Modern Real Estate Practice in Texas - Key Terms Review

Comprehensive vocabulary flashcards covering real estate physical and economic characteristics, property rights, types of deeds, encumbrances, financing principles, contracts, and closing disclosures according to Texas law.

Situs

An economic characteristic of land referring to area preference or people's preferences for given locations.

Nonhomogeneity

A physical characteristic of land stating that no two parcels of real estate are exactly alike.

Real Property

Real estate plus the bundle of legal rights associated with its ownership, including possession, control, enjoyment, exclusion, and disposition.

Subsurface Rights

Ownership rights to the mineral deposits beneath the earth's surface, which are legally dominant over surface rights in Texas.

Trade Fixture

An article of personal property attached to rented real estate by a tenant for business purposes, which remains personal property if removed before lease expiration without damaging the property.

Improvements

Structures erected on land, as well as other man-made permanent additions such as sewers, roads, and utilities.

Fee Simple

The highest type of interest in real estate recognized by law, which may be inherited, gifted, or sold by the owner.

Determinable Fee Estate

A defeasible fee estate that continues so long as the property is used for a specified purpose (e.g., land granted so long as it is used only for religious purposes).

Fee Simple Subject to a Condition Subsequent

A defeasible fee estate granted on the condition that the property be used only for a particular purpose, allowing reentry if the condition is breached.

Pur Autre Vie

A life estate measured by the duration of the life of a person other than the life tenant, meaning 'for another's life.'

Texas Homestead

A legal life estate in Texas that protects a family home from forced sale by creditors to satisfy debts, subject to nine statutory exceptions.

Easement Appurtenant

An easement involving two separately owned tracts of land, consisting of a dominant tenement that is benefited and a servient tenement that is burdened.

Easement in Gross

A personal right to use another's land that does not attach to a dominant parcel, such as utility easements for power lines, poles, and pipelines.

License

A personal, revocable permission to enter another person's property for a specific purpose, usually created orally and temporary in nature.

Encroachment

A physical improvement on one property that illegally extends beyond the owner's boundary line and occupies land belonging to an adjacent owner.

Riparian Rights

Common law water rights held by owners of land adjacent to a nonnavigable stream to use the water for domestic purposes and own the stream bed to its midpoint.

Doctrine of Prior Appropriation

A water rights doctrine used in Texas where water belongs to the state and is allocated to users who hold permits from the Texas Commission on Environmental Quality.

Rule of Capture

The Texas legal principle granting landowners the right to drill for and remove the groundwater found beneath their land as real property.

Ad Valorem Taxes

Taxes levied annually according to the value of real estate by local taxing authorities, paid in arrears, which carry statutory priority over most other liens.

Mechanic's Lien

A specific, involuntary lien that protects contractors, subcontractors, suppliers, and architects whose labor or materials enhance the value of real estate.

Lis Pendens

A recorded public notice indicating that a lawsuit is pending against a property that may affect title to that parcel.

TWC Wage Lien

A general lien placed on an employer's property for unpaid employee wages determined by the Texas Workforce Commission, superior to all liens except ad valorem tax liens.

Metes and Bounds

A system of land description that defines property boundaries using distance, direction, and physical landmarks or monuments, always returning to the point of beginning.

Section

A square parcel of land in the rectangular survey system measuring one mile by one mile, containing $640\text{ acres}$ (with $43,560\text{ sq ft}$ per acre).

Datum

A reference surface from which elevations are measured, established by the U.S. Geological Survey as the mean sea level in New York Harbor.

Ownership in Severalty

Sole ownership of real estate where title is held by a single individual or corporate legal entity alone.

Tenancy in Common

A form of co-ownership where each party holds an undivided individual interest in severalty that passes to heirs or by will upon death rather than to surviving cotenants.

Joint Tenancy with Right of Survivorship

A co-ownership form requiring the four unities of time, title, interest, and possession, in which a deceased co-owner's interest passes immediately to surviving co-owners.

Community Property

A system of co-ownership between spouses where property acquired by joint effort during marriage is owned equally, each holding an undivided one-half interest.

Cooperative Ownership

A system of property ownership where a corporation holds title to a multiunit building and unit occupants purchase shares of stock accompanied by proprietary leases.

Condominium Ownership

An ownership structure in which an occupant holds fee simple title to an individual airspace unit along with an undivided fractional interest in the common elements.

Pyramiding

The investment strategy of holding and repeatedly refinancing real estate properties to purchase additional properties without investing new capital.

Boot

Cash or non-like-kind property received in a tax-deferred exchange to balance out equities, which is taxable in the year received.

Equitable Title

The beneficial interest in real property acquired by a buyer upon the mutual signing of an enforceable real estate sales contract.

Contract for Deed

A sales and financing agreement under which a buyer takes possession of real property while the seller retains legal title until full payment of the purchase price.

Exclusive Right-to-Sell Listing

An employment agreement granting one broker the exclusive right to represent the seller and guaranteeing a commission regardless of who procures the buyer.

Net Listing

A listing agreement based on a set dollar amount the seller specifies to net, allowing the broker to retain any amount above that net figure as commission.

Covenant of Seisin

A deed warranty in which the grantor warrants that they are the rightful owner of the property and hold full legal power to convey title.

General Warranty Deed

A deed offering the greatest degree of legal protection to a grantee by binding the grantor to specific warranties and covenants concerning the chain of title.

Special Warranty Deed

A deed in which the grantor limits warranties to title defects or encumbrances created only during their period of ownership.

Quitclaim Deed

A deed containing no covenants or warranties that transfers only the right, title, or interest, if any, that the grantor possesses at the time of delivery.

Abstract of Title

A condensed, chronological history of all recorded instruments and public records affecting legal title to a specific parcel of land.

Lien Theory State

A legal model recognized in Texas where the borrower retains legal and equitable title to mortgaged property, while the lender holds a security lien against it.

Discount Point

Prepaid interest charged by a lender at closing to increase the loan's yield, where one point equals $1\%$ of the loan amount.

Hypothecation

The practice of pledging real property as collateral security for a debt without surrendering physical possession of the property.

Acceleration Clause

A provision in a mortgage or promissory note allowing the lender to declare all future installments immediately due and payable upon borrower default.

Nonjudicial Foreclosure

A public foreclosure sale conducted by a trustee under a deed of trust power-of-sale clause without court supervision, requiring written notice posted at least $21\text{ days}$ before the sale.

FIRPTA

The Foreign Investment in Real Property Tax Act of 1980, requiring buyers of U.S. property from foreign sellers to withhold capital gains taxes and remit them to the IRS within $20\text{ days}$ of closing.

Doctrine of Relation Back

A principle where title conveyed via escrow relates back to the date the deed was originally deposited with the escrow agent once all contract conditions are fulfilled.

Real Estate Settlement Procedures Act (RESPA)

A federal law regulating federally related mortgage loans that requires advance disclosure of settlement charges and prohibits unearned fees and kickbacks.

Closing Disclosure

A promulgated TRID form that itemizes the complete financial particulars, settlement expenses, and prorations of a transaction, provided to the buyer at least $3\text{ days}$ prior to closing.