Vocab

Brokerage

The business of brining together parties interested in making a real estate transaction

Real estate license

Point of contact between two or more people in negotiating the sale, purchase, or rental of a property

Supply and demand

Market

A place where goods can be bought and sold and a price established

Sponsoring broker

The broker who is sponsoring a licensed broker, managing broker, or leasing agent

Accession

Acquiring title to additions or improvements to real property as a result of the annexation of fixtures

Air rights

The rights to use the open space above property, usually allowing the surface to be used for another purpose

Annexation

Method of converting personal property into real property (cement, stones, to sidewalk)

Appurtenance

A right, privilege, or improvement belonging to, and passing with, the land

Attachment

The act of taking a person’s property into legal custody by writ or other judicial order to hold available for application to that person’s debt to a creditor

Bill of sale

A legal document that transfers personal property

Bundle of legal rights

The concept of land ownership that includes ownership of all legal rights to the land- for example, possession, control within the law, and enjoyment

Chattel

Deed

A written instrument that, when executed and delivered, conveys, title to or an interest in real estate

Emblements

Giving crops, such as corn, that are produced annually through labor and industry. Also called fructus industriales.

Fixture

An item of personal property that has been converted to real property by being permanently affixed to the realty

Improvement

(1) Any structure, usually privately owned, erected on a site to enhance the value of the property- for example, building a fence or a driveway (2) A publicly owned structure added to be benefitting land, such as a curb, sidewalk, street, or sewer

Land

The earth’s surface, extending downward to the center of the earth and upward infinitely into space, including things permanently attached by nature, such as trees and water

Manufactured housing

Dwellings that are built offsite and trucked to a building lot where they are installed and assembled

Personal property

Items, called chattels, that do not fit into the definition of real property; moveable objects, also called personalty

Real estate

Land; a portion of the earth’s surface extending downward to the center of the earth and upward infintely into space, including all things permanently attached to it, whether naturally or artificial

Real Estate License Act of 2000

State law enacted to protect the public from fraud, dishonesty, and incompetence in the purchase and sale of real estate. It was amended in 2011

Real property

The interests, benefits, and rights inherent in real estate ownership

Severance

Changing an item of real estate to personal property by detaching it fro the land; for example, cutting down a tree

Situs

The personal preference of people for one area over another

Subsurface rights

Ownership rights in a parcel of real estate of water, minerals, gas, oil, and so forth that lie beneath surface of the property

Surface rights

Ownership rights in a parcel of real estate that are limited to the surface of the property and do not include the air abve it (air rights) or the minerals below it (subsurface rights)

Trade fixture

An article installed by a tenant under the terms of a lease and removable by the tenant before the lease expires

Boot

Money or property given to make up any difference in value or equity between two properties in an exchange

Capital gains

Profit earned from the sale of an asset

Coinsurance clause

A clause in an insurance policies covering real property requiring that the policy holders maintain fire insurance coverage generally equal to at least 80% of the property’s actual replacement cost

Equity

The interest or value that an owner has in property over and above any indebtness

Homeowners insurance policy

A standardized package insurance policy that covers a residential real estate owner against financial loss from fire, theft, public liability, and other common risks

Liability coverage

Insurance that covers injuries or losses sustained within the home

PITI

Acronym for principal, interest, taxes, and insurance- expenses that compromise an owner’s monthly payment

Replacement cost

The construction cost at current prices of a property that is not necessarily an exact duplicate of the subject property

Agency

The relationship between a principal and agent wherein the agent is authorized to represent the principal in certain transactions

Agency coupled with an interest

An agency relationship in which the agent is given an estate or interest in the subject of the agency (the property)

Agent

One who acts or has the power to act for another. A fiduciary relationship is created under the law of agency when a property owner, as the principal, executes a listing agreement or management contract authorizing a licensed sponsoring broker to be his agent

Brokerage agreement

A written or oral agreement between a sponsoring broker and a consumer for licensed activities, or the performance of future licensed activities, to be provided to a consumer in return for compensation or the right to receive compensation from another. Brokerage agreements may constitute either a bilateral or unilateral agreement between the broker and the broker’s client depending upon the content of the brokerage agreement. All brokerage agreements shall be in writing and may be exclusive or nonexclusive

Buyer agency agreement

A principal-agent relationship with the sponsoring broker is the agent for the buyer, with fiduciary responsibilities to the buyer

Client

A person who is being represented by a licensee; the principal

Commingling

The illegal act by a real estate licensee of mingling client or customer funds with the licensee’s personal funds

Compensation

The valuable consideration given by one person or entity to another person or entity in exchange for the performance of some activity or service

Consumer

A person or entity seeking or receiving licensed activities

Conversion

The wrongful appropriation of property belonging to another (i.e. earnest money); also, the process of changing a property’s status from rental to condominium

Customer

A consumer who is not being represented by the licensee, but for whom the licensee is performing ministerial acts

Designated agent

A licensee authorized by a sponsoring broker to act as the agent for a specific principal in a particular transaction

Express agency

An agency relationship based on a formal agreement between the parties

Express contract

Fiduciary duties

Certain duties owed by a real estate licensee to a principal, including the duties of care, obedience, loyalty, disclosure, accounting, and confidentiality

Fraud

Deception intended to cause a person to give up property or lawful act

General agency

The relationship of a broker, managing broker, or leasing agent with a sponsoring broker

General agent

One who is authorized by a principal to represent the principal in a specific range of matters

Gratuitous agency

An agency that exists even if no fee is involved

Implied agency

Agency, intentional or otherwise, created by action or deed

Implied contract

A contract under which the agreement of the parties is demonstrated by their acts and conduct

Latent defect

A hidden structural defect that could not be discovered by ordinary inspection and that threaten’s the persons soundness or the safety of the inhabitants. Some states impose on sellers and licensees a duty to inspect for and disclose latent defects

Listing agreement

A contract between an owner and a real estate sponsoring broker (as agent) by which the sponsoring broker is employed as agent to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission

Material fact

Any fact, if known, might reasonably be expected to affect the course of events

Negligent misrepresentation

Occurs when the broker should have known that a statement about a material fact was false

Non-exclusive brokerage agreement

A written brokerage agreement that provides the sponsoring broker has the non-exclusive right, through one or more sponsored licensees, to act as an agent or representative of the client for the performance of licensed activities and meets the requirements of Section 15-50 of the Illinois Real Estate License act

Principal

(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) The original amount (as in loan) of the total due and payable at a certain date. (3) A main party to a transaction - the person for whom the agent works for

Puffing

Extreme exaggeration

Single agency

The representation of a single principal

Special agent

One who is authorized by a principal to perform a single act or transaction; a real estate broker is usually a special agent authorized to find a ready, willing, and able buyer for a particular property

Substantive contact

Dialogue between a licensee and consumer that moves to consumer’s motives, objectives, financial qualifications and other confidential information that, if disclosed, could harm the consumer’s bargaining position

Universal agent

A person empowered to do anything the principal could do personally

Antitrust laws

Laws designated to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in real estate businesses involve either price-fixing or allocation of customers or markets (real estate companies agreeing to limit theor areas of trade or dealing to certain areas or properties)

Broker

One who acts as an intermediary on behalf of others for a fee or commission

CAN-SPAM Act of 2003

Establishes requirements for commercial emails, spells out penalties for email senders, and gives consumers the right to have emailers stop sending emails to them

Cooperative commission

In Illinois, an arrangement whereby both the buyer’s and seller’s real estate agents are paid by the seller

Designated managing broker

Managing broker appointed by the sponsoring broker to have supervisory responsibilities and who is registered with the department

Employee

Someone who works as a direct employee or an employer and has employee status; the employer is obligated to withhold income taxes and SS taxes from compensation of employees

Errors and omissions insurance

Business liability insurance that helps protect real estate professionals, individuals, or companies from bearing the full cost of defense for lawsuits relating to an error of omission in providing covered professional services

Fiduciary standard

A legal standard that holds a licensee to the highest ethical standards that the law provides

Independent contractor

Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses, SS, and income taxes, and recieives no employee benefits. Most brokers are independent contractors

Junk Fax Prevention Act of 2005

A federal law under which unsolicited fax advertisements and solicitations may only be sent to persons with whom the sender has an established business relationship

National Do Not Call Registry

A registry managed by the Federal Trade Commission that lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receieve

Price-fixing

Real estate companies conspiring to set fixed compensation rates

Procuring clause

The chain of events, without abandonment or estrangement, which leads to a sale on the seller’s terms. Under an open listing, the sponsoring broker who is the procuring cause of the sale receives the commission

Procuring compensation

A form of buyer-broker compensation in which the seller covers, in whole or in part, the expense of the buyer’s broker. The compensation is typically expressed as a percentage of the sales price and may be paid either to the listing brokerage or directly from the seller to the buyer brokerage

Ready, willing, and able buyer

One who is prepared to buy the property on the seller’s terms and is ready to take positive steps to consummate the transaction

Regular employee

A person working an average of 20 hours per week for a person or entity who would be considered as an employee under the Internal Revenue Service Rules for classifying workers

Sponsoring broker

The broker who is sponsoring a licensed broker, managing broker, or leasing agent

Tie-in agreement

An agreement to sell one product only if the buyer purchases another product as well. The sale of the first product is “tied” to the purchase of the second product. Also called a tying agreement

Buyer agency agreement

A principal-agent relationship in which the sponsoring broker is the agent for the buyer, with fiduciary responsibilities to the buyer

Comparative market analysis

A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style, and amenities

Contemporaneous offers

When a buyer’s agent is acting as designated agent for more than one prospective buyer who the designated agent has reason to believe is making or preparing to make contemporaneous offers to purchase the property located at a specific address, the buyers have the option of being referred to another designated agent who will serve as the agent of the buyer

Exclusive-agency listing

A listing contract under which the owner appoints a broker as his exclusive agent for a designated period of time to sell the property on the owner’s stated terms for commission. The owner reserves the right to sell without paying anyone a commission if he sells to a prospect who has not been introduced or claimed by the sponsoring broker

Exclusive right-to-sell listing

A listing contract under which the owner appoints a designated broker as his exclusive agent for a designated period to sell the property on the owner’s stated terms. The owner agrees to pay the designated broker a commission when the property is sold, whether by the designated broker, the owner, or another broker

Market value

The most probable price that property would bring in an arm’s-length transaction under normal conditions on the open market

Minimum services

A provision of the Real Estate License Act of 2000 that requires licensees to perform a minimum level of service to clients

Net listing

A listing based on the net price the seller will receive if the property is sold. Under a net listing, the sponsoring broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is legal in IL, but discouraged

Open listing

A listing contract under which the sponsoring broker commission is contingent on the sponsoring broker producing a ready, willing, and able buyer before the property is sold bu the seller or another sponsoring broker

Option listing

Listing with a provision that gives the listing sponsoring broker the right to purchase the listed property

Statute of frauds

The part of a state law that requires certain instruments, such as deeds, real estate contracts, and certain leases, be in writing to be legally enforceable

Accretion

The increase or addition of land by the deposit of sand or soil washed up naturally from a river, lake, or sea

Appurtenant easement

An easement that is annexed to the ownership of one parcel and allows the owner the use of the neighbor’s land

Avulsion

The sudden tearing away of land, as by earthquake, flood, volcanic action, or the sudden course of a stream