CEBU REAL ESTATE TERMINOLOGIES: 

            ACCELERATION CLAUSE – A provision in a promissory note or financing instrument which renders the remaining principal balance of the loan immediately doe and payable upon default in any stipulated installment.

            AMORTIZATION – The periodic payment which includes principal and interest.

            AUTOMATIC REDEMPTION CLAUSE – A provision in a blanket mortgage (mortgage covering two or more properties) which releases a property from the mortgage upon payment of its lean value.

            BALOON PAYMENT – The final payment in an installment plan which is bigger than the previous installments and which liquidates the entire obligation.

            BREAK-EVEN POINT - The amount of rent or the occupancy level to pay operating expenses and debt service.

            BUYER’S EQUITY – The differences between contract price and loanable amount.

            BUYER’S FULL DOWN PAYMENT – is buyer’s equity plus the miscellaneous expenses such as title transfer, mortgage registration, fire insurance, mortgage redemption insurance, etc.

            COMMUNITY MORTGAGE PROGRAM – A financing scheme under the unified home lending program to enable residents in depressed areas to aquire their lot by organizing themselves into a cooperative

            DEFEASANCE CLAUSE – A provision in a mortgage contract which releases the property from encumbrance when the mortgaged obligation is fully paid.

            LOAN VALUE – The value of property which is a certain percentage of its market value which the bank is willing to lend with only property as security.

            OPEN-ED MORTGAGE – A type of mortgage loan which permits borrowing additional funds against the same collateral.

            THRUTH IN LENDING ACT – the law that requires lenders to report or disclose the cost of credit in terms of the annual percentage rate.

            ABSTRACT OF TITLE – A condensed history of the title consisting of the various links in the chain of titles, together with statements of all liens, encumbrances, or conditions affecting the title

            AIR RIGHT – Right of the landowner to use and control the air space over his land subject to the requirements of aerial navigation, law, or contract

            CAPITAL PROPERTY – Refers to property exclusively owned by the husband

            CLOUD ON TITLE – An outstanding claim which, if valid, will impair or adversely affect the owner’s title.

            DOMINANT ESTATE – Land which does not have access to a public road which is given a right of way through an adjoining land

            EMINENT DOMAIN – Right of the state or any of its instrumentalities to take private property for public use upon payment of just compensation.

            ESCHEAT – Reversion of private property to the state due to the intestate death of the owner who is not survived by any legal heir; or the confiscation of illegally acquired property.

            FEE SIMPLE – The bundle of rights which are inherent in ownership without any limitations or restrictions other than those provided by law, annotated on the title, or stipulated by contract. The bundle of rights includes the right to possess, to use, to dispose, to the fruits, and to recover.

            PARAPHERAL PROPERTY – Refers to property exclusively owned by the wife.

            RIPARIAN OWNER – An owner whose land abuts the bank of a river.

            STEWARDSHIP CONCEPT OF OWNERSHIP – A mandate to owners to use their property in a manner that will promote not only their interest but also the general welfare, and further decrees that when one’s utilization is not conducive to general welfare or the extent of his ownership exceeds the requirements of his necessities, then the state may exercise its power to regulate and control ownership.

            SERVIENT ESTATE – Land through which a tight of way is given in favor of another land.

            TENANT’S RIGHT OF FIRST REFUSAL – The priority of a lessee of land on which he has build his house to buy the land provided that 1.) he is a legitimate tenant for at least 10 years; 2.) the land is located in an urban land reform area; and 3.) the owner is selling the land.

            ACTUAL USE – The use to which the property is principally or predominantly

devoted.

            ASSESSMENT – The procurement or methodology for arriving at assessed value.

            ASSESSMENT LEVEL – A percentage of market value prescribed by law at which the assessed value is determined.

            ASSESSED VALUE – Value of real property for realty tax purpose which is arrived by multiplying market value by assessment level.

            CAPITAL ASSES – Property not constituting inventory for sale, or property not used in connection with trade, business, or source of income.

            CAPITAL GAINS TAX – Income tax payable to the Bureau of Internal Revenue for the sale, transfer, or other disposition of real estate classified as capital asset.

            ORDINARY ASSET – Property constituting inventory for sale, or property used in connection with trade, business, or source of income.

            TRANSFER TAX – A tax payable to the local government unit for the sale, transfer, or other disposition of real estate, whether capital or ordinary asset.

            WITHHOLDING TAX – A tax payable to the Bureau of Internal Revenue on the sale, Transfer or other disposition of real estate classified as ordinary asset.

            APPRAISAL – The process of estimating the value of real estate or any interest therein as of a given time and for a specified purpose.

            BUYER’S MARKET – A condition obtaining in an area at a certain time when there are many properties for sale while there are few buyers, in which case price tends to go down. Supply is more than demand.

            CONFORMITY, PRINCIPLE OF – An appraisal principle which holds that value of a property tends to be enhanced when there is reasonable homogeneity in utilization.

            CONTRACT RENT – The rental stipulated to be paid in a lease contract.

            COST APPROACH – A method of estimating the fair market value of an improvement by estimating present reproduction cost and deducting depreciation.

            DEPRECIATION – Loss in value to physical deterioration, functional obsolescence, or economic obsolescence.

            ECONOMIC RENT – The potential rental which a property can command, taking into consideration the rate of nearby or comparable properties.

            ENCROACHMENT – The displacement of an existing use by a non-confronting use, such as the introduction of a factory in a residential area.

            ECONOMIC LIFE – The period which a property can be profitably used, or the period during which a building is expected to generate more income than operating expenses.

            INCOME APPROACH – The process of estimating the fair market value of a commercial property by capitalizing its annual net income.

            INCREASING AND DIMINISHING RETURNS, PRINCIPLE OF – States that the application of more factors of production will tend to increase net income up to a certain point, beyond which the introduction of more factors