I | RISMedia

Identity of interest – The system whereby the builder and sponsor of a housing project subsidized by the government have ownership interests in each other.

Illegal – An act contrary to and in violation of the law.

Illegality of purpose – The actual purpose of the contract is illegal and this is a reason for having a contract be declared void.

Illusory – A thing that is deceptive; deceiving by an illusion or false appearances and not real.

Imperative necessity – The circumstances under which an agent has expanded authority in an emergency, including the power to disobey instructions where it is clearly in the interests of the principal and where there is no time to obtain instructions from the principal.

Implied – A conclusion that is not actually expressed in words but is suggested, presumed, assumed or deductible by fair inference or implication and is contained in its substance or essence.

Implied agency – An agency relationship that is concluded from the actions of the parties by which a third party might reasonably conclude that an agency relationship has been formed.

Implied contract – A contract that one would conclude exists as a result of the acts and/or conduct of the parties involved.

Implied knowledge – A legal concept that holds as a common understanding that a material fact or information known by a principal has been passed on to and therefore known by the agent.

Implied warranty of habitability – A theory in landlord and tenant law that when a landlord offers residential property for rent that he or she is giving the assurance that the property is actually habitable and fit for its intended use.

Impound account – A trust type account established by lenders for the accumulation of borrowers funds that are usually collected with the note payment to be used for the periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums, which are required to protect the lenders security. See PITI.

Impounds – A trust type of account established by lenders to protect their security and used to accumulate a borrower’s funds to be able to pay their periodic tax, mortgage insurance premium, and hazard insurance policy premium payments.

Improper improvement – An out-of-place building which does not conform to the highest and best use of the site.

Improved land – The land that has had some improvements made in order to be able to serve a useful purpose and and which has been partially or completely developed.

Improved value – The difference between the income-producing ability of a property and the amount required to pay a return on the investment in the property.

Improvement – A building or appurtenance that is erected or constructed upon the land to release its income-earning potential such as a building, garage or wall.

Improvements to land – The publicly owned additions such as curbs, sidewalks, street lighting system and sewers, constructed so as to permit the development of privately owned land for utilization as opposed to improvements on land which are usually privately owned.

Imputed interest – In a loan that shows a nominal or named interest rate that is insufficient, the law will require that the rate be viewed as higher and the principal be viewed as lower and the IRS will consider a portion of the principal paid on the note as imputed interest and tax that portion as ordinary income.

Imputed notice – A legal concept that holds that information communicated to an agent is communicated to the principal because in the client agent relationship and that nothing is held back because it was the duty of the agent to report the information to the principal.

In personam – A court action which imposes upon the defendant a personal obligation, literally against the person, to obey the order, judgment or decree.

In rem – A proceeding against the property which is taken directly from the Latin term meaning against the thing and which is used in taking land for nonpayment of taxes, etc. and is distinguished from a proceeding against a person.

In the business – A term used in connection with transactions in notes and sales contracts where a party acquires for resale to the public and not as an investment eight or more trust deeds or land contracts during one calendar year is considered to be in the business and is required to have a real estate broker’s license.

Incentive – The payment or reward for taking a certain action that is usually in excess of a fixed compensation and based upon better performance than required by the agreement.

Inchoate dower – A wife’s interest in her husband’s real estate during his life which may become a right of dower upon his death.

Including interest – A loan payment term that includes both principal and interest in an amortized loan or a level-payment plan.

Inclusionary zoning – An ordinance that requires a builder of new housing to set aside a designated number of units for low and moderate income people.

Income – A stream of financial benefits generally measured in terms of money as of a certain time or a flow of service which is the origin of value.

Income approach – One of the three appraisal methods that can be used with income producing property that involves a three-step process of finding the annual net income, determining the appropriate capitalization rate and then dividing the net income by the capitalization rate to determine value. See Sales comparison approach and Cost approach.

Income property – A property in which the sole purpose of its existence is to produce income which may come from a variety of sources such as commercial rents or profits attributable to the real estate that is other than rents.

Income statement – A historical financial report prepared on either an accrual or a cash basis that indicates, sources and amounts of revenues, amounts of expense accounts, and profit or loss.

Income stream – A regular flow of money that is generated by a business or an investment.

Income to price ratio – The net income of a property divided by its selling price expressed as a percentage.

Incompetent – Any person who is not insane but is mentally incapable by reason of old age, disease, weakness of mind or any other cause is unable, unless assisted, to properly manage and take care of himself and/or his property and by reason thereof could easily be taken advantage of by skillful or dishonest persons.

Incorporate – 1. The process of forming a corporation under a state’s regulations. 2. The giving to a geographic area the legal status of a political subdivision of the state.

Incorporeal rights – The non-possessory rights arising out of real estate ownership like rents or a right-of-way.

Increment – The increase of land value most frequently used to refer to that which results from population growth and increasing wealth in the community.

Incremental income tax – The additional income tax due because of a given investment.

Incurable depreciation – A defect which cannot be removed or which it is very impractical to remove such as a defect in the bone structure of a building which is measured by age-life tables or life expectancy.

Incurable penalty – What occurs when the cost of repair adds less than its cost to the property’s value.

Indemnify – The taking on of liability by one party by agreeing to compensate another party for any hurt, loss or damage suffered by them.

Indemnity – An insurance against possible loss or damage such as a title insurance policy.

Indemnity agreement – An agreement by the maker to repay the beneficiary of the document up to the stated limit for any loss due to a named unforeseen event.

Indenture – A formal written instrument such as in a lease made between two or more persons holding different interests.

Independent contractor – A person who acts for another but sells final results and whose methods of achieving those results are not subject that person’s control.

Independent fee appraiser – A person who has no personal interest in a property who estimates the value of that property and is not connected to it by any lender.

Index lease – A lease in which the rental payments vary according to variations in an agreed-upon and easily identifiable established index of prices or costs.

Index method – A cost method of appraisal that estimates building costs by multiplying the building components of a property by an established factor to arrive at the current cost of construction.

Indirect costs – The costs such as marketing, administrative costs, professional fees, real estate taxes and insurance not directly associated with creating a structure but incurred during the construction period. Also known as Soft costs. The opposite of Direct costs.

Indirect lighting – The light that is reflected from the ceiling or other object that is other than from its direct source.

Indorsement – The signature on the back of a check or note with or without needing further qualification. Also the same meaning as endorsement. See Endorsement.

Industrial districts – An area in which the primary or major improvements to land are in the nature of factory, warehouse or related property.

Industrial park – An area in which the land is developed specifically for use for industrial purposes.

Industrial property – 1. All the tangible and intangible assets pertinent to the conducting of an enterprise for the manufacturing processing and assembling of finished products from raw or fabricated materials. 2. The land, fixed improvements, machinery and all equipment fixed or movable comprising the facilities devoted to a manufacturing enterprise.

Infant – A minor or a person not of full age who is lacking legal capacity to enter into a contract other than for necessities.

Infiltration – The displacement by persons of a lower economic status.

Inflation – An economic circumstance that occurs when real purchasing is decreased as a result of increases of prices being greater than the increases in productivity.

Infrastructure – The network of public facilities located within the community such as roads, schools, sewers, parks, utilities, etc.

Ingress – A place or means of going in or an entrance. See Egress.

Inheritance – An estate in lands or tenements or other things that are acquired by an heir as a result of the death of a person.

Inheritance taxes – The state-imposed taxes collected on a decedent’s real and personal property.

Initial note rate – The note rate upon origination of an adjustable rate mortgage that usually differs from the fully indexed note rate.

Injunction – A court order to restrain or stop one or more parties in a lawsuit or proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some other party or parties in the suit or proceeding.

Inner city – The generally older and more urbanized area of a large city that surrounds the central business district and which often refers to densely populated blighted areas that are characterized by low-income residents and a high proportion of minority racial and ethnic groups.

Innocent purchaser – A party who is not responsible for the cleanup of a contaminated property such s a purchaser who knew nothing about the contamination and had a Phase I investigation done prior to the purchase.

Input – The information, data and so on that is fed into a computer or other system.

Input-output analysis – A technique for the analysis of an economy using a description of the production and the purchases of specific sectors of the economy.

Inquiry notice – The information the law assumes that a reasonable person would obtain about a property or anything else before buying it.

Inside lot – A lot in a subdivision that is surrounded on each side by other lots and having frontage on only one side as opposed to a corner lot which has frontage on at least two sides.

Inspection – A physical scrutinizing of documents or property done to assure correctness of paperwork such as loan papers, and/or compliance with building codes or absence of termites.

Installment contract – A real estate sales contract whereby the purchase price is paid in periodic installments by the purchaser who is in possession of the property and holds equitable title and where the seller retains legal title until a future date which is typically the final payment. Also known as a Contract for deed or Warranty deed.

Installment loan – See Installment note.

Installment note – An amortized loan note which provides for a series of two or more payments of principal and interest until the amount borrowed is paid in full.

Installment reporting – A method of reporting capital gains by installments for successive tax years to minimize the impact of the totality of the capital gains tax in the year of the sale.

Installment sale – The sale of real property on an extended payment basis often used to spread the tax consequence of a sale over a period of years.

Installment sales contract – See Land contract.

Institute of Real Estate Management, IREM – A National organization to professionalize members who are involved in all elements of property management through standards of practice, ethical considerations and educational programs which confers the Certified Property Manager, CPM; the Accredited Management Organization, AMO and the Accredited Resident Manager, ARM designations.

Institutional advertising – The advertising intended to popularize a particular company as opposed to the promotion of its products or services.

Institutional lenders – A financial depository such as a commercial bank, life insurance company or an intermediary, go-between, which pools the money of its depositors and then invests those funds in various ways including secured mortgages and trust deeds loans.

Instrument – A written legal document such as promissory notes, mortgages, trust deeds, installment sales contracts, leases and assignments that are created to affect the rights of the parties, to give formal expression to a legal act or agreement for the purpose of creating, modifying or terminating a right.

Insulation – A heat-retarding material applied in outside walls, top-floor ceilings or roofs to prevent the passage of heat or cold into or out of a building.

Insurable interest – An ownership interest which an insurer holds and is recognized as a property right and where the loss of it will result in a true loss of money or value to the insured party.

Insurable title – A title that a title insurance company is willing to insure.

Insurable value – The value up to which an insurer will recognize as a loss.

Insurance coverage – The total amount of insurance carried.

Insurance rate – The ratio of the insurance premium to the total amount of insurance carried which is usually expressed in dollars per $100 or per $1,000 and sometimes in percent.

Insurance risk – A general or relative term identifying the hazards involved in insuring property which is used to determine the premium or cost of insurance based on the relative risk or hazard considered to be involved.

Insured mortgage – A mortgage in which a party other than the borrower such as with an FHA-insured loan or a loan under PMI, Private Mortgage Insurance assures payment in return for the payment of a premium in the event of a default by the borrower.

Intangible – Anything that cannot be touched such as goodwill in real property.

Intangible assets – The elements in an enterprise which are represented in an established organization doing business, as its goodwill and other rights incident to the enterprise as distinguished from the physical items such as its physical loacation facilities and working capital.

Intangible value – An asset’s worth which is not immediately available in dollars but may be of significant value such as goodwill of an established business.

Integration – The initial or developmental stage in the life cycle of the value of a property.

Intelligent building – A building equipped with computer systems and sensors that monitor the areas needing to be heated and cooled and then to create maximum efficiency, automatically transfer air at the appropriate temperature from one place to another and can also heat and cool different pans of a building simultaneously.

Intensive margin – The extra benefits derived from adding increasing amounts of labor and capital to land.

Inter vivos – A Latin term meaning during one’s life.

Interchange – A system of underpasses and overpasses for routing traffic on and off highways without interfering with through traffic and for linking two or more highways.

Interest – 1. The cost in dollars paid for the use of money for a period of time like rent paid for the use of money. 2. The type and extent or having a portion, share or right in the ownership of something.

Interest extra loan – A loan in which a fixed amount of principal is repaid in installments for each period along with the interest accrued on the amount of the then outstanding principal.

Interest only loan – See Straight loan.

Interest rate – The percentage amount that is always expressed as an annual percentage but it can also be monthly or daily, of a borrowed sum that is charged for the use of the money which is sort of like rent being paid for use of the money.

Interim loan – A temporary or short-term loan secured by a mortgage which is used until permanent financing is available and which is then paid off from the proceeds of permanent financing. Also called Interim financing. See Construction loan or Bridge loan.

Intermediary – A person or entity that acts and moves between parties – a go-between.

Intermediate theory – A theory based on the principles of title theory that has been adopted by a number of states that requires a mortgage foreclosure proceeding to occur in order to be able to obtain legal title.

Intermediation – The process of pooling and supplying funds for investment by financial institutions called intermediaries, go-between, which is dependent on individual savers placing their funds with these institutions and foregoing opportunities to invest directly in the investments selected.

Internal rate of return, IRR – The predetermined earning rate requirement for an investment that is generally established by comparing other return opportunities available to the investor with the anticipated investment.

Internal Revenue Code, IRC – The law passed by Congress that specifies how and what income is to be taxed and what deductions may be taken against taxable income and gets interpreted from court cases, regulations, revenue rules, and revenue procedures.

Internal Revenue Service, IRS – An agency of the federal government that is responsible for administering the agency, collecting taxes and auditing federal income tax returns.

International Real Estate Federation, IREF – This organization promotes understanding of real estate among those involved in the real estate business throughout the world.

Interpleader – A court action or proceeding initiated by someone with no direct interest or ownership in a property, such as an escrow agent, for the purpose of having the court decide which of the claimants is legally entitled to the property.

Interpret – 1. To construe or to seek out the meaning of language. 2., To legally determine the intent of an agreement between parties.

Interstate Land Sales Full Disclosure Act, ILSFDA – A federal law administered by HUD to control the sale of large, unimproved residential subdivisions and which requires certain disclosures and advertising procedures when selling land to purchasers in other states.

Interurbia – A contiguous urban development larger than a city or metropolitan area.

Interval ownership – A form of ownership in contrast to timesharing that creates a sole ownership in a property where a buyer purchases a right to use the property for a specific part of a year.

Intestate – A condition that occurs when a person dies leaving no will or a will which is defective in form in which the estate passes according to law to his or her next of kin or heirs.

Intrinsic value – An appraisal term pointing to the value created in a person’s own mind for a particular type of property.

Inventory – A formal detailed list of articles of the property of a person or estate identifying the description, the quantity and value of each.

Inverse condemnation – An action brought by a property owner seeking just compensation for the use or value of land being so diminished due to the public use of adjacent property when the taking was not done through an eminent domain proceeding.

Inversely related cost – A simply put concept indicating that the more of them that are made the less they cost.

Investiture – See Livery of seisin.

Investment – The money placed in a property with a permanent intention and not as speculation with the expectation of producing a profit and assuming a reasonable degree of safety and the ultimate return of principal.

Investment analysis – A study of the likely return from a proposed real estate investment based on the value to a specific investor and with the objective of evaluating the amount that investor may pay for it, the investment’s suitability to that investor, or the feasibility of a proposed real estate development.

Investment calculation – The estimation of value as to a particular investor or user.

Investment credit – An allowance under federal tax law for certain items designed to assist growth in specific business sectors.

Investment property – 1. A property which is in and of itself a business enterprise consisting of tangible and intangible assets that are considered necessary to the property which have been assembled and or developed into a single unit of use that is for lease or rental in whole or in part to others with the anticipation of profit. 2. A property according to the Internal Revenue Code that is owned and produces no income like vacant land or gold.

Involuntary alienation – A loss of property due to nonpayment of taxes, loan delinquency, etc. See Alienation.

Involuntary conversion – A forced forfeit or disposition of property due to a casualty such as a sudden destruction by nature or theft for which one could receive insurance proceeds or due to condemnation or threat of condemnation in an involuntary conversion in which case most certainly a condemnation award. In contrast with voluntarily disposition ssuch as a sale.

Involuntary lien – A lien imposed against a property without the consent of its owner such as property taxes, special assessments and federal income taxes.

Inwood compound interest method – An appraisal formula used to estimate today’s value of a series of annual principal and interest payments of one dollar.

IREF – See International Real Estate Federation.

IREM – See Institute of Real Estate Management.

Irrevocable – A condition of being incapable of being changed, revoked, recalled, withdrawn or modified.

Irrigation districts – An operation of quasi-political districts created and governed to a great extent under special laws to provide for water services to property owners in the district.

Italian architecture – An architectural style ranging from a completely balanced design to an informal composition with formal treatment and openings which include completely framed window openings, circular heads over exterior openings, high windows and doors and S-shaped red roof tile.