Comprehensive Real-Estate Vocabulary Review

These flashcards cover the essential vocabulary terms and definitions found throughout the real-estate study guide, providing a concise reference for exam preparation.

Accretion

An increase in land area due to natural processes, such as soil deposited by a river.

Escheat

The reversion of property to the state when an owner dies without a will or legal heirs.

Frontage

The length of a property that borders a street, road, or waterway, important for zoning and valuation.

Usury

Charging interest on a loan at a rate higher than that allowed by law.

Unilateral Contract

A contract in which only one party makes a promise, e.g., a reward offer.

Economic Life

The span of time during which a property is expected to remain economically productive for its owner.

Alienation

The act of transferring title or ownership of real property from one party to another.

Puffing

Legal, non-fraudulent exaggeration of a property’s benefits by a real-estate agent.

Executed Contract

A contract that has been fully performed by all parties.

Principal (Loan)

The amount of money borrowed, excluding interest.

Demand

The total quantity of property buyers are willing and able to purchase at a given price.

Scarcity

An element of value reflecting the limited supply of land; value rises as availability declines.

Rescission

Mutual agreement by contracting parties to cancel a contract and release each other from obligations.

Economic Obsolescence

Loss in value caused by external factors, such as a nearby highway or factory.

Encroachment

An unauthorized physical intrusion onto another’s property, e.g., a fence or tree limb.

Commingling

Illegally mixing a client’s funds with a broker’s personal or business funds.

Separation (Funds)

Keeping client funds in a separate account from a broker’s personal funds; opposite of commingling.

Conversion

The illegal act of misappropriating client funds for personal use.

Duress

Unlawful pressure or coercion used to force a party to sign a contract.

Bilateral Contract

A contract in which both parties exchange promises to perform.

Power of Attorney

A legal document authorizing one person to act on another’s behalf.

Mechanic’s Lien

A lien placed on property for unpaid labor or materials used in construction.

Condominium

Individually owned real-estate unit within a multi-unit property, with common areas owned jointly.

Ad Valorem

Latin for “according to value”; basis for property tax assessments.

Appreciation

Increase in property value over time due to market forces such as demand or inflation.

Surveying

Measurement of three-dimensional positions, distances, and angles to determine land boundaries.

Lot-and-Block System

Legal land-description method using recorded plat maps specifying lot and block numbers.

Mortgage Lien

A lien that secures a loan used to purchase real property.

Anticipation (Appraisal)

Principle that a property’s value is based on expected future benefits.

Counteroffer

A seller’s (or buyer’s) response proposing new terms to an original offer.

Partition

Court-ordered division of property among co-owners to terminate co-ownership.

Blind Offer

Purchase offer submitted by a buyer who has not seen the property.

Deed

Written instrument that conveys title to real property.

Release Clause

Loan clause allowing portions of collateral to be freed after proportional repayment.

Emblements

Annual crops cultivated by a tenant; treated as the tenant’s personal property.

Adverse Possession

Acquisition of title through continuous, open, hostile, and notorious occupation for a statutory period.

Antitrust Laws

Federal and state statutes promoting fair competition and prohibiting monopolistic practices.

Severance

The act of detaching an item from land, converting it from real to personal property.

Option Contract

Agreement giving a buyer the right, but not the obligation, to purchase property at a set price within a specified time.

Principal (Agency)

The person who hires or authorizes an agent to act on their behalf.

Prepayment Penalty Clause

Contract provision imposing a fee on a borrower for paying off a loan early.

Package Loan

Loan financing both real property and personal property (e.g., furnished condo).

Listing Agreement

Document establishing the agency relationship between a seller and a real-estate broker.

Estate at Sufferance

Tenancy in which a tenant remains after lease expiration without the landlord’s consent.

Utility (Value)

Capability of real estate to satisfy human needs or desires, contributing to value.

Forgery

Fraudulent creation or alteration of a document to deceive.

Mortgage Points

Up-front fees paid to a lender to reduce an interest rate; one point = 1% of loan amount.

Deed Restriction

Limitation on property use imposed by current or past owners, enforceable by deed.

Novation

Substitution of a new contract for an old one, relieving the original parties of liability.

Servient Estate

Parcel over which an easement runs for the benefit of another property.

Dominant Estate

Property that benefits from an easement over another parcel.

Fee Simple Absolute

Highest form of real-estate ownership, limited only by government powers.

Condemnation

Legal process by which property is taken under eminent domain with just compensation.

Radon

Naturally occurring radioactive gas; second leading cause of lung cancer in the U.S.

Land Trust

Agreement in which property title is transferred to a trustee to maintain owner anonymity.

Universal Agent

Agent with unlimited authority to act for the principal in all matters.

Right of Survivorship

Feature of joint tenancy where a deceased owner’s share automatically passes to surviving owners.

Rectangular Survey System

Government land-description method using principal meridians and baselines.

Gross Rent Multiplier (GRM)

Ratio of a property’s sale price to its gross annual rental income.

Codicil

Written supplement or amendment to a will.

Proration

Allocation or division of expenses (e.g., taxes) between parties at closing.

Injunction

Court order prohibiting or requiring a specific action until litigation is resolved.

Implied Contract

Legally enforceable agreement created by parties’ actions or circumstances, not written.

Involuntary Lien

Lien placed on property without owner’s consent, e.g., tax lien.

Warehousing (Loans)

Aggregating mortgage loans for sale on the secondary market.

Liquidated Damages

Specific sum agreed upon in a contract as compensation if a party breaches.

Riparian Rights

Rights of landowners to reasonable use of water in adjacent rivers or streams.

Police Power

Government authority to regulate property for public health, safety, and welfare (e.g., zoning).

Lease Option

Lease giving tenant the option to purchase the property within a specified time.

General Agency

Agency relationship giving the agent limited authority, typical in property management.

Timeshare

Ownership model where multiple parties hold usage rights to a property for set time periods.

Cost Approach

Appraisal method estimating value by adding land value to depreciated replacement cost of improvements.

Probate

Court process for settling a deceased person’s estate and transferring real-estate assets.

Specific Performance

Court order requiring a party to fulfill contract obligations rather than pay damages.

Acceleration Clause

Loan provision allowing lender to demand full repayment upon borrower default.

Addendum

Document that adds new terms to an existing contract without altering original wording.

Amendment

Formal change that modifies existing contract terms already agreed upon.

Effective Date

Date on which a contract becomes legally binding and enforceable.

Brokerage Name Requirement

Advertising rule requiring inclusion of the brokerage firm’s name in all ads.

Market Allocation

Antitrust violation in which competitors divide territories or customers.

Zoning Permit

Approval required to ensure proposed development complies with zoning regulations.

Blockbusting

Illegal practice of inducing owners to sell by suggesting demographic changes will lower property values.

Trustor

Property owner who transfers title to a trustee in a trust arrangement.

Tenancy at Will

Tenancy with no fixed term, terminable by either party at any time with proper notice.

Cash Reserve Fund

Budgeted reserve set aside by property managers for variable or unexpected expenses.

Purchase Agreement

Binding contract outlining obligations of buyer and seller in a real-estate sale.

Constructive Eviction

Situation where a landlord’s actions (or inaction) make premises uninhabitable, forcing tenant to leave.

Equal Credit Opportunity Act (ECOA)

1974 law prohibiting lending discrimination based on protected characteristics.

Easement in Gross

Easement benefiting an individual or entity, not tied to a dominant estate (e.g., utility ROW).

VA Loan

Mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible borrowers.

Balloon Loan

Loan requiring periodic payments with a large final lump-sum payment due at end of term.

Eminent Domain

Government power to take private property for public use with just compensation.

General Warranty Deed

Deed offering the greatest protection to the grantee, with full warranty against title defects.

Licensee

Individual holding a real-estate license authorized to practice brokerage.

Offer

Proposal made by a buyer to purchase property under specified terms.

Earnest Money

Deposit showing buyer’s good faith, held in trust until closing or contract termination.

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

Federal law establishing Superfund to clean up hazardous waste sites and assign liability.

Voidable Contract

Contract valid on its face but may be rescinded by one party (e.g., minor’s contract).

Reverse Mortgage

Loan allowing homeowners aged 62+ to convert home equity to cash without selling.

Housing for Older Persons Act (HOPA)

Law allowing age-restricted housing if 80% of units have occupants 55 or older.