Principles of Real Estate 1 – Exam 1 (Estate & Agency) — Vocabulary Flashcards

Vocabulary flashcards covering key terms, concepts, and legal principles from the Estate/Real Estate Principles lecture notes.

Liquidated damages

A pre-set sum specified in a contract to be paid if the contract is breached; in real estate, often the earnest money is treated as liquidated damages.

Renegotiation of a contract

Process of discussing new terms (price, financing, etc.) after a contract has been formed; not mandatory for the seller.

Novation

Substitution of a new contract or new parties in place of an existing contract, releasing the original parties from their obligations.

Recovery Trust Account (Texas Real Estate Recovery Fund)

State fund that pays judgments against licensed real estate licensees up to a set maximum (commonly $125,000) when the licensee cannot pay.

Complaint filing period with TREC

Time limit to file a complaint with the Texas Real Estate Commission: typically two years from the date of the incident.

Principal

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

Lot and Block

A method of describing land by reference to a recorded plat showing lots within blocks in a subdivision.

Information About Brokerage Services (Agency Disclosure)

Disclosures presented at the first substantive dialogue describing brokerage relationships.

Texas Real Estate License Act (TRELA)

Statute governing licensing, conduct, and enforcement of real estate professionals in Texas.

Fixtures

Items attached to real property that transfer with the property on sale unless removed.

Evergreen lease

A lease that automatically renews at the end of its term without a new agreement.

Intermediary

A broker who represents both seller and buyer in a transaction, often with designated associates and specific communication rules.

Steering

Guiding buyers toward or away from certain areas based on protected characteristics under fair housing laws.

Seller’s Disclosure Notice exemptions

Situations where disclosure notices are not required, such as bankruptcy trustee sales, co-owner transfers, or certain government sales.

Familial status (pregnancy) under Fair Housing

Pregnancy is protected under fair housing laws; landlords may not discriminate based on familial status.

Stigmatized property

Property perceived as undesirable due to factors like a reported haunting, crime, or stigma, which may affect marketability.

Competency

Duty of a license holder to be competent—exercise appropriate skill and knowledge and avoid misrepresentation.

Disclosure of known facts

Obligation to disclose known material facts about a property to a client or buyer.

Improvements

Permanent additions to land (buildings, structures) that enhance value or use.

Littoral rights

Rights of a landowner to use and enjoy the water on bodies of water (lakes, seas) that border the land.

Severance

Process of removing real property to convert it into personal property.

Easement by prescription

Easement created by long-term, continuous use of land without the owner's permission.

Surface rights

Right to use and develop the surface of land and near-surface resources.

Encroachment

A structure or improvement that intrudes onto another’s property boundary.

Ad valorem taxes

Taxes based on assessed value; they create priority liens and are paid first at foreclosure.

Integrity

Ethical principle focusing on honesty and avoiding misrepresentation in real estate practice.

Net listing

A listing where the broker’s commission is the difference between a seller’s minimum price and the sale price.

Redlining

Discriminatory practice of denying or limiting services (such as lending) in a neighborhood or area.

Assignment

Transferring rights under a contract to another party; the original party may remain liable unless released.

Timeshare

Right to occupy property for a specified time period (often weekly) over a set term.

Tenancy in common

Co-ownership where each owner has an undivided interest that can be unequal and passes by will; no right of survivorship.

Exclusive right to sell listing

Listing agreement giving one broker the right to earn a commission if the property sells, regardless of who secures the buyer.

Encroachment example

A neighbor’s fence or structure extending onto your property boundary.

TREC penalties

Administrative penalties (up to a per-day amount) for violations of TRELA; can apply to licensees and others depending on context.

Fair Housing penalties

Civil (and sometimes criminal) penalties for violations of the Fair Housing Act.

Homestead tax lien foreclosure

In Texas, a homestead can be foreclosed on for nonpayment of ad valorem taxes; other liens may apply.

Voidable contract

A contract valid on its face but may be voided by one party (e.g., contracts with minors).

Civil Rights Act of 1968 (Fair Housing Act)

Law prohibiting discrimination in housing based on race, color, religion, and national origin.

Designated officer (license requirement)

The licensed officer in a licensed real estate corporation who must hold an appropriate license.

Texas Real Estate Commission (TREC)

State agency authorized to license real estate professionals and enforce TRELA.

Street address as a legal description

Street addresses are not valid legal descriptions for deeds; other methods (metes/bounds, government survey, lot/block) are used.

Recorded plat

A plat map that records subdivision boundaries and is tied to Lot and Block descriptions.

Inactive license status

Status where a licensee is not active; typically cannot earn commissions, may owe renewal fees, and may need retraining to reactivate.