Maryland Real Estate Principles & Practice Review

Comprehensive vocabulary flashcards covering real estate law, licensing regulations, agency duties, contracts, title transfers, mortgage financing, settlement procedures, and property valuation principles based on course study notes.

Statutory Law

Law passed by a legislature.

Common Law

Legal principles developed through court decisions and precedent.

Administrative Law

Rules and decisions made by government agencies under authority granted by the legislature.

Maryland Real Estate Commission (MREC)

An agency that regulates real estate licensing and conduct, investigates complaints, conducts hearings, administers ethics rules, issues, renews, suspends, or revokes licenses, approves education, and administers a guaranty fund.

License Reciprocity

A process that can facilitate transactions involving licensees from other states, subject to state requirements.

Reasonable and Adequate Supervision

A broker's oversight of agents and brokerage operations, including training, reviewing agreements and disclosures, advertising, trust money, and legal compliance.

REALTOR®

A licensed real estate professional who belongs to the relevant professional association; not every licensed agent is a REALTOR®.

Brokerage

The business of bringing parties together in real estate transactions.

Procuring Cause

The person or broker who initiated an uninterrupted chain of events leading to the desired transaction result.

Price Fixing

An illegal antitrust violation where competitors agree on prices or fees.

Group Boycott

An illegal antitrust agreement where competitors agree not to work with a person or firm.

Allocation of Customers / Markets

An illegal antitrust agreement where competitors agree to divide customers, territories, or services among themselves.

Tie-in Agreement

The practice of making the purchase of one product or service conditional on buying another.

Internet Data Exchange (IDX)

A system that lets participating brokers display eligible MLS listings on websites.

Customer Relationship Management (CRM) Software

Software used to organize contacts and follow-up in real estate practice.

Agency

A special legal relationship in which a licensee is authorized to act on behalf of a principal.

Customer

A non-represented consumer who is owed honesty and fair dealing, but not full fiduciary allegiance.

Fiduciary

A person placed in a position of special trust and confidence.

General Agency

An agency relationship covering a range of tasks, such as the relationship between a sales associate and their broker.

Special Agency

Agency authority limited to a particular transaction or task.

Universal Agency

Authority granted to an agent to do nearly anything the principal could do personally; uncommon in real estate.

Express Agency

An agency relationship created through stated words or a written agreement.

Implied Agency

An agency relationship that arises from actions or words rather than a clear written expression.

COLD AC

An acronym summarizing the core fiduciary duties: Care, Obedience, Loyalty, Disclosure, Accounting, and Confidentiality.

Duty of Care

The fiduciary obligation to use reasonable skill and diligence and avoid negligence.

Duty of Loyalty

The fiduciary obligation to put the client's interests ahead of the agent's own interests.

Material Fact

A fact that could affect a buyer's decision or price, or a seller's willingness to accept an offer.

Puffing

Subjective sales opinion, such as calling a view 'great,' distinguished from factual misrepresentation.

Negligent Misrepresentation

A material false statement that can create liability when the professional should have known it was false, even without intent.

Latent Defect

A hidden defect that is not readily observable; material latent defects may need to be disclosed.

Stigmatized Property

A property associated with events or perceptions rather than a physical defect; disclosure obligations depend on applicable law.

Contract

A voluntary, legally enforceable promise between competent parties to perform or refrain from a legal act in exchange for consideration.

Statute of Frauds

A rule requiring certain agreements—such as real estate contracts and client representation agreements—to be in writing to be enforceable.

Bilateral Contract

A contract consisting of a promise exchanged for a promise.

Unilateral Contract

A contract consisting of a promise accepted through the other party's performance.

Executory Contract

A contract with something still left to be done.

Executed Contract

A contract that has been fully performed and completed.

Voidable Contract

A contract that a party entitled to avoid it may choose to cancel under recognized circumstances.

Specific Performance

A court order requiring a party to perform the contract.

Liquidated Damages

An amount agreed to in advance as damages, when legally enforceable.

Time is of the Essence

A contract clause signifying that all deadlines are material and must be followed as stated.

Equitable Title

A buyer's equitable interest in property under a valid purchase contract before legal title transfers.

Exclusive Right-to-Sell Listing

A listing agreement where the broker is entitled to compensation if the property sells during the term, even if the seller or another party finds the buyer.

Exclusive Agency Listing

A listing agreement where the broker is the exclusive listing broker, but the seller retains the right to sell without paying a commission under the agreement's terms.

Open Listing

A nonexclusive listing in which the person who brings the buyer may earn the fee, subject to the agreement.

Net Listing

A listing where the seller specifies a net amount and the broker keeps the excess; illegal in Maryland.

First Right of Refusal

A contractual right allowing a party the opportunity to purchase before the owner accepts a qualifying third-party offer.

Tenancy in Common

A form of co-ownership requiring unity of possession, where shares may be unequal and a deceased owner's share passes through their estate rather than automatically to co-owners.

Joint Tenancy

A form of co-ownership requiring the four unities and including a right of survivorship.

Four Unities

The conditions required to establish joint tenancy: Time, Title, Interest, and Possession.

Tenancy by the Entirety

A form of co-ownership for married couples where partition is unavailable.

Condominium

Ownership consisting of an individual unit along with an undivided interest in common elements.

Cooperative

An ownership arrangement involving shares in a corporation rather than direct ownership of real estate.

Metes and Bounds

A land-description method using a point of beginning, distances, directions, and monuments.

Rectangular Survey System

A land-description system using principal meridians, base lines, townships, and sections.

Lot and Block

A land-description method that refers to specific lots on a recorded subdivision plat.

Acre Measurement

A standard unit of land area equal to $43,560\,\text{square feet}$.

Square Mile / Section Equivalencies

A square mile contains $640\,\text{acres}$, and a standard six-mile township contains $36\,\text{sections}$.

General Warranty Deed

A deed transferring real property that generally provides the greatest protection to the grantee.

Special Warranty Deed

A deed offering limited warranties that generally concern only defects originating during the grantor's period of ownership.

Quitclaim Deed

A deed conveying no warranties that transfers whatever interest the grantor has, if any.

Abstract of Title

A summary report documenting what a title search found regarding property ownership history.

Cloud on Title

A claim, defect, or uncertainty that may affect title to real property.

Satisfaction of Mortgage (Deed of Release)

A legal document proving that a mortgage loan has been fully paid and the associated lien released.

Judicial Foreclosure

A foreclosure procedure carried out through a court-supervised process and sale.

Nonjudicial Foreclosure

A foreclosure sale using a power-of-sale process without court action where permitted.

Strict Foreclosure

A foreclosure process where the lender directly takes title to the property without conducting a sale.

Deed in Lieu of Foreclosure

A process where a borrower conveys the property to the lender to satisfy a default, subject to mutual agreement.

Conventional Loan

A mortgage loan that is not insured or guaranteed by the FHA or VA.

Loan-to-Value Ratio (LTV)

The loan amount divided by the property value (using the lower of sale price or appraised value), expressed as $\text{LTV} = \frac{\text{Loan Amount}}{\text{Property Value}} \times 100\%$.

Primary Mortgage Market

The marketplace where lenders originate loans and supply funds directly to borrowers.

Secondary Mortgage Market

The marketplace where existing loans are bought, sold, or traded, allowing originating lenders to replenish capital.

Ginnie Mae

Government National Mortgage Association; a government agency that guarantees mortgage-backed securities backed by FHA and VA loans.

Package Loan

A loan arrangement secured by both real estate and personal property.

Blanket Loan

A mortgage loan secured by multiple separate parcels of land.

Sale-and-Leaseback

A transaction in which a property owner sells the real estate and leases it back from the buyer.

Buydown

A financing technique where funds are paid up front to lower the interest rate or payment temporarily or under an agreed structure.

HELOC

Home equity line of credit; a revolving line of credit secured by the borrower's equity in the home.

Real Estate Settlement Procedures Act (RESPA)

A federal law regulating settlement-service disclosures and prohibiting kickbacks, referral fee splitting, and unearned fees.

Truth in Lending Act (TILA) / Regulation Z

Federal legislation and rules governing consumer credit disclosures, including finance charges, loan terms, and annual percentage rate (APR).

Affiliated Business Arrangement (ABA)

A relationship between affiliated settlement-service businesses requiring disclosure when there is common ownership of $1\%$ or greater.

Proration

Dividing an income or expense item between buyer and seller based on the duration each party owns the property.

Paid Outside Closing (POC)

A closing statement notation indicating an item paid outside closing that is shown for information and not charged again in totals.

Net-to-Seller Formula

A calculation used when commission is the only deduction: $\text{Sales Price} = \frac{\text{Desired Net}}{1 - \text{Commission Rate}}$.

Comparative Market Analysis (CMA)

An informal estimate of likely listing or sale price; explicitly distinguished from a formal appraisal.

Broker Price Opinion (BPO)

A real estate broker's estimate of property value; explicitly distinguished from a formal appraisal.

DUST

An acronym representing the four basic elements of value: Demand, Utility, Scarcity, and Transferability.

Market Value

An opinion of value based on objective market analysis.

Market Price

The exact monetary amount a property actually sells for in a real transaction.

Market Cost

The expense required to produce, build, or improve a property; cost and value are not necessarily identical.

Principle of Anticipation

The valuation principle that property value is derived from expectations of future benefits.

Principle of Conformity

The valuation principle that maximum property value is sustained when a home aligns with its surrounding neighborhood.

Principle of Contribution

The valuation principle that a specific component's value is measured by what it contributes to the overall property.

Highest and Best Use

The legally permissible, physically possible, and financially feasible use of a property that yields the highest value.

Assemblage

The act of combining two or more adjoining parcels of real estate into a single unit.

Plottage

The incremental value gained as a result of combining adjacent parcels through assemblage.

Principle of Regression

The valuation principle where a higher-value property's worth is lowered by neighboring lower-value properties.

Principle of Progression

The valuation principle where a lower-value property's worth is raised by neighboring higher-value properties.

Principle of Substitution

The valuation principle stating that an informed buyer will pay no more for a property than the cost of acquiring an equally desirable alternative.