| Term | Definition |
|---|
| adjustable rate mortgage (ARM) | A mortgage loan whose interest rate fluctuates according to the movements of an assigned index or a designated market indicator--such as the weekly average of one-year U.S. Treasury Bills--over the life of the loan. To avoid constant and drastic fluctuations, ARMs typically limit how often and by how much the interest rate can vary. |
| adjusted basis | The original cost of a property plus the value of any capital expenditures for improvements to the property minus any depreciation taken. |
| adjustment date | The date on which the interest rate changes for an adjustable-rate mortgage (ARM). |
| adjustment period | The period that elapses between the adjustment dates for an adjustable-rate mortgage (ARM). |
| adjustments | Money that the buyer and sellers credit each other at the time of closing. Often includes taxes and down payment. |
| administrator/administratrix | A man/woman appointed by a court to settle the estate of a deceased person when there is no will. Contrast with executor/executrix. |
| adverse possession | The right of an occupant of land to acquire title against the real owner, where possession has been actual, continuous, hostile, visible, and distinct for the statutory period. The requirements for adversely possessing property vary between states, but usually include continuous and open use for a period of five or more years and paying taxes on the property in question. |
| affidavit | Written statement signed and sworn to before some person authorized to take an oath. |
| agency | The legal relationship between a principal and an agent. In real estate transactions, usually the seller is the principal, and the broker is the agent: however, a buyer represented by a broker (i.e., buyer as principal is a growing trend. In an agency relationship, the principal delegates to the agent the right to act on his or her behalf in business transactions and to exercise some discretion while so acting. The agent has a fiduciary relationship with the principal and owes to that principal the duties of accounting, care, loyalty, and obedience. Also see buyer's broker. |
| agent | A person authorized to act for and under the direction of another person when dealing with third parties. The person who appoints an agent is called the principal. An agent can enter into binding agreements on the principal's behalf and may even create liability for the principal if the agent causes harm while carrying out his or her duties. See also attorney-in-fact. |
