Land Lingo & Terms

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1031 Exchange

Also known as a Starker exchange or a tax-deferred exchange, permits investment property owners to sell a property and defer tax payments by reinvesting the proceeds into a "like-kind" investment property or properties. A 1031 exchange is enabled by Section 1031 in the Internal Revenue Code.

Acre

A common unit of land measure equal to 43,560 square feet.

Comparative Market Analysis (CMA)

Done by a Realtor to help determine the probable sales price of a property. A good CMA will take into account recent sales, pending sales, and current listings that are within the same neighborhood and have similar characteristics as the subject property.

Conservation Easement

A voluntary, legally binding agreement that limits certain types of uses or prevents development from taking place on a piece of property now and in the future, while protecting the property’s ecological or open-space values.

Conservation Reserve Program (CRP)

A voluntary program for agricultural landowners. Through CRP, you can receive annual rental payments and cost-share assistance to establish long-term, resource conserving covers on eligible farmland.

Deed

A legal document which conveys title (ownership) to real property.

Easement

Right held by one property owner to make use of the land of another for a limited purpose, as right of passage.

Fair Market Value (FMV)

A fair market value is often an estimate of what a willing buyer would pay to a willing seller, both in a free market, for an asset or any piece of property. If such a transaction actually occurs, then the actual transaction price is usually the fair market value.

General Warranty Deed

The most common deed is called a "General Warranty" deed. Such a deed contains "warranties" or guarantees from the grantor (commonly the "Seller") to the grantee (commonly the "Buyer") that the Seller is the owner of the property and that no one else has any interest in the property, other than those exceptions stated in the deed.

Grantee

Someone to whom the title of property is transferred (buyer).

Grantor

A person who makes a grant in legal form; "conveyed from grantor to grantee" (seller).

Land Locked

Referring to a parcel of real property which has no access or egress (entry or exit) to a public street and cannot be reached except by crossing another's property.

Legal Description

A legal description is used to describe the location of your land in legal documents (for example, the deed to your land). The Public Land Survey System (PLSS) is used in legal descriptions. It employs a grid system based on township, range and section numbers.

Life Estate

Freehold estate giving the person owning it the right to receive income of the estate until death. The beneficiary cannot sell the property and the estate terminates at death.

Limited Warranty Deed

A less common form of deed that warrants the state of title while the seller owned the property. (A "Limited Warranty" deed’s warranty is limited to the time the grantor owned the property, while a "General Warranty" deed’s warranties also cover all the time the property was owned by prior owners.)

Perk Test

A test to determine the absorption rate of soil for a septic drain field or "leach field". The results of a percolation test are required to properly design a septic system.In general, sandy soil will absorb more water than soil with a high concentration of clay or where the water table is close to the surface.

Prime Rate

The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime lending rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis.

Quit Claim Deed

Conveys to a Buyer only what the Seller actually owns, if anything, and provides no guarantee from the Seller to the Buyer that the Seller has any interest in the property to convey. The rule to follow for a person accepting a quit claim deed is "Buyer beware". If it later turns out that the Seller’s rights to use the property are encumbered by another person’s interest in the property, the Buyer is out of luck, and has no recourse against the Seller.

Survey

To determine the exact form, boundaries, position, extent, etc., of (a tract of land, section of a country, etc.) by linear and angular measurements and the application of the principles of geometry and trigonometry.

Tax-Assessed Value

It is the number on which the seller’s property taxes are calculated. The number is found in the county courthouse where taxes are assessed. Tax-assessed values are updated every few years, but they may not reflect actual current market values, especially in rapidly appreciating markets.

Topograpgy Map (aka Topo Map)

A map showing topographic features, usually by means of contour lines.
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