1. The first step to understanding is to be familiar with terminologies used in Philippine Real Estate Absolute Deed of Sale - is a document for a type of deed where the sale is not subject to any condition and where the transfer of ownership is complete and irrevocable. Abstract of Title - is a summary, or digest of the conveyances, transfer and any other facts relied on as evidence of title, together with any other elements which may impair the title. Acceleration Clause - is a clause on trust deed or mortgage giving the lender the4 right to call all sums owing him to be immediately due and payable upon the happening of a certain event. Accession - is the right pertaining to the owner of a thing over everything which is produced thereby such as fruits produced by lands. Acquired Assets - is the collection of mortgages and other securities held by a lending institution. Ad Valorem Tax - is a levy on real property determined on a basis of a fixed proportion of the value of the property Accretion - is a mode of acquiring more lands adjoining banks of rivers due to addition to land from natural causes or from gradual deposit of soil to the land due to the action of ocean or river waters. Acknowledgment - is a formal declaration by a person, or other legally recognized entity such as a corporation, that execution of a written instrument is the result of a free act and deed. It is made before an authorized person, such as a notary public, who signs the written acknowledgment that the attached written instrument was acknowledged in his or her presence. Adverse Possession - Adverse possession is the taking of title to real estate by possessing it for a certain period of time. The person claiming title to real estate by adverse possession must have actual possession of the real estate which is open, notorious, exclusive and adverse to the claims of others to title of the real estate. Agrarian Reform - is the resdistribution of all public and private agricultural land, regardless of tenural or produce, to farmers and regular farm workers, who are landless. Retention limits for landowners is 5 hectares plus 3 hectares for every child above 15 years and is actually tilling the land or directly managing the farm. Air right - is the right of the property owner to use, control or occupy the air space over his property, subject to the requirements of aerial navigation and Government regulations. Amortization -The periodic payment which includes principal and interest Antichresis - is a process of conveying a thing as security of an obligation having to surrender ownership or possession. Appraisal -The process of estimating the value of real estate property as of a given time and for a specified purpose. Assessed Value - Value of real property for realty tax purpose which is arrived at by multiplying market value by assessment level Assessment Level - A percentage of market value prescribed by law at which the assessed value is determined Assessor - is the official who has the responsibility of determining assessed value Assumption of Mortage - is the taking of title to property by a grantee, wherein he assumes liability for payment of an existing note secured by a mortgage, or deed of trust against a property, becoming a co-guarantor for the payment of mortgage of deed of trust note. Attorney-In-Fact - is one who is authorized to perform certain acts for another under a power of attorney which could be specific or general. Automatic Redemption Clause - is a stipulation in a mortgage of several properties providing that when a buyer of one or more lots pays in full the purchase price, a portion of the payment shall be applied and the mortgagee shall correspondingly release said lot or lots from the mortgage. Backfill - is the replacement of excavated earth in the hole or against a structure Balloon Payment - is a form of payment where the final installment is greater than the preceding installment payments and it pays the note in full. Building Code - is a government ordinance that regulates building construction pertaining to height, setback, material specifications etc. Building Line - is a line or boundary set by law as a certain distance from a street line in front of which an owner cannot build on his lot. Buyer's Market -A condition prevailing 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. Capital Gains Tax -Income tax payable to the BIR for the sale, transfer, or other disposition of real estate classified as capital asset. Capital Property -Refers to property exclusively owned by the husband Chain of Title - is a history of conveyances and encumbrances affecting the title from the time the original patent was granted, or as far back as records are available. Commission - is the agent's compensation for performing the duties of his agency; in real estate practive, a percentage of the selling price of the property or percentage of rentals, etc. Community Property - is property which is owned by a husband and wife. Each spouse has an undivided one-half interest in the property. Some states have the community property system; others do not, but instead follow the common law system. The difference is that in a community property system, each spouse has an undivided one-half interest in what the other owns or earns during the marriage, while in a common law system, each spouse owns what he or she earns. Common Areas ( in condominiums) - refer to the weight-bearing structures (foundation, columns, beams, service areas (lobby, corridors, stairways, elevators, etc.) utilities and facilities (electric, water, plumbing and sewerage systems) and amenities (clubhouse, swimming pool, gym, etc.) Community or Conjugal Property - is a property accummulated through the efforts of husband and wife living together. Condemnation - is the act of taking private property for public use by a political subdivision or a declaration that a structure is unfit for use. Condominium Project - is the totality of the site (land), condominium units and common areas Condominium Unit - is a space encompassed by the interior surface of the floor, ceiling, walls and exterior doors and windows which is susceptible of independent use and ownership Conditional Sale of Contract - is a contract of the sale of property stating that delivery is to be made for the buyer, the title remain vested in the seller until the conditions of the contract have been fulfilled. Contract - is an agreement in writing to do or not to to do certain things Contract of Sale of Real Property - is a contract whereby one of the parties called the seller or vendor obligates himself to deliver a specific real property to the other party called the buyer or vendee who for his part binds himself to pay therefore a sum of money or its equivalent. In contract of sale, there is already transfer of ownership from vendor to vendee but failure to make full payment is a negative resolutory condition. Contract to Sell Real Property - The exclusive right or privilege to purchase is merely an executory contract in which ownership is not transferred; is merely consist of a promise to sell but ownership of the title is reserved and/or retained by the seller and is not passed to the buyer until the full payment of the purchase price is made. Full payment is a positive suspensive condition. Conversion - is the act of authorizing the change of the current use of a piece of land into some other uses Conveyance - A conveyance is the transfer of land from one person to another. Examples of conveyances include deeds, real estate contracts, or contracts for deeds, assignments, leases, or mortgages or deeds of trust. A conveyance usually is accomplished by execution by one person of a written instrument transferring his or her interest in the real estate to another person. Corner of influence - is the added desirability or utility of a property due to its frontage of two streets which provides better ventilation for residential purposes or more displays for commercial use. Cost Approach - a method of estimating the fair market value of an improvement by estimating present reproduction cost and deducting depreciation Covenant - A covenant is an agreement, contract, or promise. It may be in the affirmative such as the representation as to certain facts or the future performance of an act, or it may be in the negative such as the obligation not to do something. Affirmative covenants may be found in a deed such as the warranties of seisin, quiet enjoyment, right to convey, freedom from encumbrances and defense of title as to adverse claims. Negative covenants sometimes are referred to as restrictive covenants. Cul De Sac- is a passageway with one outlet; a blind alley Dacion En Pago- is an indebtedness paid with real property. The debtor has a pre-existing obligation to the creditor; price is fixed and dacion extinguishes the indebtedness of the debtor. Deed - is the transfer of title to real estate from one person to another. It is in writing. The person transferring the title is known as the grantor and the person receiving the title is known as the grantee. There are several types of deeds including warranty deeds, special warranty deeds, quit claim deeds, contracts for deed, and deeds of trust. Default - is the failure to fulfill a duty or promise or to discharge an obligation. Defeasance Clause - is the clause in a mortgage that gives the mortgagor the right to redeem his property upon the payment of his obligations to the mortgagee. Depreciation - Loss in value due to physical deterioration, functional obsolescence or economic obsolescence. Earnest money - is a payment by the buyer to the seller to show good faith on the part of the buyer and the seller to hold the property within a specified period of time until the sale is closed. Easement - is a right of one person to use the real estate of another, or a portion of it, for certain purposes. An example of an easement is one for ingress and egress; that is, the right to travel across a portion of another’s real estate to reach one's own real estate. Another example of an easement commonly seen is one for utilities. Easements may arise from an agreement between the parties or from operation of law. Economic Life- The period during which a property can be profitably used or expected to generate more income than expenses Eminent Domain - is a consititutional mandate that provides the right of the government or the power of the state to take private property necessary for public welfare or quasi-public by condemnation upon payment of just compensation Encumbrance - is a claim by another person against the land. Examples of encumbrances include mortgages, liens, leases, easements or unpaid taxes. Equity - The difference between contract price and loanable amount. Equity of Redemption - is the right to redeem the property during the foreclosure period, such as mortgagor's right to redeem within a year after foreclosure sale. Escheat - the reversion of private property to the state when heirs capable of inheriting are lacking or due to the instestate death of the owner who is not survived by any heir. Estate - as applied to real estate practice, is the totality of assets, equity, fortunes or riches that may consist of real property of an individual Escrow -An agreement where the consideration of the contract or portion thereof is deposited with a third party known as escrow agent who is authorized to release payment after fulfillment of some conditions. Exclusive Agency Listing - a written instrument giving right to sell property for a specified period of time but reserving the right of the owner to sell the property himself without the payment of any commission Exclusive Right to Sell Listing - is written agreement between an owner and an agent giving the agent the right to collect a commission if the property is sold by anyone during the term of the agreement. Fair Market Value - The highest price the property will probably bring in a competitive and open market under conditions requisite to a fair sale, with seller and buyer acting prudently and knowledgeably and assuming that the price is not affected by undue stimulus Foreclosure - Foreclosure is the legal enforcement of a mortgage, deed of trust, or other lien through legal proceedings. A common example is a foreclosure of a mortgage because of some type of default by the debtor. Foreclosure usually terminates the rights of the debtor, or mortgagor, in the real estate, except for such rights of redemption, mandatory mediation, or other rights afforded to the debtor by law. Grantee - A grantee is a person who receives title or some other interest in real estate from a conveyance. For example, a person who receives title to real estate by way of warranty deed is known as a grantee. Grantor - A grantor is a person who conveys title or some other interest to property to another. HLURB ( Housing and Land Use Regulatory Board) - is the sole regulatory body for housing and land development which was mandated by Executive No. 90 (1986) to encourage greater private sector participation in low cost housing through liberalization of development standards, simplification of regulations and decentralization of permits and licenses. Hold Over Clause - is provision in a listing agreement which entitles a broker to a commission even when he closed the sale after the period of the authority provided that the buyer was registered by him with the seller and with whom he has negotiated during the period of his authority. Hypothetecate - is to give a thing as security without the necessity of giving up possession of it Income Approach -a method of estimating the fair market value of an improvement by capitalizing its annual net income. Intestate - a person who dies having made no will in which case his estate descends to his heirs at law or next of kin Involuntary Grant - mode of acquiring private property by acquisition against consent of former owner such as foreclosure sale, execution sale, and public bidding. Involuntary Lien - is a lien imposed against property without the consent of the owner such as taxes. Joint Venture Agreement - is an agreement where land owners extend their property as equity and the developer undertakes the preparation of all requirements and development needs at his own expenses normally on a profit sharing of the income. Land Registration - is the inscription, recording or annotation of acts and contracts relating to the ownership of and other rights over land or immovable property Lease - A lease is an agreement or contract for possession of property for a certain period of time and for certain uses. A lease may run for a determinate or indeterminate period of time. Upon conclusion or termination of the lease, possession of the property reverts back to the landlord or lessor. The person leasing the property is known as the lessee or tenant. Lien - A lien is a claim or interest of right to property or a portion of it, arising by law or by agreement for payment of a debt. Examples of liens include mortgages, mechanic’s liens, judgment liens, and security agreements. Listing -The authority given by the principal to the broker for the latter to negotiate the sale within a stipulated period and at stated price and terms. Loan Value -The value of the property which is a certain percentage of its market value which the bank is willing to lend with only the property as security. Market Data Approach - A process of determining fair market value of properties by comparing it with nearby or comparable properties which were subject of recent sales offerings, making positive or negative adjustments depending on the comparatives are superior or inferior. Market Value - the price at which the property will bring in fair market value after fair and reasonable efforts have been made to find a buyer who will give the highest price for it without abnormal stimulus or pressure on either parties. Moratorium - is a temporary suspension usually by statute or the enforcement of liability for debts. Mortgage - A mortgage is a written instrument giving an interest in real estate from one person, the mortgagor, to another person, the mortgagee, as security for a debt or performance of a duty. Depending on the laws of a particular state, a mortgage may create an actual transfer of title, or it may create a lien with the mortgagor retaining title to the property. Mortgagee - is one to whom a mortgagor gives a mortgage to secure a loan or performance of an obligation; A lender. Mortgagor - is one who gives a mortgage on his property to secure a loan or assure performance of an obligation. A borrower Multiple Listing -A cooperative arrangement among brokers who are members of a realty association where properties for sale are circularized to all members and the commission is shared between the listing member and the selling member with a nominal percentage going to the association as service fee. Negotiable - capable of being negotiated usually with regards to price and payment terms and conditions Negotiation - It is the process of reconciling the opposing views of the parties to a transaction as to price and terms. Net Listing - where the compensation of the broker is the amount obtained over and above the price quoted by the seller. Open Mortgage - a mortgage which can be paid off anytime even before its maturity Open End Mortgage - a mortgage containing a clause which permits the mortgagor to borrow additional money after the loan was reduced without re-writing the mortgage. Option Money - refers to the reservation given by the owner to a prospective buyer to buy the property within a specified period of time after the owner receives payment called option money. It is populary known as Reservation Fee which is normally non-refundable but deductible to the price of the property Over - improvement - An improvement which is not suitable to the site on which it is placed because of excessive size/cost Pag-ibig Fund - is the acronym for PAGtulungan - Ikaw, Banko, Industiya, at G obyerno mandated by RA 7742 June 17, 1994 which made mandatory for all SSS and GSIS members earning P4,000 or more per month to make universal and compulsory contribution. Paraphernal Property -Refers to property exclusively owned by the wife Patent - the conveyance of title to government land Percentage Listing -where the compensation of the broker is a pre-stipulated percentage of the total contract price. Power of Attorney - A power of attorney is a written instrument which authorizes one person to act as another's agent or attorney. The power of attorney may be for a definite, specific act, or it may be general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Principle of Diminishing Returns -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 of production will tend to decrease net income. Principle of Progression -An appraisal principle which holds that the value of a property tends to be enhanced by association with superior properties Principle of Regression - An appraisal principle which holds that the value of a property tends to be adversely affected by association with inferior properties. Principle of Substitution - an appraisal principle which holds that the value of a replaceable property is inferred from the value of an equally desirable substitute property. Procuring Cause -The act of a broker which is instrumental in effecting the minds between the seller and the buyer as to price and terms. It is one of the requisites to entitlement of a commission. Property - is anything which is or maybe the object of appropriation Prospect - Is a person who is in need and can afford to buy. A person who has the willingness but without capacity or one who has the capacity but without willingness is only a suspect. Real Estate - is land and anything permanently attached to it such as buildings. Personal property is all other types of property. Real Estate Broker - A natural or juridical person who in behalf of a principal, negotiates or effects the meeting of the minds on the sale or any transactions in real estate in an expectation of a commission or other valuable consideration Real Estate Salesman -A natural person who performs in behalf of a real estate broker under whom he is licensed in expectation of a share of commission or other valuable consideration Real Estate Contract - is an agreement to transfer title to real estate at some time in the future contingent upon the occurrence of certain events such as payment of the purchase price. The seller is known as the vendor and the buyer is known as the vendee. The vendor transfers title upon the vendee’s performance of his or her obligations under the real estate or sales contract. Realtor - is a real estate broker holding active membership in a real estate board affiliated with Philippine Association of Realtor's Boards Reservation Agreement -A contract between seller and buyer wherein the former, for a consideration known as option money, binds himself to reserve the property for the latter to purchase at a stipulated price and within a stipulated period. Right of Way - the right of individuals to access to any existing public road which must be developed and maintained according to the requirements of the government authorities concerned Riparian Rights - is the right of the landowner to water, on, under or adjacent to his land Seller's Market -A condition prevailing in an area at a certain time when there are few properties for sale while there are many buyers, in which case price tends to go up. Supply is less than demand. Servient Estate - Land through which a right of way is given in favor of another land Title - Title is not synonymous with Torrens Certificate of Title. Rather, it is a generic word which means proof, evidence, or monument of ownership, such as tax declaration, realty tax receipts, deed of sale, and Torrens Certificate of Title. But, of course, the best title or best evidence of ownership is the Torrens Title because it is indefeasible, imprescriptible, and binding against the whole world. Title means ownership of real estate. Good or clear title means such ownership of real estate is free and clear of the claims of others. Clouded title means such ownership is marred by some claim or demand of another person which hinders or impedes the ability of the owner of the real estate to transfer title. Ownership of real estate is a right to use, enjoy and transfer the real estate as allowed by the laws of the particular state. Torrens System - is a system of registration named after Sir Robert R. Torrens who devised it as a member of the south Australia Parliament from his experience as Register of Deeds made effective Feb. 1, 1903. Torrens Title - a certificate of ownership issued under the Torrens system of registration by the government thru the Register of Deeds declaring the owner of the land. Townhouses - is a series of individual homes having architectural unity and a common wall between each unit. Transfer Certificate of Title (TCT) - is a certificate of title registered by the Register of Deeds subsequent to the Original Certificate of Title (OCT) pursuant to any voluntary or involuntary instrument relating to the same land. It is in like form as the OCT issued in duplicate. Transfer Tax -A tax payable to the local government unit for sale, transfer or other disposition of real estate, whether capital or ordinary asset Under improvement - An improvement which is not suitable to the site in which it is placed because of deficient size/ cost. Value Added Tax - The tax on the value added every seller to his purchase of goods and services. It is a tax imposed on any sale or transaction of taxable goods including capital goods. WithholdingTax - A tax payable to the BIR on the sale, transfer or other disposition of real estate classified as ordinary asset. Zonal Value - is the value assigned by the Bureau of Internal Revenue (BIR) for ceertain areas in a province, city or municipality purposely to be used in the computation of capital gains tax.<br />