l. The object of an human desire; especially advantage or profit of a financial nature <conflict of interest>.
2. A legal share in something; all or part of a legal or equitable claim to or right in property <right, title, and interest>. * Collectively, the word includes any aggregation of rights, privileges, powers, and immunities; distributively, it refers to any one right, privilege, power, or immunity.
Types of Controlling Interest:
Controlling Interest – sufficient ownership of stock in a company to control policy and management; especially, a greater-than-50% ownership interest in an enterprise.
Absolute Interest – not subject to any condition.
Entire Interest – a whole interest or right, without diminution.
Beneficial Interest – a right or expectancy in something (i.e a trust or estate) as opposed to legal title.
Carried Interest – the share of any profits produced by a partnership’s investment, paid to the general partner as compensation for managing the investment.
p concurrent interest. See concurrent estate under ESTATE (1).
Contingent Interest – an interest that the holder may enjoy only upon the occurrence of a condition precedent.
Defeasible Interest – an interest that the holder may enjoy until the occurrence of a condition.
Direct Interest – a certain, absolute interest.
Entailed Interest – an interest that devolves through lineal descendants only as a result of a fee tail.
Equitable Interest – held by virtue of an equitable title or claimed on equitable grounds, such as the interest held by a trust beneficiary.
executory interest. See exncuronr m’renes’r. ’
expectant interest. See future Interest.
> expectation interest. (1836) The interest of 3 mm breaching party in being put in the position that would have resulted if the contract had been performed. ice expectation damages under DAMAGES; BENEFIT or rm»,
> iinancial interest. (1846) An interest involving money or its equivalent; esp., an interest in the nature ofan investment. -Also termed pecuniary interest.
I> fractional interest. See undivided interest.
> future interest. (17c) A property interest in which the privilege of possession or 0 other enjoyment is future and not present. 0 A future interest can exist in either the grantor (as with a reversion) or the grantee (as with a remainder or executory interest). Today, most future interests are equitable interests in stocks and debt secu. rities, with power of sale in a trustee. ~-Also termed future estate; expectant estate; expectant interest; estate in expectancy. Cf. present interest.
“[T]he interest is an existing interest from the time of its creation, and is looked upon as a part of the total ownership of the land or other thing [that] is its subject matter. In that sense, future interest is somewhat misleading, and it is applied only to indicate that the possession or enjoyment of the subject matteris to take place in the future.” Lewis M. Simes & Allan F. Smith, The Law of Future Interests 51, at 2-3 (2d ed. 1956).
“To own a future interest now means not only to be entitled now to judicial protection of one’s possible future possession, but also (in most cases) to be able to make transfers now of that right of possible future possession.” Thomas F. Bergin & Paul G. Haskell, Preface to Estates in Land and Future Interests 56 (2d ed. 1984). “When 0 transfers today ‘to A for five years,’ we can say either that O has a future interest or that he has a ‘present’ estate subject to a term for years in A. Similarly, when 0 transfers today his entire estate in fee simple absolute by a conveyance ‘to A for five years, then to B and his heirs,’ we can say either that B has a future interest or that he has a ‘present’ estate subject to a term for years in A. Unhappily, the fact that we have two
locutions available to us can be a source of confusion . . . .” Id. at 42.
> inalienable interest. (1848) An interest that cannot be sold or traded.
h inchoate interest. (1800) A property interest that has not yet vested.
D insurable interest. (18c) A legal interest in another person’s life or health or in the protection of property from injury, loss, destruction, or pecuniary damage. 0 To take out an insurance policy, the purchaser or the potential insured’s beneiiciary must have an insurable interest. If a policy does not have an insurable interest as its basis, it will usu. be considered a form of wagering and thus be held unenforceable. See wager insurance under INSURANCE.
v interest in the use and enjoyment of land. (1834) The pleasure, comfort, and advantage that a person may derive from the occupancy of land. O The term includes not only the interests that a person may have for resi~ dential, agricultural, commercial, industrial, and other purposes, but also interests in having the present-use value of the land unimpaired by changes in its physical condition.
joint interest. (16c) An interest that is acquired at the same time and by the same title as another person’s. Sec joint tenancy under TENANCY.
y junior interest. (1906) An interest that is subordinate to a senior interest.
elegal interest. (17C) 1. An interest that has its origin in the principles, standards, and rules developed by courts of law as opposed to courts of Chancery. 2. An interest recognized by law, such as legal title.
ylegally protected interest. (1925) A property interest that the law will protect against impairment or destruc» tion, whether in law or in equity.
p liberty interest. (1960) An interest protected by the due process clauses of state and federal constitutions. See FUNDAMENTAL RIGHT (2).
smultiple interest. A property interest that is good against an indefinitely large number of people.
> ownership interest. See property interest. specuniary interest. See financial interest. r possessory interest. See POSSESSORY INTEREST.
r present interest. (17c) 1. A property interest in which the privilege of possession or enjoyment is present and not merely future; an interest entitling the holder to immediate possession. -Also termed present estate. Cf. FUTURE INTEREST. 2. A trust interest in which the beneficiary has the immediate beneficial enjoyment of the trust’s proceeds. 3. A trust interest in which the trustee has the immediate right to control and manage the property in trust.
r property interest. 1 . Property law. An interest, perhaps including rights of possession and control, held by an owner, beneficiary, or remainderman in land, real estate, business, or other tangible items. 2. Constitutional law. A legitimate claim of entitlement to some legal or contractual beneiit that cannot be taken away without due process. Also termed proprietary interest; ownership
interest; interest in property.
> proprietary interest. (17c) A property right; specif., the interest held by a property owner together with all appurtenant rights, such as a stockholder’s right to vote the shares. 0 Contingent fees and attorney’s liens are exceptions to the rule that a lawyer may not have a proprietary interest in a client’s claim or the subject matter
of the litigation. See property interest.
> reliance interest. (1936) The interest of a nonbreaching party in being put in the position that would have resulted if the contract had not been made, including out-of-pocket costs.
brestitution interest. (1936) A nonbreaching party’s interest in preventing the breaching party from retain~ ing a benefit received under the contract and thus being unjustly enriched. 0 The benefit may have been received from the nonbreaching party or from a third party.
* reversionary interest. (18c) A future interest left in the transferor or successor in interest. See REVERSION.
* senior interest. (1937) An interest that takes precedence over others; esp., a debt security or preferred share that has ahigher claim on a corporation’s assets and earnings than that of a junior obligation or common share.
terminable interest. (1883) An interest that may be terminated upon the lapse of time or upon the occurrence
of some condition.
> undivided interest. (18c) An interest held under the same title by two or more persons, whether their rights are equal or unequal in value or quantity. -Also termed undivided right; undivided title; fractional interest. See joint tenancy and tenancy in common under TENANCY.
> vested interest. (18c) An interest for which the right to its enjoyment, either present or future, is not subject to
the happening of a condition precedent. Cf. contingent interest.
r working interest. See WORKING INTEREST.
3. The compensation fixed by agreement or allowed by law for the use or detention of money, or for the loss of money by one who is entitled to its use; esp., the amount owed to a lender in return for the use of borrowed money. -Also termed finance charge. See USURY.
b accrued interest. (18c) Interest that is earned but not yet paid, such as interest that accrues on real estate and that will be paid when the property is sold if, in the meantime, the rental income does not cover the mortgage payments.
> add-on interest. (1952) Interest that is computed on the original face amount of a loan and that remains the same even as the principal declines. 0 A $10,000 loan with add-on interest at 8% payable over three years would require equal annual interest payments of $800 for three years, regardless of the unpaid principal amount. With add-on interest, the effective rate of interest is typically about twice the stated add-on interest rate. In the example just cited, then, the effective rate of interest would be about 16%. Also termed block interest. See add-on loan under LOAN.
> Boston interest. (1985) Interest computed by using a 30-day month rather than the exact number of days in the month. Also termed New York interest.
> capped interest. (1979) Interest that is calculated according to a variable interest rate, as with an adjustable-rate mortgage, but that cannot exceed an upper limit either for a specified period of time or for the entire duration of the period when the interest applies.
> compound interest. (17c) Interest paid on both the principal and the previously accumulated interest. Cf.
> conventional interest. (1878) Interest at a rate agreed to by the parties themselves, as distinguished from that prescribed by law. Cf. interest as damages.
> discount interest. The interest that accrues on a discounted investment instrument (such as a government bond) as it matures. O The investor receives the interest when the instrument is redeemed.
v gross interest. (1884) A borrower’s interest payment that includes administrative, service, and insurance charges.
> illegal interest. See USURY’»
> imputed interest. (1968) Interest income that the IRS attributes to a lender regardless of whether the lender actually receives interest from the borrower. 0 This is common esp. in loans between family members.
interest as damages. (1841) Interest allowed by law in the absence of a promise to pay it, as compensation for a delay in paying a fixed sum or a delay in assessing and paying damages. Cf. conventional interest.
> lawful interest. (16c) l. A rate of interest that is less than or equal to the statutory maximum. 2. See legal interest.
> legal interest. (17c) 1. Interest at a rate usu. rescribed by statute. 0 Courts often order monetary ju gments to
accumulate legal interest until paid. Cf. legal rate under INTEREST RATE. 2. See lawful interest.
> moratory interest. See prejadgment interest. > New York interest. See Boston interest.
> prejudgment interest. (1953) Statutorily prescribed interest accrued either from the date of the loss or from
the date when the complaint was filed up to the date the final judgment is entered. 0 Prejudgment interest is usu. calculated only for liquidated sums. Depending on the
statute, it may or may not be an element of damages. -Also termed moratory interest.
p prepaid interest. (1887) Interest paid before it is earned.
> qualified residence interest. (1993) Tax. Interest paid on debt that is secured by one’s home and that was incurred to purchase, build, improve, or relinance the
home. 0 This type of interest is deductible from adjusted gross income. Abbr. QRI.
> simple interest. (17c) Interest paid on the principal only and not on accumulated interest. 0 Interest accrues
only on the principal balance regardless of how often
interest is paid. –Also termed straight-line interest. Cf. compound interest.
> straight-line interest. See simple interest.
r unearned interest. (1880) Interest received by a financial institution before it is earned.
> unlawful interest. See USURY.
interest-analysis technique. (1964) Conflict of laws. A method of resolving choice-of-law questions by reviewing a state’s laws and the state’s interests in enforcing those laws to determine whether that state’s laws or those of
another state should apply. Also termed governmentalinterest-analysis technique.
interest arbitration. See ARBITRATION. interest as damages. See INTEREST (3). interest-based quorum. See QUORUM. interest bond. See BOND (3).
interest coupon. See COUPON.
interest-coverage ratio. (1960) The ratio between a com
pany’s pretax earnings and the annual interest payable on bonds and loans.
interested party. See PARTY (2). interested person. See PERSON (1). interested shareholder. See SHAREHOLDER.
interested stockholder. See interested shareholder under SHAREHOLDER.
interested witness. See WITNESS. interest-equalization tax. See TAX.
interest factor. (1894) Insurance. In life-insurance ratemakv ing, an estimate of the interest or rate of return that the
Insurer will earn on premium payments over the lilt, fiPOliCY0 The interest factor is one element that “t” Insurer uses to calculate premium rates. See PRPMII e RATE; gross premium (1) under PREMIUM (I). (.t’. MON IA, ITY FACTOR; RISK FACTOR.
il’tterest-free, adj. (1943) Involving no charge UfCle money that a borrower must pay back in add lllOl’l to ti.
principal amount. interest-free loan. See LOA N.
interest group, n. (1908) An assodal ion of people who M tOgether to try to influence popular opinion or gown, ment action. Cf. PRESSURE GROUP.
b special-interest group. (1920) An organization that seeks to influence legislation or government policy in favor of a particular interest or issue, esp. by lobbying, Abbr. SIG. –Also termed special interest.
interest in property. See PROPERTY INTEREST.
Interest on Lawyers’ Trust Accounts. A program that allows a lawyer or law iirm to deposit a client’s retained funds into an interest-bearing account that designates the interest payments to charitable, law-related purposes, such as providing legal aid to the poor. 0 Almost all states
have either a voluntary or mandatory IOLTA program. -Abbr. IOLTA.
interest-only loan. See LOAN.
Interest-only mortgage. See MORTGAGE. Interest policy. See INSURANCE POLICY.
Interest rate. (1886) The percentage that a borrower of money must pay to the lender in return for the use of the money, usu. expressed as a percentage of the principal payable for a one-year period. -Often shortened to rate. -Also termed rate of interest.
5 annual percentage rate. (1941) The actual cost of bor
rowing money, expressed in the form of an annualized interest rate. ~ Abbr. APR.
> bank rate. (1913) The rate of interest at which the Federal Reserve lends funds to member banks.
> base rate. (1970) The standard rate of interest, set by the Federal Reserve, Bank of England, etc., on which all the banks of a country set their charges.
> contract rate. (1856) The interest rate printed on the face of a bond certificate.
r coupon rate. (1962) l. The specific interest rate for a coupon bond. -Also termed coupon interest rate. See coupon bond under BOND (3). 2. See nominal rate.
r discount rate. (1913) 1. The interest rate at which a member bank may borrow money from the Federal Reserve. 0 This rate controls the supply of money available to banks for lending. Cf. rediscount rate. 2. The percentage of a commercial paper’s face value paid by an issuer who sells the instrument to a iinancial institution. 3. The interest rate used in calculating present value.
v effective rate. (1912) The actual annual interest rate, which incorporates compounding when calculating interest, rather than the stated rate or coupon rate.
> face rate. See nominal rate.
r fixed interest rate. An interest rate that is speciiied and is not subject to change.
floating rate. (1921) A varying interest rate that is tied to a financial index such as the prime rate.
y illegal rate. (1867) An interest rate higher than the rate allowed by law. See USURY.
,legal rate. (1857) l. The interest rate imposed as a matter of law when none is provided by contract, 2. The maximum interest rate, set by statute, that may be charged on a loan. See legal interest under INTEREST
(3). Cf. USURY.
leCk rate. (2000) A mortgage~application interest rate that is established and guaranteed for a specified period. -Also termed locked-in rate.
ynominal rate. (1872) The interest rate stated in a loan agreement or on a bond, with no adjustment made for inflation. —Also termed coupon rate; face rate; stated rate; stated interest rate.
p prime rate. (1952) The interest rate that a commercial bank holds out as its lowest rate for a short-term loan to its most creditworthy borrowers, usu. large corporations. 0 This rate, which can vary slightly from bank to bank, often dictates other interest rates for various personal and commercial loans. -Often shortened to prime. -Also termed prime lending rate.
> real rate. (1895) An interest rate that has been adjusted for inflation over time.
> rediscount rate. (1913) The interest rate at which a member bank may borrow from the Federal Reserve on a loan secured by commercial paper that has already been resold by the bank. Cf. discount rate (1).
r stated rate. See nominal rate.
r variable rate. (1970) An interest rate that varies at preset intervals in relation to the current market rate (usu. the prime rate).
interest-rate swap. (1982) An agreement to exchange interest receipts or interest-payment obligations, usu. to adjust one’s risk exposure, to speculate on interest-rate changes, or to convert an instrument or obligation from a fixed to a floating rate -or from a Heating to a fixed rate. 0 The parties to such an agreement are termed “counter
parties.” > generic swap. See plain-vanilla swap.
> hara-kiri swap. An interest-rate swap made without any profit to the party offering the transaction.
> plain-vanilla swap. (1981) A typical interest-rate swap that involves one counterparty’s paying a iixed interest rate while the other assumes a floating interest rate based on the amount of the principal of the underlying debt. 0 The underlying debt, called the “notional” amount of the swap, does not change hands -only the interest payments are exchanged. -Also termed generic swap.
interests of justice. (17c) The proper view of what is fair and right in a matter in which the decision-maker has been granted discretion. -Also termed (less traditionally) interest of justice.
Interest suit. See SUIT. interest unity. See unity of interest under UNITY. intend warrant. See WARRANT (2).
interesse (in-ter-es-ee). [Latin] (15c) 1. Monetary interest. 2. A legal interest in property.
interessee (in-ta-re-see). See real party in interest under PARTY (2).
interesse termini (in-tar-es-lee tar-ma-nl). [Latin “interest of term or end”] (17c) Archaic. A lessee’s right of entry onto the leased property; esp., a lessee’s interest in real pr0perty before taking possession. 0 An interesse termini is not an estate; it is an interest for the term. It gives the lessee a claim against any person who prevents the lessee ‘
from entering or accepting delivery of the property.
“[The interesse termini’s] essential qualities, as a mere interest, in contradistinction to a term in possession, seems to arise from a want of possession. it is a right or interest only, and not an estate, and it has the properties of a right. It may be extinguished by a release to the lessor, and it may be assigned or granted away, but it cannot, techni~ cally considered, be surrendered; for there is no reversion before entry, in which the interest may drown. Nor will a release from the lessor operate by way of enlargement, for the lessee has no estate before entry.” 4 James Kent,
Commentaries on American Law *97 (George Comstock ed., 11th ed. 1866).
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