Dictionary – Illiquidity – Italian Villa

ILLIQUIDITY – 1) Inadequate cash to meet obligations; 2) REAL ESTATE is an illiquid investment because of the time and effort required to convert to cash.

IMMEDIATE ANNUITY – An ANNUITY providing for payment to begin immediately.

IMMEDIATE PARTICIPATION GUARANTEE PLAN (IPG) – Type of PENSION plan in which all pension contributions are deposited in an unallocated fund and used directly to pay BENEFITS to retirees.

IMPAIRED RISK – Also known as SUBSTANDARD RISK – A RISK that cannot meet the normal health requirements of a standard HEALTH INSURANCE POLICY. Protection is provided in consideration of a WAIVER, a special policy form or a higher PREMIUM charge. IMPAIRED RISKS may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.

IMPLIED AGENCY – Occurs when the words and actions of the parties indicate that there is an AGENCY relationship.

IMPLIED CONTRACT – A binding CONTRACT created by the actions of the parties rather than by any oral or written agreement.

IMPLIED WARRANTY – A WARRANTY that is not written but exits under the law.

IMPOUND ACCOUNT – A fund set aside for future needs.

IMPROVED LAND – 1) LAND that has some improvements; 2) LAND that has been partially or fully developed for use.

IMPROVEMENT – Any permanent attachment to the LAND.

IMPROVEMENT RATIO – The relative VALUE of IMPROVEMENTS to the value of unimproved property.

IMPUTED INTEREST – 1) Implied interest; 2) in a MORTGAGE that states an insufficient INTEREST RATE, the law will ascribe that the RATE is higher and the PRINCIPAL is less.

IMPUTED NEGLIGENCE – Case in which responsibility for DAMAGE can be transferred from the NEGLIGENT party to another person, such as an employer.

INCHOATE – 1) Unfinished; 2) begun but not yet completed; 3) contingent.

INCHOATE INTEREST – An interest in REAL ESTATE which is not a present interest but may ripen into a VESTED INTEREST.

INCIDENTAL    INCOME    –    Also    known    as    ANCILLARY,    ADDITIONAL    and SUPPLEMENTAL INCOMEINCOME derived from a business enterprise which is not inherent to the business. Examples would be the INCOME from the shoe rentals and concession stands in a bowling alley or the laundry and soda facilities in an APARTMENT complex.

INCOME – The money or other state benefit coming from the use of property, skill or business.

INCOME APPROACH TO VALUE – The APPRAISAL method of estimating the MARKET VALUE of the PROPERTY by its ability to generate an INCOME for its owner. One of two methods may be used, either the GROSS RENT MULTIPLIER or CAPITALIZATION.


INCOME STREAM – A regular flow of money generated by a business or INVESTMENT.

INCOMPETENT – One not legally capable of completing a CONTRACT, including the mentally ill, minors, and others considered incapable.

INCONTESTABILITY – Except for non-payment of PREMIUMS and certain other circumstances, LIFE POLICIES which provide that the POLICY shall be INCONTESTABLE after the POLICY has been in force for two years during the lifetime of the INSURED.

INCONTESTABLE CLAUSE – An optional clause which may be used in non-cancel-able or GUARANTEED RENEWABLE HEALTH INSURANCE CONTRACTS providing that the INSURER may not challenge the VALIDITY of the CONTRACT after it has been in force for two (sometimes three) years.

INCORPORATE – 1) To provide a geographic area the legal status of a political subdivision of the state; 2) to form a CORPORATION under state regulations provided by the Secretary of State.

INCORPOREAL – 1) Not having a body; 2) non-physical and intangible, such as an idea.

INCORPOREAL PROPERTY – Legal interests in REAL PROPERTY that do not entail the right of possession.

INCORPOREAL RIGHT – A non-possessory right in REAL PROPERTY, such as an EASEMENT or RIGHT-OF-WAY.

INCREASE IN RESERVES – The difference between the year end and beginning of the year CLAIM reserves.

INCURABLE DEPRECIATION – Items of PHYSICAL DETERIORATION and FUNCTIONAL OBSOLESCENCE that is not economically feasible to cure. An item is incurable if the cost to cure the DEPRECIATION is more than the resulting contribution to the PROPERTY VALUE.

INCURRED-BUT-NOT-REPORTED (IBNR) RESERVESLIABILITY account on an INSURER’S BALANCE SHEET reflecting CLAIMS that are expected based upon statistical projections but which have not yet been reported to the INSURER.

INCURRED CLAIMS – The total of the CLAIMS paid during the POLICY year plus the CLAIM RESERVES as of the end of the policy year minus the corresponding reserves as of the beginning of the POLICY year. The difference between the year end and beginning of the year claim reserves is called the INCREASE IN RESERVES and may be added directly to the paid CLAIMS to produce the INCURRED CLAIMS.

INDEMNIFICATION – Compensation to the victim of a LOSS, in whole or in part, by payment, repair, or replacement.

INDEMNITY – 1) INSURANCE or other SECURITY against possible DAMAGE, LOSS or injury; 2) legal principle that specifies an INSURED should not collect more than the actual cash VALUE of a LOSS but should be restored to approximately the same financial position as existed before the LOSS.

INDENTURE – A written agreement made between two or more persons having different interests.

INDEPENDENT ADJUSTORCLAIMS ADJUSTOR who offers his or her services to INSURANCE COMPANIES and is compensated by a fee.

INDEPENDENT AGENT – An independent business person who usually represents two or more INSURANCE COMPANIES in a sales and service capacity and who is paid on a COMMISSION basis.

INDEPENDENT AGENCY SYSTEM – Also known as the AMERICAN AGENCY SYSTEM – Type of PROPERTY and LIABILITY INSURANCE marketing system in which the AGENT is an independent businessperson representing several companies. The AGENCY owns the expirations or RENEWAL rights to the business and the AGENT is compensated by COMMISSIONS that vary by line of INSURANCE.

INDEPENDENT APPRAISAL – A VALUE estimate provided by someone who does not participate in the INCOME or VALUE of the PROPERTY.

INDEPENDENT CONTRACTOR – 1) A CONTRACTOR who is self-employed; 2) the person hired under a specific written CONTRACT to perform certain acts according to his or her own methods and without the control of a superior; the INDEPENDENT CONTRACTOR is solely responsible for the results of the work performed. Most REAL ESTATE salespeople are INDEPENDENT CONTRACTORS with their BROKERS for tax purposes.




INDETERMINATE PREMIUM WHOLE LIFE INSURANCE – Nonparticipating WHOLE LIFE POLICY that permits the INSURER to adjust PREMIUMS based on anticipated future experience. Initial premiums are guaranteed for a certain period. After the initial guaranteed period expires, the INSURER can increase PREMIUMS up to some maximum limit.

INDEX – Often used to make adjustments in loan interest rates, wage rates, rental rates and pension BENEFITS set by long term contracts,  a statistic that indicates some current economic or financial condition.

INDEXED LOAN – A long-term LOAN in which the TERM, payment, INTEREST RATE or PRINCIPAL amount may be adjusted periodically according to specific INDEX. The INDEX and the manner of adjustment are generally stated in the LOAN CONTRACT.

INDEXING – Adjustment of VALUES over time to reflect the impact of INFLATION.

INDEX LEASE – A LEASE under which the RENT paid is tied to some economic indicator or INDEX which is beyond the control of both the LESSOR and LESSEE, such as the CONSUMER PRICE INDEX.

INDIRECT COSTS – Also known as SOFT COSTS – Costs not directly associated with the structure but are incurred during the construction period.

INDIRECT LOSS – Also known as CONSEQUENTIAL LOSS – Financial loss occurring as the consequence of some other loss.

INDIVIDUAL CONTRACT – A CONTRACT of HEALTH INSURANCE made with an individual called the POLICYHOLDER or the INSURED, which normally covers such individual and, in certain instances, members of his family.

INDIVIDUAL DEDUCTIBLE – Amount that an INSURED and each person of his or her family covered by the POLICY must pay before the group or individual MEDICAL INSURANCE POLICY begins to pay for medical expenses.

INDIVIDUAL INSURANCE – Also known as PERSONAL INSURANCE as distinct from group and blanket insurance – POLICIES which provide protection to the POLICYHOLDER and/or his/her family.

INDIVIDUAL POLICY PENSION TRUST Frequently used for small groups, a type of PENSION PLAN administered by TRUSTEES who are authorized to purchase individual level PREMIUM policies or ANNUITY CONTRACTS for each member of the plan. The polices usually provide both LIFE INSURANCE and retirement BENEFITS.

INDIVIDUAL RETIREMENT ACCOUNT (IRA) – An account to which an individual can save for retirement on a tax-favored basis. Contributions to a standard IRA are tax DEDUCTIBLE for many workers; contributions to a Roth IRA are made with after-tax dollars but can be withdrawn tax-free at retirement.

INDUSTRIAL LIFE INSURANCE – Also known as DEBIT LIFE INSURANCE – Issued in small amounts, usually less than $1,000, with PREMIUMS payable on a weekly or monthly basis. The PREMIUMS are generally collected at the home by an AGENT of the company INDUSTRIAL PARK – An area designed and zoned for manufacturing associated activities.

INDUSTRIAL PROPERTYPROPERTY used for industrial purposes, such as factories.

INFLATION – 1) Generally measured by the CONSUMER PRICE INDEX as published by the Bureau of Labor Statistics, a LOSS in the purchasing power of money; 2) an increase in the general price level.

INFLATION-GUARD ENDORSEMENTENDORSEMENT added at the INSURED’S request to a HOMEOWNERS policy to increase periodically the face amount of INSURANCE of the DWELLING and other POLICY coverages by a specified percentage.

INFORMATION REPORTING – Reports provided to the INTERNAL REVENUE SERVICE, such as COMMISSIONS earned by REAL ESTATE sales AGENTS and REAL ESTATE transactions of home sellers reported by the BROKER.

INFRASTRUCTURE – The basic public works of a city or SUBDIVISION, including bridges, roads, sewer, drainage and water systems and essential public UTILITIES.

INGRESS AND EGRESS – Right to enter and exit through LAND owned by another.

INHERENT VICE – A defect or cause of LOSS arising out of the nature of the goods in question.

INHERITANCE TAX – 1) A TAX on the right of an HEIR to receive PROPERTY at the death of another; 2) based on PROPERTY VALUE, a TAX imposed in some states on those who acquire PROPERTY from a DECEDENT.

INITIAL RESERVE – In LIFE INSURANCE, the reserve at the beginning of any POLICY year.

INJUNCTION – An order issued under the seal of a court to restrain one or more parties to a legal proceeding from performing an act deemed inequitable to another party or parties in the proceeding.

INJURY INDEPENDENT OF ALL OTHER MEANS – An injury resulting from an accident, provided that the ACCIDENT was not caused by an illness.

IMPOUNDED PROPERTYPROPERTY that has been seized and is in the custody of the law.  

INLAND MARINE INSURANCE – A broad form of INSURANCE, generally covering articles in transit as well as tunnels, bridges and other means of transportation and communication. Besides goods in transit, (generally excepting trans-ocean), it includes numerous FLOATER POLICIES, such as those covering PERSONAL PROPERTY, fine arts,  jewelry, personal effects, furs and other items. See also MARINE INSURANCE and OCEAN MARINE INSURANCE.

INNER CITY Generally the older and more urbanized area of a large city surrounding the CENTRAL BUSINESS DISTRICT. The term often refers to densely populated BLIGHTED AREAS characterized by low-income residents and a high portion of racial, minority and ethnic groups.

IN REM – Latin meaning “against the thing” – Used in taking LAND for nonpayment of TAXES, etc., a proceeding against the PROPERTY directly, as distinguished from a proceeding against a person.

INSIDE LOT – In a SUBDIVISION, a LOT surrounded on each side by other LOTS, as opposed to a CORNER LOT, which has road frontage on at least 2 sides.

INSPECTION – A physical scrutinizing review of PROPERTY or of documents.

INSPECTION REPORT – Conducted by an independent AGENCY that specializes in INSURANCE investigations and usually written, a report of an investigation of an applicant,. The report covers such matters as health history, occupation, financial status and moral problems.

INSOLVENT – Having insufficient financial resources (ASSETS) to meet financial obligations (LIABILITIES).


INSTALLMENT LOAN – Also know as DIRECT REDUCTION LOAN – A LOAN, which calls for the payment of a fixed amount of PRINCIPAL each period, along with the INTEREST due on the unpaid PRINCIPAL balance.

INSTALLMENTS – 1) Payments made to reduce a MORTGAGE; 2) parts of the same DEBT, payable at successive periods as agreed.

INSTALLMENT SALE – When a seller accepts a MORTGAGE for part of the sale, the TAX on the gain is paid as the MORTGAGE PRINCIPAL is collected.

INSTALLMENT TO AMORTIZE ONE DOLLAR – A mathematically computed factor derived from COMPOUND INTEREST function that offers the level periodic payments required to RETIRE a $1.00 LOAN within a certain time frame. The periodic INSTALLMENT must exceed the periodic INTEREST RATE.


INSTITUTE OF REAL ESTATE MANAGEMENT (IREM) – Affiliated with the NATIONAL ASSOCIATION OF REALTORS,  a professional organization of PROPERTY MANAGERS which  publishes The Journal of Property Management.

INSTITUTIONAL LENDERFINANCIAL INTERMEDIARIES who INVEST in LOANS and other SECURITIES on behalf of their depositors or customers; lending and investment activities are regulated by laws to limit RISK.

INSULATION BOARD – Also known as FIBERBOARD and PARTICLE BOARD – A prefabricated building material composed of wood or other plant fibers, compressed and bonded into sheet.

INSURABILITY – Acceptability to the COMPANY of an applicant for INSURANCE.

INSURABLE RISK – The conditions that make a risk insurable are 1) the PERIL INSURED against must produce a definite LOSS not under the control of the INSURED; 2) there must be a large number of HOMOGENEOUS exposures subject to the same PERILS; 3) the LOSS must be calculable and the cost of insuring it must be economically feasible; 4) the PERIL must be unlikely to affect all INSUREDS simultaneously and 5) the LOSS produced by a RISK must be definite and have a potential to be financially serious.


INSURABLE VALUE – The cost of total replacement of destructible improvements to a PROPERTY.

INSURANCE – 1) A system under which businesses, individuals and other organizations or entities, in exchange for payment of a sum of money (a PREMIUM), are guaranteed compensation for LOSSES resulting from certain PERILS under specified conditions; 2) protection by written CONTRACT against the financial HAZARDS, in whole or in part, of the happenings of specified fortuitous events.

INSURANCE COMPANY – 1) An organization chartered to operate as an INSURER; 2) Any CORPORATION primarily engaged in the business of furnishing INSURANCE protection to the public.

INSURANCE COMMISSIONER – The top INSURANCE regulatory official in a state.

INSURANCE COVERAGE – Total amount and type of INSURANCE carried.

INSURANCE EXAMINER – The representative of a STATE INSURANCE DEPARTMENT assigned to participate in the official audit and examination of the affairs of an INSURANCE COMPANY.

INSURANCE EXCHANGETERM used to describe a FACILITY that exists in a few states to provide a market for REINSURANCE and for the INSURANCE of large and unusual domestic and foreign RISKS that are difficult to INSURE in the normal markets. Examples are the Insurance Exchange of the Americas, the New York Insurance Exchange and the Illinois Insurance Exchange.

INSURANCE GUARANTY FUNDS – State funds that provide for the payment of unpaid CLAIMS of INSOLVENT INSURERS.

INSURANCE (MORTGAGE) – Generally purchased by a borrower, a service that will indemnify the LENDER in case of FORECLOSURE of the LOAN. Indemnification is generally limited to LOSSES suffered by the LENDER in the FORECLOSURE process.

INSURANCE SERVICES OFFICES (ISO) – Major rating organization in PROPERTY and LIABILITY INSURANCE that drafts POLICY forms for personal and commercial lines of INSURANCE and provides RATE data on LOSS costs for PROPERTY and LIABILITY INSURANCE lines.

INSURED OR INSURED LIFE  – 1) The person on whose LIFE the POLICY is issued; 2) a person or organization covered by an INSURANCE POLICY, including the named INSURED and any other parties for whom protection is provided under the POLICY TERMS.

INSURER – 1) Any corporation engaged primarily in the business of furnishing insurance to the public; 2) the party to the INSURANCE CONTRACT who promises to pay LOSSES or BENEFITS.

INSURING AGREEMENT – That part of an INSURANCE CONTRACT that states the promises of the INSURER.

INSURING CLAUSE – The clause which sets forth the type of LOSS being covered by the POLICY and the parties to the INSURANCE CONTRACT.

INTANGIBLE ASSETSASSETS that are not capable of being appraised such as future leases or future earnings.

INTANGIBLE PROPERTY – Nonphysical valuables as distinguished from PHYSICAL PROPERTY such as land and buildings.

INTANGIBLE VALUEVALUE that cannot be seen or touched.

INTEGRATION – A coordination of DISABILITY, pension or other BENEFIT with the other sources of INCOME, such as SOCIAL SECURITY benefit, through a specific formula designed to ensure reasonable INCOME replacement. Qualified plans must integrate so that total BENEFITS are non-discriminatory between rank and file employees and owners, officers or highly compensated employees.

INTEGRATION, EQUILIBRIUM, DISINTEGRATION – Also known as LIFE CYCLE OF A NEIGHBORHOOD – The APPRAISAL principle, which maintains that NEIGHBORHOODS can form, exists, and decay in relatively predictable patterns.

INTEREST – 1) A charge paid for borrowing money, usually a percentage of the amount borrowed;  2) money paid for the use of money.

INTEREST-ADJUSTED METHOD – Method of determining cost to an INSURED of a LIFE INSURANCE POLICY that considers the time cost of money by applying an INTEREST factor to each element of cost. See also Net Payment Cost Index; Surrender Cost Index.

INTEREST DEDUCTIONSINVESTMENT INTEREST DEDUCTIONS are limited to net investment income, which includes INTEREST, LONG-TERM CAPITAL GAINS, DIVIDENDS and INCOME or LOSS from working interests in oil and gas interests. Net investment income, however, does not include either RENTAL nor other PASSIVE ACTIVITY INCOME or LOSS nor INTEREST paid to buy an ownership in a passive activity.

INTEREST-ONLY LOAN – A LOAN in which INTEREST is payable at regular intervals until LOAN MATURITY, when the full LOAN BALANCE is due but does not require AMORTIZATION.


INTEREST RATE – 1) The RATE OF RETURN ON INVESTMENT; 2) the percentage of a sum of money charged for its use.

INTEREST-SENSITIVE WHOLE LIFE INSURANCE NONPARTICIPATING WHOLE LIFE POLICY in which the cash values are based on the INSURER’S current MORTALITY, investment, and expense experience. An accumulation account is credited with a current INTEREST RATE that changes over time. Also called CURRENT ASSUMPTION WHOLE LIFE INSURANCE.

INTERIM FINANCING – Usually for construction purposes, a short-term LOAN.

INTERNAL RATE OF RETURN (IRR) – The true annual RATE of earnings on an INVESTMENT which equates the VALUE of cash returns with cash invested. While it considers the application of COMPOUND INTEREST factors, it requires a trial-and-error method for solution.

INTERNAL REVENUE CODE (IRC) – The law passed by Congress that specifies how and what INCOME is to be TAXED and what may be DEDUCTED from taxable INCOME.

INTERNAL REVENUE SERVICE (IRS) – An agency of the federal government that is responsible for the administration and collection of federal INCOME TAXES.

INTERNATIONAL ARCHITECTURE – An early twentieth century style house whose design is very simple with no ornamentation. The windows appear to be continuous rather than appearing to be holes in the walls.

INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS (IAAO ) – A professional organization of PROPERTY TAX ASSESSORS which awards the designation of Certified Assessment Evaluator.

INTERNATIONAL REAL ESTATE FEDERATION – An organization with worldwide membership that is devoted to encouraging private rights to REAL ESTATE. The international abbreviation is FIABCI; its American chapter is an affiliate of the NATIONAL ASSOCIATION OF REALTORS.

INTERNATIONAL RIGHT OF WAY ASSOCIATION (IR/WA) An individual membership association that offers courses covering various phases of RIGHT-OF-WAY work. Educational curriculum includes engineering, law and appraisal. Offers a designation, SR/WA and a bimonthly magazine.

INTERPLEADER Proceeding initialed by a neutral third party to determine the rights of rival CLAIMANTS to PROPERTY or a transaction.

INTERSTATE LAND SALES ACT – Administered by the DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, a federal law which requires certain disclosures and advertising procedures when selling LAND to purchasers in other states.

INTER VIVOS – During one’s life.

INTER VIVOS TRUST – Also known as a LIVING TRUST – A TRUST created while the creator of the TRUST is living.

INTESTATE – 1) Without a WILL; 2) a person who dies leaving no WILL or leaving one that is defective. PROPERTY goes to the legal HEIRS of the intestate.

INVESTOR – A person or group of people who commit their time or money to a project with the intention to make money in the future.

INVENTORY – Property held for sale or to be used in the manufacture of goods held for sale. Does not qualify for CAPITAL GAINS tax treat.

INVERSE CONDEMNATION – A legal procedure to obtain compensation when a

PROPERTY interest has been taken or diminished in VALUE by a government activity.

INVESTMENT – The purchase of a CAPITAL ASSET that has the potential for profit.

INVESTMENT ANALYSIS – A study of the likely return from a proposed REAL ESTATE investment with the objective of evaluating the investment’s suitability to that investor, the amount an investor may pay for it or the feasibility of a proposed real estate development. While APPRAISED VALUE is based on a synthesis of people in the market, investment analysis is based on the value to a specific investor.

INVESTMENT INCOME – 1) The portion of a company’s income which is derived from its investments, including interest and dividends on stocks and bonds.; 2) the INCOME generated by a company’s portfolio of INVESTMENTS, such as in stocks, bonds or other financial ventures.

INVESTMENT LIFE CYCLE – A reduction in INCOME TAX generally based on the cost and life of certain ASSETS purchased.

INVESTMENT ONLY CONTRACT – Type of funding instrument that uses only the INVESTMENT services of an INSURER.

INVESTMENT VALUE – The estimated value of certain REAL ESTATE investment to a particular individual or institutional investor. Depending on the investor’s particular situation. it may be greater or less than MARKET VALUE,


INVOLUNTARY CONVERSIONCONDEMNATION or sudden destruction by nature.

INVOLUNTARY COSTSINSURANCE COMPANY costs incurred as a result of participating in INSURANCE POOLS such as WORKERS COMPENSATION. INSURANCE COMPANIES must participate in these POOLS as a condition of doing business.

INVOLUNTARY LIEN – Any LIEN against REAL PROPERTY without the consent of the owner, or through an involuntary process, such as A JUDGMENT LIEN or TAX LIEN.

INWOOD ANNUITY FACTOR – A number that, when multiplied by the periodic payment from a level payment income stream, indicates the present value of the INCOME STREAM, based on a specific INTEREST RATE.


IRREVOCABLE – 1)Unchangeable; 2) incapable of being recalled or revoked.

IRREVOCABLE BENEFICIARYBENEFICIARY designation allowing no change to be made in the BENEFICIARY of an INSURANCE POLICY without the BENEFICIARY’S consent.

IRREVOCABLE INTERESTINTEREST that cannot be changed or altered.

IRREVOCABLE TRUST – A TRUST in which the creator does not reserve the right to reacquire the TRUST PROPERTY.

ITALIAN VILLA A Latin style, massive two or three-story house of masonry with large overhanging eaves.

Browse the Dictionary Item archive. This entry was posted in Real Estate Investor Dictionary. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

Post a Comment

Your email is never published nor shared. Required fields are marked *

You may use these HTML tags and attributes <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>


  • Tenant Alert

    Tenant Alert
  • IntelliCorp-Landlord-Association-Banner-Ad-2014-F

    Landlord Association - IntelliCorp - Background Checks
  • rent_price_calc

    What should I be paying for rent?
  • rent-o-meter

    What should you charge for rent?