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ACCELERATION CLAUSE: This clause in a note and trust
deed permits the payee or beneficiary to declare the entire unpaid balance
immediately due and payable when a given condition occurs. Such a condition
can be the sale of the property. This clause is sometimes called an
“alienation clause.”
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ACCOMMODATION RECORDING: The
recordation of an instrument without assumption of responsibility for
correctness or validity.
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ALL-INCLUSIVE TRUST
DEED (AITD/WRAP
AROUND): An all-inclusive procedure is used when a Seller (or lender) will
carry back a junior note without disturbing the trust deed loan(s) of
record. The document “wraps around” the existing loan(s). The sum of the
all-inclusive trust deed includes the total amount of the balances on the
underlying loan(s). The most common purpose for using an AITD procedure is
to avoid giving notice to the underlying lender(s) and not disturbing their
interest rates.
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AMENDMENTS: After the initial
escrow instructions have been executed and the parties wish to change the
instructions an amendment is prepared and signed. Amendments are used in
conjunction with the original escrow instructions.
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AMORTIZATION: Provision for
the payment of a debt as to both principal and interest in equal
installments over a period of time.
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APPRAISAL: An opinion as to
the fair market value of land and the improvements on it.
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ASSESSED VALUE:
The value placed on land and improvements as a basis for taxation.
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ASSESSMENTS: Special and
local levies upon property in the immediate vicinity of an improvement.
Assessments can be imposed by such entities as flood control districts,
street lighting districts and air pollution control districts which serve an
area.
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ASSIGNEE: One to whom a
transfer of interest is made. For example, the assignee of a Deed of Trust
or contract.
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ASSIGNMENT: The transfer, in
writing, of a person’s interest to another person or entity in an asset,
such as an assignment of stock, a deed of trust and note or a lease.
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ASSIGNOR: One who makes an
assignment. For example, the assignor of a Deed of Trust or contract.
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ASSUMPTION: An agreement by
one party to pay an obligation previously owed by another. For example, the
assumption of an existing trust deed loan by a new owner may occur when
property is sold.
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ASSUMPTION FEE: The charge
made by a lender when a buyer assumes the seller’s existing loan.
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ATTORNEY-IN-FACT: One who
holds a power of attorney from another allowing him to act on behalf of the
grantor of the power.
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BENEFICIARY: In a trust deed,
the lender is designated as the beneficiary. The beneficiary obtains the
benefit of the security.
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BENEFICIARY’S STATEMENT: A
report from a lender, in writing, setting forth the terms and conditions of
a loan already of record, such as amounts still owed, interest rate, monthly
payments, etc.
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BILL OF SALE:
A document that
attests to the transfer of ownership of personal property.
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BORROWER: One who obtains a
loan and owes money to a lender.
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BUYER: One who purchases or
acquires property.
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BY-LAW: A rule adopted for
the internal government of a corporation.
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CITY REPORTS: (Residential
Property Report) The requirement of a special report to be issued in
connection with the sale of property, usually processed through the Building
and Safety Department.
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CLOSING STATEMENT: Settlement
of the escrow. (1) The seller’s statement gives an accounting of the sales
price paid less the charges normally assessed to the Seller and payoffs made
on behalf of the seller. (2) The buyer’s statement shows the deposits made,
the loan(s) obtained or assumed, and any credits by instructions less the
sales price, loan costs, insurance, pro-rata items and charges usually paid
for by the buyer.
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COLLECTION SERVICE: A service
performed by a neutral third party in receiving and disbursing loan payments
as instructed by the parties concerned.
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COMMUNITY PROPERTY: Property
acquired after marriage by either a husband and or wife, other than by gift,
or as an heir, legatee or devisee.
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CONDEMNATION: The exercise of
the power of eminent domain by which property is taken for a public use upon
payment of just compensation. Condemnation can also refer to the condemning
of unsafe structures.
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CONDOMINIUM: A multifamily or
other structure in which units are individually owned and in which owners of
individual units also own an undivided interest in common areas.
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CONTINGENT: Dependent upon
conditions or events specified but not yet accomplished. Property may be
sold contingent upon the seller or buyer meeting pre-determined conditions.
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CONTRACT OF SALE: An
agreement entered into for the sale and purchase of property where title
remains in the seller’s name until all conditions of the contract have been
fulfilled.
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CONVEYANCE: A written
document that transfers title to an asset from one person to another. A deed
and an assignment are both conveyances, as is a bill of sale.
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COUNTY ASSESSOR: One who sets
value of property for taxation purposes.
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COVENANTS, CONDITIONS AND
RESTRICTIONS (CC&R’S): Those matters that inhibit the use and/or sale of a
property which are usually placed against properties by an inclusion on a
prior deed. Not all properties have CC&R’S, however, all condominium
projects will have such restrictions.
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CREDIT REPORT: Report which
shows your credit history. The lender uses the information in a credit
report to help decide whether or not to approve your loan and how much money
to lend you.
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DEED: A written document
which conveys ownership of real property from one person to another.
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DEED OF TRUST: A document
executed by the owner of real property by which the real property is given
as security for the payment of a note or other performance of an obligation.
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DEFAULT: Failure to perform a
duty or to pay an obligation.
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DEFICIENCY JUDGMENT: A
personal judgment in a judicial foreclosure action for the remaining amount
due after a sale of the security.
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DEMAND: A statement from a
lender showing the amount due on a loan. If a seller’s loan is to be paid in
full through escrow, the escrow officer must obtain a written demand for
payment and the documents necessary to release the loan.
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DISCOUNT: Also often called
‘discount points,’ a loan discount is a one-time charge imposed by the
lender or broker to lower the rate at which the lender or broker would
otherwise offer the loan to you. Each ‘point’ is equal to one percent of the
loan amount.
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DOCUMENTARY TRANSFER
TAX: A
tax on recorded transfers of title to real property.
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EARNEST MONEY: An amount of
money given as part of the purchase price of property to bind the agreement
between the buyer and seller (initial deposit).
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EASEMENT: A right or interest
in the property of another, such as a right to cross over another person’s
property to reach yours.
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EMINENT DOMAIN: The right or
power of a governmental body to take property for a public purpose upon
payment of just compensation.
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ENCUMBRANCE: A lien affecting
the land and improvements, such as a deed of trust.
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EQUITY: Market value of
property, less any encumbrance or other liens on it.
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ESCROW: A transaction in
which an impartial third party acts as agent for both seller and buyer, or
for both borrower and lender, in carrying out instructions, delivering
papers and documents and disbursing funds.
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EXCEPTION: An interest in
real property which is excluded from the conveyance and remains with the
grantor or which had been excluded in a prior conveyance such as oil and
mineral rights.
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FIRE INSURANCE: Insurance
against loss or damage by fire to specific property.
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FORECLOSURE: A proceeding to
enforce a lien by the sale of the real property in order to satisfy the
debt.
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GRANTEE: The buyer on a deed.
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GRANTOR: The seller on a
deed.
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HOME PROTECTION
POLICY:
Basically provide limited protection against failure of heating, plumbing,
electrical and other systems. Available in a variety of coverage’s and
costs.
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HOMESTEAD: The dwelling in
which an owner or head of a family resides which can be protected to a
limited extent from forced sale by a recorded “Declaration of Homestead”.
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IMPOUND ACCOUNT: An account
held in trust by the lender in which the borrower is required to place
monthly deposits for property taxes, insurance and/or other purposes.
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INDEMNITY AGREEMENT: A
warranty backed up with a written guarantee of payment on a matter in
question.
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INVENTORY LIST: A detailed
signed statement listing all personal property included in the purchase
price.
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JOINT TENANCY: A form of
co-ownership by two or more persons in equal shares characterized by the
incident of survivorship.
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LEASE: A writing constituting
a conveyance of real property for a period of time along with a contract for
its possession during that term.
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LEGAL DESCRIPTION:
Description of real property as used in legal documents in contrast to a
street address by which the property is commonly known. Legal descriptions
usually refer to recorded maps, surveys or other public documents.
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LESSEE: The tenant under a
lease.
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LESSOR:
The landlord under a lease.
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LIEN: A security interest in
real or personal property which places the holder in a position prior to the
rights of the general creditors of the owner. Examples include trust deeds,
mortgages, special assessments, recorded judgments, mechanic’s liens, taxes,
etc.
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LIS
PENDENS: A recorded notice of a law suit filed against a property.
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LOAN ORIGINATION: See
“Points”.
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LOAN TITLE POLICY: A policy
of title insurance insuring the interest of a lender (ALTA).
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LOSS PAYABLE CLAUSE: An
endorsement to a fire insurance policy specifying the parties entitled to
participate in proceeds in the event of a loss.
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MAKER: A person who makes,
executes or signs a legal instrument such as a promissory note.
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NOMINEE: Person(s) that is
named, designated or appointed.
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NOTARIZE: To prove execution
of a document by means of a Certificate of Acknowledgement by a notary
public.
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NOTE: Written evidence of a
debt by a borrower that includes a promise of payment in accordance with
specified terms. A valuable document which must not be lost even when paid
in full. In real property transactions, a note is usually secured by a deed
of trust.
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NOTICE OF COMPLETION: A
notice which should be recorded to indicate the completion of improvements
to real property. A valid notice of completion limits the time for filing
mechanic’s liens.
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NOTICE OF DEFAULT: Recorded
notice that a default has occurred under a deed of trust and/or note.
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OFFSET STATEMENT: A statement
obtained from the owner of real property to verify the loan balance,
interest rate, interest paid-to-date, and maturity date with respect to a
loan being taken over by a purchaser. Not to be confused with a
beneficiary’s statement. This can also be provided by a tenant regarding his
rights of possession.
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ORDINANCE: A legislative
enactment of a city or county.
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PAYEE: One who receives
payments.
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PAYOR:
One who makes payments.
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PERSONAL PROPERTY: All
property which is not land or improvements permanently affixed to land.
Example: stocks, bonds, furniture, automobiles, clothing, promissory notes,
etc.
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POINTS: Covers the lender’s
administrative costs in processing the loan. Often expressed as a percentage
of the loan, the fee will vary among lenders. Generally, the buyer pays the
fee, unless otherwise negotiated.
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POWER OF ATTORNEY: A written
authorization to an agent to perform specified acts on behalf of his
principal. This may be granted as either a general or limited power.
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PRELIMINARY TITLE
REPORT: A
report from a title company of the present condition of title made prior to
the issuance of a title policy.
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PREPAYMENT PENALTY: An
agreement to pay a specified penalty for the full or partial payment of a
note before its maturity date.
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PRORATION:
The allocation of property taxes, interest, insurance premiums, rental
income, etc... between buyer and seller proportionate to time of use.
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PURCHASE MONEY
TRUST DEED/NOTE: When a seller carries back a note secured by a deed of trust on
his property it is called a purchase money obligation. Purchase money trust
deeds are exempt from the usury limitations, the viewpoint being that the
seller has agreed to the extended payment of the purchase, and the interest
itself is a part of that purchase price.
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QUITCLAIM DEED: A deed which
conveys whatever right, title or interest the grantor may have in property
at the time of conveyance. There is no guarantee implied in a quitclaim
deed.
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REAL PROPERTY: Land and
improvements permanently affixed to land.
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RECONVEYANCE:
A document evidencing that a deed of trust affecting real property has been
paid in full and that the lender and the trustee no longer have any interest
in the property.
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RECORDATION: Filing for
record in the office of the county recorder.
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RENTAL STATEMENT: A detailed
signed statement covering the rental income of a property. The rent
statement is usually given for pro-rata purposes with respect to monthly
rentals, security deposits, last months rents, etc.
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REQUEST FOR NOTICE: A
recorded request by anyone desiring written notice of the recording of a
notice of default under a deed of trust.
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RESERVATION: A right reserved
by the grantor when conveying property, or a right which had previously been
reserved.
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RIGHT OF WAY: The right of
another to cross over, under or through a parcel of land.
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RESTRICTIONS: This is often
referred to as covenants, conditions and restrictions (CC&R’s) in regard to
a piece of property, setting limitations on its use.
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SINGLE: A person that has
never been married.
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SELLER: One who sells
property to another.
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SPECIAL RECORDINGS: “Special”
recordings are those filings that are not recorded at the County Recorder’s
title company window at the beginning of the day with the normal volume of
transactions. If the documents are recorded later in the day, it is called a
“Special” recording. “Special” recordings are rarely allowed; the recording
is at the discretion of the County Recorder’s office.
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STATEMENT OF INFORMATION:
A
brief statement of facts relied upon by title insurers to assist in the
proper identification of persons.
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SUBJECT TO: (1) When a buyer
assumes the obligations of a loan on a property informally he is accepting
the property “Subject To” the loan of record. The escrow officer will not
request the lender process a formal assumption with credit checks and
assumption documentation. (2) The recognition of an existing lien or
encumbrance without assuming personal liability thereof.
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SUBORDINATION AGREEMENT:
An
agreement by which a prior lien is made inferior to an otherwise junior
lien.
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SUPERSEDE: Documents that
have been amended, or changed, supersede the old agreement. Any escrow
instructions that are fully re-drawn will recite at the top that the
instructions supersede all prior instructions.
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TAX COLLECTOR: One who
collects the taxes on property.
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TAX SERVICE CONTRACT: When a
lender wishes to be kept informed as to whether or not property taxes are
being paid a Realty Tax Service Contract can be purchased which entails an
audit of the tax rolls and issuance of notices when taxes are delinquent.
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TENANCY IN COMMON: A form of
co-ownership of property by two or more persons in undivided interests.
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TITLE: Evidence of a person’s
right to or the extent of his interest in real property.
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TITLE INSURANCE: Insurance
against loss or damage resulting from defects in title to a particular
parcel of real property.
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TRUST DEED: A deed of trust.
(See deed of trust.)
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TRUSTEE (IN A DEED OF TRUST):
The entity to which real property is conveyed in trust, not to be confused
with the beneficiary.
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TRUSTOR
(IN A DEED OF TRUST): The borrower under a deed of trust.
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UNMARRIED: Person that was
married and divorced.
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USURY: A greater payment or
return for the loan of money that is permitted by law.
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VARIABLE INTEREST
RATE:
Interest rate which fluctuates up or down according to the current cost of
money.
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VENDEE: One who is purchasing
property under a Contract of Sale.
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VENDOR: One who is selling
property under a Contract of Sale.
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VESTING: The manner in which
the owner of real property holds title.
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ZONING: Local government
regulations relating to the use of real property.
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