Glossary
Welcome to the “Glossary” section, your go-to resource for demystifying the terminology surrounding Fannie Mae and the mortgage industry. Here, you’ll find a curated list of terms along with their corresponding definitions, designed to enhance your understanding of Fannie Mae’s operations, policies, and guidelines. Whether you’re a first-time homebuyer, a seasoned investor, or a real estate professional, this comprehensive glossary serves as a valuable reference tool to clarify any confusion and ensure clarity in navigating the world of Fannie Mae.
License
Permission granted by an owner to another for the execution of work on the owner’s land.
Lien
A monetary claim made against a property for unpaid mortgage, taxes, contractor work, or other charges. A lien attaches to the property, not the owner, but must be recorded in the property records of the resident county.
Board of Directors
In the context of community associations, this is a body of elected homeowners who make decisions to manage the association. Usually the board elects a president, or chairman, to lead the group.
Budget
A plan for the finances of a community association over the course of a specified period of time, usually one year.
Bylaws
A set of guidelines that regulate the way the association is run as well as the board of director’s actions. Bylaws are drafted and adopted by the community association and can include certain rights, such as the right to hold meetings or vote.
Cash Accounting Method
This method, unlike accrual accounting, records income and expenses only when funds are transferred. This system is easier to learn and utilize, but only shows transactions that have already been processed.
CC&Rs
This stands for covenants, conditions, and restrictions, which are the rules for living in a community association. Also called the master deed, declaration, or governing documents, these documents are filed with the county property records.
Common Area
The parts of property (building and grounds) are owned jointly by members of a community association.
Community Association
An association (usually incorporated as not for-profit) of property owners whose membership is required upon becoming a unit owner. Members of the association are required to adhere to governing documents and pay assessments for the upkeep of common areas and the provision of certain services.
Condominium
A development consisting of an undivided interest in a common area coupled with a separate interest in a unit.
Cooperative / Co-op
A multifamily community association composed of a residential structure of two or more units. The interior space belongs to an individual unit owner and the common areas, including the outside structure itself, are owned jointly by members.
Developer (Declarant)
The person or group who either signs the original declaration governing the development and association or acquires the original developer’s (declarant’s) rights.
Declaration
See CC&R’s
Directors & Officers Liability Coverage
In the case of a lawsuit against a community association, “D&O Insurance” protects the members of the Board of Directors from liability, unless negligent or criminal acts are proven.
Encroachment
Any item, usually a tree or fence, owned by one unit owner but extending onto another owner’s property.
Executive Session
A portion of a board meeting that is confidential and attended only by members of the Board of Directors.
Fiduciary Duty
The duty of the members of a community association’s Board of Directors is act in the best interests of the association as a whole, even if that conflicts with personal interests.
Governing Documents
See CC&R’s
Indemnity
The act of holding harmless; protection from damage or loss. This applies to a Board of Directors and protects those in volunteer positions from being liable.
Injunction
A motion or request for a court-order to perform an action or refrain from performing an action.
License
Permission granted by an owner to another for the execution of work on the owner’s land.
Lien
A monetary claim made against a property for unpaid mortgage, taxes, contractor work, or other charges. A lien attaches to the property, not the owner, but must be recorded in the property records of the resident county.
Managing Agent
A person or entity hired to assist the board of directors in enforcing the documents and managing the assets, including funds, of the association.
Mediation
An informal proceeding during which a neutral third person works with both parties in a legal dispute trying to reach a resolution.
Mitigate
An attempt to alleviate trouble or cause damage to be less severe.
Motion
A formal request, usually in writing, for a hearing and decision on a specific issue.
Open Meeting
Any meeting of a community association’s Board of Directors in which any member of the association is allowed to attend. Opposite of executive session.
Priority of Liens
Liens are usually ranked in the order in which they are “perfected” or recorded. As a result, “first in time, first in line” is how liens are normally prioritized.
Proxy
A person appointed to act or vote on behalf of another person by representing them at a meeting of the association. Also refers to the written piece of paper granting that power.
Quorum
The minimum number of owners required to hold a meeting of the association. The number of owners required varies according to the governing documents.
Statute of Limitations
A time period during which a complaint must be filed or it is not recognized.
Title to Real Estate
Ownership of land and the right to use it.
Title Insurance
Insurance is provided by a title insurance company that reviews all recorded documents that impact the title of a particular piece of real estate. This title “search” discloses mortgages, liens, or other encumbrances on the property that would negatively impact the purchaser’s ownership rights.
Townhouse
A term used to describe an attached residential dwelling. A townhouse can be a planned development on a lot or a condominium.
Tract Map
A document recorded in the county real property records that shows the location of all lots within a tract and provides specific descriptions and dimensions.
Temporary Restraining Order / TRO
A court order obtained on short notice to stop a prohibited activity. It remains in effect until an injunction hearing can take place.
Waiver
The voluntary relinquishment of a right, claim, or privilege.
Zoning
A comprehensive system of land use controls normally reserved for city or county governments.
