habitability A minimum maintenance standard of residential rental property. Habitability requires toilet facilities, hot and cold water, heat, and a cooking facility.
handyman’s special syn fixer upper See fixer upper.
hard dollars syn hard money See hard money.
hard money syn hard dollars Nonrefundable money. Earnest money becomes “hard” when all contingencies are satisfied or waived in a purchase contract, which then becomes enforceable. The proceeds of a loan are hard monies. Mere credit, as extended in a carryback mortgage, is soft money. Cash, as distinguished from paper (promissory note), also is called hard money.
hard money loan syn recourse loan See recourse loan.
hard sell Persistent and aggressive sales techniques.
hardball Serious business. When a transaction results in a decision that produces an adverse consequence to some player in the deal, the game has become "hardball," presumably as opposed to "softball" where everyone is friendly.
hassle factor A negative factor related to the ownership of or investments in real property. When the hassle factor is added to the capitalization rate, it reduces the market value of the real property to reflect the "hassle" inherent in its ownership. For example, a prospective purchaser may bid on the basis of a cap rate which reflects an artificial one percent on top of the market rate. That increase necessarily lowers the offered price. The hassle factor of litigation is considerable, which is one important reason why real estate business-persons try to avoid it like the plague.and why some unscrupulous persons try to use it as a weapon to hammer out grossly unfair settlements.
hazard insurance syn casualty insurance See casualty insurance.
head lease syn main lease, master lease, principal lease, original lease, and underwriting lease See master lease.
hearsay evidence Evidence not based on personal observation or knowledge of the witness, but consisting of repetition of what someone else has said. Hearsay is generally not admissible to prove a fact, but exceptions exist.
heavy hitter A very financially substantial real estate player. During the 90s many heavy hitters of the 80s lost their status, if not their wealth, through lack of liquidity and holding power.
HFA syn Housing Finance Agency See Housing Finance Agency.
HHFA syn Housing and Home Finance Agency A federal agency that administers home financing and governmental housing programs enacted by Congress.
highest and best use An appraisal phrase referring to that use of a property (at the time of an appraisal) that is most likely to produce the greatest net return from the land and/or buildings over an optimal period of time. Highest and best use is not always dictated by zoning, because there may be a reasonable probability of re-zoning.
HOA syn homeowner’s association See homeowner’s association.
hodge-podge development A vegetable soup development. Development in a patchwork pattern of uses.
hold harmless clause syn disclaimer and exculpatory clause See exculpatory clause.
holder of mortgage The present owner of a mortgage loan, to whom monthly payments are made by the homeowner. Mortgage loans are often transferred from one holder to another investor.
holding agreement An agreement whereby title to real property is vested in a nominee, such as a title company, for a specified period of time. The real owner’s name never appears in the public records. The nominee is charged with duties of holding the title, paying property taxes, and performing whatever other administrative tasks may be called for in the agreement. One reason for such an arrangement is to maintain business privacy. A buyer of real estate may use a dummy to buy and then vest the title immediately in a third person under a holding agreement, thereby concealing the identity of the owner.
holdover tenant syn tenant at sufferance A tenant who continues to occupy premises following termination of the lease.
home equity law syn equity-purchase laws See equity-purchase laws.
home equity loan A loan secured by a second mortgage or deed of trust on a person’s home. The loan may be used to finance a home improvement or for purposes unrelated to the home. Pursuant to the Tax Reform Act of 1986, value of interest payments on loans in excess of the cost of the home are deductible only if loan proceeds are used for home improvements, education or medical expenses. Interest on other forms of consumer loans, such as automobile, boat and credit card loans, is not tax deductible. Thus, home equity loans are advantageous compared to other consumer product loans. See also expandable second mortgage.
home improvement loan A mortgage loan with second or third priority that provides funds for the improvement of a residence.
home inspection report A written report made by a home inspector that conforms to the standards of the American Society of Home Inspectors or the California Real Estate Inspection
home inspection service A service for prospective buyers that involves the presale inspection of a home. Frequently, offers to purchase will include a contingency clause that allows a buyer the opportunity to approve a home inspection report before the purchase becomes obligatory. Defects that turn up often result in a price reduction or in corrective repairs by the seller. A home inspection service is not a termite inspection service.
home inspector A person in the business of inspecting homes during the sales event to assure the buyer that all of its systems are in operating order, or are in need of fixing. Anyone can go into the home inspection business because no license is required. However, the better inspectors are members of both the state Real Estate Inspection Association (REIA) and American Society of Home Inspections (ASHI). The standard of care that home inspectors are expected to meet is established by members of a nationally recognized trade association (e.g., American Society of Home Inspectors) or licensing agency. Employment contracts that attempt to limit the liability of such inspectors to the cost of their reports is invalid (against public policy). Thus a negligent inspector who does not report the improper absence of ground fault protection devices on certain electrical outlets may be held liable for the cost of repair.
homeowners' association, (HOA) syn property owners' association, (POA) Owners' associations of large residential projects that feature common areas and amenities, such as roadways and recreational facilities. The owners within such projects elect officers and vote on important matters relating to the operation and maintenance of the project. The associations are governed by by-laws that are usually created by the developer.
homeowners' policy of insurance A package insurance contract covering most of the property and casualty risks common to dwellings, including losses from theft and personal liability from negligent conduct not involving an automobile. Renters may obtain similar coverage in a tenant's policy.
homeowners' tax exemption An amount of money, say, $7,000, subtracted from the value of a resident homeowner's home when ad valorem property taxes are computed. Property tax exemptions are a matter of state law.
homeowners' warranty, (HOW) A type of insurance program for new-home buyers that guarantees specific items or components of the home, such as appliances, plumbing, and heating. Major exclusions include roof and air conditioning. This insurance covers the home for a specific time period and is not voided by a change in ownership. Modified HOWs covering resale homes are often available through a sponsoring broker as an enticement to complete a sale.
homestead An exemption from creditors’ remedies granted to debtors who own a home and who properly claim homestead rights. A homestead is applicable only to the debtor’s residence. The effect of a homestead is to protect a specified portion of the debtor’s equity, if any. Homesteads are subject to the earlier priorities of deeds of trust, mortgages, or other encumbrances and their payment cannot be avoided.
hometel An executive-class hotel facility with suites that include a sitting room, a bedroom, a kitchenette, wet bar, bath and vanity area. Hometels are designed for the business traveler.
horse property See ranchette.
hot listing A listing of a property that is very desirable, perhaps because there is a buyer's market, with the result that multiple offers to purchase are received within a short period. Hot listings often lead to verbal non-binding counteroffers from sellers who play one prospect against another.
hot market A very active market with lots of buying, selling and building.
house-poor homeowner A homeowner who can afford to pay for little more than his mortgage.
housing affordability index An index published by the National Association of Realtors that reveals the ability of families earning median incomes to qualify for loans equal to eighty percent of the price of median-priced homes. At an index of 100, all families earning the median income would be able to qualify for eighty percent mortgages to finance the purchase of a median priced home.
Housing and Home Finance Agency, (HHFA) See HHFA.
Housing Finance Agency, (HFA) A public agency established by state statute, and empowered to raise money and make direct loans to sponsors of low- and moderate-income housing under more favorable conditions than those available in the open market. HFAs raise money to finance their programs through the public issuance of tax exempt bonds.
housing starts The number of housing units on which construction has begun. Estimates of housing starts are made on national, regional and local bases to evaluate economic activity.
HOW syn homeowner’s warranty See homeowner’s warranty.
HUD See Department of Housing and Urban Development.
hundred percent location The best possible site or location in a business district. It is also the best suited location to conduct a particular type of enterprise.
hybrid ARM Adjustable rate mortgage that offers a constant interest rate (and monthly payment) for a few years before converting and adjusting rates. The constant rate periods typically are 3 years, 5 years, 7 years or even 10 years, and are known respectively as a 3/1, 5/1, 7/1 and 10/1. These loans are preferred by purchasers who intend to sell their homes (i.e., pay off their mortgages) about the time the constant rate period ends. The hybrid ARM is a generic term inclusive of, for example, all varieties of two-step loans.
hype An exaggerated or extravagant statement made in connection with a sales pitch. Whether or not hype can form the basis for actionable misrepresentation is a fuzzy area in the law.