included in a sale so there are no disputes.
- A fixture is an item that began as personal property but was attached to real property and is treated as part of it.
- Personal property needs separate insurance coverage, such as homeowner's or renter's insurance.
Personal property is movable property that is not permanently attached to land or buildings, such as furniture, vehicles and free-standing appliances, as opposed to real property.
- The Real Estate Beginners Guide to Periodic Tenancy in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A periodic tenancy is a rental that continues for successive periods, such as weekly, monthly or yearly, until the landlord or tenant gives notice to end it.
- Unlike a fixed-term lease, a periodic tenancy has no specified end date and renews automatically.
- The notice needed to end it typically matches the rental period, so a month-to-month tenancy usually requires about a month's notice.
- Rent changes are made at the end of a period and are subject to local laws.
- State and local law governs notice periods and other essential terms.
A periodic tenancy is a rental agreement that renews automatically for successive periods, such as month to month, until the landlord or the tenant gives proper notice to end it.
- The Real Estate Beginners Guide to Pending Property in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A pending property has an accepted offer, but the sale has not yet closed.
- Contingencies such as inspection, appraisal and financing approval may still be unresolved.
- The pending period typically lasts several weeks while contingencies are addressed.
- Some sellers accept back-up offers in case the primary deal falls through.
- Buyers who back out for reasons not covered by contingencies may forfeit their earnest money.
A pending property is a listing with an accepted offer that has not yet closed, meaning the seller and buyer are under contract but ownership has not transferred.
- The Real Estate Beginners Guide to Payment Change Date in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- The Payment Change Date is the date a new monthly payment amount takes effect on an adjustable-rate mortgage (ARM).
- Under federal Regulation Z, lenders must give notice of the first adjustment 210 to 240 days before the first adjusted payment is due, and notice of later adjustments 60 to 120 days before.
- The new rate is the index plus the margin, subject to any interest rate or payment caps.
- A 5/1 ARM has its first rate adjustment after a five-year fixed period, then adjusts every year.
- Fixed-rate mortgages have no Payment Change Date.
The Payment Change Date is the date on which a new monthly payment amount takes effect on an adjustable-rate mortgage after a rate adjustment.
- The Real Estate Beginners Guide to Payment Cap in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A payment cap limits how much the monthly payment on an adjustable-rate mortgage (ARM) can increase at each adjustment period.
- A payment cap limits the payment, not the interest rate, so it differs from an interest rate cap.
- If the capped payment is less than the interest due, the unpaid interest is added to the loan balance, which is called negative amortization.
- Not all ARMs have payment caps; it depends on the lender's loan terms.
- Lenders must clearly disclose payment caps in the mortgage agreement.
A payment cap is an adjustable-rate mortgage feature that limits how much the borrower's monthly payment can rise at each adjustment, usually as a percentage of the current payment.
- The Real Estate Beginners Guide to Patriot Act in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- The Patriot Act was signed into law on October 26, 2001, after the September 11, 2001 attacks.
- Its name stands for "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism."
- Its anti-money-laundering provisions expand the Bank Secrecy Act and focus on preventing money laundering and terrorist financing.
- The Financial Crimes Enforcement Network (FinCEN) is the agency that administers these rules.
- Which real estate participants have direct duties under the Act depends on their role, such as lender, title or settlement provider, or agent.
The Patriot Act is a U.S. law signed on October 26, 2001, whose anti-money-laundering provisions expand the Bank Secrecy Act and require covered financial institutions to verify customers and report suspicious activity.
- The Real Estate Beginners Guide to Partition in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- Partition is a legal process that divides property owned by two or more co-owners.
- There are two forms: partition in kind, which physically divides the property, and partition by sale, which sells it and splits the proceeds.
- A partition action starts when a co-owner files a lawsuit; a court decides whether to divide or sell.
- Co-owners can avoid partition through mutual agreement, a buyout or a private sale.
- Legal fees, appraisal costs, court fees and possible sales commissions reduce what each co-owner receives.
Partition is a legal process that ends co-ownership of property by dividing it physically among the owners or selling it and splitting the proceeds according to ownership shares.
- The Real Estate Beginners Guide to Participation Loan in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A participation loan is a single loan in which a lead lender sells interests, called participations, to one or more other lenders.
- The lead lender typically services the loan and deals with the borrower on behalf of the group.
- Risk and returns are shared in proportion to each lender's contribution.
- Participations are most common in large commercial real estate loans, where one lender would be overexposed alone.
- Each lender's rights and responsibilities are set out in a participation agreement.
A participation loan is one loan in which a lead lender sells ownership interests, called participations, to other lenders, who share the payments, risk and returns in proportion to their stake.
- The Real Estate Beginners Guide to Partial Payment in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A partial payment is a payment that is less than the full amount due on a mortgage or other loan.
- Not all lenders accept partial payments; some hold them in a suspense account until the full payment is received.
- Late fees can still apply if the full payment is not made by the due date, and interest continues to accrue on the unpaid balance.
- A partial payment is not a loan modification: it gives no lasting relief unless the lender agrees to an arrangement.
- Contacting the lender early is the most important step when a borrower can only pay part of a payment.
A partial payment is a payment smaller than the full scheduled amount due on a mortgage or other loan, and it does not by itself bring the loan current.
- The Real Estate Beginners Guide to Parcel in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A parcel is a defined plot of land with specific boundaries.
- Parcel boundaries are established through surveys and recorded in public land records.
- Zoning laws, easements and liens attached to a parcel determine what an owner can do with it and what a buyer inherits.
- Property taxes are based on the assessed value of the parcel, and a parcel can be subdivided into smaller plots through a local approval process.
A parcel is a single piece of land with legally defined boundaries, recorded in public records and usually identified by a parcel number (APN) that the county assessor assigns.
- The Real Estate Beginners Guide to Package Mortgage in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A package mortgage is secured by both real estate and personal property, such as appliances and furniture.
- One loan finances the home and its contents, so the borrower makes a single payment.
- Both the real estate and the personal property must be appraised to set the total loan amount.
- Because personal property is collateral, a default puts both the home and the included items at risk.
- Package mortgages are most common for furnished homes in resort areas, luxury markets, model homes and furnished rentals.
A package mortgage is a mortgage secured by real estate plus personal property, such as appliances and furniture, so a single loan finances both the home and its contents.
- The Real Estate Beginners Guide to PACE Loan in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A PACE (Property Assessed Clean Energy) loan funds energy-efficient or renewable-energy upgrades and is repaid through an assessment added to the property tax bill.
- PACE repayment terms can span 10 to 20 years, aligned with the useful life of the improvements.
- The obligation is often tied to the property rather than the borrower, so it can transfer to the next owner on a sale.
- PACE assessments are typically given the same priority as property taxes, which can affect mortgage lenders.
- Availability and terms vary by state and municipality, so not every property can use PACE.
A PACE loan is financing for energy-efficiency, renewable-energy or similar upgrades that is repaid as a special assessment on the property tax bill, often over 10 to 20 years.
- The Real Estate Beginners Guide to Ownership In Severalty in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- Ownership in severalty is ownership of property by a single person or entity, with no co-owners.
- The sole owner can sell, mortgage or lease the property without a co-owner's consent, subject to any spousal rights in the state.
- The owner bears all of the responsibility for taxes, debts and upkeep.
- Severalty differs from tenancy in common and joint tenancy, in which two or more owners share title.
Ownership in severalty is sole ownership of real estate by one individual or one legal entity, such as a corporation or LLC.
- The Real Estate Beginners Guide to Owner-Occupied Property in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- An owner-occupied property is a home the owner lives in as a primary residence, including a duplex or house where the owner rents out other units.
- Lenders often offer lower rates and smaller down payments on owner-occupied loans than on investment-property loans.
- Many conventional loans ask borrowers to move in within about 60 days of closing and stay at least a year; confirm the terms in your own loan documents.
- House hacking, living in one unit and renting the others, is a common way investors use owner-occupied financing.
An owner-occupied property is real estate that the owner uses as their primary residence, whether a single-family home, condo or one unit of a multi-unit building.
- The Beginners Guide to Americans with Disabilities Act (ADA) Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- The Americans with Disabilities Act (ADA) is a federal civil rights law signed on July 26, 1990, that prohibits discrimination based on disability.
- The ADA has five titles: Title I covers employment, Title II state and local government services, Title III businesses and nonprofits open to the public, Title IV telecommunications, and Title V other provisions (ADA.gov).
- Title III also covers commercial facilities, such as office buildings and warehouses, which must follow the ADA Standards for Accessible Design (ADA.gov).
- The ADA applies to certain housing, such as university housing and public housing programs, but the Fair Housing Act covers many more types of housing, public and private (ADA.gov).
- Landlords of private rental housing should look to the Fair Housing Act for rules on reasonable accommodations and modifications, and to the ADA for areas open to the public, such as a rental office.
ADA definition: the Americans with Disabilities Act is a federal law that bars discrimination against people with disabilities in employment, public services, businesses open to the public and telecommunications, and requires accessibility and reasonable accommodations.
- The Real Estate Beginners Guide to Joint Venture in 2026 Nov 6, 2026 Austin Beveridge Read article →
Key Takeaways
- A joint venture (JV) in real estate is an arrangement in which two or more parties pool capital, expertise or assets to complete a specific project.
- JVs are commonly structured as a partnership or a limited liability company (LLC) with defined roles, contributions and profit-sharing terms.
- A JV agreement should set capital contributions, profit and loss sharing, management structure, and duration and exit terms.
- JVs share both risk and reward, so they can make large or complex projects more viable, but they can also bring management conflicts.
- Due diligence on the partner and the project comes before signing the JV agreement.
A real estate joint venture is a legal agreement between two or more parties to combine money, skills or property for one defined project and share its profits and losses.