Language of Real Estate

Exclusive right to sell vs. Exclusive agency The exclusive right to sell gives the broker a commission no matter who sells the property (the owner or the brokers), whereas under an exclusive agency, no commission is due if the seller finds the buyer. Exclusive agency...

Assemblage vs. Plottage Assemblage is the process of joining several parcels to form a larger parcel; the resulting increase in value is called plottage. Assemblage -- The combining of two or more adjoining lots into one large tract. This is usually done to increase...

Statute of frauds vs. Statute of limitations The statute of frauds requires that certain contracts be in writing to be enforceable, whereas the statute of limitations sets time limits on the ability to file a lawsuit to enforce a right. Statute of frauds -- State law...

Functional obsolescence vs. External obsolescence Obsolescence is a cause of depreciation in a property. A loss in value resulting from some internal (i.e., functional) factor (e.g., poor design, outdated equipment) as opposed to an external factor (e.g., neighborhood...

 Eminent Domain vs Police Power When property is taken under eminent domain, there must be payment of just compensation, whereas a taking under the police power (such as zoning) does not require compensation. Eminent Domain - The right of government (both state and...

Riparian Rights vs. Littoral Rights Riparian rights are those rights and obligations that are incidental to ownership of land adjacent to or abutting watercourses such as navigable streams and rivers, whereas littoral rights are a landowner's claim to use of the body...

Mistaken Identity -- Variance vs. Nonconforming Use A variance is an exception to the existing zoning, whereas a nonconforming use (also known as a grandfather clause) arises when there is a change to the zoning but an existing use is still permitted to continue....

Void vs Voidable A void contract lacks the essential elements to be valid, whereas a voidable contract is valid, except one of the parties has the ability to void it because of some wrongdoing. Void -- Having no legal force or binding effect; a nullity; not...

Note: This is the 9th post in our series of real estate words that are sometimes misunderstood, what we call cases of "Mistaken Identity."  Encroachment vs. Encumbrance An encroachment is an unauthorized intrusion of one property onto another, and it is an ...

Gross Lease vs. Net Lease In a gross lease, the tenant pays a single amount and the landlord pays the expenses, whereas in a net lease the tenant pays a net amount to the landlord and the tenant pays the expenses. Gross Lease A lease of property under which the lessee...

Estoppel Certificate vs. Reduction Certificate The estoppel certificate (also called a certificate of no defense) is issued by the mortgagor to establish the amount of the debt and whether any defenses exist, whereas the reduction certificate is issued by the lender...

Option vs. Right of First Refusal An option is a right to purchase property at a set price for a fixed period of time, whereas a right of first refusal is a right to purchase property only if it is offered for sale in the future. Option -- An agreement to keep open,...