Real Estate Practice

Agency

The relationship between a principal and an agent, wherein the agent is authorized to represent the principal in certain transactions

Agency Coupled with an Interest

An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property) 

Agent

One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a principal authorizes a licensed real estate agent broker to be the principals agent

Agreement of Sale

An offer to purchase that has been accepted by the seller and has become a binding contract

Americans with Disabilities Act (ADA)

A federal law passed in 1990 to open doors, both figuratively and literally, for people with disabilities to become part of the economic and social mainstream of society. The law mandates equal access to employment and goods and services. Title I prohibits discriminatory employment practices. TItle III requires anyone providing goods and services to the public to make them accessible by removing architectural and communications barriers and, if that is not readily achievable, to provide reasonable accommodations to people with disabilities.

Amendment

A change to the existing content of a contract (i.e. if words or provisions are added to or deleted from the body of the contract). Must be initialed by all parties

Anti Trust Laws

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain conspiracies and combinations formed to minimize competition. Violations of antitrust laws in the real estate business generally involve group boycotting (brokers conspiring to set fixed compensation rates), or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).

Blockbusting

The illegal practice of attempting, for profit, to induce homeowners to sell their properties by making representations about the entry or prospective entry of persons in the protected classes into the neighborhood, also known as panic selling. 

Brokerage

The bringing together of parties interested in making a real estate transaction

Buyer Agency Agreement

A principal - agent relationship in which the broker is the agent for the buyer with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency

Capital Gain

Profit earned from the sale of an asset.

Client

The person who is the principal who hires the agent and delegates to the agent the responsibility of representing the principal's interest. In a real estate transaction, the client may be the seller/property owner or buyer/tenant who has an agency relationship with the broker.

Civil Rights Act of 1866

An act that prohibits racial discrimination in the sale and rental of housing

Code of Ethics

A written system of standards for ethical conduct.

Comparative Market Analysis (CMA)

A written analysis, opinion, or conclusion by a contracted buyer’s agent, transaction licensee, or an actual or potential seller’s agent relating to the probable price of a specified piece of real estate. A CMA is a comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style, and amenities. Also called competitive market analysis, it is not an appraisal.

Comprehensive Loss Underwriting Exchange (CLUE)

A database of consumer claims history that allows insurance companies to access prior claims information in the underwriting and rating process. 

Commission

Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Coinsurance Clause

A clause in insurance policies covering real property that requires the policy holder to maintain fire insurance coverage generally equal to at least 80% of the property’s actual replacement cost.

Conciliation

The resolution of the fair housing complaint by HUD by obtaining assurance that the person against whom the complaint was filed (the respondent) will remedy any violation that may have occurred and will take steps to eliminate and or prevent discriminatory practices in the future.

Consumer

A person who is the recipient of any real estate service, as defined by Pennsylvania’s licensing law. This person may receive client or customer services, depending on the nature of the relationship established with the real estate broker. 

Consumer Notice

A specific form adopted by the State Real Estate Commission in Pennsylvania to disclose information about permitted business relationships and specific agency procedures in real estate transactions. This notice must be presented at an initial interview to any consumer of real estate services.

Customer

A person who is a consumer of real estate service, who is not a client of the real estate licensee. A customer receives customer - level services rather than client - level services, which means the customer is not being represented by the licensee as the principal in an agency relationship.

Contingency

Provisions in a contract that require a certain act to be done or a certain event to occur before the contract becomes binding.

Counter Offer

A new offer made as a reply to an offer received. It has the effect of rejecting the original offer, which cannot be accepted thereafter unless revived by the offeror.

Demand

The amount of goods people are willing and able to buy at a given price; often coupled with supply.

Designated Agency

The process wherein one or more licensees are designated by the employing broker to act exclusively as agent(s) on behalf of the principal to the exclusion of all other licensees within the broker’s employ.D

Disability

A physical or mental impairment that substantially limits one or more major life activitiesDi

Disparate Impact

Policies or procedures that appear to be neutral but which negatively affect people in the protected class.

Dual Agency

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.

Earnest Money

Money deposited by a buyer under the terms of a contract, to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed; also known as hand money

Elevation Certificate

A form supplied by a licensed surveyor certifying building elevations and required to show compliance with community floodplain regulations and determine appropriate insurance rates.

Employee

Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees

Equal Credit Opportunity Act (ECOA)

The federal law that prohibits discrimination in the extension of credit because of race, color, religion, national origin, sex, age, or marital status

Equity

The interest or value that an owner has in property over and above any indebtedness.

Equitable Title

The interest held by a vendee under an installment contract or agreement of sale; the equitable right to obtain absolute ownership to property when legal title is held in another’s name.

Ethics

The system of moral principals and rules that becomes the standards for professional conduct.

Exclusive Agency Listing

A listing contract under which the owner appoints a real estate broker as her excluding agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if the sale is to a prospect who has not been introduced or claimed by the broker.

Exclusive Right - To - Sell Listing

A listing contract under which owners appoint a real estate broker as their exclusive agent for a designated period, to sell the property on the owners’ stated terms, and agree to pay the broker a commission when the property is sold, whether by the broker, the owner’s, or another broker

Express Agency

An agency relationship based on a formal agreement between the parties

Fair Housing Act

The federal law that prohibits discrimination in housing based on race, color, religion, sex, disability, familial status, and national origin.

Fair Housing Amendments Act

Expansion of the Fair Housing Act to include families with children and those with physical and mental disabilities

Familial Status

One or more individuals under age 18 living with a parent or guardian. It also includes pregnant women and anyone in the process of assuming custody of a child under 18.

Flood Insurance

A government subsidized insurance policy that is always separate from homeowner’s insurance. It covers physical damage to a building or personal property directly caused by flooding (rising water). The Federal Emergency Management Agency (FEMA) administers the program.

Fiduciary Relationship

A relationship between trustee and beneficiary, attorney and client, or principal and agent.

Fraud

Deception intended to cause a person to give up property or a lawful right.

General Agent

One who is authorized by a principal to represent the principal in a range of matters.

Group Boycotting

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain conspiracies and combinations formed to minimize competition. Violations of antitrust laws in the real estate business generally involve group boycotting (brokers conspiring to set fixed compensation rates), or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).

Homeowner’s Insurance Policy

A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks. 

Housing for Older Person’s Act (HOPA)

A federal law that repealed the requirement that 55 and older housing have "significant facilities and services” designed for seniors, HOPS still requires that at least 80% of occupied units have one person aged 55 or older living there

Implied Agency

An agency that arises by conduct or inference from other acts or circumstances, often creating an agency relationship when none was intended

Independent Contractor

Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses and social security and income taxes and receives no employee benefits. Most real estate sales associates are independent contractors, meeting the Internal Revenue Service definition for a qualified real estate agent.

Installment Contract

A contract for the sale of real estate whereby the purchase price is paid in periodic installments by the purchaser, who is in possession of the property even though title is retained by the seller until a future date, which my not be until final payment; also called contract for deed or articles of agreement for warranty deed.

Internet Advertising

A powerful computer tool for providing information about properties, relocation services, and particular communities; however, state laws do apply.

Latent Defect

A hidden structural defect that is not discovered by ordinary inspection and that threatens the property soundness or the safety of its inhabitants. Sellers and licensees have a dirty to inspect for and disclose latent defects

Law of Agency

An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property)

Listing Agreement

A contract between an owner (as principal) and a real estate broker (as agent) by which the broker is employed as agent to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission

Material Fact

Information that is significant to a person and that person’s ability to make an informed decision

Megan’s Law

Federal legislation that promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexually violent crimes

Misrepresentation

The unintentional misstatement or omission; does not have to be intentional to result in broker liability

Multiple Listing Insurance (MLS)

A marketing organization composed of member brokers who agree to share their listing agreements with one another in hopes of procuring ready, willing, and able buyers for their properties more quickly than they could on their own.Nat

National Do Not Call Registry

A national registry, managed by the Federal Trade Commission, which lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.

Net Listing

A listing based on the net price the seller will receive if the property is sold. Under a net listing, the broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states.

Nonagent

An intermediary between a buyer and a seller, or a landlord and a tenant, who assists one or both parties with a transaction without representing either; also known as a facilitator, transaction broker, transaction coordinator, and contract broker.

Open Listing

A listing contract in which the broker’s commission is contingent on the broker producing a ready, willing, and able buyer before the property is sold by the seller or another broker.

Option

An agreement to keep open for a set period an offer to sell or purchase property

Pennsylvania Human Relations Act (PHRA)

The state law that prohibits discrimination in the sale or rental of real estate, both housing and commercial properties, on the basis of race, color, religion, ancestry, national origin, sex, familial status, disability, or use of guide or support animal due to a disability

Personal Assistant

An individual who is employed to perform certain activities to assis real estate licensees in the course of their business. A personal assistant may be licensed or unlicensed; this status determines the scope of the activities that are permitted and whether the broker or an associate broker or salesperson is the assistant’s employer.

PITI

The basic costs of owning a home - mortgage principal and interest, real estate taxes, and hazard insurance

Price Fixing

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain conspiracies and combinations formed to minimize competition. Violations of antitrust laws in the real estate business generally involve group boycotting (brokers conspiring to set fixed compensation rates), or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).

Principal

(1) a sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) the original amount (as in a loan) of the total due and payable at a certain date. (3) a main party to a transaction - the person for whom the agent works.

Procuring Cause

The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.

Puffing

Exaggerated or superlative comments or opinions

Race

Ancestral and ethnic characteristics, including certain physical, cultural, or linguistic traits that are shared by a group with a common national origin.

Ready, Willing, and Able Buyer

One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.

Real Estate Seller Disclosure Act

A Pennsylvania state law that requires the seller of a residential property to disclose to a buyer all known material defects about the property being sold that are not readily observable; such disclosure is not a substitute for any inspection or warranties that a buyer may wish to obtain.

Redlining

The illegal practice of lending institutions denying loans or restricting their numbers for certain areas of a community.

Replacement Cost New

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property but serves the same purpose or function as the original

Single Agency

The broker acts as the agent of one principal, either the seller/landlord or the buyer/tenant, in a transaction. The broker may practice exclusive single agency or may represent sellers and buyers, but never both in a  transaction

Special Agent

One who is authorized by a principal to perform a specified single act on behalf of a principal

Special Flood Hazard (SFHA’s)

A categorization of risk associated with floods determined by flood history and location used to determine the cost of flood insurance. The Federal Emergency Management Agency (FEMA) uses A to indicate inland areas and V for coastal areas

Steering

The illegal practice of channeling homeseekers to particular areas to maintain the homogeneity of an area or to change the character of an area in order to create a speculative situation

Stigmatized Property

A property that has acquired an undesirable reputation due to an event that occurred on or near it, such as violent crime, gang related activity, illness, or personal tragedy.

Subagency

An agency relationship in which the broker- agent appoints other brokers as subagents to help perform client based functions on behalf of the principal. The subagent assumes the same fiduciary responsibilities as the agent. In Pennsylvania, the principal must authorize the broker to engage subagents

Subagent

One who is employed by a person already acting as an agent - typically a reference to a salesperson licensed under a broker (agent) who is employed under the terms of a listing agreement.

Supply

The amount of goods available in the market to be sold at a given price. The term is often coupled with demand.

Title VIII of the Civil Rights Act of 1968

Prohibits discrimination in housing based on race, color, religion, or national origin. 

Transaction Licensee

A licensee who provides services to a consumer without an agency relationship

Universal Agent

A person empowered to do anything the principal could do personally