National Real Estate Exam Prep Flashcards

Comprehensive vocabulary flashcards covering key real estate topics for national exam preparation.

Real Property

Land, plus appurtenances that benefit the land.

Appurtenances

Things that transfer with the land when the land is transferred to another owner, such as improvements, rights, privileges, and fixtures.

Littoral Rights

Water rights associated with land bordering a body of water where the water is NOT flowing, such as a lake.

Riparian Rights

Water rights associated with land bordering a body of water where the water IS flowing, such as a river.

Personal Property

Everything owned that is not real property; also referred to as chattel or personalty. It is moveable and transferred with a bill of sale.

Emblement

An annual crop that is considered a tenant farmer's personal property.

Fixture

Personal property that has been attached and converted into real property.

Annexation

The process of personal property becoming real property.

Severance

The process of real property becoming personal property.

Trade Fixture

A tenant-installed fixture used for business purposes.

Situs

An economic characteristic of real property referring to people's preferences for a particular location or area.

Nonhomogeneity

A physical characteristic of real property meaning uniqueness; no two parcels of land are alike.

Metes and Bounds

A legal description system measuring distances in feet and compass degrees (metes) and shape or boundaries (bounds) using fixed reference points called monuments.

Point of Beginning (POB)

The starting and ending reference point of a metes-and-bounds survey, indicated by phrases such as 'starting at' or 'commencing at'.

Lot and Block

A legal description system based on a recorded plat map, used most often for properties located in typical subdivisions.

Government Survey System

A legal description method locating parcels within a grid system using north-south meridian lines and east-west base lines.

General Lien

A lien that attaches to ALL real and personal property of an owner.

Specific Lien

A lien that affects only a single, specific property.

Voluntary Lien

A lien created intentionally by the property owner, such as a mortgage.

Involuntary Lien

A lien created without the owner's consent, such as a property tax lien.

Easement

A nonpossessory interest in the land of another, used for ingress (entering) and egress (exiting) across someone else's property.

Servient Tenement

The parcel of land over which an easement runs; the burdened parcel.

Dominant Tenement

The parcel of land that benefits from an easement.

Appurtenant Easement

An easement involving both dominant and servient tenements that runs with the land upon transfer.

Easement in Gross

An easement held by a utility or service provider company that involves only a servient tenement.

Easement by Prescription

An easement acquired through adverse, hostile, open, notorious, and continuous use of another's land for a statutory period.

License

A revocable personal privilege to enter the land of another for a specific purpose.

Encroachment

The unauthorized intrusion or use of another person's land.

Encumbrance

A charge, claim, or liability attached to real property that creates an imperfection or cloud on the title.

Ownership in Severalty

Sole property ownership by one individual or single entity.

Tenancy in Common

Concurrent ownership by two or more parties without the right of survivorship, where owners may acquire interests at different times and hold unequal ownership percentages.

Joint Tenancy

Concurrent ownership by two or more parties with the right of survivorship, requiring four unities (TTIP): time, title, interest, and possession.

Fee Simple Absolute

The highest and best type of property ownership, providing the complete bundle of rights and unlimited duration.

Fee Simple Defeasible

A freehold estate subject to specific conditions defined in the deed; also referred to as a qualified fee estate.

Fee Simple Determinable

A defeasible fee estate that automatically ends when the specified purpose for which it was created terminates.

Life Estate

A freehold estate whose duration is limited to the lifetime of the owner or another specified individual.

Pur Autre Vie

A life estate based on the lifetime of someone other than the life tenant.

Reversionary Interest

The interest held by the original grantor to regain fee simple absolute ownership when a life estate ends.

Remainderman

The third party designated to receive fee simple absolute ownership when a life estate terminates.

Estate for Years

A leasehold estate with definite starting and ending dates that terminates automatically without notice.

Periodic Tenancy

A leasehold estate with set period intervals that requires notice to terminate; automatically renews on a month-to-month basis if no notice is given.

Estate at Will

An informal lease agreement that can be terminated at any time by either party with or without notice.

Tenancy at Sufferance

A tenancy created when a tenant remains in possession of the property after their legal right to occupy it has expired.

Condominium

A form of common interest community ownership featuring individual ownership of a unit and an undivided common interest in shared areas.

Cooperative (Co-op)

Ownership structure where a corporation holds title to land and building, and tenants purchase stock shares giving them a proprietary lease rather than direct real estate title.

Trust

A legal device where a trustor transfers property ownership to a trustee to hold or manage for the benefit of a beneficiary.

Police Power

Government authority to regulate land use for public health, safety, and general welfare.

Eminent Domain

The government's right to take private property for public use through the legal process of condemnation.

Escheat

The reversion of property to the state when an owner dies intestate without any legal heirs.

Market Value

The estimated price a property SHOULD sell for in a competitive and open market.

Market Price

The actual price paid for a property in a real estate transaction.

DUST

An acronym representing the four essential elements of property value: Demand, Utility/usefulness, Scarcity, and Transferability.

Principle of Anticipation

The appraisal principle stating that value is created by the expectation of future benefits or events.

Principle of Substitution

The appraisal principle stating that maximum property value is established by the cost to purchase an equally desirable substitute.

Principle of Progression

The appraisal concept where the value of a lower-quality property is enhanced by being located near higher-quality properties.

Principle of Regression

The appraisal concept where the value of a higher-quality property declines when surrounded by lower-quality properties.

Sales Comparison Approach

An appraisal method determining property value by comparing the subject property with recently sold comparable properties (comps).

Functional Obsolescence

A form of depreciation resulting from outdated, outmoded, or undesirable physical design features within the building.

Economic Obsolescence

A form of depreciation caused by negative factors originating outside the subject property boundaries; also called external obsolescence.

Net Operating Income (NOI)

Effective gross income minus operating expenses (excluding mortgage debt service).

Capitalization Rate (Cap Rate)

The rate of return an investor demands on an income property, calculated as $\text{NOI} \div \text{Value} = \text{Cap Rate}$.

Gross Rent Multiplier (GRM)

A rough valuation formula for 1-4 unit residential rentals, calculated as $\text{Sales Price} \div \text{Gross Rent} = \text{GRM}$.

Comparative Market Analysis (CMA)

An informal estimate of property value conducted by real estate licensees to help sellers set listing prices.

Loan-to-Value (LTV)

The percentage ratio reflecting the loan amount relative to the property's appraised value or purchase price.

PITI

A monthly mortgage payment consisting of Principal, Interest, 1/12th of annual property Taxes, and 1/12th of annual homeowner's Insurance.

Deed of Trust

A three-party security instrument where the trustor (borrower) conveys legal title to a neutral trustee to hold for the beneficiary (lender).

Promissory Note

The legal instrument signed by the borrower that serves as evidence of debt and outlines terms of repayment.

Acceleration Clause

A loan provision permitting the lender to demand immediate repayment of the entire outstanding debt upon borrower default.

Defeasance Clause

A loan clause requiring the lender to release their lien and clear title once the debt is paid in full.

Alienation Clause

A due-on-sale clause permitting the lender to demand full loan payoff if the property is sold or transferred.

Lien Theory

A mortgage concept where legal and equitable title pass to the buyer at closing, while the lender holds a mortgage lien as security.

Title Theory

A mortgage system where the buyer gets equitable title and the lender or trustee holds bare legal title until the loan is satisfied.

Adjustable Rate Mortgage (ARM)

A loan whose interest rate fluctuates periodically according to a specified economic index plus a margin.

Contract for Deed

A financing arrangement (land contract) where the buyer pays in installments, holding equitable title while the seller keeps legal title until full payment.

Reverse Mortgage

A loan for senior homeowners where the lender provides advances against equity, resulting in negative amortization repaid upon death or move.

Blanket Loan

A single loan covering multiple parcels of real estate, usually containing a partial release clause.

RESPA

Real Estate Settlement Procedures Act (Regulation X), which standardizes residential mortgage settlement procedures and prohibits referral kickbacks.

TILA

Truth in Lending Act (Regulation Z), requiring lenders to disclose finance charges and the true cost of credit expressed as an Annual Percentage Rate (APR).

Suit for Specific Performance

A lawsuit in which an injured party asks the court to order a defaulting party to perform their obligations exactly as promised in the contract.

Steering

The illegal practice of channeling potential homebuyers toward or away from specific neighborhoods based on protected class traits.

Blockbusting

The illegal practice of inducing homeowners to sell by claiming protected classes are moving into the area and causing values to drop.

Redlining

The illegal practice of refusing mortgage loans or insurance coverage in specific geographic areas based on neighborhood demographics.

Covenant of Seisin

A general warranty deed covenant guaranteeing that the grantor holds legal title and has the right to convey the property.

Abstract of Title

A condensed historical summary of all recorded conveyances, encumbrances, and legal proceedings affecting a parcel of property.

Chain of Title

The continuous chronological record of a property's successive ownership changes.

Constructive Notice

Legally implied notice given to the public by recording documents in the public county records.

Commingling

The illegal act of mixing personal or business funds with client trust account monies.

Conversion

The illegal act of using client trust account funds to cover personal or company operating expenses.