TNREPL_60HR_RealEstatePreLicense_KeyTermsIndex
Key Terms in Tennessee Real Estate Principles
Abstract of Title
Definition: An abbreviated history of a property, detailing any transfers, grants, wills, conveyances, liens, and encumbrances.
Level: L23, C5
Acceleration Clause
Definition: A clause in a security instrument (such as a mortgage or deed of trust) that requires the entire loan amount to be due immediately upon default.
Level: L17, C1
Accession
Definition: The right to all that one's property produces, including anything added to the property by natural forces or human action.
Level: L1, C4
Accretion
Definition: The process that results in the gradual increase in land area through deposits of soil by natural forces.
Level: L1, C4
Acre
Definition: A measurement of land equal to 43,560 square feet.
Level: L4, C2
Actual Eviction
Definition: The legal process by which someone is expelled from a property and prevented from re-entering.
Level: L20, C3
Ad Valorem Taxes
Definition: A tax calculated according to the assessed value of a piece of real estate.
Level: L6, C2
Adjustable-Rate Mortgage (ARM)
Definition: A mortgage with an interest rate that can be adjusted based on fluctuations in the cost of money.
Level: L16, C1
Adverse Possession
Definition: Involuntary transfer of title from an owner who does not actively use or inspect their land for a specified number of years to another person who has taken possession.
Level: L5, C2
Affiliate Broker
Definition: A licensee operating under the sponsorship, authority, and guidance of (and on behalf of) their principal broker in a brokerage environment.
Level: L7, C2; L11, C1
Agent
Definition: An individual with authority to act on behalf of another; requires a state license to operate as an agent in real estate.
Level: L11, C1
Alienation
Definition: The transfer of ownership (title) to real property, which may be voluntary or involuntary.
Level: L5, C2
Alienation Clause (Due on Sale)
Definition: A clause in the mortgage contract that allows the lender to demand payment in full of the loan upon the sale or conveyance of the property, also referred to as due on sale.
Level: L17, C1
Americans with Disabilities Act (ADA)
Definition: A federal civil rights law passed in 1990 that prohibits discrimination against individuals with disabilities and establishes standards for accessibility.
Level: L27, C2
Amortization
Definition: The process of paying off a debt or mortgage in regular installments based on a fixed payment schedule.
Level: L15, C1
Annual Percentage Rate (APR)
Definition: The total amount a borrower will pay in interest over the course of a year expressed as a percentage.
Level: L15, C1
Antitrust Laws
Definition: Laws established to prevent unfair or anti-competitive practices such as price-fixing, collusion, and monopolies.
Level: L26, C2
Appraisal
Definition: An official valuation given to a property by a licensed appraiser.
Level: L21, C1
Appraiser
Definition: An individual trained and licensed to perform appraisals, which estimate the value of real property.
Level: L21, C1
Appreciation
Definition: The increase in value of a property over time.
Level: L21, C1
Arrears
Definition: Payment that occurs at the end of a period to compensate for charges accrued during that time.
Level: L15, C1
Asbestos
Definition: A naturally occurring mineral fiber used in insulation; can cause severe respiratory health issues if airborne or inhaled.
Level: L14, C3
Assemblage
Definition: The combining of multiple contiguous pieces of real property into a single tract of land, often increasing value.
Level: L21, C1
Assessed Value
Definition: The value assigned to a property by a governmental unit to calculate property taxes.
Level: L21, C1
Assessment
Definition: The determination of the value of a property for tax purposes.
Level: L6, C2
Assignment
Definition: The transference of rights and obligations in a contract from one party to another.
Level: L9, C3
Assumption
Definition: The process of transferring the mortgage obligation from one party (mortgagor) to another who assumes the responsibility for payment.
Level: L16, C2
Attachments
Definition: Physical objects permanently attached to land, which can be human-made or natural.
Level: L1, C3
Avulsion
Definition: The sudden loss of land, either through flood or changes in a stream or river's course.
Level: L1, C4
Balloon Payment
Definition: A payment occurring at the end of a loan period that includes the total outstanding balance of the loan.
Level: L16, C2
Bargain and Sale Deed
Definition: A deed that implies the grantor has possession of the property and holds the right to convey title; lacks covenants or warranties against encumbrances.
Level: L23, C3
Baseline
Definition: A parallel used in conjunction with a meridian to identify ranges, tiers, and townships in the rectangular survey method of land description.
Level: L4, C2
Basis
Definition: The cost of purchasing a property plus the cost of improvements, minus the amount of depreciation.
Level: L22, C3
Benchmark
Definition: A permanent marker of known location and elevation above sea level established by a government survey team, such as the USGS.
Level: L4, C1
Beneficiary
Definition: The recipient of advantage or gain from an act or instrument such as a trust, will, or insurance policy.
Level: L2, C3
Bilateral Contract
Definition: A contract where both parties are obligated to perform in exchange for promises.
Level: L9, C2
Blind Ad
Definition: An advertisement by a license holder promoting real estate activity without disclosing their status as a license holder.
Level: L8, C4
Block and Lot System
Definition: A legal land description system that identifies a property by referring to section, lot, and block numbers in a subdivision; also known as the recorded plat method.
Level: L4, C1
Blockbusting
Definition: The illegal act of creating fear among property owners to sell their homes by suggesting members of a protected class are moving into the area.
Level: L27, C3
Branch Office
Definition: Any office where business is conducted other than the principal office.
Level: L8, C1
Bridge Loan
Definition: A short-term loan that facilitates a transition between two loans, such as from a construction loan to a mortgage loan.
Level: L16, C2
Broker
Definition: A licensee who holds a broker license and engages in activities enumerated in the license law for compensation.
Level: L7, C2; L11, C1
Brownfield
Definition: Real property where expansion, redevelopment, or reuse may be complicated by the presence of hazardous substances, pollutants, or contaminants.
Level: L6, C4
Building Code
Definition: A set of regulations regarding building design, materials, safety, sanitation, and structure.
Level: L6, C1
Bundle of Rights
Definition: Ownership of land includes legal rights such as possession, control, quiet enjoyment, exclusion, transfer, and encumber.
Level: L1, C2
Buydown
Definition: A loan where multiple collateral properties act as security.
Level: L15, C4
Buyer Representation Agreement
Definition: An agency agreement between a broker and a buyer, where the broker represents the buyer in property purchase or lease efforts.
Level: L13, C1
Capital Expenditure
Definition: An expense incurred to improve a property.
Level: L19, C2
Capital Gain
Definition: The increase in an asset's value from purchase to sale.
Level: L22, C3
Capital Improvement
Definition: Upgrades or improvements to property that exceed normal repair and maintenance, aiming to increase value.
Level: L19, C2
Capitalization Rate (Cap Rate)
Definition: A rate of return that calculates expected annual income percentage earned over a property's value.
Level: L22, C2
Cash Flow
Definition: Measurement of the amount of cash moving in and out of a business.
Level: L19, C2
Certificate of Occupancy (CO)
Definition: A legal document from local authority authorizing a building's occupancy after requisite inspections.
Level: L6, C1
Certificate of Title
Definition: A document from a title attorney detailing the chain of title and opinion on the seller's title marketability.
Level: L23, C5
Chain of Title
Definition: The entire chronological record of ownership of a property.
Level: L23, C5
Chattel
Definition: A term for personal property within real estate context.
Level: L1, C3
Civil Rights Act of 1866
Definition: A law making it illegal to discriminate in housing based on race or color, enforceable after Jones v. C Mayer (1968).
Level: L27, C1
Closing Disclosure
Definition: A form that itemizes services and fees charged by the lender when applying for a real estate loan. Also called a closing statement.
Level: L24, C1
Cloud
Definition: Any claim or encumbrance affecting the title to a property hindering its transferability.
Level: L5, C2
Collateral
Definition: Property pledged by a borrower to secure a loan, protecting the lender's investment.
Level: L15, C1
Collusion
Definition: An unlawful agreement among competitors to monopolize a market or undermine fair trade laws.
Level: L26, C2
Color of Title
Definition: A defective title transfer that is unknown to the new owner.
Level: L23, C5
Commingling
Definition: Mixing personal funds with a client's funds.
Level: L8, C2
Common Elements
Definition: Portions of a shared ownership property that are not controlled by any one owner or tenant, such as parking lots or lobbies.
Level: L3, C2
Community Property
Definition: A co-ownership system concerning married couples, detailing joint and individual property.
Level: L2, C2
Comparable (Comp)
Definition: Properties similar enough in features or location to assist in estimating another property's value.
Level: L21, C2
Comparative Market Analysis (CMA)
Definition: A report comparing prices of recently sold or listed homes (comparables) to estimate the market value of a similar property (subject property).
Level: L21, C2
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
Definition: A federal law that provides authority to respond to hazardous substance releases that may endanger health or environment. Also known as the Superfund.
Level: L6, C4
Condominium
Definition: Property where each owner has individual ownership of their unit and undivided interest in the common areas.
Level: L3, C2
Consideration
Definition: Something of value exchanged by parties as evidence of agreement to contractual terms.
Level: L9, C1
Constructive Eviction
Definition: The termination of a lease when the landlord defaults, making the premises unusable.
Level: L20, C3
Contingency
Definition: A contractual provision making performance conditional upon the occurrence of a specified event.
Level: L10, C2
Contract
Definition: A legally enforceable agreement between parties wherein a promise is made in exchange for valuable consideration.
Level: L9, C1
Contract for Deed
Definition: A sales contract where the buyer pays the seller in installments, with the seller holding the title until fully paid. Also known as installment sales contract or land contract.
Level: L10, C2
Contribution
Definition: The amount of market value added to a property by an improvement, not necessarily equal to the improvement's cost.
Level: L21, C1
Conventional Loan
Definition: Any loan that is not insured or guaranteed by the government.
Level: L16, C1
Conversion
Definition: The illegal act of using trust account funds for a payment of an agency's expenses.
Level: L8, C2
Conveyance
Definition: An instrument transferring a grantor’s interest in real property.
Level: L5, C1
Cooperating Brokerage
Definition: An agency arrangement where two brokerages work together to finalize a real estate transaction.
Level: L12, C3
Corrective Maintenance
Definition: Repairing equipment after it has failed.
Level: L19, C2
Correlation
Definition: The appraiser's process of weighing the relevance of each value approach for a property to arrive at a final estimate.
Level: L22, C2
Cost Approach
Definition: A valuation method estimating property value based on replacement costs of improvements minus depreciation, plus land value.
Level: L22, C2
Counteroffer
Definition: A proposal submitted in response to an original offer, modifying the terms and effectively rejecting the initial offer.
Level: L10, C1
Covenant of Seisin
Definition: A grantor's assurance that they hold the title conveyed in the deed.
Level: L23, C3
Covenants, Conditions, and Restrictions (CCRs)
Definition: Private restrictions dictating how homeowners may use their property, similar to deed restrictions.
Level: L5, C1
Credit Report
Definition: A report detailing an individual's credit history and current status of all open credit accounts.
Level: L18, C1
Credits
Definition: A sum of money received.
Level: L24, C2
Customer
Definition: An individual with whom a license holder has no agency relationship but whose dealings require fairness and honesty.
Level: L11, C1
Datum
Definition: A designated reference point to elevation used to determine land and property elevations.
Level: L4, C1
Debits
Definition: A sum of money owed.
Level: L24, C2
Debt Service
Definition: The total amount spent on an investment property’s loans, including both principal and interest components.
Level: L18, C2
Debt Service Coverage Ratio
Definition: Calculated by dividing net operating income by total debt service, used to evaluate income-producing properties.
Level: L18, C2
Debt-to-Income Ratio
Definition: A measure of a borrower's creditworthiness, calculated by dividing total debt by monthly income.
Level: L18, C1
Deed Restriction
Definition: A provision in a deed that restricts property use.
Level: L5, C1
Defeasance
Definition: A clause indicating that a loan has been satisfied, wherein title will either be conveyed to the borrower or the lien will be lifted.
Level: L17, C1
Demise
Definition: Transfer of title through a lease.
Level: L20, C3
Density
Definition: The number of people residing in a square mile (or kilometer).
Level: L6, C3
Depreciation
Definition: A reduction in value of a property for any reason.
Level: L22, C2
Designated Agent
Definition: The only licensee in a brokerage designated by the principal broker to act as the agent of a party. No other licensees in the brokerage share that relationship.
Level: L11, C2
Devise
Definition: The transfer of real or personal property through a will.
Level: L23, C1
Disability
Definition: A physical or mental impairment that substantially limits major life activities, observable in records or perceived as such.
Level: L27, C2
Discrimination
Definition: Unjust or prejudicial treatment based on race, sex, religion, disability, or other classifications.
Level: L27, C1
Disintermediation
Definition: The removal of an intermediary from a transaction.
Level: L15, C2
Doctrine of Laches
Definition: A legal principle barring dated claims due to unreasonable delay in asserting rights.
Level: L5, C1
Dodd-Frank Act
Definition: A law enacted in response to the subprime mortgage crisis, creating the Consumer Finance Protection Bureau.
Level: L17, C2
Due Diligence
Definition: The reasonable steps taken to satisfy legal requirements in a real estate transaction.
Level: L13, C1
Earnest Money
Definition: Funds paid to confirm or commit to a contract.
Level: L10, C2
Easement
Definition: An interest giving a right to use another's land for a specific limited purpose.
Level: L5, C2
Easement by Condemnation
Definition: An easement established when private property is taken for public use through eminent domain.
Level: L5, C2
Easement in Gross
Definition: An easement that applies to a person or entity rather than specific land.
Level: L5, C2
Effective Gross Income (EGI)
Definition: The total annual income produced by a property, without accounting for any expenses.
Level: L22, C2
Emblements
Definition: Profits from crops grown by a farmer, considered personal property.
Level: L1, C3
Eminent Domain
Definition: The government's power to seize private property for public use with just compensation required.
Level: L6, C1
Encroachment
Definition: Physical properties that cross into a neighbor's property boundary.
Level: L5, C2
Encumbrance
Definition: A non-possessory interest in a property that burdens its title.
Level: L5, C1
Enforceability
Definition: The essential elements necessary for a contract to be legally binding.
Level: L9, C1
Environmental Assessment
Definition: A report identifying potential or existing environmental liabilities for real estate holdings.
Level: L14, C3
Environmental Protection Agency (EPA)
Definition: The agency responsible for enforcing federal environmental protection laws.
Level: L6, C4
Equal Credit Opportunity Act (ECOA)
Definition: A law aimed at preventing discriminatory lending practices.
Level: L17, C2; L27, C1
Equity
Definition: The portion of a property's total value owned outright by the titleholder.
Level: L15, C1
Erosion
Definition: The gradual loss of land over time due to natural forces.
Level: L1, C4
Escalation Clause
Definition: A lease clause allowing payments to increase according to a specified factor or index.
Level: L20, C2
Escheat
Definition: A legal principle whereby a deceased person's property passes to the state if they die without a will or known heirs.
Level: L6, C1
Escrow
Definition: A procedure where funds and documents are held by a disinterested third party until conditions are met in a real estate transaction.
Level: L24, C1
Estate at Sufferance
Definition: A tenant’s continued occupancy beyond the lease terms without the landlord’s consent.
Level: L20, C1
Estate at Will
Definition: A tenant’s occupancy of a property with the landlord's consent that can be terminated at any time.
Level: L20, C1
Estate for Years
Definition: A lease containing specific starting and ending dates, also known as tenancy for years.
Level: L20, C1
Ethics
Definition: Standards of conduct recognized and agreed upon by a specific group or culture.
Level: L26, C1
Eviction
Definition: The forced removal of a tenant due to lease defaults.
Level: L20, C3
Evidence of Title
Definition: Constructive or actual notice of real property ownership.
Level: L23, C5
Exclusive Agency
Definition: An agency arrangement where one agent represents one party in a transaction; may be a seller or buyer.
Level: L12, C3; L13, C2
Exclusive Right to Sell
Definition: An agreement in which a seller guarantees a named broker receives a commission if the property is sold, regardless of who brings the buyer.
Level: L13, C2
Executory Contract
Definition: A contract that has not yet been fully performed with obligations pending on both sides.
Level: L9, C2
External Obsolescence
Definition: Loss in property value due to negative environmental influences external to the property.
Level: L22, C2
Fair Housing Act of 1968
Definition: A federal law prohibiting housing discrimination based on race, color, religion, or national origin; later amended to include sex, disability, and familial status.
Level: L27, C1
Familial Status
Definition: A protected class under the Fair Housing Act that includes families with children under 18, pregnant women, and individuals in the process of securing custody of a child.
Level: L27, C1
Federal Deposit Insurance Corporation (FDIC)
Definition: An independent agency providing deposit insurance to depositors in U.S. banks.
Level: L15, C1
Federal Home Loan Mortgage Corporation (Freddie Mac)
Definition: A government-sponsored enterprise established in 1970 to support the secondary mortgage market and assist smaller thrift banks.
Level: L15, C2
Federal Housing Administration (FHA)
Definition: A government agency that insures mortgages.
Level: L15, C1
Federal National Mortgage Association (Fannie Mae)
Definition: The first government-sponsored enterprise, created in 1938, which buys and securitizes loans, primarily from large commercial banks.
Level: L15, C2
Federal Reserve System
Definition: The central banking system of the United States, established to conduct monetary policy and stabilize the economy.
Level: L15, C1
Fee Simple Defeasible
Definition: A property interest allowing perpetual ownership with conditions; reverts back to the original owner if those conditions are violated.
Level: L2, C1
Fee Simple Estate
Definition: The maximum ownership of real property, of indefinite duration, freely transferable and inheritable; also called fee or fee simple absolute.
Level: L2, C1
FICO Score
Definition: A credit scoring system developed by Fair Isaac Corporation used to assess creditworthiness.
Level: L18, C1
Fiduciary
Definition: An individual entrusted with the highest levels of trust and confidence to act on behalf of another.
Level: L11, C1
Fiduciary Duties
Definition: The total obligations owed to a client in an agency relationship, ensuring the agent acts in the client's best interests.
Level: L11, C3
First Substantive Contact
Definition: The point at which agency disclosure is required, usually during the first face-to-face meeting before sharing confidential information.
Level: L11, C3
Foreclosure
Definition: The legal process by which a lender takes control of a property during default and sells it to recover losses.
Level: L15, C1
Fraud
Definition: Wrongful deception intended for personal or financial gain.
Level: L14, C1
Freehold Estate
Definition: A form of ownership characterized by an indeterminate length.
Level: L2, C1
Functional Obsolescence
Definition: Loss of property value due to changes in function or style.
Level: L22, C2
General Agency
Definition: An agency relationship authorizing an agent to manage affairs across specified areas, offering broader authority than special agency.
Level: L11, C1
General Lien
Definition: A lien encompassing both real estate and personal property for satisfying a debt.
Level: L5, C3
General Partnership
Definition: A business entity where co-owners share power, liability, responsibilities, and profits.
Level: L2, C3
General Warranty Deed
Definition: A deed transferring full interest in title, free from all liens and encumbrances.
Level: L23, C3
Goodwill
Definition: Consideration exchanged for value in a contract, generally regarded as a gift.
Level: L9, C1
Government National Mortgage Association (Ginnie Mae)
Definition: A government-owned entity supporting the secondary mortgage market, assisting housing and support programs.
Level: L15, C2
Government Survey System
Definition: A method of describing land using global longitudinal and latitudinal lines to create a surveyed grid, also known as the rectangular survey system.
Level: L4, C2
Graduated Lease
Definition: A lease where rental rates increase over time in specific increments.
Level: L20, C2
Grantee
Definition: The recipient of a property conveyance.
Level: L23, C1
Grantor
Definition: The individual conveying real property in a transaction.
Level: L23, C1
Gross Lease
Definition: A lease where tenants pay a fixed monthly charge while landlords cover all operating expenses. Also known as a full-service lease.
Level: L20, C2
Gross Rent Multiplier (GRM)
Definition: The ratio of an investment property’s price to its annual rental income before expenses are considered.
Level: L22, C2
Ground Lease
Definition: A lease of bare, undeveloped land, also called a land lease.
Level: L20, C2
Habendum Clause
Definition: A clause that clarifies the extent of interest conveyed by the granting clause in a deed.
Level: L23, C2
Hazard Insurance
Definition: Insurance covering loss or damage to real property; typically required by lenders.
Level: L14, C2
Highest and Best Use
Definition: The most legally, physically feasible, financially viable use of a property that yields maximum return.
Level: L22, C1
Holographic Will
Definition: A will written by the testator without witnesses.
Level: L23, C4
Home Equity Loan
Definition: A loan using homeowner’s equity as collateral; can be used for any purpose.
Level: L16, C2
Homestead Laws
Definition: Laws protecting homeowners from losing their main residence from most creditor claims.
Level: L2, C1
Illiquidity
Definition: The difficulty of converting an asset into cash without value loss.
Level: L1, C4
Implied Agency
Definition: Created by the actions and conduct of the parties without explicit request.
Level: L11, C4
Implied Contract
Definition: A contract inferred from actions of the parties instead of from explicit agreement.
Level: L9, C2
Improvement
Definition: Any non-natural structure affixed to land.
Level: L1, C2
Income Capitalization Approach
Definition: A method for valuing a property using the net income it generates and