State Real Estate Exam Vocabulary

Comprehensive vocabulary flashcards for real estate prep, covering financing, property ownership, regulations, and valuation based on exam definitions.

assume

Buying a property and taking over or assuming the responsibility for the existing mortgage.

grandfather clause

A provision that exempts present users from new property ownership, land use controls, and regulations.

assessed value

The value placed on land and buildings by a government unit (assessor) for use in levying annual real estate taxes; the value set on property for taxation purposes.

avulsion

The sudden removal of land by the action of water, such as a river changing its course, or physical disruption by flooding, earthquake, or other natural forces.

licensee

A person who is issued a valid real estate license by the licensing body in the jurisdiction in which the person provides real estate services as prescribed by law.

liens

A legal claim against property as security for a debt; an encumbrance against real property that can be foreclosed.

quiet title action

A court proceeding brought to establish title to real property.

easement

A right to use the land of another for a specific purpose, such as a right-of-way or for utilities; a nonpossessory, incorporeal interest in land.

ad valorem

A Latin phrase meaning "according to value" or "in proportion to the value"; describes taxes where the amount is based on the value of the property taxed.

ALTA policy

American Land Title Association title insurance policy; the most comprehensive form of title insurance.

secondary mortgage market

A market for the purchase and sale of existing mortgages, designed to provide greater liquidity; where originators sell loans to free up funds for continued lending.

contract

A legally enforceable agreement between two or more competent parties who, for valuable consideration, undertake to do or refrain from doing some legal act.

unearned increment

An increase in the value of land or property without labor or expenditure on the part of the owner.

unilateral contract

A one-sided contract where an offer is accepted through performance rather than a mutual promise; valid only when one party performs the requested act.

VA loan

A mortgage loan on approved property made to a qualified veteran by an authorized lender and guaranteed by the Department of Veterans Affairs to limit lender loss.

interpleader

A court proceeding initiated by someone, such as an escrow agent, who holds property for another to decide which of the claimants is legally entitled to it.

pre-payment penalty clause

A clause that provides for a penalty to be levied against a borrower who repays a loan before the specified due date.

commingling monies

Mixing broker and principal funds, or depositing client funds into a broker's personal or business account instead of a trust account.

tenancy in common

Co-ownership of property in equal or unequal shares by two or more persons, each holding an undivided interest without right of survivorship.

novation

The substitution or exchange of a new obligation or contract for an old one by mutual agreement, or the full substitution of an original borrower by a new one.

statute of frauds

A state law requiring certain contracts, such as those for the sale of real estate, to be in writing and signed to be legally enforceable.

broker

A licensed real estate agent who can deal directly with principals and employ licensed real estate salespersons.

master plan

A comprehensive government plan intended to guide the long-term physical development and land-use for a jurisdiction.

escrow

The deposit of instruments and/or funds with a neutral third party (escrow agent) to carry out the provisions of an agreement or contract.

real property

Land, things fixed to the land (buildings, roads), and appurtenances including incidental rights such as easements; the rights of ownership often called the bundle of rights.

cost (replacement) approach

The process of estimating value by adding the appraiser's estimate of reproduction or replacement cost of improvements, less depreciation, to the land value.

nominal interest rate

The stated interest rate of a loan stipulated in a contract before taking into account loan fees, points, and other costs.