Accommodator. The company which holds Taxpayer’s funds between sale of the Relinquished Property and purchase of the Replacement Property.

Amortization – the gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest.

Assignment of agreements – an assignment of rights under specifically identified agreements (such as construction contracts, architect’s agreements, laundry services etc).

Assignment of leases – an assignment of rights under specifically identified leases.

Attornment – the agreement by a tenant to recognize a replacement or successor landlord in the event of a foreclosure or other enforcement of rights under an assignment of leases or agreement of similar effect


Bankruptcy-remote – an entity created to be a borrower in a commercial loan which is less likely to put itself into or be entangled in a federal bankruptcy or state insolvency proceeding.

Business day – the part of a day during which most businesses are operating, usually from 9 am to 5 pm Monday through Friday. Often, this term is defined in the relevant document as a day other than a Saturday, Sunday or national holiday.


Cognovit note – a promissory note which contains a provision by which the borrower agrees to let the lender, without notice to the borrower or guarantor, file an answer on behalf of the borrower confessing judgment in favor of the lender, which then allows a court to issue a judgment immediately rather than through the normal, lengthier process of litigation.

Collateral – an item of economic value, such as real estate, pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default.

Credit score – a number that reflects the borrower’s credit risk level, typically with a higher number indicating lower risk. Credit scores are generated through statistical models using elements from the borrower’s credit history report, and change over time to reflect changes in the borrower’s credit history.


Deed of trust – one form of real estate security agreement granting a security interest in real estate which typically contains a power of sale allowing a.trustee to hold a non-judicial public sale much more quickly than would be the case in a judicial foreclosure.

Default – failure to make required payments on a timely basis or to comply with other conditions of an obligation or agreement.

Due on sale – the concept of accelerating the maturity of a loan if the mortgagor/borrower sells or conveys an interest in mortgaged property prior to the contractually agreed maturity date of the loan.


EBITDA – a commonly used accounting term which refers to a formula for analyzing cash flow of a property as “earnings before interest, taxes, depreciation and amortization”.

Environmental indemnity – an agreement under which a borrower (and often a guarantor) contracts to indemnify, defend and hold another person (typically the lender) harmless from any liability arising out of existing of potential environmental violations (such as contamination from a release of prohibited substances like petroleum) related to the property which is the security for a loan.

Equal Credit Opportunity Act (ECOA) – a federal (US) statute which prohibits creditors from requiring information concerning a spouse or former spouse of an applicant, except when: (1) the spouse will be permitted to use the account; (2) the spouse will be contractually liable on the account; (3) the applicant is relying at least partially on the spouse’s income as a basis for repayment of the credit requested; (4) the applicant resides in a community property state or is relying on property located in such a state as a basis for repayment of the credit requested; or (5) the applicant is relying at least partially on alimony, child support, or separate maintenance payments from a spouse or former spouse as a basis for repayment of the credit requested.

The most commonly known regulation interpreting ECOA is called Regulation B, sometimes called “Reg B.”

Equitable subordination – the concept of granting an otherwise junior lien a superior or prior right over a nominally senior lien, most commonly resulting from serious inequitable conduct by the senior lien holder.

Escrow account – an account that is held by a lender or an escrow agent, for a particular purpose defined in the escrow agreement controlling the account. When the conditions in the escrow agreement are triggered, such as when the tax bill comes due, the funds needed for that purpose are paid out of the escrow account.

Escrow agent – a third party who holds and delivers funds and documents under specific instructions. Often when purchasing a property, the escrow agent acts as a custodian of the earnest money or deposit and ensures that the appropriate funds are paid at the closing. In some states, all of the closing documents are delivered through an escrow agent operating under detailed instructions.

Estoppel – the concept of being prevented (or “estopped”) from raising or denying a fact or circumstance, typically used in connection with the issuance of an estoppel certificate.

Estoppel certificate – a statement from one party to another, providing information on which the recipient is entitled to rely. For example, a purchaser of a property may require a tenant to give an estoppel certificate to a new owner or that new owner’s lender identifying information regarding the nature and status of the tenant’s lease, and this estoppel certificate is also intended to prevent or “estop” the tenant from later raising, as defenses to a claim under the lease, facts the tenant omitted to claim in the estoppel certificate.

Exchange Value. The amount of proceeds from sale of a Relinquished Property which a Taxpayer must spend on Replacement Property in order to have a fully deferred exchange.


Fee mortgage – a mortgage granted by the owner of the fee simple estate of real property.

Fee simple estate – the highest and most complete form of real property ownership.

FHA –an acronym for the Federal Housing Administration. The FHA is a government agency whose primary purpose is to insure residential mortgage loans.

FICO score –an acronym for Fair Isaac Credit Organization. Fair, Isaac and Company, Inc. is a developer of data management systems used to rate credit risk. The term has evolved into a shorthand reference to credit scores created using their system. See www.fairisaac.com.

Financing statement – a form created in connection with the UCC and designed to be filed in one or more official government offices to perfect a creditor’s security interest.

Fixture – personal property which is permanently affixed or attached to real property such that it is considered to be an integral part of the real property.

Foreclosure – the process of enforcing a mortgage or other security interest against real property, usually through a judicial or court-supervised process.


Gross earnings – an individual’s taxable income before any adjustments (such as deductions, depreciation and other calculations) are made.

Guaranty – the agreement of a person or entity to pay amounts due, or otherwise perform the obligations, of another person or entity (for example, the promise by Tom to pay the loan Dick owes to Harry).


Homeowners association – an association of two or more homeowners created for the ownership and maintenance of commonly owned real estate and improvements, from a simple duplex up to a huge development with thousands of homes, condominiums and townhouses, typically created in a recorded document such as a condominium declaration or deed restrictions.


Indemnification – one party’s agreement to compensate someone else for loss or damage.

Intercreditor agreement – an agreement between two or more creditors of the same borrower, governing joint or unilateral action, and the manner in which common collateral will be held and foreclosed.


Junior financing – a loan relationship which is junior or lower in priority to a first or more senior loan.

Junior lien – a lien which is subordinate to or lower in priority to another (senior) lien.


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Lease – a contract granting use or occupation of property during a specified time for a specified payment.

Leasehold estate – an interest in real estate granted by a lease, typically limited to a specified term of years, and which estate terminates at the end of the lease.

Leasehold mortgage – a mortgage and security interest in a leasehold estate.

Lending regulations – regulations and rules issued periodically by federal (US) or state governmental agencies (such as the Federal Reserve Bank, the Federal Deposit Insurance Corporation or the Office of Thrift Supervision) which govern the lending and other business practices of banking and thrift/savings institutions.

Lien – an interest in property granted by the owner of that property, to another party (the lienholder), until the property owner fulfills a legal duty to the lienholder, such as the repayment of a loan or the payment of lawful charges for work done on the property.

Loan origination fee – a fee charged by a lender for processing a loan application, typically calculated as a percentage of the mortgage amount.


Mezzanine loan – a loan usually secured not by a lien on property, but secured by the ownership of equity interests of a borrower (for example, the shares of a corporation or the membership units of a limited liability company).

Mortgage – an agreement creating a security interest and other rights in a parcel of real property for the benefit of a lender or other secured party.

Mortgage broker – an individual or company who brings borrowers and lenders together for the purpose of loaning money.

Mortgage insurance – insurance protecting a lender against loss from a mortgagor’s default. Mortgage insurance is issued by the FHA or a private mortgage insurer. If the borrower defaults on the loan, the insurer would pay the lender the lesser of the loss incurred or the insured amount.


Neighborhood association – a voluntary membership organization that deals with social, political, zoning and other issues which typically affect the members’ properties and usually does not maintain commonly owned property.

Non-disturbance – the concept of consenting to (i.e., not disturbing) the rights of another, used typically in the context of a lender agreeing to permit a tenant to remain in its leasehold when the tenant’s landlord (who would be the lender’s borrower) defaults under its loan to the lender.

Non-recourse – the concept of a lender not having recourse against (i.e., the right to pursue recovery from) any assets of a borrower other than those assets specifically given as collateral.

Non-recourse carve-outs – exceptions to non-recourse provisions of a loan, identifying circumstances and events for which a lender could seek recovery from a borrower’s assets other than the specific pledged collateral.


Participation agreement – a document providing for an allocation and ordering of rights and obligations of two or more lenders who are jointly funding a loan, or to whom a piece of a loan is sold after the loan closing.

Participation loan – a loan funded by two or more lenders, or a loan funded by one lender who then sells off pieces of the loan to another lender.

Perfection – the concept of confirming the granting of a security interest (governed by the UCC with respect to personal property).

Personal property – any property other than real estate property and fixtures.

PITI – acronym for principal, interest, taxes, and insurance, the four components of a mortgage payment.

Power of sale – the right to hold a sale of an asset (such as real property secured by a deed of trust) without the requirement of a judicial process.

Pre-approved or pre-qualified – evidence that a potential borrower has passed a preliminary credit screening. A pre-approval from a lender shows that a potential borrower has a solid credit history and is qualified for a mortgage loan of a specified size. In a competitive market, a pre-approval letter can provide greater negotiating clout with a seller, as it can give the seller confidence that borrower is financially capable of completing a purchase.

Prepayment – the act of paying all or a portion of an outstanding loan balance prior to the contractually agreed date for such payment.

Prepayment penalty or fee – a fee assessed by a lender on a borrower who repays all or part of the principal of a loan before it is due. The prepayment penalty compensates the lender for the loss of interest that would have been earned had the loan remained in effect for its full term.

Principal – the amount borrowed, or the part of the amount borrowed which remains unpaid (excluding interest). This term is also used to describe that part of a monthly payment that reduces the outstanding balance of a mortgage.


Realized Proceeds. The sales proceeds received by the Taxpayer from sale of the Relinquished Property including the amount used to pay off the mortgage or deed of trust.

Recognized Proceeds The portion of the realized proceeds which is recognized as or in

Regulations. The Internal Revenue Service regulations authorizing and regulating deferred exchanges in which the Taxpayer sells the Relinquished Property to a Buyer and acquires Replacement Property from a different Seller rather than exchanging directly.  

Regulation B – the most commonly known rule under the Equal Credit Opportunity Act (ECOA).

Relinquished Property.  The property being exchanged.

Replacement Property.  The property being acquired in the exchange.

RESPA – an acronym that stands for the Real Estate Settlement Procedures Act, a federal consumer protection law originally implemented in 1974 governing loans on one to four-family properties and requires, among other matters, that a lender provide an advance notice of estimated closing costs, establishes guidelines for escrow account balances and prohibits “kickbacks” to parties for referring business associated with the loan.


Secondary financing – a junior priority loan.

Security agreement – a document granting a lender the right to execute against certain specified real and/or personal property as collateral for a loan or other obligation.

Security interest – the interest granted to a lender by a borrower in a security agreement.

Seller. The seller of the Replacement Property.Seller. The seller of the Replacement Property.

Single purpose entityor special purpose entity or “SPE” – an entity (typically but not always a limited liability company) designed to provide bankruptcy-remote protections for a lender.

Submortgage – an arrangement in which a mortgage lender pledges a mortgage as collateral for his/her own loan.

Subordinate the fee – the act of a landlord property owner granting to the tenant’s lender a right to foreclose the landlord’s interest, upon default of the tenant under its loan agreements, sometimes in return for a fee.

Subordination – the concept of agreeing to make an otherwise senior interest junior (or subordinate) to an interest which otherwise would be a junior interest.

Subordination, non-disturbance and attornment agreement – a document providing for subordination, non-disturbance and attornment obligations by parties with diverse interests in the same property.


Taxpayer.  The person or entity carrying out  the exchange.

Title insurance – an insurance policy issued to protect a property owner or the owner of a security interest against losses resulting from undisclosed defects which affect or impair the ownership rights of the insured person.

Title policy endorsement – specific individual agreements by a title insurance company adding to or altering the basic provisions of a title policy (for example, specifically insuring that the subject property (1) has access to a dedicated street, (2) is a single tax parcel, or (3) is the same land as the land identified in a certain survey).


Underwriting – the process by which a lender decides whether a potential debtor is creditworthy and should receive a loan.

Uniform commercial code or “UCC” – a uniform law created by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and adopted in essentially identical form by all fifty of the United States, governing goods and personal property transactions.


Yield maintenance fee – a component of a prepayment penalty, stated to be designed to replace interest earnings a lender would have received on a loan if the borrower had not prepaid the loan.