HABENDUM CLAUSE
The part of the deed defining the extent of the estate
granted. Coming from the Latin phrase 'habendum et
tenendum", which means 'to have and to hold",
the habendum clause states the owner's exact interest
in the property, whether it be fee simple or some
lesser interest.
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HABITABLE Suitable for occupancy.
Local building codes ensure that structures are habitable
through requirements for building permits and certificates
of occupancy. Anyone wishing to construct a new building
or make a major addition to an old one must obtain
a building permit which binds the builder to minimum
standards of construction. Before a new structure
can be occupied, the owner must obtain a certificate
of occupancy to certify that the building has passed
a final inspection by local officials. Though building
codes differ from locality to locality, most areas
have regulations regarding fireproofing structures,
electrical wiring, and plumbing.
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HALF-SECTION An area of land comprised
of 320 acres. There are 72 half-sections in a township.
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HAMLET A small village.
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HANDYMAN'S SPECIAL A parcel of real
estate, normally residential, that is in need of major
work and repair in order to bring the property up
to market standards. Normally, such property is on
the market at a price significantly below current
prices, reflecting the loss in value due to wear and
tear.
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HARBOR LINE An arbitrary line set
by the appropriate authorities on navigable rivers,
beyond which permanent structures may not be build.
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HARD SELL Action by a salesperson
that results in an aggressive sales presentation.
Hard sell tactics are sometimes used with certain
types of real estate such as time sharing and second
home sites. In both instances, a substantial amount
of time and money is often spent in attempting to
bring about a sale.
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HARRIS, CHAUNCEY D.An urban economist
who, along with Edward L. Ullman, is credited with
developing the multiple nuclei growth theory of urban
development. The theory is used to explain how development
of different types of land use occurs.
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HAZARD INSURANCE An insurance policy
on property to protect the insured against loss due
to physical damage to the property.
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HEAVY HITTER A real estate developer
or investor who has substantial financial resources
and or financial backing.
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HEDGING The sale or purchase of
mortgage future contracts by a mortgage banker or
lender for the purpose of protecting cash transactions
made at a future date.
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HEIGHT ZONING A zoning technique
used to establish height restrictions so as to protect
the sunlight and flow of air to adjoining properties.
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HEIR A person who is entitled to
the real property of a deceased person who died intestate
(left no will).
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HEREDITAMENT Any property capable
of being inherited, be it real, personal, corporeal,
incorporeal, or mixed.
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HETEROGENEOUS Different or diverse.
Heterogeneity is one of the physical characteristics
of real estate. Because no two parcels of land are
the same, investors should carefully evaluate the
characteristics of a particular site for suitability
for proposed uses since a use that works on one parcel
of land may fail for another. In addition, heterogeneity
makes specific performance a viable remedy for breaches
of contract involving real estate. If a person contracts
for a particular parcel of land, receiving its value
in money or receiving another similar parcel does
not substitute for the original land.
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HIDDEN AMENITIES Features of a property
which, even though they may not be easily recognizable,
add to the value of the property. Examples would include
extra wall insulation, high quality paint, and better
grade materials.
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HIGHEST AND BEST USE The legal use
of a parcel of land which, when capitalized, will
generate the greatest net present value of income.
Existing uses of land are not always the highest and
best use.
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HIGHEST AND BEST USE STUDY A study
of two or more possible uses of a particular parcel
of land to determine which use will be the most profitable.
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HIGH RISE A commonly used expression
referring to a building, usually an apartment or condominium
complex, that is high enough to require an elevator.
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HIGH WATER LINE OR MARK The line
or mark on a shore to which the water rises at high
tide under normal weather conditions.
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HIGHWAY A free and public road or
street which anyone has the right to use.
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HISTORICAL COST Actual cost of a
project when it was first constructed.
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HISTORIC DISTRICT A zoning classification
which refers to a geographic area that has been identified
as having historical significance. Quite often a local
government will limit both the type and the extent
of land use changes that can occur in an area deemed
a historical district.
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HOFFMAN RULE A rule of thumb used
by some appraisers in estimating the value of land.
The rule states that the front half of a 100-foot-deep
lot is worth two-thirds of that lot's value, while
the back half is worth the remaining one-third.
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HOFFMAN-NEILL RULE A rule of thumb
used by appraisers and developers many years ago based
on a set of depth factors published by Henry H. Neill.
These factors were an extension of similar factors
developed by Judge Murray Hoffman which originally
came to be known as the Hoffman Rule. Such set factors
are not widely used today and reliance on this rule
is highly questionable.
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HOLDBACK That portion of a contractor's
draw under a construction loan that is withheld by
the lender until all work is completed to the satisfaction
of the lender. Quite often the amount withheld is
equal to the contractor's profit, which means that
enough of the loan is dispersed so that the subcontractors
can be paid.
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HOLDER IN GOOD FAITH One who takes
property without any knowledge of defective title.
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HOLD HARMLESS CLAUSE An exculpatory
clause freeing one from personal liability.
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HOLDING COMPANY A company that is
not actively involved in business operations but which
owns enough stock in other companies so as to have
control over their operation.
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HOLDING PERIOD The period of property
ownership, from the date of purchase to the date of
sale.
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HOLDOVER TENANT The retention by
a tenant of possession after the lease on a property
has expired. Holding over creates a tenancy at sufferance.
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HOLOGRAPHIC WILL An entirely handwritten
will which is not properly witnessed. Such a will
is valid only in some jurisdictions and then only
if it is free from suspicion of fraud or other defects.
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HOME The place in which a person
lives.
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HOME EQUITY LOAN A loan secured
by a second mortgage on a person's home and characterized
by an open line of credit based on the homeowner's
equity. As a result of the Tax Reform Act of 1986,
consumer interest on credit cards, automobile loans,
and similar purchases is not deductible when itemizing
deductions for federal income tax purposes. However,
the interest paid on a home equity loan is fully deductible
as long as certain guidelines are met, namely that
the amount borrowed must be used for home improvements,
medical expenses, or education. Thus, home equity
loans have become very popular in recent years. Adding
to the popularity is the ease within which such a
loan can be made. Most lenders will establish a line
of credit to the homeowner up to a total loan-to-value
ratio of 75 or 80 percent.
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HOME IMPROVEMENT LOAN A loan made
to a homeowner in which the home is used as collateral
for the loan. In recent years one result of increased
housing costs and higher market prices has been the
relatively fast equity build-up for owners of real
estate. To an owner this equity can become a source
of capital that can be drawn out of the home for home
improvements or personal or business reasons. Numerous
commercial banks and finance companies make short-
term (three to five years) junior mortgages based
on a percentage of the homeowner's equity. Since they
are junior mortgages, such loans normally carry an
interest rate three or four percentage points above
that charged on senior instruments or first mortgages.
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HOME INSPECTION SERVICE A professional
service available to homebuyers normally undertaken
prior to the transfer of title to the property. Quite
often, particularly in the case of older homes, a
buyer will make an offer contingent upon an inspection
of the property being done by a qualified person and
if the property does not pass the minimum inspection
requirements, the offer is voidable. Home inspection
services charge from one hundred to several hundred
dollars, with the fee normally paid by the buyer.
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HOME INSPECTOR A person who inspects
real estate for the purpose of determining whether
or not the property meets minimum structural and code
standards. Such persons normally have engineering
and or building backgrounds and are employed on a
fee basis.
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HOMEOWNER'S ASSOCIATION The organization
in a condominium made up of all the unit owners and
which is responsible for maintaining the common areas
of the condominium. The homeowner's association also
decides on matters affecting the common areas, such
as whether an individual unit owner may put up window
boxes or plow a garden. Most homeowner's associations
have a fight of first refusal, or right to purchase
a unit at market value before the owner seeks other
purchasers; however, this right may not be used to
discriminate against prospective buyers on the basis
of race, color, creed, national origin, sex, handicap,
or families with children.
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HOMEOWNERSHIP Owning the home in
which one lives. One of the successes of the American
economic system has been its ability to provide a
decent home to a broad number of households. Approximately
60% to 65% of all occupied housing in the United States
is owner occupied. Homeownership offers several advantages
to an individual. It provides a sense of security
and belonging to a community. There is a certain pride
and satisfaction in controlling one's own territory
without being restricted by rules established by a
landlord or having one's privacy intruded upon by
strangers. In a privately owned home, there is generally
more living space, more rooms, more storage space,
and more privately controlled outdoor space for the
dollar spent. This is particularly important for large
families with young children. Homeownership often
gives a person more social status and a better credit
rating. In addition, there are certain financial benefits;
monthly payments for a mortgage include a build-up
of equity and tax deductible interest. There are other
tax advantages as well. Property taxes are deductible,
and capital gains on the sale may be deferred if a
person reinvests in another house of same or greater
price. Except for certain types of variable rate mortgages,
the mortgage debt service remains constant, providing
protection against inflation while the asset generally
appreciates in value. However, homeownership is not
for everyone. It may lead to constraints on one's
ability to relocate.
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HOMEOWNER'S INSURANCE A package
insurance policy available to anyone who owns a one-family
house, condominium, cooperative, mobile home, or who
resides in an apartment. It is quite common for a
homeowner to purchase and maintain insurance coverage
for his or her residence. For a relatively small and
certain amount of money the homeowner buys protection
against a potentially large and unpredictable loss.
Numerous types of policies are available. The homeowner
can buy a standard fire insurance policy which insures
only against fire and lightning, whereas for an additional
premium, the coverage is broadened to include damage
from wind, hail, smoke, explosion, riot, vehicles,
and falling aircraft. Or one can purchase protection
against burglary, injuries suffered by parties while
on the property, and damages the policyholder causes
to the property of others. Besides being able to purchase
any number of separate policies, one can also purchase
a package policy called a homeowner's policy that
includes all of the above mentioned risks. A homeowner's
policy can be purchased by anyone who owns and occupies
either a one- or two-family residence. The advantages
to purchasing such a policy are numerous: (1) only
one policy is purchased, (2) only one premium has
to be paid, (3) the coverage is for a wide variety
of perils, and (4) the cost is considerably less than
if the same perils were covered through individual
policies. What properties are covered? First, the
house or the dwelling is covered. In addition to the
living quarters, this includes such structures as
garages or other additions. Other structures referred
to as appurtenant structures are covered such as a
tool shed or a detached garage. However, buildings
located on the property that are either rented to
others or used for commercial purposes are not covered.
Personal property including all household contents
and personal belongings is covered. This would include
losses both at home or away from home. Pets are not
protected, nor are automobiles, which have their own
special insurance. Another added feature of a homeowner's
policy is the coverage of additional living expenses.
which is intended to cover the increase in living
expenses incurred while a house cannot be occupied
because of damages caused by an insured peril. What
perils are insured against? The number of perils insured
against under a homeowner's policy depends upon what
form is purchased. Three forms are available: (1)
the Basic Form (HO-]), (2) the Broad Form (HO-2),
or (3) the Comprehensive Form (HO-5). The Broad Form,
which is the most common, insures against eighteen
different perils. 'Me Basic Form insures only against
the first eleven, whereas the Comprehensive Form covers
the eighteen perils, plus additional coverage. While
the HO-5 is often referred to as an all-risk policy,
it still has certain exceptions listed in the policy.
Is there a policy for renters? For those who rent,
the Tenant's Form (HO-4) of the homeowner's policy
is available. It insures contents and personal property
against the same perils included in the Broad Form.
However, since a renter does not own either the dwelling
or other private structures on the property, the dwelling
is not insured. Such a policy does, however, provide
coverage for additional living expense.
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HOMEOWNER'S ONCE-IN-A-LIFETIME TAX EXCLUSION
A forgiveness of $125,000 in capital gains taxes for
taxpayers 55 years or older who sell their principal
residence. To qualify, a taxpayer must be at least
55 years old on or before the date of the sale. The
house must have been the principal residence in at
least three of the five years preceding the sale.
If married, only one spouse must be 55 years old,
but both must join in making the election. If filing
separately, each spouse is only allowed half the exclusion
or $62,500. There are other more technical provisions
which may require consultation with an attorney or
tax accountant for an understanding of how the law
applies in the situation of any particular individual.
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HOMEOWNER'S (HOMESTEAD) TAX EXEMPTION
The amount of the assessed value of property not subject
to property tax due to the fact that the taxpayer
resides on the property and declares it as his or
her homestead. Those states that provide for a homestead
exemption normally require the homeowner to file for
the exemption within a statutory period of time within
the tax year.
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HOMEOWNER'S WARRANTY (HOW) PROGRAM
A ten-year warranty program administered by a subsidiary
of the National Association of Home Builders and available
from some builders of new homes. The program has strict
building standards, and it requires the builder to
give a one-year warranty against defects in workmanship,
a two-year warranty against defects in electrical
and mechanical systems, and a full ten-year warranty
against major structural and sanitary defects. The
warranty is transferable to new owners and provides
for arbitration in case of owner/builder disputes.
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HOME RULE The power of local self-government
given either by the state constitution or legislation
to a municipal corporation. Home rule powers allow
local governments to pass zoning ordinances and other
land-use regulations.
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HOMESTEAD EXEMPTION A statutory
or constitutional right which gives a person who is
defined as the head of a household protection from
creditors for property known as the homestead. The
homestead is ordinarily defined as the primary dwelling
and surrounding land, and usually there must be a
family which owns and occupies the dwelling. This
exemption does not normally apply to rented premises.
Many states define this exemption. Ordinarily, any
recorded debts which existed before the declaration
of the exemption are not affected. In some states
homestead exists automatically by operation of law,
while in other states the head of the household must
file a declaration of homestead with the appropriate
public official in the jurisdiction. Debts incurred
to finance and to repair the homestead may or may
not be affected by the exemption. The exemption may
be waived and each state has its own requirements
for what constitutes a waiver. Upon the death of the
head of the household, the surviving spouse may be
entitled to the exemption. In some states the homestead
is also important in calculating property taxes. A
certain statutory amount may be subtracted from the
assessment of the homestead before the tax rate is
applied.
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HOMOGENEOUS Similar in type. Real
estate is the opposite of homogeneous, since no two
parcels of land are exactly alike.
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HORIZONTAL PROPERTY ACT The name,
in some states, for legislation authorizing the creation
of the condominium form of ownership. Before 1960,
no such legislation existed, while today every state
has some form of condominium legislation.
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HOSKOLD FACTOR A factor used to
value an annuity that is based on reinvesting capital
recapture at a safe rate of interest, named after
H. E. Hoskold.
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HOSKOLD, H. E. An English mining
engineer who originated the use of the 'Hoskold"
method of valuing coal mines, timberland, and other
types of real estate with depleting assets.
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HOTEL A building offering its facilities
as lodging to the public rather than to a limited
private group.
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HOT LISTING A listing on property
that, in the opinion of the real estate broker acquiring
the listing, is located in a market with much more
demand than supply. In theory, hot listings do not
remain on the market for a very long period of time.
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HOUSEHOLD The total number of people
who occupy a particular dwelling including people
who may not be related to the householder.
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HOUSE-POOR HOMEOWNER A homeowner
who has bought more house than he or she can comfortably
afford and, thus, spends a more than normal percentage
of his or her income on the mortgage payment. First
home buyers who have financed a high percent of the
purchase price are sometimes referred to as being
"house poor."
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HOUSING AFFORDABILITY INDEX A monthly
index published by the National Association of Realtors
showing the financial ability of the median income
family to purchase the median-priced home with an
80 percent loan. An index greater than 100 means that
the median income family could qualify for more than
the median-priced home with an 80 percent loan. A
less than 100 index means that the same median income
cannot qualify to buy the median-priced home, which
is normally the case during times of inflation and
higher than normal interest rates.
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HOUSING AND URBAN DEVELOPMENT (HUD) An
agency of the federal government which oversees many
federal housing programs, including enforcement of
fair housing laws.
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HOUSING ASSISTANCE COUNCIL (HAC) The
Housing Assistance Council is funded by the Department
of Housing and Urban Development (HUD) and provides
assistance, training, and loans for the development
of low-income housing in rural areas. The mailing
address is 1025 Vermont Avenue, N.W., Washington,
D.C. 20005; (202) 842-8600.
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HOUSING CODE Local government codes
which specify minimum standards that a dwelling unit
must meet.
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HOUSING FINANCE AGENCY A state financing
program that provides direct loans at a preferred
interest rate to citizens of that state who, for various
reasons, have been unable to obtain financing from
private institutions. Applicants must be residents
of the state for a specified period of time and under
most programs may not own other real property. In
recent years, cities and counties have also established
mortgage funds in order to meet the needs of the housing
market in their political jurisdictions.
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HOUSING FOR THE ELDERLY A real estate
project specifically built for elderly persons and
normally, in addition to living accommodations, provides
recreational facilities and nursing services.
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HOUSING STARTS The number of housing
units (including apartments) placed under construction
during a specific period of time. Since the construction
industry is such a vital component of the overall
economy, the number of housing starts is an important
barometer for how well the economy is doing.
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HUNDRED PERCENT LOCATION The location
which generates the highest per square foot revenues
for a particular type of use in a geographic area.
This particular location generally commands the highest
rentals or cost per square foot.
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HYBRID MORTGAGE A type of mortgage
in which the lender is allowed to receive income generated
from the property
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HYPOTHECATE The process of pledging
something as security but retaining possession of
it. The borrower who gives a mortgage to a lender
but keeps possession of the mortgaged property has
hypothecated the property.
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