Real Estate Glossary

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Obedience:
The fiduciary relationship obligates the agent to act in good faith at all times, obeying the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. Because illegal acts do not serve the principal's best interests, obeying such instructions violates the broker's duty of loyalty. On the other hand, an agent who exceeds the authority assigned in the contract will be liable for any losses that the principal suffers as a result.
Obligor:
A promisor; one who incurs a lawful obligation to another (the obligee). The maker of a promissory note is an obligor. In a performance bond, the contractor is the obligor. One who guarantees the performance of the obligation is a surety; also called a guarantor. (See payor)
Obligatory advance:
Any advance which, under the terms of the credit line deed of trust or other agreement, the secured party has legally obligated itself to make in the absence of a default, breach, or other such event. Obligatory advances include, but are not limited to, advances which the secured party has agreed to make as a term or condition of the credit line deed of trust or other related agreement; obligations arising out of the occurrence of a condition, event or circumstance contemplated by the agreement; obligations arising on a specified date or time; or advances made upon application therefor by the grantor under the credit line deed of trust or by another obligor whose indebtedness is secured by the deed of trust.
Obsolescence:
The loss of value due to factors that are outmoded or less useful. Obsolescence may be functional or economic.
Occupancy permit:
A permit issued by the appropriate local governing body to establish that the property is suitable for habitation by meeting certain safety and health standards.
Occupational Safety and Health Act (OSHA):
Congress created OSHA under the Occupational Safety and Health Act, which was signed by President Richard M. Nixon on December 29, 1970. OSHA's mission is to prevent work-related injuries, illnesses and deaths.OSHA Website
Offer:
An offer is a promise made by one party, requesting something in exchange for that promise. The offer is made with the intention that the offeror will be bound to the terms if the offer is accepted. The terms of the offer must be definite and specific and must be communicated to the offeree.
Offer and acceptance:
Two essential components of a valid contract; a "meeting of the minds." (See acceptance, offer)
Offeree:
The person to whom an offer is made - usually the owner.
Office of Thrift Supervision (OTS):
Monitors and regulates the savings and loan industry. OTS was created by FIRREA.OTS Website
Office property:
Income-producing commercial property from which a particular service is rendered.
Offeror:
The party who makes an offer - usually the buyer.
Offsite improvements:
Improvements made outside of a property's boundaries, such as sidewalks and streets.
Oil and gas lease:
A grant of the sole and exclusive right to extract oil and/or gas from beneath the surface of land. Such a lease is generally for a designated term of years and is subject to a payment of royalties in the event of production, the commencement of drilling operations on or before a specified date and the performance within a specified time of a certain amount of development work. Typically, an express or implied easement is granted to enter the property in order to drill.
One-hundred-percent commission plan:
Some firms have adopted a 100 percent commission plan. Salespersons in these offices pay a monthly service charge to their brokers to cover the costs of office space, telephones and supervision in return for keeping 100 percent of the commissions from the sales they negotiate. The 100 percent commission salesperson pays all of his or her own expenses.
One stop shopping:
An arrangement where settlement and service providers are all available through the broker.
Open-buyer-agency-agreement:
This agreement is a nonexclusive agency contract between a broker and a buyer. It permits the buyer to enter into similar agreements with an unlimited number of brokers. The buyer is obligated to compensate only the broker who locates the property the buyer ultimately purchases.
Open-end loan:
A mortgage loan that is expandable by increments up to a maximum dollar amount, the full loan being secured by the same original mortgage.
Open-end trust deed:
An expandable loan in which the borrower is given a limit up to which he or she may borrow, with each incremental advance to be secured by the same trust deed.
Open house:
The common real estate practice of showing listed homes to the public during established hours.
Open listing:
A listing given to any number of brokers who can work simultaneously to sell the owner's property. The first broker to secure a buyer who is ready, willing and able to purchase at the terms of the listing earns the commission. In the case of a sale, the seller is not obligated to notify any of the brokers that the property has been sold. Unlike an exclusive listing, an open listing need not contain a definite termination date. The listing terminates after a reasonable time, usually whatever is customary in the community. Either party can, in good faith, terminate the agency at will. (See listing agreement)
Open-market operations:
The buying and selling of government securities by the Federal Reserve to control the amount of money in circulation.
Operating budget:
A projection of income and expenses for the operation of a property over a one year period.
Operating expenses:
Those recurring expenses that are essential to the continuous operation and maintenance of a property. Operating expenses are generally divided into the following categories: fixed expenses such as real property taxes and building insurance; variable costs such as utilities, payroll, administration and property management fees; and reserves for replacement. Operating expenses do not include items such as mortgage payments, capital expenditures and depreciation.
Opportunity cost:
Earnings that may be available on alternative investments.
Option:
An agreement to keep open, for a set period, an offer to sell or lease real property.
Opinion of title:
An opinion of the marketability of a title given by an attorney based on the abstract of title. (See abstract of title)
Option listing:
A listing in which the broker also retains an option to purchase the property for the broker's own account. In view of the body of litigation involving breach of fiduciary duties by brokers who conceal offers from buyers until after the broker has exercised the option, full and fair disclosure must be given to the seller. (See listing agreement)
Ordinance:
A military weapon or item of destruction (e.g. bullets). (See military ordinance location)
Original basis:
The sum of the purchase price of a property plus buying expenses on acquisition. (See basis)
Ostensible agency:
A form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document. (See implied agency)
Other income:
Refers to income other than rent, such as vending and laundry machines, storage or parking space income, and so on.
Overriding trust deed:
See wraparound mortgage
Owner-occupied:
A property where the owner physically occupies the property.
Ownership:
The right to use, possess, enjoy, transfer, and dispose of a thing to the exclusion of all others.
Owner's title insurance:
An insurance policy protecting the buyer for the amount of the purchase price in the event of a future title dispute. (See mortgagee's title insurance, title insurance)


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