Safe Harbor - A provision in the Tax Code that gives a taxpayer protection as long as the requirements to comply with the code are met. There are four types of safe harbors: 1) A safe harbor which provides the taxpayer with methods to obtain security on exchange funds, 2) A safe harbor which provides for qualified escrow accounts and trusts, 3) A safe harbor which establishes the use of a Qualified Intermediary (QI), and 4) A safe harbor that provides a way for the taxpayer to receive a growth factor on exchange funds.

Sale and leaseback - The sale of an asset to a buyer who immediately leases it back to the seller.

Satisfaction - An instrument releasing the lien of a mortgage.

Second Mortgage — A second loan on real estate that already has a mortgage. It is subordinate to the first mortgage. Usually of shorter term and often at a higher interest rate.

Secondary market - A market system for the purchase and sale of mortgage loans, often gathered into pools and traded as mortgage-backed securities.

Section or Section of Land — A parcel of land comprising one square mile or 640 acres.

Security - Protection against loss, usually with a lien created by a mortgage, pledge or a deposit given by a borrower to its creditor.

Seller - Same as replacement property owner. In a three-party exchange, the person who owns the property that the taxpayer wants to acquire.

Senior lien or mortgage - If there is more than one lien on land, those liens are ranked by priority. A senior lien or mortgage is entitled to be paid first in foreclosure or bankruptcy, before a junior lien.

Separate property - Property a husband or wife owns independently of the other.

Service charge - A charge paid by the borrower to the lender for the lender’s expenses in processing the loan.

Servient estate - The land burdened by an easement.

Setback lines - See building lines.

Settlement - See closing.

Settlement funds - All of the money, from the buyer, the buyer’s lender or any other source, that is necessary to meet all obligations created in a real estate transaction.

Shared appreciation mortgage - A loan having a fixed interest rate set below the market rate for the term of the loan which provides for contingent interest based upon a percentage of the appreciation in the value of the security at the sale or transfer of the property, or the payment of the loan.

Simultaneous Exchange - Originally, exchanges were of the two-party type where A wants B's property and B wants A's property. The parties would swap the properties at the same time ("concurrently" or "simultaneously").

Special warranty of title - A covenant by a seller of land to protect the buyer against being dispossessed because of any adverse claims to the land by the seller, or anyone claiming through the seller.

Standard coverage policy - A form of title insurance which contains certain standard printed exceptions not included in the ALTA policies.

Starker Exchange - Starker vs. U.S., 602 F2d 1341 (CA9 1979): Original case where Starker, as Taxpayer, structured a non-simultaneous, delayed exchange where the Buyer of the Relinquished Property acted as the Accommodator. Starker acquired 12 replacement properties over a two year period, and the Court upheld Starker’s deferred exchange and determined that he completed his exchange within a reasonable period of time. After Starker, in 1984 Congress amended IRC Section 1031 by adding vague rules for delayed exchanges including the 45-day and 180-day rules. Starker is the grandfather of delayed Exchanges which are sometimes called “Starker Exchanges.”

Starter - See back title letter.

Subcontractor - A party having a contract with another contractor instead of contracting directly with the owner.

Subdivision - A tract of land surveyed and divided into lots for purposes of sale.

Subordination - Placing in a lower class.

Subrogation - The substitution of one person in the place of another with reference to a claim, demand, or right, so that the individual who is substituted succeeds to the rights of the other in relation to the debt or claim and its rights, remedies, or securities.

Sub-surface Right — The right of ownership to things lying beneath the physical surface of the property.

Substitution loan and substitution rate - A loan made to the same borrower on the same land, or by the same lender on the same land, the title to which was insured by the insurer in connection with the original loan.

Surety - A person who agrees to be responsible for a debt or obligation of another.

Survey — The process of measuring land to determine its size, location and physical description and the resulting drawing or map.