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ACCELERATION
CLAUSE: This clause in a note and trust deed permits the
payee or beneficiary to declare the entire unpaid balance
immediately due and payable when a given condition occurs. Such a
condition can be the sale of the property. This clause is
sometimes called an “alienation clause.”
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ACCOMMODATION
RECORDING: The recordation of an instrument without
assumption of responsibility for correctness or validity.
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ALL-INCLUSIVE TRUST
DEED (AITD/WRAP AROUND): An all-inclusive
procedure is used when a Seller (or lender) will carry back a
junior note without disturbing the trust deed loan(s) of record.
The document “wraps around” the existing loan(s). The sum of
the all-inclusive trust deed includes the total amount of the
balances on the underlying loan(s). The most common purpose for
using an AITD procedure is to avoid giving notice to the
underlying lender(s) and not disturbing their interest rates.
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AMENDMENTS:
After the initial escrow instructions have been executed and the
parties wish to change the instructions an amendment is prepared
and signed. Amendments are used in conjunction with the original
escrow instructions.
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AMORTIZATION:
Provision for the payment of a debt as to both principal and
interest in equal installments over a period of time.
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APPRAISAL:
An opinion as to the fair market value of land and the
improvements on it.
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ASSESSED VALUE:
The value placed on land and improvements as a basis for taxation.
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ASSESSMENTS:
Special and local levies upon property in the immediate vicinity
of an improvement. Assessments can be imposed by such entities as
flood control districts, street lighting districts and air
pollution control districts which serve an area.
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ASSIGNEE:
One to whom a transfer of interest is made. For example, the
assignee of a Deed of Trust or contract.
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ASSIGNMENT:
The transfer, in writing, of a person’s interest to another
person or entity in an asset, such as an assignment of stock, a
deed of trust and note or a lease.
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ASSIGNOR:
One who makes an assignment. For example, the assignor of a Deed
of Trust or contract.
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ASSUMPTION:
An agreement by one party to pay an obligation previously owed by
another. For example, the assumption of an existing trust deed
loan by a new owner may occur when property is sold.
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ASSUMPTION
FEE: The charge made by a lender when a buyer
assumes the seller’s existing loan.
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ATTORNEY-IN-FACT:
One who holds a power of attorney from another allowing him to act
on behalf of the grantor of the power.
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BENEFICIARY:
In a trust deed, the lender is designated as the beneficiary. The
beneficiary obtains the benefit of the security.
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BENEFICIARY’S
STATEMENT: A report from a lender, in writing, setting
forth the terms and conditions of a loan already of record, such
as amounts still owed, interest rate, monthly payments, etc.
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BILL OF SALE:
A document that attests to the transfer of ownership of
personal property.
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BORROWER:
One who obtains a loan and owes money to a lender.
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BUYER:
One who purchases or acquires property.
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BY-LAW: A
rule adopted for the internal government of a corporation.
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CITY REPORTS:
(Residential Property Report) The requirement of a special report
to be issued in connection with the sale of property, usually
processed through the Building and Safety Department.
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CLOSING STATEMENT:
Settlement of the escrow. (1) The seller’s statement gives an
accounting of the sales price paid less the charges normally
assessed to the Seller and payoffs made on behalf of the seller.
(2) The buyer’s statement shows the deposits made, the loan(s)
obtained or assumed, and any credits by instructions less the
sales price, loan costs, insurance, pro-rata items and charges
usually paid for by the buyer.
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COLLECTION
SERVICE: A service performed by a neutral third
party in receiving and disbursing loan payments as instructed by
the parties concerned.
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COMMUNITY
PROPERTY: Property acquired after marriage by
either a husband and or wife, other than by gift, or as an heir,
legatee or devisee.
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CONDEMNATION:
The exercise of the power of eminent domain by which property is
taken for a public use upon payment of just compensation.
Condemnation can also refer to the condemning of unsafe
structures.
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CONDOMINIUM:
A multifamily or other structure in which units are individually
owned and in which owners of individual units also own an
undivided interest in common areas.
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CONTINGENT:
Dependent upon conditions or events specified but not yet
accomplished. Property may be sold contingent upon the seller or
buyer meeting pre-determined conditions.
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CONTRACT OF
SALE: An agreement entered into for the sale and
purchase of property where title remains in the seller’s name
until all conditions of the contract have been fulfilled.
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CONVEYANCE:
A written document that transfers title to an asset from one
person to another. A deed and an assignment are both conveyances,
as is a bill of sale.
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COUNTY ASSESSOR:
One who sets value of property for taxation purposes.
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COVENANTS,
CONDITIONS AND RESTRICTIONS (CC&R’S): Those matters
that inhibit the use and/or sale of a property which are usually
placed against properties by an inclusion on a prior deed. Not all
properties have CC&R’S, however, all condominium projects
will have such restrictions.
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CREDIT REPORT:
Report which shows your credit history. The lender uses the
information in a credit report to help decide whether or not to
approve your loan and how much money to lend you.
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DEED: A
written document which conveys ownership of real property from one
person to another.
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DEED OF
TRUST: A document executed by the owner of real
property by which the real property is given as security for the
payment of a note or other performance of an obligation.
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DEFAULT:
Failure to perform a duty or to pay an obligation.
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DEFICIENCY
JUDGMENT: A personal judgment in a judicial
foreclosure action for the remaining amount due after a sale of
the security.
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DEMAND:
A statement from a lender showing the amount due on a loan. If a
seller’s loan is to be paid in full through escrow, the escrow
officer must obtain a written demand for payment and the documents
necessary to release the loan.
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DISCOUNT:
Also often called ‘discount points,’ a loan discount is a
one-time charge imposed by the lender or broker to lower the rate
at which the lender or broker would otherwise offer the loan to
you. Each ‘point’ is equal to one percent of the loan amount.
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DOCUMENTARY
TRANSFER TAX: A tax on recorded transfers
of title to real property.
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EARNEST MONEY:
An amount of money given as part of the purchase price of property
to bind the agreement between the buyer and seller (initial
deposit).
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EASEMENT:
A right or interest in the property of another, such as a right to
cross over another person’s property to reach yours.
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EMINENT DOMAIN:
The right or power of a governmental body to take property for a
public purpose upon payment of just compensation.
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ENCUMBRANCE:
A lien affecting the land and improvements, such as a deed of
trust.
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EQUITY:
Market value of property, less any encumbrance or other liens on
it.
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ESCROW:
A transaction in which an impartial third party acts as agent for
both seller and buyer, or for both borrower and lender, in
carrying out instructions, delivering papers and documents and
disbursing funds.
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EXCEPTION:
An interest in real property which is excluded from the conveyance
and remains with the grantor or which had been excluded in a prior
conveyance such as oil and mineral rights.
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FIRE INSURANCE:
Insurance against loss or damage by fire to specific property.
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FORECLOSURE:
A proceeding to enforce a lien by the sale of the real property in
order to satisfy the debt.
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GRANTEE:
The buyer on a deed.
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GRANTOR:
The seller on a deed.
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HOME PROTECTION
POLICY: Basically provide limited protection
against failure of heating, plumbing, electrical and other
systems. Available in a variety of coverage’s and costs.
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HOMESTEAD:
The dwelling in which an owner or head of a family resides which
can be protected to a limited extent from forced sale by a
recorded “Declaration of Homestead”.
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IMPOUND ACCOUNT:
An account held in trust by the lender in which the borrower is
required to place monthly deposits for property taxes, insurance
and/or other purposes.
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INDEMNITY
AGREEMENT: A warranty backed up with a written
guarantee of payment on a matter in question.
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INVENTORY
LIST: A detailed signed statement listing all
personal property included in the purchase price.
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JOINT TENANCY:
A form of co-ownership by two or more persons in equal shares
characterized by the incident of survivorship.
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LEASE: A
writing constituting a conveyance of real property for a period of
time along with a contract for its possession during that term.
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LEGAL DESCRIPTION:
Description of real property as used in legal documents in
contrast to a street address by which the property is commonly
known. Legal descriptions usually refer to recorded maps, surveys
or other public documents.
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LESSEE:
The tenant under a lease.
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LESSOR:
The landlord under a lease.
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LIEN: A
security interest in real or personal property which places the
holder in a position prior to the rights of the general creditors
of the owner. Examples include trust deeds, mortgages, special
assessments, recorded judgments, mechanic’s liens, taxes, etc.
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LIS
PENDENS: A
recorded notice of a law suit filed against a property.
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LOAN ORIGINATION:
See “Points”.
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LOAN TITLE
POLICY: A policy of title insurance insuring the
interest of a lender (ALTA).
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LOSS PAYABLE
CLAUSE: An endorsement to a fire insurance
policy specifying the parties entitled to participate in proceeds
in the event of a loss.
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MAKER: A
person who makes, executes or signs a legal instrument such as a
promissory note.
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NOMINEE:
Person(s) that is named, designated or appointed.
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NOTARIZE:
To prove execution of a document by means of a Certificate of
Acknowledgement by a notary public.
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NOTE:
Written evidence of a debt by a borrower that includes a promise
of payment in accordance with specified terms. A valuable document
which must not be lost even when paid in full. In real property
transactions, a note is usually secured by a deed of trust.
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NOTICE OF
COMPLETION: A notice which should be recorded to indicate
the completion of improvements to real property. A valid notice of
completion limits the time for filing mechanic’s liens.
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NOTICE OF
DEFAULT: Recorded notice that a default has
occurred under a deed of trust and/or note.
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OFFSET STATEMENT:
A statement obtained from the owner of real property to verify the
loan balance, interest rate, interest paid-to-date, and maturity
date with respect to a loan being taken over by a purchaser. Not
to be confused with a beneficiary’s statement. This can also be
provided by a tenant regarding his rights of possession.
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ORDINANCE:
A legislative enactment of a city or county.
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PAYEE:
One who receives payments.
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PAYOR:
One who makes payments.
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PERSONAL
PROPERTY: All property which is not land or improvements
permanently affixed to land. Example: stocks, bonds, furniture,
automobiles, clothing, promissory notes, etc.
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POINTS:
Covers the lender’s administrative costs in processing the loan.
Often expressed as a percentage of the loan, the fee will vary
among lenders. Generally, the buyer pays the fee, unless otherwise
negotiated.
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POWER OF
ATTORNEY: A written authorization to an agent to perform
specified acts on behalf of his principal. This may be granted as
either a general or limited power.
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PRELIMINARY
TITLE REPORT: A report from a title company of the
present condition of title made prior to the issuance of a title
policy.
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PREPAYMENT
PENALTY: An agreement to pay a specified penalty for the
full or partial payment of a note before its maturity date.
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PRORATION:
The allocation of property taxes, interest, insurance premiums,
rental income, etc... between buyer and seller proportionate to
time of use.
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PURCHASE
MONEY TRUST DEED/NOTE: When a seller carries
back a note secured by a deed of trust on his property it is
called a purchase money obligation. Purchase money trust deeds are
exempt from the usury limitations, the viewpoint being that the
seller has agreed to the extended payment of the purchase, and the
interest itself is a part of that purchase price.
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QUITCLAIM
DEED: A deed which conveys whatever right, title or
interest the grantor may have in property at the time of
conveyance. There is no guarantee implied in a quitclaim deed.
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REAL PROPERTY:
Land and improvements permanently affixed to land.
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RECONVEYANCE:
A document evidencing that a deed of trust affecting real property
has been paid in full and that the lender and the trustee no
longer have any interest in the property.
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RECORDATION:
Filing for record in the office of the county recorder.
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RENTAL STATEMENT:
A detailed signed statement covering the rental income of a
property. The rent statement is usually given for pro-rata
purposes with respect to monthly rentals, security deposits, last
months rents, etc.
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REQUEST
FOR NOTICE: A recorded request by anyone desiring
written notice of the recording of a notice of default under a
deed of trust.
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RESERVATION:
A right reserved by the grantor when conveying property, or a
right which had previously been reserved.
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RIGHT OF
WAY: The right of another to cross over, under or through a
parcel of land.
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RESTRICTIONS:
This is often referred to as covenants, conditions and
restrictions (CC&R’s) in regard to a piece of property,
setting limitations on its use.
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SINGLE:
A person that has never been married.
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SELLER:
One who sells property to another.
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SPECIAL
RECORDINGS: “Special” recordings are those filings that
are not recorded at the County Recorder’s title company window
at the beginning of the day with the normal volume of
transactions. If the documents are recorded later in the day, it
is called a “Special” recording. “Special” recordings are
rarely allowed; the recording is at the discretion of the County
Recorder’s office.
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STATEMENT
OF INFORMATION: A brief statement of facts relied
upon by title insurers to assist in the proper identification of
persons.
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SUBJECT
TO: (1) When a buyer assumes the obligations of a loan on a
property informally he is accepting the property “Subject To”
the loan of record. The escrow officer will not request the lender
process a formal assumption with credit checks and assumption
documentation. (2) The recognition of an existing lien or
encumbrance without assuming personal liability thereof.
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SUBORDINATION
AGREEMENT: An agreement by which a prior lien is made
inferior to an otherwise junior lien.
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SUPERSEDE:
Documents that have been amended, or changed, supersede the old
agreement. Any escrow instructions that are fully re-drawn will
recite at the top that the instructions supersede all prior
instructions.
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TAX COLLECTOR:
One who collects the taxes on property.
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TAX SERVICE
CONTRACT: When a lender wishes to be kept
informed as to whether or not property taxes are being paid a
Realty Tax Service Contract can be purchased which entails an
audit of the tax rolls and issuance of notices when taxes are
delinquent.
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TENANCY IN
COMMON: A form of co-ownership of property by two
or more persons in undivided interests.
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TITLE:
Evidence of a person’s right to or the extent of his interest in
real property.
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TITLE INSURANCE:
Insurance against loss or damage resulting from defects in title
to a particular parcel of real property.
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TRUST DEED:
A deed of trust. (See deed of trust.)
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TRUSTEE
(IN A DEED OF TRUST): The entity to which real property is
conveyed in trust, not to be confused with the beneficiary.
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TRUSTOR
(IN A DEED OF TRUST): The borrower under a deed of trust.
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UNMARRIED:
Person that was married and divorced.
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USURY: A
greater payment or return for the loan of money that is permitted
by law.
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VARIABLE
INTEREST RATE: Interest rate which fluctuates up or
down according to the current cost of money.
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VENDEE:
One who is purchasing property under a Contract of Sale.
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VENDOR:
One who is selling property under a Contract of Sale.
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VESTING:
The manner in which the owner of real property holds title.
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ZONING:
Local government regulations relating to the use of real property.
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