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CHAPTER TWENTY-SEVEN
IMPERATIVE NECESSITY — Circumstances under which an agent has expanded authority in an
emergency, including the power to disobey instructions where it is clearly in the interests of the principal
and where there is no time to obtain instructions from the principal.
IMPOUNDS — A trust type account established by lenders for the accumulation of borrowers funds to meet
periodic payment of taxes, FHA mortgage insurance premiums, and/or future insurance policy premiums,
required to protect their security. Impounds are usually collected with the note payment. The combined
principal, interest, taxes and insurance payment is commonly termed a PITI payment.
INCOME (CAPITALIZATION) APPROACH — One of the three methods of the appraisal process
generally applied to income producing property, and involves a three-step process— (1) find net annual
income, (2) set an appropriate capitalization rate or “present worth” factor, and (3) capitalize the income
dividing the net income by the capitalization rate.
INCOMPETENT — One who is mentally incompetent, incapable; any person who, though not insane, is, by
reason of old age, disease, weakness of mind, or any other cause, unable, unassisted, to properly manage and
take care of self or property and by reason thereof would be likely to be deceived or imposed upon by artful
or designing persons.
INCORPOREAL RIGHTS — Nonpossessory rights in real estate, a rising out of ownership, such as rents.
INCREMENT — An increase. Most frequently used to refer to the increase of value of land that accompanies
population growth and increasing wealth in the community. The term “unearned increment” is used in this
connection since values are supposed to have increased without effort on the part of the owner.
INDEMNITY AGREEMENT — An agreement by the maker of the document to repay the addressee of the
agreement up to the limit stated for any loss due to the contingency stated on the agreement.
INDENTURE — A formal written instrument made between two or more persons in different interests, such
as a lease.
INDEPENDENT CONTRACTOR — A person who acts for another but who sells final results and whose
methods of achieving those results are not subject to the control of another.
INDORSEMENT — The act of signing one’s name on the back of a check or note, with or without further
qualification.
INITIAL NOTE RATE — With regard to an adjustable rate mortgage, the note rate upon origination. This
rate may differ from the fully indexed note rate.
INITIAL RATE DISCOUNT — As applies to an adjustable rate mortgage, the index value at the time of loan
application plus the margin less the initial note rate.
INJUNCTION — A writ or order issued under the seal of a court to restrain one or more parties to a suit or
proceeding from doing an act which is deemed to be inequitable or unjust in regard to the rights of some
other party or parties in the suit or proceeding.
INSTALLMENT NOTE — A note which provides for a series of periodic payments of principal and interest,
until amount borrowed is paid in full. This periodic reduction of principal amortizes the loan.
INSTALLMENT REPORTING — A method of reporting capital gains by installments for successive tax
years to minimize the impact of the totality of the capital gains tax in the year of the sale.
INSTALLMENT SALES CONTRACT — Commonly called contract of sale or “land contract.” Purchase of
real estate wherein the purchase price is paid in installments over a long period of time, title is retained by
seller, and upon default by buyer (vendee) the payments may be forfeited.
INSTITUTIONAL LENDERS — A financial intermediary or depository, such as a savings and loan
association, commercial bank, or life insurance company, which pools money of its depositors and then
invests funds in various ways, including trust deed and mortgage loans.
INSTRUMENT — A written legal document; created to effect the rights of the parties, giving formal
expression to a legal act or agreement for the purpose of creating, modifying or terminating a right. Real
estate lenders’ basic instruments are — promissory notes, deeds of trust, mortgages, installment sales
contracts, leases, assignments.
INTEREST — A portion, share or right in something. Partial, not complete ownership. The charge in dollars
for the use of money for a period of time. In a sense, the “rent” paid for the use of money.