Dictionary – Safe Harbor – Syndicator

SAFE HARBOR – Rules that, if followed, will guarantee compliance with the law.

SAFE RATE – An INTEREST RATE provided by relatively low-risk INVESTMENTS such as well-secured first MORTGAGES or high-grade bonds.


CONTRACT – The CONTRACT through which the seller and buyer agree to the TERMS of the sale of REAL PROPERTY.

SALE-LEASEBACK – Also known as LEASEBACK – The simultaneous purchase of PROPERTY and LEASE back to the seller. The LEASE portion of the transaction is generally long-term. The seller-LEASEE in the transaction is converted from an owner to a TENANT.

SALESPERSON – A person licensed by the state to work on behalf of a BROKER.

SALES PRICE – The price to which the seller and buyer finally agree, regardless of the


SALTBOX COLONIALAlso known, in the South, as CATSLIDE – An early American style two- or two and a half story house that is square or rectangular with a steep gable roof that extends down to the first floor in the rear.

SALVAGE – Recovery made by an INSURANCE COMPANY by the sale of PROPERTY which has been taken over from the INSURED as a part of LOSS settlement.

SALVAGE VALUE – The estimated VALUE that an ASSET will have at the end of its useful life.

SANDWICH LEASE – Also known as SUBLEASE – A LEASE subordinate to the original LEASE between the LESSOR and the LESSEE. The LESSEE re-leases the PROPERTY to a third person, creating a SUBLESSOR-SUBLESSEE relationship. In a SUBLEASE, there is some change from the terms and conditions of the original LEASE.

SASH – The framework that holds the glass panes in a window or door.

SATELLITE TENANT – A smaller store in a SHOPPING CENTER, usually a specialty store, which relies on the ANCHOR TENANT to generate pedestrian traffic through the MALL.

SATISFACTION – Also known as SATISFACTION OF LIEN and SATISFACTION OF MORTGAGE – A written instrument given by the MORTGAGEE to the MORTGAGOR which describes the MORTGAGE and states that the DEBT has been paid.

SATISFACTION OF LIEN – Also known as SATISFACTION and SATISFACTION OF MORTGAGE – A written instrument given by the MORTGAGEE to the MORTGAGOR which describes the MORTGAGE and states that the DEBT has been paid.

SATISFACTION OF MORTGAGE – Also known as SATISFACTION and SATISFACTION OF LIEN – A written instrument given by the MORTGAGEE to the MORTGAGOR which describes the MORTGAGE and states that the DEBT has been paid.

SAVINGS AND LOAN ASSOCIATION (S&LA) – Depository institutions that specialize in originating, servicing and holding MORTGAGE LOANS, primarily on OWNEROCCUPIED, RESIDENTIAL PROPERTY.

SCALE – The proportional relationship between the dimensions of a drawing, plan or model to the dimensions of the physical object it represents.

SCENIC EASEMENT – An ENCUMBRANCE on the TITLE to a PROPERTY to preserve it in a more-or-less natural or undeveloped state.

SCHEDULED GROSS INCOME – Also known as GROSS POTENTIAL INCOME – The maximum possible INCOME to be derived from the operation of a business, not including


SEASONED LOAN – A LOAN on which several payments have been collected.

SECOND EMPIRE STYLEAlso known as AMERICAN MANSARD – A nineteenth century style house whose main and distinguishing characteristic is the roof design. The MANSARD ROOF slopes gently back from the wall line and then is topped with an invisible section resembling a conventional hip roof. Multiple DORMERS protrude through the roof.

SECONDARY MORTGAGE MARKET – The mechanisms available to buy and sell MORTGAGES, mainly RESIDENTIAL FIRST MORTGAGES. There is no set meeting place for the secondary mortgage market. FNMA and FREDDIE MAC hold AUCTIONS weekly to buy those MORTGAGES offered at the highest effective rate with BIDS collected from all over the country.

SECOND HOME – A RESIDENCE that is not one’s PRINCIPAL RESIDENCE. Under current tax law, a taxpayer may deduct INTEREST on two PERSONAL RESIDENCES.

SECOND MORTGAGE – A subordinated LIEN, created by a MORTGAGE LOAN, over the amount of a first MORTGAGE. Second mortgages are used at purchase to reduce the amount of cash DOWN PAYMENT or in REFINANCING to raise cash for any purpose.

SECTION – A UNIT of LAND measurement one mile square containing one square mile or 640 acres under the GOVERNMENT SURVEY METHOD,.

SECTION 8 HOUSING – Privately owned RENTAL DWELLING UNITS participating in the LOW-INCOME RENTAL assistance program created by 1974 amendments to Section 8 of the 1937 Housing Act. Under the program, LANDLORDS receive RENT subsidies on behalf of qualified low-income TENANT, allowing the TENANTS to pay a limited proportion of their INCOMES toward the RENT.

SECTION 167 – The part of the INTERNAL REVENUE CODE that deals with DEPRECIATION.

SECTION 1031 – The section of the INTERNAL REVENUE CODE that deals with taxdeferred exchanges of certain PROPERTY. Generally rules for a tax-deferred exchange of REAL ESTATE are: The PROPERTIES must be: 1)  EXCHANGE or qualify as a DELAYED EXCHANGE;  2) LIKE-KIND PROPERTY (REAL ESTATE for REAL

ESTATE);  3) Held for use in a trade or business or held as an INVESTMENT.

SECTION 1034 – The section of the INTERNAL REVENUE CODE dealing with sales of PERSONAL RESIDENCES. Generally there is no recognized GAIN or LOSS on the sale of PERSONAL RESIDENCE, provided another one is purchased within two years of the sale date of the old one. The new one must cost at least as much as the adjusted sales price of the old one’s sales price, less expenses of sale, less FIX-UP EXPENSES.

SECTION 1221 – The part of the INTERNAL REVENUE CODE that defines what is not considered a CAPITAL ASSET.

SECTION 1231 – The section of the INTERNAL REVENUE CODE that deals with ASSETS used in a trade or business. Generally, GAINS on SECTION 1231 ASSETS are TAXED at CAPITAL GAINS rates (except for DEPRECIATION RECAPTURE) and LOSSES are TAX DEDUCTIBLE as ordinary INCOME.

SECTION 1245 – The section of the INTERNAL REVENUE CODE dealing with GAINS from PERSONAL PROPERTY on which DEPRECIATION had been claimed. Generally, GAINS are taxed at CAPITAL GAINS rate except to the extent of DEPRECIATION claimed, which is taxed as ordinary INCOME.

SECTION 1250 – The section of the INTERNAL REVENUE CODE dealing with GAINS from REAL ESTATE on which ACCELERATED DEPRECIATION had been claimed. Since 1986, STRAIGHT-LINE DEPRECIATION is mandated for most buildings; consequently, the importance of SECTION 1250 has been minimized. Under prior law, GAINS on RESIDENTIAL PROPERTY were generally treated as CAPITAL GAINS except to the extent of ACCELERATED DEPRECIATION claimed. GAINS on non-residential PROPERTY on which ACCELERATED DEPRECIATION was claimed were all recaptured to the extent of GAIN or DEPRECIATION, whichever is less.

SECURITIES AND EXCHANGE COMMISSION (SEC) – The federal agency created in

1934 to carry out the provisions of the Securities Exchange Act. Generally, the agency seeks to protect the investing public by preventing FRAUD, MISREPRESENTATION, manipulation and other abuses in the securities market.

SECURITIZATION – The process of creating a SECURITY marketable in the capital markets and backed by a package of ASSETS such as MORTGAGE LOANS.

SECURITY – 1) A document that serves as evidence of ownership; 2) PROPERTY that serves as COLLATERAL for a DEBT.


SECURITY DEED Also known as  SECURITY INSTRUMENT, MORTGAGE or TRUST DEED – An interest in REAL ESTATE that allows the PROPERTY to be sold upon a DEFAULT on the obligation for which the SECURITY INTEREST was created.

SECURITY DEPOSIT – A deposit of money from the LESSEE which is held by the LESSOR to assure the LESSEE’S PERFORMANCE with the LEASE and to cover CONTINGENCIES such as DEFAULT on the RENT payment, DAMAGES to the LEASED REAL PROPERTY, etc.


TRUST DEED – An interest in REAL ESTATE that allows the PROPERTY to be sold upon a DEFAULT on the obligation for which the SECURITY INTEREST was created.


SEED MONEY – Amounts needed to begin a REAL ESTATE DEVELOPMENT prior to being able to borrow under a MORTGAGE LOAN. Required costs include those for a FEASIBILITY STUDY, LOAN APPLICATION and LOAN COMMITMENT FEESATTORNEY and accountant fees, land option costs and others.

SEE-THROUGH BUILDING– A vacant building.

SEGREGATED COST METHOD – Also known as UNIT-IN-PLACE METHOD – A method of estimating construction costs in which the total IMPROVEMENT cost is based on the costs of the various components, including their purchase and installation.

SEISIN – The possession of REALTY by one who claims to own a FEE SIMPLE ESTATE, a LIFE ESTATE or other salable interest.

SELF-ADMINISTERED (TRUSTEED OR DIRECTLY INVESTED) PLAN – A plan funded through a FIDUCIARY, generally a bank but sometimes a group of individuals, which directly INVESTS the accumulated funds. Retirement payments are made from the fund as they fall due.

SELF-ADMINISTRATION – The procedure where an employer maintains all records regarding the employees covered under a GROUP INSURANCE PLAN.

SELF-AMORTIZING MORTGAGE – One that will RETIRE itself through regular PRINCIPAL and INTEREST payments.

SELF-CONTAINED APPRAISAL REPORT – A written APPRAISAL REPORT with extensive detail that contains all the information required by USPAP.

SELF-HELP – In most states not considered a legitimate substitute for a legal EVICTION, the efforts of a LANDLORD to cure DEFAULT on the LEASE without aid of legal proceedings.

SELF-INSURED RETENTION – A form of RISK financing through which a firm assumes all or a part of its own LOSSES.

SELLER FINANCING – A DEBT instrument taken back by the seller as part of the purchase price for a PROPERTY. Used as an inducement to a sale when normal third-party financing is expensive or unavailable and in situations where the existing, first LIEN LOAN may be assumed by the buyer but the difference between the existing DEBT and sale price exceeds the cash resources of the buyer, seller financing may be in the form of a Senior Mortgage or a JUNIOR MORTGAGE.

SELLER’S MARKET – Economic conditions reflecting prices and market activity that favor sellers,.

SELLING BROKER (AGENT) – The licensed REAL ESTATE BROKER that brings forth the buyer.

SEMI-ANNUAL – Also known as BIANNUAL – Twice a year.

SENIOR CITIZEN POLICIESCONTRACTS insuring persons 65 years of age or more. In most cases, these SUPPLEMENTARY POLICIES complement the COVERAGE afforded by the government under the MEDICARE program.

SENIOR REAL ESTATE ANALYST (SREA) – The highest designation once awarded by the SOCIETY OF REAL ESTATE APPRAISERS. SREAS could exchange this designation for the MAI.


SENIOR RESIDENTIAL APPRAISER (SRA) – A designation conferred by the SOCIETY OF REAL ESTATE APPRAISERS. An SRA may refer to himself as a member of the APPRAISAL INSTITUTE, though not an MAI.

SEPARATE ACCOUNT – A fund held by a LIFE INSURANCE COMPANY which is separate and apart from its general ASSETS and is generally used for INVESTMENT of pension ASSETS in common stocks.

SEPARATE PROPERTY – Any PROPERTY owned by either a husband or wife in which the other spouse has no ownership interest.

SEPARATE PROPERTY STATE Any state that subscribes to the system of PROPERTY ownership based on the theory that either spouse has separate and complete ownership of any PROPERTY which that spouse has acquired during the marriage.

SERVICE-TYPE PLANS – Plans that provide their BENEFITS in the form of services rendered rather than cash .

SERVICING – Often performed for a fee by MORTGAGE bankers after LOANS are sold to investors, the act of billing, collecting payment and filing reports for a MORTGAGE LOAN; may also include LOAN analysis, DEFAULT follow-up and management of tax and insurance ESCROW accounts.

SERVIENT ESTATE – Also known as SERVIENT TENEMENT – The PARCEL of REAL PROPERTY over which an EASEMENT runs and which is subject to the EASEMENT.

SERVIENT TENEMENT – Also known as SERVIENT ESTATE – The PARCEL of REAL PROPERTY over which an EASEMENT runs and which is subject to the EASEMENT.

SETBACK AND SIDEYARD RESTRICTIONS – The distances required by ZONING between the building lines of the IMPROVEMENT and the LOT LINES of the REAL PROPERTY.

SETTLEMENT OPTIONS – Other than immediate payment in cash, the several ways which a POLICYHOLDER or BENEFICIARY may choose to have POLICY BENEFITS paid.


SEVERANCE – The act of removing or detaching REAL PROPERTY so that it becomes PERSONAL PROPERTY.

SEVERABILITY OF INTEREST – A potential LIABILITY between different ENTITIES named on a single INSURANCE POLICY.

SEVERANCE   DAMAGES    –    An    ELEMENT    OF    VALUE    arising     out    of     a CONDEMNATION to which a TRACT was a part.

SEWER – A system of containments, pipes and treatment facilities for the disposal of plumbing wastes.

SHAKE – Also known as SHAKE SHINGLE – A SHINGLE made from split wood.

SHAKE SHINGLE – Also known as SHAKE – A SHINGLE made from split wood.

SHARE-CROPPING – When the LESSEE in a FARM or CROP LEASE pays the LESSOR for the privilege of farming the LESSOR’S LAND with a share of the crop when the crop is harvested.

SHARED APPRECIATION MORTGAGE (SAM) – A MORTGAGE in which, in exchange for receiving a below-market INTEREST RATE, the lender is promised a certain portion of the VALUE that the PROPERTY will increase over time.

SHARED EQUITY MORTGAGE – A home LOAN in which the lender is granted a share of the EQUITY which then allows the lender to participate in the proceeds from resale. It often requires the lender to buy a portion of the EQUITY by providing a portion of the DOWN PAYMENT.

SHAREHOLDER – Also known as STOCKHOLDER – A person who owns shares of stock in a CORPORATION.

SHEATHING – The fiberboard, plywood or boards nailed to the STUDS and RAFTERS on the exterior of a structure as the foundation for the finished siding and roofing.

SHED ROOF – One having a single, sloped side.

SHERIFF’S DEED– A DEED issued by the sheriff as the result of a court-ordered FORECLOSURE SALE.

SHERIFF’S SALE – The sale of REAL or PERSONAL PROPERTY made by a sheriff under a court order to obtain funds in LIEU of an unpaid DEBT.

SHINGLE – Usually made of wood, asphalt, slate, fiberglass or tile, a roof or exterior wallcovering material which is applied in overlapping layers.

SHOPPING CENTER – Sometimes including an enclosed MALL or walkway, a collection of retail stores with a common parking area and generally one or more large discount, department or food stores.

SHORT FORM – Seldom more than two pages, an instrument that refers to another document which is often recorded in LIEU of a longer, more cumbersome document.

SHORT-TERM CAPITAL GAIN – Taxable INCOME derived from the sale of a CAPITAL ASSET, which was owned for six months or less. Considered ordinary income, it is 100 percent taxable.

SHORT-TERM DISABILITY INCOME INSURANCE – The provision to pay BENEFITS to a covered disabled person as long as he/she remains disabled up to a specified period not exceeding two years.

SICKNESS INSURANCE – A form of HEALTH INSURANCE providing BENEFITS for LOSS resulting from illness or disease.

SIDEYARD AND  SETBACK RESTRICTIONS – The distances required by ZONING between the building lines of the IMPROVEMENT and the LOT LINES of the REAL PROPERTY.

SILL PLATE – Also known as SOLE PLATE – The lowest horizontal member of a frame wall which rests on the foundation and forms the base for the STUDS.

SIMPLE INTERESTINTEREST computed on the PRINCIPAL balance only.

SIMPLE LISTING – Also known as NON-EXCLUSIVE and OPEN LISTING – The employment CONTRACT which is given to as many BROKERS as the seller desires, but with an obligation to pay the COMMISSION only to the BROKER who produces the buyer for the PROPERTY.

SIMULATE – Also known as MODEL – Artificial replication of the behavior of a system for purposes of analysis. The simulation may be less complex than the actual system, allowing the analysis to focus on certain variables that are of interest.

SINGLE-FAMILY HOME – A type of residential structure designed to include one DWELLING. Adjacent UNITS may share walls and other structural components but generally have separate access to the outside and do not share plumbing and heating equipment.

SINKING FUND – An account that, when compounded, will equal a specified sum after a specified time period.

SITE – 1) The location of a PROPERTY;  2) a plot of LAND prepared for or underlying a structure or development.

SITE ASSESSMENT (ENVIRONMENT) – Prior to the acquisition of TITLE to the PROPERTY, an evaluation of a SITE for the existence of hazardous waste. Under the


LIABILITY ACT of 1980 (CERCLA), as amended by the SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT of 1986 (SARA), anyone acquiring TITLE to a SITE is responsible for environmental damages resulting from hazardous wastes on the SITE. However, there are legal defenses for landowners who conduct proper SITE ASSESSMENTS prior to acquisition.

SITE PLAN – A document that describes how a PARCEL of LAND is to be improved including the outlines of all STRUCTURES and site IMPROVEMENTS such as driveways, landscaping, parking lots and UTILITY connections.

SITUS – Also known as AREA PREFERENCE – 1) The physical location of a PROPERTY;

2) the preference by people for a particular location.

SKIP PERSON – A BENEFICIARY who is at least two generations younger than the person making the transfer.

SKY LEASE – A LEASE under which the LESSEE receives the right to use only the air space above a PARCEL of REAL PROPERTY.

SMALL BUSINESS ADMINISTRATION (SBA) – A federal government agency in

Washington, D.C., that encourages small business.

SOCIAL SECURITY FREEZE – A LONG-TERM DISABILITY POLICY provision which establishes that the offset from BENEFITS paid by Social Security will not be changed regardless of subsequent changes in the Social Security law.

SOCIAL SECURITY OPTION – An option under which the employee may elect that monthly payments of an ANNUITY before a specified age (62 or 65) be increased and that payments thereafter be decreased to produce, as nearly as practical, a level total annual ANNUITY to the employee, including Social Security benefits when they become due.

SOCIETY OF INDUSTRIAL AND OFFICE REALTORS (SIOR) – Affiliated with the NATIONAL ASSOCIATION OF REALTORS, an organization whose members are mainly concerned with the sale of factories, warehouses and other INDUSTRIAL PROPERTY.

SOCIETY OF REAL ESTATE APPRAISERS (SREA) – Also known as THE SOCIETY – A professional APPRAISAL organization.

SOCIETY, THE – Also known as SOCIETY OF REAL ESTATE APPRAISERS (SREA) – A professional APPRAISAL organization.

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

SOFT MARKET – 1) A buyer’s market; a market in which demand has shrunk or supply has grown faster than a demand and in which sale at reasonable prices have become more difficult; 2) that part of the INSURANCE sales cycle in which competition is at a maximum as INSURANCE COMPANIES use their excess CAPACITY to sell more POLICIES at lower prices. See HARD MARKET.

SOFT MONEY – 1) In a DEVELOPMENT or an INVESTMENT, money contributed that is tax-deductible; 2) costs that do not physically go into construction, such as INTEREST during construction, legal fees, architect’s fees, etc.

SOIL BANKLAND held out of agricultural production in an effort to stabilize commodity prices and promote soil conservation, Subsidies to farmers participating in a SOIL BANK are provided by the U.S. Department of Agriculture.


SOLE PLATE – Also known as SILL PLATE – The lowest horizontal member of a frame wall which rests on the foundation and forms the base for the STUDS.

SOLE PROPRIETORSHIP – Ownership of a business with no formal ENTITY as a vehicle or structure.

SOUTHERN COLONIAL – A large, early American style two- or three-story frame house with a characteristic COLONNADE extending across the front where the roof extends over the


SOURCES OF LAW – The seven recognized sources of law are (1) the U.S. Constitution, (2) laws passed by Congress, (3) federal regulations, (4) state constitutions and charters, (5) state laws, (6) local ordinances and (7) court decisions.

SPANISH VILLA – A Latin-style, asymmetrical, one – to three-story house with painted stucco exterior walls and red tile roof.

SPEC HOUSE – A single-family DWELLING constructed in anticipation of finding a buyer.

SPECIAL AGENT – The person who is empowered to represent the PRINCIPAL in only one facet of the PRINCIPAL’S business. REAL ESTATE BROKERS are usually employed as SPECIAL AGENTS.

SPECIAL ASSESSMENT – An ASSESSMENT made against a PROPERTY to pay for a public IMPROVEMENT by which the assessed PROPERTY is supposed to be especially benefited.

SPECIAL ASSISTANCE LOAN PROGRAM – Managed by the GOVERNMENT NATIONAL MORTGAGE ASSOCIATON (GPM), also known as GINNIE MAE, a  program which provides low-interest rate MORTGAGE LOANS.

SPECIAL DAMAGES – Compensation awarded for actual economic LOSSES, such as medical expenses and lost wages. See GENERAL DAMAGES.


SPECIAL-PURPOSE PROPERTIES – Also known as DEDICATED-USE PROPERTIES – Those improvements built for a single purpose which would have a limited demand in the marketplace, such as schools, churches, funeral homes, hospitals, etc.

SPECIAL RISK INSURANCE Coverage for RISKS or HAZARDS of a special or unusual nature.

SPECIAL USE PERMIT – A right granted upon special approval by a local ZONING authority to conduct certain activities within a ZONING district. Also known as CONDITIONAL USE PERMIT.

SPECIAL WARRANTY DEED – Also known as BARGAIN AND SALE DEED WITH WARRANTIES – A DEED that conveys ownership from a GRANTOR to a GRANTEE with expressed WARRANTIES of protection for the GRANTEE’S ownership.  It specifies that the GRANTOR will defend the DEED only against CLAIMS arising from action taken during the GRANTOR’S period of ownership.

SPECIFICATIONS – Detailed instructions provided in conjunction with plans and blueprints for construction that may stipulate the type of materials to be used, dimensions, special construction techniques and colors.


SPECIFIC PERFORMANCE – A legal action in which one party to a CONTRACT asks the court to force the other party to live up to TERMS of the CONTRACT.

SPECULATIVE BUILDING – Land development or construction with no formal commitment from the end users of the finished product. The speculative builder anticipates that a demand exists or will form for the product when it is put on the market.

SPECULATOR – One who invests with the anticipation that an event or series of events will occur to increase the VALUE of the INVESTMENT.

SPLIT FUNDING – The use of two or more funding agencies for the same PENSION PLAN. A portion of the contributions to the PENSION PLAN are paid to a LIFE INSURANCE COMPANY and the remainder of the contributions are INVESTED through a corporate TRUSTEE, primarily in EQUITIES.

SPLIT-LEVEL – Also known as TRI-LEVEL – A popular style of home, best suited for sideto-side slopes, in which a one-story wing is attached between the levels of a two-story wing.

SPOT ZONING – A change in ZONING permitting a particular use which is inconsistent with the ZONING for the area, such as the location of a convenience store in the middle of a residential subdivision.

SPOUSE’S BENEFIT – Payments to the surviving spouse of a deceased employee, usually in the form of a series of payments upon meeting certain requirements and usually terminating with the survivor’s remarriage or death.

SPREAD – 1) The difference between the cost of money and the earnings rate; 2) the difference between the BID price and asking price;

SPREADING AGREEMENT – An agreement that extends the COLLATERAL of a LOAN to include several PROPERTIES.

SQUARE FOOT – A UNIT of AREA measurement twelve inches square containing 144 square inches.

SQUARE YARD – A UNIT of AREA measurement three feet square containing nine square feet.

SQUATTER’S RIGHTS – The legal allowance to use the PROPERTY of another in absence of an attempt by the owner to force EVICTION. This right may eventually be converted to TITLE to the PROPERTY over time by ADVERSE POSSESSION, if recognized by state law.

STABLE MORTGAGE – A creation of General Electric Capital Mortgage Service, Inc. and FNMA,  a MORTGAGE LOAN instrument that combines FIXED and ADJUSTABLE RATES in the same LOAN.

STAGFLATION – Term coined in the 1970’s to describe an economic situation of stagnant economic condition with INFLATION.

STANDARD INSURANCEINSURANCE written on the basis of regular MORBIDITY UNDERWRITING assumptions used by an INSURANCE COMPANY and issued at normal rates.

STANDARD MARKETSINSURANCE POLICIES for which the vast majority of people


STANDARD PROVISION – Those CONTRACT PROVISIONS generally required by state STATUTES until superseded by the UNIFORM POLICY PROVISION.

STANDARD PROVISIONS – Originally introduced in 1912 but now replaced by the UNIFORM PROVISIONS, a set of POLICY PROVISIONS prescribed by former laws setting forth certain rights and obligations of both the INSURED and the company under an individual


STANDARD RISK – A person who, according to a company’s UNDERWRITING standards, is entitled to purchase INSURANCE protection without extra rating or special restrictions.

STANDBY COMMITMENT – A COMMITMENT by a lender to make available a sum of money at specified terms for a specified period for which a STANDBY FEE is charged. The borrower retains the option of closing the LOAN or allowing the COMMITMENT to LAPSE.

STANDBY FEE – The sum required by a lender to provide a STANDBY COMMITMENT. The FEE is FORFEITED should the LOAN not be closed within a specified time.



STATE DISABILITY PLAN – A plan for accident and sickness or DISABILITY INSURANCE required by state legislation of those employers doing business in that particular state.

STATE FUND – A fund set up by a state government to provide a specific line or lines of insurance. Some states permit private INSURERS to compete with the STATE FUND.

STATE INSURANCE DEPARTMENT – A department of a state government whose duty it is to regulate the business of INSURANCE and give the public information on INSURANCE.

STATE-OF-THE-ART DEFENSE – An argument used in PRODUCT LIABILITY cases that the technology needed to avoid the LOSS in a particular case did not exist at the time of the product’s manufacture.

STATUTE – A law established by an act of legislature.

STATUTE OF FRAUDS – A law which provides that certain CONTRACTS must be in writing to be legally enforceable, such as LEASES for more that one year. Although the time limits may vary from state to state, this law was created to prevent PERJURY.

STATUE OF LIMITATIONS – A statutory time period after which a claimant is prohibited from enforcing the CLAIM in court.

STATUTORY ACCOUNTING – Special accounting practices for INSURANCE companies required by state law and designed to provide greater protection for the public against potential INSOLVENCY of these essential institutions.

STATUTORY ACCOUNTING PRINCIPLES (SAP) – Differing from the GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP), principles required by STATUTE which must be followed by an INSURANCE company when submitting its FINANCIAL STATEMENTS to the various state INSURANCE departments.

STATUTORY DEDICATION – Where the owners of a subdivision or other PROPERTY file a PLAT that results in a GRANT of public PROPERTY, such as the streets in a DEVELOPMENT.

STATUTORY FORECLOSURE – A FORECLOSURE proceeding not conducted under court supervision. Contrast with JUDICIAL FORECLOSURE.

STATUTORY LAW – The rules and principles enacted into written law by a POLITICAL UNIT.


STATUTORY REDEMPTION – Not available in all states, the right of a DEFAULTED MORTGAGOR to recover the PROPERTY by paying off the entire NOTE and other EXPENSES after the FORECLOSURE SALE.

STATUTORY SURPLUS – The amount left after a company’s LIABILITIES are subtracted from ASSETS when both those VALUES are computed using STATUTORY ACCOUNTING PRINCIPLES (SAP).


STEERING – The illegal act of directing potential homebuyers to certain AREAS, either to maintain the similarity of residents in the AREA or to change the character of the AREA to create a SPECULATIVE situation, an activity that might precede BLOCKBUSTING.


RATE is adjusted only once during the term of the LOAN. Therefore, the LOAN shares some of the features of both FIXED-RATE and ADJUSTABLE-RATE LOANS.

STEP-RATE PREMIUM – A rating structure in which the PREMIUMS increase periodically at pre-determined times such as POLICY years or attained ages.

STEP-UP IN BASIS – An increase in the TAX BASIS of PROPERTY to the VALUE claimed in the TAXABLE ESTATE of a DECEDENT.

STEP-UP LEASE – Also known as GRADUATED LEASE and GRADED LEASE – A LEASE under which the RENTAL increases are made at scheduled intervals and for specific amounts.

STEPPED-UP BASIS – An income TAX term used to describe a change in the ADJUSTED TAX BASIS of PROPERTY, allowed for certain transactions. The old basis is increased to MARKET VALUE upon inheritance, as opposed to a CARRY-OVER BASIS in the event of a TAX-FREE EXCHANGE.

STICK-STYLE OR CARPENTER GOTHIC HOUSE – A nineteenth-century-style house with exposed framing members, diagonal braces, high step roofs, complex silhouettes and large amount of gingerbread trim.

STIGMA – A negative image of PROPERTY after its environmental problem was REMEDIATED.


STOCK COMPANY – A company organized and owned by STOCKHOLDERS, as distinguished from the MUTUAL form of company which is owned by its POLICYHOLDERS.

STOCK EXCHANGE – An organization that provides a facility for buyers and sellers of listed SECURITIES to come together to make grades in those SECURITIES.

STOCKHOLDER – Also known as SHAREHOLDER – A person who owns shares of stock in a CORPORATION.

STOCK INSURANCE COMPANY – A company in which the legal ownership and control is VESTED in the STOCKHOLDERS.

STOCK-IN-TRADE – The INVENTORY or merchandise held for sale to customers.


STOCKHOLDERS who elect a board to direct the company’s management. Stock companies, in general, issue NON-PARTICIPATING INSURANCE but may also issue PARTICIPATING INSURANCE.

STOCK REDEMPTION PLAN – An ENTITY purchase form of BUY-SELL AGREEMENT within a CORPORATION that involves the CORPORATION buying back shares from a departing owner.

STOP CLAUSE – In a LEASE, STIPULATES an amount of OPERATING EXPENSES above which the TENANT must bear. Often the base amount is the amount of EXPENSE for the full year of operation under the LEASE.



ASSET in equal amounts over the life of the ASSET.

STRAIGHT-LINE RECAPTURE RATE – The part of a CAPITALIZATION rate that accounts for the annual EROSION of a WASTING ASSET by assuming an equal amount of LOSS in VALUE each year of the useful life of the ASSET.

STRAIGHT LOAN – Also known as TERM, BULLET or NON-AMORTIZING LOAN – A LOAN which calls for the payment of INTEREST only with the entire PRINCIPAL balance becoming due at the final payment.

STRAW MAN – One who purchases PROPERTY that is, in turn, conveyed to another for the purpose of concealing the identity of the eventual purchaser.

STRICT FORECLOSURE – Rarely used in contemporary markets, a FORECLOSURE proceeding in which the MORTGAGEE has the right to possess the MORTGAGED PROPERTY directly upon DEFAULT on the MORTGAGE agreement.

STRICT    LIABILITY    –    LIABILITY    for    DAMAGES    even    though    FAULT    or

NEGLIGENCE cannot be proven.

STRIP DEVELOPMENTAlso known as STRIP SHOPPING CENTER – Generally associated with intensive use of signs to attract passers-by and generally without an ANCHOR TENANT, a form of COMMERCIAL land use in which each establishment is afforded direct access to a major thoroughfare.

STRIP SHOPPING CENTERAlso known as STRIP DEVELOPMENT – Generally associated with intensive use of signs to attract passers-by and generally without an ANCHOR TENANT, a form of COMMERCIAL land use in which each establishment is afforded direct access to a major thoroughfare.

STRUCTURE – Any constructed IMPROVEMENT to a SITE.

STUDS OR STUDDING – In wall framing, the vertical members to which the horizontal members are attached, usually spaced between sixteen and twenty-four inches apart and serving as the main support for the roof or second floor.

SUBAGENT – The person who represents the PRINCIPAL through another person (the AGENT). In LISTING CONTRACTS, cooperating BROKERS and the SALESPEOPLE of the LISTING BROKER are SUBAGENTS of the PRINCIPAL.

SUBCHAPTER S CORPORATION – A CORPORATION with a limited number of STOCKHOLDERS (thirty-five or fewer) that elects not to be taxed as a regular CORPORATION and meets certain other requirements. SHAREHOLDERS include, in their personal tax return, their PRO-RATA share of CAPITAL GAINS, tax preference items, ordinary INCOME and so on.

SUBCONTRACTOR – One who performs services under CONTRACT to a GENERAL CONTRACTOR.

SUBDIVIDER – One who creates smaller PARCELS of LAND from a larger PARCEL for the purpose of DEVELOPMENT or sale.

SUBLEASE – Also known as SANDWICH LEASE – A LEASE subordinate to the original LEASE between the LESSOR and the LESSEE. The LESSEE re-leases the PROPERTY to a third person, creating a SUBLESSOR-SUBLESSEE relationship. In a SUBLEASE, there is some change from the terms and conditions of the original LEASE.

SUBLETPROPERTY, especially an APARTMENT, rented by a TENANT to another party.

SUBORDINATION CLAUSE – Usually used in LAND DEVELOPMENT situations, a clause in a financing document by which a lender agrees to accept a lower, or subordinated, LIEN priority.

SUBROGATION – 1) Process by which one INSURANCE COMPANY seeks reimbursement from another company or person for a CLAIM it has already paid; 2) The substitution of one person for another, so that the former may exercise certain rights or CLAIMS of the latter. If an

INSURANCE COMPANY pays a CLAIM to an injured party on behalf of a POLICYHOLDER, then the company is subrogated for the injured party and that party may no longer exercise any CLAIM against the POLICYHOLDER.

SUBSTANDARD RISK – Also known as IMPAIRED 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. SUBSTANDARD RISKS may include those persons who engage in certain sports and persons who are rated because of poor habits or morals.

SUBSTANDARD INSURANCEINSURANCE issued with an extra PREMIUM or special restriction to those persons who do not qualify for INSURANCE at standard RATES.

SUBSTITUTION – The APPRAISAL principle which maintains that the worth of a PROPERTY is comparable to what a willing buyer would pay for a similar PROPERTY.

SUBSURFACE RIGHTS – 1) The right to use LAND below the surface for IMPROVEMENTS; 2) the rights to coal, minerals or petroleum below a certain depth beneath the surface of a designated PARCEL of REAL PROPERTY. 

SUBURB – An unincorporated, developed area in close proximity to a city. Largely RESIDENTIAL, SUBURBS are often dependent on the city for employment and support services and are generally characterized by low-density development relative to the city.

SUIT TO QUIET TITLE – Also known as QUIET TITLE ACTION – A suit in court to remove a DEFECT, CLOUD ON THE TITLE or suspicion regarding legal rights of an owner to a certain PARCEL of REAL PROPERTY.

SUMMARY APPRAISAL REPORT – A written APPRAISAL REPORT that contains a moderate amount of detail. Contrast with SELF-CONTAINED APPRAISAL REPORT.

SUM-OF-YEAR-DIGITS DEPRECIATION (SYD) –  A tax and accounting method of allocating the cost of an ASSET over its useful life. It requires a fraction to be computed each year, which is applied against the DEPRECIABLE amount. The numerator is the number of years left to be DEPRECIATED and the denominator is the sum of the year’s digits of the DEPRECIABLE life.

SUMP – As part of a drainage system, a pit in the basement to collect excess moisture and liquids. To avoid flooding, a sump pump may be installed to remove accumulated water in the sump pit.

SUNSPACE – A room, generally with glass walls and roof, designed to collect solar heat.

SUPERADEQUACY – A component of REAL ESTATE that is beyond what is needed in the structure.

SUPERFUND– The commonly used name for CERCLA, the federal environmental cleanup law which imposes strict LIABILITY.  If a SITE is on the SUPERFUND list, it is required to be cleaned up by any and all previous owners, transporters, operators and disposers of waste to the SITE. The federal government will clean such SITES requiring the responsible parties to pay the cleanup costs.

SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT (SARA) – Law that confirmed the continued existence of SUPERFUND. SARA put more teeth into CERCLA, though SARA provides an innocent landowner defense for a buyer who conducted a Phase I environmental study before the acquisition, with negative results.


SUPERSTRUCTURE – The part of the structure which is above the ground or above the top of the foundation walls.

SUPPLEMENTAL INCOME – Also known as ADDITIONAL, INCIDENTAL and ANCILLARY 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.

SUPPLEMENTARY CONTRACT – An agreement between a LIFE INSURANCE company and a POLICYHOLDER or BENEFICIARY by which the company retains the cash sum payable under an INSURANCE POLICY and makes payments in accordance with the SETTLEMENT OPTION chosen.

SUPPLY AND DEMAND – The APPRAISAL principle which maintains that the VALUE of any REAL PROPERTY is affected by the supply of available similar PROPERTIES and the total demand for such PROPERTIES.

SURETY – One who guarantees the PERFORMANCE of another.

SURETY BOND – An agreement providing for monetary compensation in the event of a failure to perform specified acts within a stated period. The SURETY company, for example, becomes responsible for fulfillment of a CONTRACT if the CONTRACTOR DEFAULTS.

SURFACE RIGHTS – 1) The rights to control, use or occupy the surface of a designated PARCEL of REAL PROPERTY including the right to drill or mine through the surface when the SUBSURFACE RIGHTS are involved;  2) the right to use and modify the surface area of REAL PROPERTY. In Texas, SURFACE RIGHTS are subservient to MINERAL RIGHTS. In the absence of an agreement to the contrary, an oil driller who owns the MINERAL RIGHTS may operate anywhere on the surface of the PROPERTY.

SURFACE WATER – All water occurring naturally on the surface of the earth, such as diffused storm water in rivers, lakes and streams.

SURGICAL EXPENSE INSURANCEHEALTH INSURANCE POLICIES which provide BENEFITS toward the physician’s or surgeon’s operating fees. Benefits may consist of scheduled amounts for each surgical procedure.

SURGICAL SCHEDULE – A list of cash allowances attached to the POLICY which are payable for various types of surgery, with a maximum amount based upon the severity of the operation.

SURPLUS – The amount by which the VALUE of an INSURER’S ASSETS exceeds its LIABILITIES, i.e., the NET WORTH of an INSURANCE COMPANY.

SURPLUS LINES – (1) INSURANCE written by NON-ADMITTED INSURANCE COMPANIES; (2) A RISK or a part of a RISK for which there is no normal INSURANCE market available.

SURPLUS PRODUCTIVITY – The APPRAISAL principal which maintains that the SURPLUS is the NET INCOME remaining from an enterprise after all of the appropriate costs of management, CAPITAL and labor have been paid.

SURRENDER – The voluntary giving up of possession by the LESSEE with the premature REVERSION of the INTEREST to the LESSOR. The LESSEE who surrenders LEASED REAL PROPERTY is usually no longer obligated by the TERMS of the LEASE.

SURRENDER CHARGE – Typically assessed only during the first five to ten years of a POLICY, an amount retained by the ISSUER of a LIFE INSURANCE POLICY when a POLICY is canceled.

SURVEY – 1) the plan showing the area, boundaries, measurements and contours; 2) The process by which a PARCEL of LAND is measured and its AREA ascertained;

SURVEYOR – One who prepares SURVEYS.

SURVIVORSHIP – The right of a JOINT TENANT(S) to maintain ownership rights following the death of another JOINT TENANT. SURVIVORSHIP prevents HEIRS of the DECEASED from making CLAIMS against the PROPERTY.

SWEAT EQUITY – An EQUITY in PROPERTY created by the contributed labor of the borrower.

SWEETENER – Something included in a transaction to make it more acceptable.

SWING LOAN – A short-term LOAN that allows a HOMEOWNER to purchase a new home before selling the former RESIDENCE.

SWISS CHALET– A Swiss-style one and a half- to two and a half-story, GABLE ROOF house with extensive natural decorative woodwork on the exterior.

SYNDICATE – Also known as SYNDICATION – An association of individuals formed for the purpose of making and operating a mutual INVESTMENT. Often formed as GENERAL PARTNERSHIPS, REAL ESTATE INVESTMENT TRUSTS, LIMITED PARTNERSHIPS and CORPORATIONS.

SYNDICATION – Also known as SYNDICATE – An association of individuals formed for the purpose of making and operating a mutual INVESTMENT. Often formed as GENERAL PARTNERSHIPS, REAL ESTATE INVESTMENT TRUSTS, LIMITED PARTNERSHIPS and CORPORATIONS.

SYNDICATOR – A person in business who sells an INVESTMENT in shares or units.

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