F | RISMedia

Facade – The real front or face of a building but often also used to refer to a false front.

Facade easement – An historic preservation area arrangement whereby an owner agrees to retain the original facade or face of a building in exchange for the right to alter the interior and other exterior walls.

Face value – The dollar amount shown on a document by words or numbers.

Facilatator – A licensee who acts as an intermediary between a buyer and seller, or landlord and tenant, who assists both parties in the transaction with the paperwork and formalities involved in transferring real property ownership but who is not an agent of either party. Also known as a Transaction broker, Transactional broker, Nonagent and Contract broker.

Factory-built home – See Manufactured homes. Contrast with Site-built homes.

Fair Credit Reporting Act – A federal law that allows individuals to examine and correct credit information about them that is used by credit reporting services.

Fair Housing Act – A federal law that prohibits discrimination in housing based on a person’s race, color, religion, sex, handicap, familial status or national origin.

Fair market rent – The amount that a property would command if it were currently available for lease. Contrast with Contract rent. See Economic rent, Rent control, Section 8 housing.

Fair market value – The amount of money that would be paid for a property offered on the open market for a reasonable period of time with both buyer and seller knowing all the uses to which the property could be put and with neither party being under any pressure to buy or sell.

False advertising – A misleading description of property. See Puffing.

Family – A group of people living as one household as an organized unit of society.

Fannie Mae – A quasi-governmental agency established to purchase from the primary lenders any kind of mortgage loans in the secondary mortgage market.

Farm and Land Institute – An association that brings together specialists in the sale, development, planning management and syndication of land to establish professional standards through educational programs for members and confers the AFLM, Accredited Farm and Land Member designation.

Farm Credit System – A agency of the federal Department of Agricultural that offers programs to help families purchase or operate family farms.

Farmer Mac – An agency that operates for agricultural loans like Fannie Mae and Freddie Mac does for residential loans.

Farmers Home Administration, FmHA – An agency of the federal Department of Agriculture whose primary responsibility is to provide financial assistance on reasonable terms from private sources to farmers and others living in rural areas where financing is not available.

Feasibility study – An analysis of the cost-to-benefit ratio of an economic endeavor done prior to purchase and its undertaking.

Fed – An abbreviation for the Federal Reserve Board and often referred to as The Fed.

Federal Deposit Insurance Corporation, FDIC – An agency of the federal government that insures deposits at commercial banks, savings banks and savings and loans.

Federal Emergency Management Agency, FEMA – A former independent agency that had its beginnings from the Congressional Act of 1803 and that became part of the new Department of Homeland Security in March 2003 and which is charged with planning for, mitigating against, responding to, and recovering from disasters such as hurricanes, earthquakes, floods and other natural disasters.

Federal Fair Housing Act of 1968 – A federal law that prohibits discrimination against any person due to race, color, religion, sex, handicap, familial status, or national origin in the sale, rental, leasing, financing and advertising of housing or in the prevention of real estate brokerage services.

Federal Home Loan Bank – A district bank of the Federal Home Loan Bank System that lends only to member financial institutions such as savings and loan associations.

Federal Home Loan Bank Board – The administrative agency that charters federal savings and loan associations and exercises regulatory authority over members of the Federal Home Loan Bank System.

Federal Home Loan Bank System – The network of Federal Home Loan Banks and member financial institutions.

Federal Home Loan Mortgage Corporation, Freddie Mac – An independent stock company that creates a secondary market by purchasing conventional and also FHA and VA residential loans.

Federal Housing Administration, FHA – An agency of the federal government that insures private first mortgage loans for the financing of new and existing homes and home repairs and does not permit second mortgages on insured mortgage loans.

Federal Land Bank, FLB – An agency of the federal government agency that makes long term loans to farmers.

Federal National Mortgage Association, FNMA – A quasi-public agency popularly known as Fannie Mae which was converted into a private corporation and whose primary function is to buy and sell FHA and VA mortgages in the secondary mortgage market.

Federal Reserve System – Also known as the Fed. or The Fed. The federal banking system of the U.S. under the control of central twelve-member board of governors known as the Federal Reserve Board that involves a central bank in each of twelve geographical districts with broad powers in controlling credit and the amount of money in circulation.

Federal Savings and Loan Association – A federally-chartered savings and loan association in contrast to a state-chartered savings and loan association whose charter was issued by the Federal Home Loan Bank Board.

Federal Savings and Loan Insurance Corporation, FSLIC – A federal agency that use to insure the accounts of savings and loan association savers which is now done by the FDIC.

Federal Trade Commission, FTC – An agency of the federal government created by an Act signed into law on September 26, 1914 by President Woodrow Wilson.

Fee – 1. The term fee is of Old English derivation and means an estate of inheritance in real property. See Fee simple and Fee simple estate. 2. A compensation for a particular act.

Fee simple – 1. An estate under which the owner has unrestricted powers to dispose of the property including by gift, will, etc. 2. Today, the terms “fee” and “fee simple” mean substantially the same thing – ownership.

Fee simple absolute – A title that is absolute and unqualified and is the best one can have giving complete ownership and control of real property without any conditions or limitations.

Fee simple defeasible – An estate in fee subject to the occurrence of a condition happening subsequently or afterwards, upon which the estate may be terminated. See Fee simple determinable.

Fee simple determinable – A fee that may terminate upon the occurrence of a specific event that may or may not ever occur or the time of which is uncertain.

Fee simple estate – The greatest interest that one can have in real property which is unqualified, of indefinite duration, freely transferable and inheritable.

Fee simple limited – See Fee simple determinable.

Fee simple qualified – An estate in which the holder has a fee simple title but is subject to be returned to the grantor if a specified condition occurs. See Fee simple determinable.

Fee tail – A freehold estate of inheritance limited so as to descend to a particular class of heirs of the person to whom it is granted.

Fee tail estate – A limited freehold estate which was originally used to insure the restricted passing of land in a direct ancestral line and the property had to pass to the descendants of the owner.

Fee-for-service – An arrangement where a consumer asks a licensee to perform specific real estate services for a set, established, or predetermined fee.

Felony – A crime more serious than one termed a misdemeanor and which is defined by several of the U.S. statutes and codes and includes crimes punishable by imprisonment and or death in a state prison or penitentiary.

Feudal system – A political and social system which prevailed throughout precolonial Europe from the 11^th through the 13^th centuries under which ownership of land was by the king or other sovereign who held all rights and whose subjects had only the privilege of the use of land where upon death, title passed back to the sovereign and not to the decedent’s heirs and is opposed to allodial or private ownership in the land which gives the owner the full bundle of rights.

Feudal tenure – A real property ownership system in which ownership rests with a sovereign who may grant lesser interests in return for service or loyalty. See contrasted allodial tenure.

Feuds – A grant of land under the feudal system. See Feudal system.

FHA – See Federal Housing Administration.

FHA loan – A loan made by an approved lender in accordance with the Federal Housing Administration’s regulations and insured by the FHA.

FHLMC – See Federal Home Loan Mortgage Corporation.

Fictitious mortgage or trust deed – A recorded generic mortgage or trust deed that is not related to one specific transaction but is used as a reference mortgage or trust deed in order to avoid recording a lengthy mortgage or trust deed for each title transfer.

Fictitious name – A name used for business purposes that is not the true name of the business owner. Also referred to as Doing Business As or a DBA.

Fidelity bond – A bond posted as security for discharging a personal services obligation.

Fiduciary – A party who is an agent in a position of trust and confidence and as a result owes fiduciary duties to a principal or a client which cannot be breached under the rules of agency. See Fiduciary duties.

Fiduciary duties – The duties or responsibilities that an agent owes to his or her principal or client of loyalty, obedience, disclosure of material facts, accountability for funds, confidentiality and to exercise the highest skill level to the principal and not to gain any personal advantage over the principal by even the slightest misrepresentation, concealment, duress or pressure.

Fiduciary relationship – A relationship involving trust and confidence and fiduciary duties like between an attorney and a client an agent and a principal or client or a trustee and a beneficiary.

Fiduciary responsibilities – See Fiduciary duties.

File and Use – In most states, title insurers file mandatory rate schedules, title insurance policies and endorsement forms with the State Insurance Department or other state regulatory agency and may use such items or rates only within a specified period of time after filing.

Filtering – The upward mobility of people of one income group into homes that have recently dropped in price and that were previously occupied by persons in the next higher income group.

Filtering down process – The process of passing the use of real estate housing to successively lower-income groups as the real estate produces less income or has a lower value.

Financial feasibility – 1. The ability of a proposed land use or change of land use to justify itself from an economic point of view. 2. One of but not the only test of the highest and best use of land because it does not necessarily make it the best use of the land.

Financial institutions – The organizations like commercial banks, savings and loan associations, credit unions, savings banks and insurance companies that deal in money or claims to money and serve the function of channeling money from those who wish to lend to those who wish to borrow.

Financial Institutions Reform, Recovery, and Enforcement Act, FIRREA – A federal law passed in 1989, that is often referred to as the S&L bailout, and was in response to the savings and loan crisis of the 1980s and which changed the rules under which federally-regulated S&Ls operated and restructured the S&Ls’ regulatory and deposit insurance program. See Office of Thrift Supervision and Resolution Trust Corporation.

Financial intermediary – The financial institutions like commercial banks, mutual savings banks and life insurance companies that act as an intermediary or go-between for savers and borrowers by selling its own obligations for money and, in turn, lending the accumulated funds to borrowers as real estate loans.

Financial risk – The possibility of losses based on the amount invested and legal provisions concerning borrowed funds.

Financial statement – A presentation as of a specific date that shows a balance sheet with assets, liabilities, and equity as well as a profit and loss statement with income and expenses.

Financing – The use of another party’s money which is typically that of a lending instution to buy something which in real estate is real property. See Creative financing.

Financing expenses – The amounts used to pay the costs of acquiring real estate such as the interest on all loans or the ground rent for leased land and because loan principal payments reduce the debt, they are not technically expenses. Contrast Operating expenses.

Financing process – The systematic five-step procedure followed by major institutional lenders when analyzing a proposed loan: 1. Application filed by a borrower; 2. Analysis of borrower and property by lender; 3. Processing of loan documentation; 4. Closing, funding, the loan; and 5. Servicing through collection and recordkeeping.

Financing statement – An instrument filed in a government office in order to protects the interest of any secured parties in the collateral and to give public notice of a security interest. See Security interest and Secured party.

Finder’s fee – A monetary payment which is prohibited or limited in most states to a party who is other than a licensed broker and who locates an owner of suitable property interested in selling or a purchaser interested in buying.

Finished floor – The final covering such as wood, tile or carpet applied over the wood joists and subflooring.

Fire stop – A solid, tight closure of a concealed space built to prevent the spread of fire and smoke through such a tight space.

Firm commitment – 1. An unqualified written promise as to under what specified terms and conditions a lender will lend money. 2. An FHA commitment to insure a mortgage for a specified mortgagor.

FIRREA – See Financial Institutions Reform, Recovery, and Enforcement Act.

First mortgage – A legal document that is pledged as collateral for a loan that was recored before any others giving it first priority and which will be superior to all other liens or claims against the property except for taxes and bonded indebtedness. See Mortgage.

First trust deed – See First mortgage.

Fiscal controls – The federal tax revenue and expenditure policies used to control the level of economic activity by manipulation of the amount of federal taxation and spending programs and the amount of surplus or deficit.

Fiscal policy – The policy of the federal government regarding taxation and spending programs the balance of which determines the amount of money the government will withdraw from or place into the economy in order to counter any economic peaks or slumps.

Fiscal year – A business or accounting year that is different than a calendar year.

Fixed assets – The tangible property such as buildings, furniture and fixtures and equipment that are used in a business operation that are not for sale and are shown on the financial statement of the company.

Fixed expenses – The regular recurring costs required in owning a property or business such as taxes and fire insurance and are necessary even if the building is unoccupied.

Fixed payment loan – A mortgage secured by real property having the periodic principal and interest payments remain the same over the life of the loan unless the rate changes as in a graduated payment loan.

Fixed rate loan – A mortgage secured by real property having the interest rate remain the same for the life of the loan.

Fixed-rate loan – A mortgage secured by real property featuring a constant interest rate and loan payment over the term of the loan. See Adjustable Rate Mortgage.

Fixity of location – The physical characteristic of real estate that subjects it to the influence of its surroundings.

Fixture – A movable item such as hot water heater and built in store showcases that are attached to land or its improvements which become appurtenances and which under normal circumstances cannot be removed without a prior agreement because the affixing converted them to real property.

Flag lot – A parcel of land which is typically located behind another lot facing a main street that is in the shape of a flag on a pole which provides access to the site.

Flashing – The sheet metal or other material used to protect a building from water leaks.

Flat – 1. A one-level apartment. 2. A level (flat) payment mortgage. See Flat lease.

Flat fee broker – A real estate broker who charges a fixed or flat fee for brokerage services instead of a commission based on a percentage of the sales price of the property. See Discount broker.

Flat lease – A lease in which the rent is a fixed (flat) sum paid periodically throughout the entire lease term.

Flexible payment mortgage – A loan in which the repayment schedule is based on the borrower’s financial position to pay so that payments are usually lower in the earlier years and increase as the borrower’s ability to repay increases.

FLI – See Farm and Land Institute.

Flip – The purchase and immediate resale of property often within hours or days for a quick profit which often carries a negative connotation of people who profit illegally or at the expense of an innocent party and helped give rise to FIRREA.

Float – 1. The interval of time after a deposit or withdrawal is made and before the transaction is credited or deducted. 2. The difference between a variable interest rate and the index to which it is pegged.

Float a loan – The borrorwing of money to fund a project. Also Float a bond issue.

Floating rate – An interest rate that is not fixed over the term of a loan, bond, or other fixed-income security but is allowed to vary according to the change in a specified index.

Flood Certification – An independent agency report required by the lender to determine whether a property is located in a flood hazard zone which would then require a federally mandated flood insurance policy.

Flood insurance – An insurance policy that covers damage to property due to natural flooding which is offered by private insurers but is subsidized by the federal government.

Flood water – The water overflowing a regularly defined channel.

Floodplain – A level land area subject to periodic flooding from a contiguous body of water which is identified as to the anticipated frequency of flooding such as an area designated as an annual floodplain would be expected to flood once annually.

Floor loads – The capabilitiy of weight stated in pounds per square foot that a floor of a building can safely support if uniformly distributed.

Floor plan – A plan drawn to scale indicating wall-to-wall dimensions, room sizes and exposures and the placements of windows, doors, partitions, etc.

Flow of funds – An accounting method used primarily by the Federal Reserve to describe the sources and uses of the nation’s funds as of a given period of time.

FNMA – See Federal National Mortgage Association.

Footing – The base of a building where a foundation wall or column is placed.

For Sale By Owner, FSBO – A term referring to properties on the market that are not listed with a real estate broker because the owner desires to sell the property his or her self without paying a commission.

Forbearance – A tolerant action by a creditor against a borrower who has not received payment once the debt has become due.

Force majeure – A contract clause inserted to protect a party from unavoidable delays or of failure to perform the contractual obligations in a timely manner due to a major force(s) beyond control such as weather, labor disputes or strikes or other unavoidable events.

Forced sale – The act of selling property under a compulsion as to time and often the result of legal proceedings ordering the sale.

Forced sale value – The price realized at the forced sale.

Forecasting – The projection of the future by taking the past and present into consideration and tempering it with the appraiser’s judgment.

Foreclosure – A legal process whereby in the event of a default in loan payments or terms, property pledged as security for a debt is sold to satisfy the debt.

Forfeiture – The loss of money or something of value resulting from the failure to perform.

Forfeiture of title – A common penalty for the violation of conditions or restrictions imposed by the grantor upon the grantee in a deed or other proper document whereby title to the land is forfeited meaning lost by the grantee or a subsequent owner which causes title to revert back to the party that imposed the condition.

Forgery – The legal offense of imitating or counterfeiting documents or signatures in an effort to deceive.

Form appraisal – See Uniform Residential Appraisal Report, URAR.

Forthwith – A performance done at once or promptly.

Foundation – The supporting portion of a structure including the footings that are below the first floor construction.

Foundation Plan – A scale drawing showing the size of footings, size and dimensions of piers and the construction measurements and details of the sub-floor area.

Foundation wall – A wall below or partly below ground which provided support for the exterior or other structural parts of the building.

Four agents in the production of income – The four components of land, capital, management or labor are what produces income.

Four-plex – A building containing four dwelling units in comparison to a duplex which only has two.

Four-three-two-one rule – An appraisal rule for computing value based on the depth factors of lots which is used primarily in retail environments.

Fractional interest – An ownership interest of some but not all real property rights such as leasehold, easement and hunting rights.

Fractional section – A parcel of land less than 160 acres which is usually found at the edge of a rectangular survey.

Frame house – A house constructed with a wooden frame on which some form of siding or veneer is placed.

Franchise – A specific privilege awarded by a government or a business firm which awards exclusive dealerships.

Fraud – The intentional and successful employment of any cunning, deception, collusion or trickery used to cheat, deceive, circumvent or gain an unfair advantage over another person when that party acts upon it to their legal injury or the loss of property.

Freddie Mac – See Federal Home Loan Mortgage Corporation.

Free and clear sale – A fee simple sale of real estate that is unclouded by any encumbrances such as liens, mortgages, etc.

Freehold estate – An fee simple or a life estate that runs forever and whose end cannot be exactly determined.

French architecture – Any one of several very common housing styles originating in France of smaller, rectangular, formal perfectly balanced houses having a steep roof, hipped at the ends, with plaster walls one story high, with dormer windows provided for second-floor rooms.

French farmhouse – A housing style of informal stone, painted brick or plaster which sometimes use half-timbering as an accent.

French Normandy – A housing architecture style that is large in scale and usually can be distinguished by a round tower.

Friable – A crumbly, brittle or dusty substance such as asbestos which can release hazardous fibers or particles that can become airborne and can enter the lungs and cause ill health.

Front feet or foot – The measurement of a parcel of land according to the number of feet facing a street or road abutting the property.

Front money – The minimum amount of money needed to get a real estate venture transaction started.

Frontage – An important property valuation concept used mainly in retail or commercial situations based on the belief that the more frontage certain businesses have is advantageous and where property is identified by its number of linear front feet facing the most important street or road surrounding the property and with imaginary parallel lines one foot apart extending the full depth of the lot.

Frost line – The depth to which frost can penetrate the soil which varies in different parts of the country depending on the winters therefore requiring that footings must be placed below this mark to prevent movement.

FSBO – Pronounced fizzbo. See For Sale By Owner.

FTC – See Federal Trade Commission.

Full disclosure – A requirement in real estate for an owner and the licensee to reveal to the prospective buyer or tenant all material facts about the physical, financial, and economic condition of the subject property that are pertinent to a transaction.

Full face rate of interest – The rate of interest stated in the debt. See Nominal interest rate.

Fully amortized note – A note that is fully repaid at maturity by periodic reductions of the principal amount.

Fully indexed note rate – The rate in adjustable rate mortgages which named indexed is agreed upon at the time of the loan application and to which the gross margin stated in the note will be added.

Functional obsolescence – A loss of value due to adverse factors arising from inside the property lines such as a defect in the layout or design which affects how well the property can be used, function or perform which affects its value and marketability.

Functional plan – An appropriate arrangement of real estate improvements so it relates well to the useability of the property.

Functional utility –A property having attractiveness and usefulness.

Funding – A loan concept whereby the lender provides the cash to pay the seller.

Funds – The cash or other resources having value which maybe sold in order to buy another asset.

Furniture, Fixtures and Equipment, FF&E – A concept frequently used in hotel or motel ownership indicating that which wears out much more rapidly than other the building components causing an owner or prospective buyer to establish a fund for the cost and frequency of replacement.

Furring – The strips of wood or metal applied behind a wall or other surface to make it even, to form an air space or to give the wall an appearance of greater thickness.

Future benefits – The anticipated benefits that the present owner can expect to receive from the property in the future.

Future interest – A party’s present right to an interest in real property such as of reversion or reentry that will not result in possession or enjoyment until some time in the future.