Legal Glossary

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z #

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Back-end ratio: A lender calculation that compares a borrower's total debt (principal, interest, property taxes, and insurance, plus other monthly debt payments) to gross monthly income.

Back pay: A type of damages award in an employment lawsuit that represents the amount of money the employee would have earned if the employee was not fired or denied a promotion illegally.

Backup offer: A secondary bid for a property that the seller will accept if the first offer fails.

Badges of fraud: Various kinds of conduct that may suggest fraudulent intent on the part of the debtor.

Bait and switch: A dishonest sales practice in which a business advertises a bargain price for an item in order to draw customers into the store and then tells the prospective buyer that the advertised item is of poor quality or no longer available and attempts to sell them something else that is higher priced.

Balance sheet: The statement of the assets and the liabilities (amounts owed) of a business at a particular time usually prepared each month, quarter of a year, annually, or upon sale of the business.

Balloon payment: Any payment that is greater than twice the amount of the normal and periodic payment. Generally used to refer to the final payment of a note with an advanced due date.

Bankruptcy: Legal process that takes place because of insolvency; unable to pay one's debts; insolvent.

Bankruptcy Act of 1898: The bankruptcy statute enacted in 1898 and repealed in 1978 to be replaced by the Bankruptcy Reform Act of 1978 (the current statute followed for bankruptcy cases).

Bankruptcy estate: All legal or equitable interests of the debtor in property at the time of the bankruptcy filing.

Bankruptcy Reform Act of 1978: The 1978 statute under which bankruptcy would be governed, establishing the current Bankruptcy Code and replacing the former Bankruptcy Act.

Bankruptcy Reform Act of 1994: The 1994 legislation amending the Bankruptcy Code. This enactment included provisions to expedite bankruptcy proceedings, standardize fees, and encourage consumers to file chapter 13 instead of chapter 7. Created the National Bankruptcy Review Commission to do a thorough review of the Bankruptcy Code and recommendations for additional changes.

Bankruptcy rules: Also known as the Federal Rules of Bankruptcy Procedure, the rules that govern the procedures in bankruptcy and adversary cases. In addition to these rules, each bankruptcy court typically adopts is own “local rules” that supplement the Federal Rules.

Basis point: A basis point is one one-hundredth of one percentage point. For example, the difference between a loan at 8.25 percent and a mortgage at 8.37 percent is 12 basis points.

Bench trial: A trial without a jury. The judge rules on facts and evidence presented to him.

Benefits:   Retirement, Disability, Dependents, Survivors and Medicare are the five (5) categories within the Social Security system that you may receive benefits under.

Best interests test: Under the "test" the plan must provide to pay the general unsecured creditors at least as much as they would have been paid had the debtor filed in Chapter 7 instead.

Blue sky laws: The securities laws of individual states, collectively. These laws seek to protect people from investing in sham companies-companies that offer nothing more than "blue sky."

Board of Directors: The directors of a corporation, collectively. The directors of a corporation are its governing board. Elected by shareholders, they vote on major corporate matters such as the issuing of shares of stock, election of officers, and approval of mergers and acquisitions.  Also called the Board or Executive Board.

Bond: An interest-bearing instrument issued by a corporation or other entity that serves as evidence of a debt or obligation.

Book account: An account of a customer kept in a business ledger of debits and credits (charges and payments), which shows the amount due at any given time. This can provide a clear basis for suing for a debt.

Breach of contract: The failure to perform provisions of a contract without a legal excuse.

Bridge loan: A short-term loan for borrowers who need more time to find permanent financing.

Broker: A person who brings parties together and assists in negotiating contracts between them for a commission or fee.

Builder upgrades: Extra features or better finishing materials offered by a builder.

Building code: A comprehensive set of laws that controls the construction or remodeling of a home or other structure.

Building line or setback: Guidelines that limit how close an owner can build to the street or an adjacent property.

Building permit: A permit issued by a local government agency that allows the construction or renovation of a house.

Building restrictions: Regulations that limit the manner in which property can be used.

Built-ins: Appliances or other items that are framed into a home or permanently attached.

Bundle of rights: The various interests or rights an owner has in a property.

Burden of proof: The obligation of one party in a suit to prove all the requirements necessary to show entitlement to recovery. If the burden is not met, the party with the burden will lose the issue or the case.

Business judgment rule: The rule that shields directors from liability for mismanagement of the corporations that they serve.

Business law: Business law is the general field of law relating to business organizations, business structures, and business transactions. Also included in the business law field are issues related to real estate, tax, and the environment. Business law courses are available for non-lawyers at the college level. For law students, business law courses are very detailed and will allow the attorney to give competent business law advice as to what kind of business organization might be appropriate for a client and what course of action may be best in certain business transactions.

Buyer's agent: An agent representing a buyer in a home purchase, either as a single agent or as an exclusive buyer's broker.

Buyer's market: A slow real estate market in which buyers have the advantage.