Other Real Property Definitions

Investment Property

Any property that is owned and used for the sole purpose of keeping or gaining a future increase in its value, and/or is considered an investment property. This includes:

Homes (other than those used as principal residence)
Residential or commercial lots/units.

These properties could be acquired through direct purchase, inheritance, case settlement (e.g., divorce), lottery winnings, or as gifts. When property is held without an immediate intent to sell it, it is considered as being held as an investment.
An investment property is a countable property. It is considered other real property and is subject to the utilization requirements. A property is considered being utilized if the property is earning an annual income of 6% of its net market value.

Market Value

California Property

The market value is the assessed value shown on the most recent property tax assessment.

Property Located Outside California

Use the assessment method where property is located. The EW may call the local tax assessor's office.
Use the value of an appraisal by a member of a recognized professional appraisal society.

Note: It is the client's responsibility to obtain the appraisal.

Encumbrances

An encumbrance is any of the following:

Loans.
Attachments for debts and taxes.
Chattel mortgages and liens.

Note: Each encumbrance must be verified by a legal document (i.e., loan paperwork, mortgage statements, etc.).

Net Market Value (NMV)

The net market value is the owner's equity in the property. It is obtained by subtracting the encumbrances from the market value.
ExampleExample

Market Value	$125,000 (assessed value)
Minus Encumbrances	-60,000
Net Market Value	$65,000