Massachusetts RE Salesperson License Test

21E Certificate

Certifies that property is free from contamination

203(b)

FHA financing program for anyone purchasing a primary 1-4 family, owner-occupied residence

1031 Exchange

Way to defer capital gains tax; property owner must re-invest profits from the sale of an investment property into another investment property within 6 months

1099

Independent contractor status according to the IRS tax classifications

ABAs

Affiliated Business Arrangements; service providers, such as mortgage brokers and real estate attorneys, package their services together as an offering to their clients

Abandonment

When the tenant leaves the property before the lease expires, without consent

Abatement

A reduction of municipal property taxes; must file taxes before requesting

Abstract of title

A history of property ownership (title), summarizing all instruments in chain of ownership; provided by lender's attorney and paid by borrower

Abutting

Neighboring land with a common boundary

Acceleration Clause

A clause in the note protecting the lender by permitting them to demand the loan balance be paid immediately in the event of a default

Acceptance

Indication by the offeree (most often by signature) that they are willing to be bound by terms of offer from offeror

Accretion

Increase of property by gradual natural additions (usually wind or water)

Accretion line

The water's edge; often the mean high tide line

Accrued depreciation

Difference between cost of replacing property new as of date of appraisal and present value; already occurs when property is purchased

Acknowledgement

An act of executing a legal instrument such as a deed, mortgage or discharge before a lawyer or other officer of state such as a notary public; this act declares signing to be free and voluntary; this is necessary before recording at registry

Acre

43,560 square feet

Act of Waste

Unreasonable or improper use of land by an individual in rightful possession of the land

Action of law

A way in which a lease can be terminated; includes eminent domain taking, tax sale, etc.

Active income

Income generated from active activities, such as a salary; cannot deduct depreciation from this income unless you are a real estate professional

Actual Eviction

Legal action originated by lessor whereby lessee in default is physically ousted pursuant to a court order (unlawful detainer).

Actual Notice

Specific notice of something (e.g. being served a lawsuit)

Adjacent

Nearby or abutting

Adjoining

Touching and contiguous

Adjustments

The proration of costs and income (taxes, rents, HOA fees, etc.) between buyer and seller at closing of title (passing of papers)

Administrator/Administratrix

Person appointed by court to probate or prove and settle estate of person leaving no will

Ad Valorem

Tax assessment based on actual value

Adaptability

One of the tests to determine if something is real or personal property; was it custom built to fit the space or can it fit anywhere

Adverse possession

The right to acquire legal title to privately owned property if held openly, notoriously, adversely and without permission for 20 years; also known as squatter's rights

Aeolian soil

Soil deposited by wind, such as sand dunes or silt

Affidavit

A sworn written statement

Affirmation

A solemn declaration

Agency

A contract by which someone represents another in a transaction or area of business

Agency for Toxic Substances and Disease Registry

Created by CERCLA as part of their environmental protection programs

Agent

An individual, corporation, or other person, acting on behalf of another person with permission and legally binding authority

Agreement

One of the tests to determine whether something is real or personal property; buyer and seller agree to make that decision; this overrides all other tests, but should be in writing per Statute of Frauds

Agreement of sale

A bilateral contract whereby buyer promises to buy and seller promises to sell by execution and delivery of deed; also known as Purchase and Sale Agreement (P&S); Agreement means the same as Contract

Air rights

Ownership or lease of air space over a specific parcel of realty, such as a building over a turnpike; also known as air lots or vertical interests; typically extend no more than 80-500ft above real estate, depending on where navigable air space begins

Alienation

Loss of ownership; can be voluntary, such as in a real estate sale or involuntary, such as in a foreclosure

Alienation clause

Also known as due on sale clause or assumption clause; permits lender to speed up the due date of the loan in the event of a title transfer; prevents transfer of mortgage to a third party

Alluvion

Increasing of land area along a shore by deposited alluvium or by the recession of water

Alluvium

Clay, silt, sand, gravel, or similar detrital material deposited by running water

Amenities

The features of a property that make it desirable like fitness centers, access to transport, views, etc.

Amortization

The payment of a debt in equal installments; each payment is the same, and pays down the debt over time, with a portion of each payment going to the principal and interest on the loan

Anchor tenants

Major tenants which draw consumers to a shopping center, such as department stores

Annexation

When property that was personal becomes real

Annual Property Operating Data (APOD Sheet)

Sheet that shows the annual income of a rental property; profit and loss statements for investment properties; looks at vacancies, operating expenses (, debt service (mortgage), and capital expenditures (improvements).

Anticipation

The benefit a property owner expects to receive over the lifetime of their ownership

Appraisal

An estimate of value

Appraiser

Professionals with an appraisal license who estimate what buyers will pay for real estate

Appreciation

Increase in value resulting from market forces such as demand stronger than supply

Approaches to value

Three methods used by appraiser to form an estimate of value such as cost, market and income approaches

Appurtenance

A right belonging to and passing with a property such as having a right of way through adjoining property

ARM

Adjustable Rate Mortgage; loan with an interest rate that adjusts

Arm's length transaction

An open and willing sale without cooperation or coordination between the buyer and seller

Asbestos

Hazardous material that was used as an insulation material and fire retardant; carcinogenic; most often seen in homes with popcorn ceilings; most dangerous in a friable state

Assemblage

The act or process of combining two or more lots under single ownership

Assessed value

Also known as tax value; value given to realty by assessor's office for property taxation purposes

Assets

All of the property someone owns

Assignment

Transfer of one's remaining interest in a lease or option to a third party

Assignee

Person receiving a portion of rights or obligations under someone else's contract

Assignor

Person assigning a contract

Associate broker

A broker who chooses to work for another broker

Assumption of mortgage

Method of taking over a mortgage; borrower and original mortgagor are both responsible for the loan and liability for any deficiency after foreclosure; joint responsibility

Attachment (court action)

A writ issued, beginning or during a legal action commanding sheriff to attach ("seize") property, rights and effects of defendant to satisfy possible credit demands of plaintiff if judgment comes out in plaintiff's favor; involuntary lien

Attachment (test)

One of the ways to test whether something is real or personal property; whether or not the property is attached with roots or nails to the land

Attest

Affirmation that something is true or authentic

Attestation

Testimony or evidence given under oath

Attorney-at-law

A licensed lawyer

Attorney-in-fact

Someone holding a written power of attorney

Auction

Public sale of property to highest bidder

Avulsion

Sudden separation of land from one property and it's attachment to another typically by flooding or changing course of a river

Bait and switch

Form of fraud where an agent advertises a certain property that may or may not be available, with the intention of switching it out for something more expensive or lower quality when the client comes into the office to view; prohibited under licensing law

Balance

The notion that value is created and maintained when there is equilibrium in the market

Balloon mortgage

Principal loan amount paid off in lump sum at end of term as opposed to amortized direct reduction method

Bargain and Sale Deed

Also known as a certificate of sale; provides no warranties; typically used in tax foreclosures

Benchmark

Mark on stone or cement permanently fixed to ground; used as measuring point by surveyors

Beneficiary

Someone receiving money from a trust

Bequeath

To transfer personal property in a will

Bequest

An item of personal property transferred in a will

Betterments

Improvements adding to value of realty, done by local government and paid for by gainers of value; sidewalks, streets, etc. Results in a special assessment

Biennially

Every 2 years; real estate licenses are renewed on this time frame

Bilateral contract

One person's promise in exchange for another person's promise such as purchase and sale agreement

Bill of sale

A written instrument that is the evidence of transfer of one person's right in personal property to another

Binder

Deposit or earnest money given as evidence of good faith by buyer to secure property until sale is consummated; it can also refer to a temporary memorandum outline a real estate deal, similar to a letter of intent.

Blanket mortgage

A single mortgage covering more than one piece of real estate as collateral for a loan; usually includes partial release clause

Blind advertising

When real estate agents advertise property under their own name, without disclosing the name of their broker/brokerage and that they are a licensed agent; prohibited under licensing law

Blockbusting

Employing fear tactics to induce panic selling or panic peddling in a neighborhood: illegal

Board of Registration of Real Estate Brokers and Salespersons

Licensing authority in Massachusetts under the Division of Public Licensure. Issues real estate licenses

Bona fide

In good faith and without fraud

Bond

A type of insurance that provides a guarantee from a third party that they will make good any loss, up to a certain amount, suffered by someone dealing with the covered party; insurer is the surety or obligor, and the person or entity the insurance is payable to is the obligee

Boot

Unreplaced property value or reduced mortgage debt; taxable

BPO

Broker Price Opinion; a broker or their subagent's opinion of real estate's value based on evaluating data of comparative properties; used to determine listing price

Bounds

Directions

Breach

Violation of the terms of a contract

Bridge loan

Short-term loans designed to bridge the gap in cash flow, such as between development projects

Broker

A type of real estate license, must take a 40-hour course, state exam and be bonded for $5,000; may handle client money

Broker of record

Owner of the brokerage; may also be known as employing broker

Brownfields

Lands previously used for commercial purposes and are contaminated by hazardous waste or pollution

Brownfields Act of 1998

Encourages cleanup and redevelopment of land contaminated by hazardous waste

Buffer zones

Used to ease transitions between zoning areas