Arm’s Length Purchase: The term is used to describe a real estate transaction in which the buyers and sellers of property or a parcel of land act independently, and are not related to each other. The idea of an arm’s length transaction ensures the buyers and sellers in the real estate transaction are acting in their own self interest and are not subject to any outside influence. In a ‘non-arm’s length tansaction their could be other factors that influence the transaction and subsequently the value of the exchange. This concept is important as it is a common way to determine if the price is a proxy for fair market value. If the transaction is not an ‘arm’s length’ transaction, then the stated price will likely differ from the actual fair market value of the property.

Joint Tenancy:  An equal undivided ownership interest of a property by two or more natural persons each of whom has the right, called the right of survivorship, upon the death of one joint tenant to the automatic succession of the title of the deceased tenant.  An estate owned by two or more parties in equal shares that is created by a single transfer document. Upon the death of a joint tenant the surviving joint tenants take the entire decedent’s share of the property, so nothing passes to the heirs of the deceased.

Natural Person:  A living person as distinguished from a legal person such as an organization or a corporation.

Acceleration Clause:   A condition in a real estate financing instrument giving the lender the power to declare all sums owed to the lender immediately due and payable upon the happening of an event such as sale of the property or a delinquency in the repayment of the note.  Clause in a deed of trust or mortgage which “accelerates” the time when the indebtedness becomes due. For example, some mortgages or deeds of trust contain a provision that the note balance shall become due immediately upon the resale of the land or upon the default in the payment of principal and interest.