Law of Contracts Vocab

Consequences for unauthorized practice of law

License suspension or revocation plus fees

Deceptive Trade Practices Act (DTPA)

Any false, misleading, or deceptive actions or practices in the advertising, offering for sale, selling, or leasing of personal property or real property are prohibited in Texas

Intentional violation of DTPA

May result in triple the economic damage awarded by the court

Texas Real Estate Commission (TREC)

Administers the Texas Real Estate License Act and establishes policy and rules

TREC board members

Nine commissioners - six brokers with at least five years of real estate experience, and three members of the public

Texas Real Estate Licensing Act (TRELA)

The primary law that regulates the real estate profession in Texas, protects the public through the regulation of licensed real estate brokerage practitioners, real estate inspectors, residential service companies, and entities offering timeshare services

TRELA contract forms law

Licensees must use forms promulgated by the Texas Real Estate Broker-Lawyer Committee and adopted by TREC

Unauthorized practice of law

Acting outside the scope of one’s license; offering legal advice or drafting legal forms (including contracts)

Agency law

Law related to the agency relationship

Air rights

The right to use the open space above buildings up to a height established by law

Annexation

The conversion of personal property into real property by attaching it to real property, making it a fixture

Co-ownership

When more than one person owns the same piece of real estate

Corporations

Business organizations owned by stockholders that exist as a legal entity

Fruits of Industry (Fructus Industriales)

Plants that require annual cultivation. These include crops of fruit, vegetables, wheat, and corn. Also known as emblements, and are considered personal property.

Fruits of Nature (Fructus Naturales)

Plants that don’t require annual cultivation. These include trees, perennial shrubs, and some grasses. Considered real estate.

General Partnership

A partnership in which each partner shares in the administration profits, and losses of the venture

Immobility

The geographic location of a piece of land is fixed; it can never be changed

Indestructibility

While improvements may deteriorate over time, the land itself cannot be destroyed

Intrest

Ownership that is divided equally among owners

Joint Tenancy

Property is owned by a group of two or more persons; the death of one person simply raises the stake the others have in the property; called right of survivorship

Joint Venture

A temporary organization of two or more people who carry out a single project

Land

The earth’s surface to the center and the airspace above, including trees, water, and other natural attachments

Limited Liability Company (LLC)

A hybrid business formation that combines the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership

Limited Partnership

A partnership in which there are one or more general partners who administer the enterprise and one or more limited partners who are liable only to the extent of their investment

Location or Area Preference

When the area where a property is located and market desirability affect property value

National Manufactured Housing Construction and Safety Standards Act of 1974

Act which authorized the Department of Housing and Urban Development to establish construction standards for manufactured homes

Permanence of Investment

Improvements, such as sewer, roads, and utilities, are long-term, stable investments with relatively stable returns over time

Personal Property

Anything that’s not real property

Possesion

The right to live or work on a property

Property Law

Pertains to the purchase, sale, transfer, possession of an interest in real estate and all accompanying rights

Real Estate

Land and the permanent man-made additions attached to the land, such as buildings, fences, utilities, etc

Real Property

Attributes of both land and real estate, plus the legal bundle of rights

Right-to-use

When individuals who has possession of a property has the authority to use the property in whatever way they desire

Right of Disposition

The right to sell or convey the property

Right of Control

The owner controls the use of the property

Right of Possession

The right to occupy the property in privacy, which belongs to the legal titleholder

Right of Enjoyment

The right of the owner to use and enjoy the property in any legal manenr

Right of Exclusion

The right to decide who may or may not access the property

Scarcity

The limited availability of real estate

Severalty

When a title is held by a single owner

Severance

When an item that was real property becomes personal property by detaching it from the land

Statement of Ownership and Location

The statement that officially changes a manufactured home from personal property to real property

Surface rights

Both land and water rights

Subsurface Rights (Mineral Rights)

The right to use underground resources such as natural gas and minerals

Syndicate

An organization with many investors who jointly pool their money to participate in a real estate investment

Tenancy in common

Each person is entitled to possession of the whole, if one dies, that person’s ownership is inheritable; it does not necessarily pass to the other owners

Texas Department of Housing and Community Affairs (TDHCA)

The Texas agency responsible for promoting and preserving homeownership, financing the development of affordable rental housing, supporting community and energy assistance programs

Uniqueness (Inhomogeneity)

When one parcel (a piece of land) is not exactly like the others

Bilateral

A mutual contract that involves an exchange of promises or other consideration between two parties

Enforceable

A contract that will stand up in court

Executed

A contract in which all parties have met all terms of the contract

Executory

A contract in progress; one or more terms of the contract remain undone

Express

A stated (written or oral) agreement between two parties to specific terms

Implied

A contract that is based on the actions or behaviors of the parties, not on words

Invalid

A contact in which one or more of the essential elements is missing

Statute of Frauds

A legal concept stating that contracts involving the creation or conveyance of an interest in real property must be in writing to be enforceable

Valid

A contact that contains all of the essential elements

Void

A contract with no legal force or effect

Voidable

A contract that may be cancelled by one or more parties for one of several reasons; it may be missing an essential element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress

Unenforceable

A contract that will not hold up in court

Unilateral

A contract in which consideration (promise) is only given by one party to the other

Accretion

The gradual growth in the size of a land parcel due to water-deposited sand, silt, or gravel

Ad valorem tax

A tax based on the value of a transaction or property

Avulsion

A loss of existing land by the sudden change in a watercourse, washing it away

Condemnation

The taking of a property under the condition of eminent domain

The doctrine of prior appropriation

A legal right to use water that takes precedent over subsequent users of that waters

Escheat

The state’s power to claim the estate of a deceased person who left no wills, heirs, or creditors

Encumbrance

A limitation on a property title, such as a lien or easement

Easement

The authorized use of another’s property for a specific purpose runs with the land

Easement appurtenant

The permanent right to use another’s land

Easement by necessity

Usually, this involves access to a road; without such an easement, the owner requiring the right of passage would be landlocked

Easement by prescription

Acquired through the years of use; one party acquires the permanent right to use another’s property by doing so for some time (10 years in Texas)

Easement in Gross

An individual or company’s interest in or right to use the land (not necessarily an adjoining property), such as for the placement of utility lines

Eminent Domain

The power of the government to take private property for public use

Erosion

The wearing away of land by wind, water, and other natural disturbances

Environmental site assessment

The process of performing due diligence on a property (usually commercial or industrial) to determine whether environmental issues exist

Fee simple

An inheritable estate with ownership

Fee simple absolute

An inheritable estate with absolute ownership; provides the most complete form of ownership and bundle of rights in real property

Fee simple defeasible

The property holder owns the property with all legal rights, but is subject to a condition

Fee simple determinable

A defeasible fee estate in which the property holder owns the property subject to a condition; if the condition is breached, the property automatically reverts back to the original owner

Fee simple subject to condition subsequent

A defeasible fee estate that dosen’t end automatically when the stated event or condition occurs, but the grantor can reclaim ownership by taking action

Freehold estate

An inheritable estate with ownership for an undetermined period of time

Homestead law

A law offering certain tax breaks and protections for a single, owner-occupied residence

Involuntary lien

A lien created without the property owner’s consent (tax lien or mechanic’s lien)

Leasehold estate

An estate comprised of possession, but not title, to the tenant, and for a limited period of time

Legal life estate

A life estate caused by a rule of law

Lien

A legal claim against another’s property until a debt owed by the property owner is discharged

Life estate

A freehold estate granted for the duration of someone’s lifetime

Lis pendens

A legal notice that a lawsuit is pending that affects the title of the property, which serves as a warning to prospective buyers that a pending lawsuit could impact the title

Littoral rights

Rights of the owners of a bordering property to the use of a stationary body of water, such as a lake or sea

Mechanic’s lien

When a property owner dosen’t pay for work that was performed, the worker can file this lien to collect the money owed

Mortgage lien

A lien created on the property that’s used as collateral for a loan to purchase a home

Police power

The authority of all levels of government to act on behalf of the health, safety, and welfare of citizens

Pur autre vie

Means “for the life of another”, and is a life estate that lasts for the life of someone other than the life tenant

Riparian rights

Rights of the owners of a bordering property to use a flowing body of water, such as a river or creek

Rule of capture

In texas, a landowner has the right to use or sell all the water that can be drilled and captured form beneath the land

Taxation

The government’s authority to levy property (and other) taxes, and to place liens on any property if the owner doesn’t pay property taxes. Owners are not compensated if the property is taken as the result of a lien

Tax lien

When an owner does not pay real estate taxes, a lien is levied against that property

Voluntary lien

A lien created by the property owner, or created with the property owner’s consent

Water rights

The right to use the water either on or adjacent to one’s land