Principles of Real Estate 1 Key Terms Flashcards
Apartment Locator
A real estate license holder who locates dwelling units for prospective tenants
Tenant
One who possess a property under a lease without ownership
Broker
Someone who assists in buying and selling to receive a commission
Client
The person that an agent is representing, made official through a representation document
Sales Agent Apprentice Education (SAE)
An educational requirement for courses in the first two years of being licensed as a real estate agent
Consumer
A person or company that buys or leases any product or service
Consideration
Something of value as a part of a contract
Land
The surface of the earth, extending down to the center of the earth and up into space
Real Estate
Includes the land and any natural or man made improvements attached to it
Real Property
Includes the land and any natural or man made improvements attached to it, plus the bundle of legal rights of ownership
Personal Property
Items that can easily be removed from the land
Immobility
Characteristic of land stating that land has a particular geographical location that will remain constant, barring erosion or slow, geographical changes
Fixity
The permanence of land
Real Estate Broker
A person or corporation who markets to find buyers and sellers to put together in exchange for a commission
Broker’s Price Opinion (BPO)
A broker’s price opinion is the process used by a hired sales agent to determine the potential selling price or estimated value of a real estate property
Closing
The completion of a real estate transaction in which the buyer receives ownership and the seller receives the contract amount
Comparative Market Analysis (CMA)
A report comparing the prices of sold homes that are similar to the subject property, is created by a license holder to help the seller or buyer determine the market price
Misrepresentation
An unintentional mistake, spoken or written
Party
A person involved in a contract for sale, lease, or agency
Commingle
An illegal act of a license holder who mixes their own money with a client’s or customer’s money
Promulgated Contracts
Contracts prepared and authorized by the Texas Real Estate Commission that must be used by real estate license holders; there are a few exceptions to this rule
Cloud on the Title
An encumbrance that keeps the title to the property from transferring easily
Puffing
The exaggeration of opinions about real estate
Nolo Contendere
A plea in a criminal court in which the defendant accepts the punishment without admitting guilt
Improvement
Any permanent man-made addition to land
Subsurface Rights
Ownership of the minerals, gas, or oil beneath the surface of a piece of real estate
Surface Rights
The ownership of the land in a parcel or real estate but limited only to the plane
Air Rights
The right to the airspace above the surface of land
Water Rights
The right to enjoy the water that borders a property
Littoral Rights
Rights that govern lakefront or oceanfront property and usually allow the property owner to use the water bordering their property
Riparian Rights
Rights that govern the use of flowing water, such as rivers and streams that pas through or border a property
Personal Property
Any item that is not real estate, also known as chattel or personality
Real Estate
A part of the surface of land to the center of the earth and upward to space plus all improvements made by man or nature
Real Property
Land from the surface to the center of earth and upward into space including everything attached by man or nature as well as the bundle of legal rights of the ownership
Fixture
Personal property that became real property when it was attached permanently to the real estate
Trade Fixture
An item attached to real property by a tenant that may be removed by the tenant and is considered to be personal property
Adaptation
The use and modification of a particular item for a specific use in a property
Fructus Naturales
Trees, bushes, and grass that are part of real estate
Fructus Industriales
Annually cultivated crops
Condominium
A single unit in a residential complex, which may or may not share common walls with neighbors in which the owner owns the unit and a share of the common areas, but NOT the land
Common Elements
Shared areas in a residential community, such as hallways, elevators, stairwells, pools, and recreational facilities
Cooperative
Residential building in which the title is held by a corporation and the residents are stockholders in the corporation and have a long term lease
Planned Unit Development (PUD)
A subdivision of development that includes single family dwellings along with some common elements such as parks, pools, community recreational centers, or golf courses
Timeshare
Residence with multiple owners who share the right to possession for a specific period of time with the other owners
Ad Valorem Tax
A tax calculated according to the assessed value of real estate
Homestead Tax Exemption
Reduces the amount of ad valorem taxes assessed on a homestead
Prorate
The dividing of expenses for items like taxes, interest, and rent at the closing between the seller and the buyer
Amortization
Paying off of a debt/mortgage in regular installments based on a fixed payment schedule
Arrears
Payment for an item or service after it is received
CLUE Reports
Stands for Comprehensive Loss Underwriting Exchange, a database used by insurance agencies that contains information on any claims made in the past five years by property owners on specific properties
PITI
Principle, Interest, Taxes, and Insurance, which are the components of most mortgage payments
Brokerage
The joining of two people for the purpose of an exchange of products or services
Agency
Relationship between a client and a broker
Express Agency
Agency created by a specific agreement
Implied Agency
Created when an agent is given permission to act on behalf of a client through conduct or communication, but the permission is not established orally or in writing
Agency by Ratifitcation
Created when a license holder actors on behalf of but without prior authorization of a principal and that principal accepts the license holder’s action after the fact
Attorney
A person who is licensed to give legal advice
Intermediary Broker
A broker who negotiates a contract between two parties that are both being represented by that broker
Appointed License Holder
A sales agent license holder who was designated to work with a client during an intermediary transaction
Special Agency
The relationship between a broker and a principal where the broker has restricted authority to act on behalf of the principal to achieve a specific objective
Agent
A person who acts on behalf of someone else
Seller’s Disclosure Notice
A document filled out by the seller concerning any defects in the improvements on the property
Subagent
A license holder from one office who represents the seller through cooperation with the listing broker of another company
Material Fact
Any fact that is significant or essential to the transaction
Fiduciary Duties
An agent owes their client the following fiduciary duties: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable Care (OLD CARE)
Misrepresentation
An unintentional mistake, spoken or written
Puffing
The exaggeration of opinions about real estate
Fraud
A misstatement made intentionally to deceive
Civil Rights Act of 1866
The first law that began to promise equal rights for all citizens regardless of race or color
Fair Housing Act
A federal law that prohibits discrimination in housing based upon race, color, religion, or national origin and was amended to include sex, disability, and familial status; aka the Fair Housing Act of 1968
Disability
A physical or mental impairment that limits at least one major activity in someone’s life
Steering
An illegal act of channeling buyers or tenants to certain areas, either to keep the area demographically the same or to change the demography of the area
American with Disabilities Act
A federal law enacted to remove barriers for individuals with disabilities
Equal Opportunity in Housing
The concept that everyone will have equal access to house in with no discriminatory actions taking place
Texas Department of Housing and Community Affairs
A department that administers assigned programs on Texas housing, invests resources strategically, and develops high quality affordable housing which allows Texas communities to thrive
Reasonable Accommodation
A chance in rules, policies, or practices, that may be necessary to afford a person, with a disability an equal opportunity to use or enjoy a dwelling
Protected Classes
Groups that are illegal to discriminate against, as defined by the Fair Housing Act
Housing and Community Development Act
An 1988 amendment to the Fair Housing Act that added familial status and disability to the list of protected classes
Familial Status
A family with at least one person under 18 years of age with at least one parent or legal guardian
Blockbusting
The illegal practice of causing owners to sell their holes by creating fear that minorities are moving into the area, also known as panic peddling
Equal Credit Opportunity Act (ECOA)
Law prohibiting credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or use of public assistance
Community Reinvestment Act
A federal law that requires lenders to assist their local communities by participating in community development projects
Redlining
The illegal act of a lender denying mortgages in certain areas of town
Home Mortgage Disclosure
Federal act that requires lenders to disclose specific lending information, which HUD then uses to map lending patterns
Disability
A physical or mental impairment that substantially limits one or more of an individual’s major life activities
REALTOR
A registered trademark designed for the sole use of identifying the members of a local board who are affiliated with the National Association of REALTORS
Code of Ethics
A document created by the National Association of REALTORS that their members pledge to abide by
Canon’s of Professional Ethics and Conduct
The Texas Real Estate Commission’s code of ethics for real estate license holders
Texas Real Estate License Act (TRELA)
A law that governs the licensing, education, and activities of real estate license holders practicing brokerage in this state.
In 1939, the Texas Legislature passed this Act to govern the licensing and practice of real estate in Texas — it was originally called the Real Estate Dealers License Act but eventually took another name.
Today, this Act is a part of the Texas Occupations Code, Chapter 1101.
Texas Real Estate Commission (TREC)
A group of nine people appointed by the governor and confirmed by the state senate that are to set policy and rules from the real estate license act.
In order to enforce the provisions of TRELA, the Texas Legislature created the __________ in 1948 (10 years later).
__________ purpose is to oversee the licensing, education requirements, and ethical standards of practice for real estate sales professionals and real estate inspectors within the State of Texas. __________ has the authority to adopt and enforce rules for governing real estate practitioners.
Sales Agent
A person who is licensed to practice real estate and is sponsored by a real estate broker
Real Estate Center
Located a Texas A&M University to provide the results of research and education to license holders
Texas Real Estate Broker-Lawyer Committee
A committee that creates and corrects contract forms to be used by Texas real estate license holders
Errors and Omissions Insurance
Insurance that protects against mistakes a license holder might make in real estate transactions; does not cover acts of fraud or other intentional misconduct
Abstract of Title
An abbreviated history of property, including info on any transfers, grants, wills, conveyances, liens, and encumbrances
Real Estate Recovery Trust Account
A fund managed by the Texas Real Estate Commission to provide payment to a party who has been damaged through the violation of The Real Estate License Act by a license holder
Survey
A legally valid drawing of the dimensions of a piece of real estate, including its boundaries and the location of improvements
Metes and Bounds
A legal land description method identifying a piece of real estate’s exact dimensions and location in reference to a fixed and permanent monument
Point of Beginning
The definite starting point for a metes and bounds description
Monument
An object used to mark the boundaries of a piece of real estate
Rectangular Survey System
A method to describe land by using principal meridians and base lines; also known as the government survey system
Lot and Block
A way to describe a piece of land by referring to the lot and block numbers in a subdivision that were assigned by the developer
Plat
A map of a Subdivision indicating its location and property lines
Longitude Lines/Meridians
Units of measurement that run North and South to Earth’s poles
Latitude Lines/Parallels
Units of measurements that run east and west, parallel to the equator
Range
A column created by drawing a parallel line every 6 miles east and west of a principal meridian
Township Lines
Lines that intersect with range lines to create 36-square-mile parcels (6X6 square miles) called townships
Acre
A measure of the surface of land (43,560 ft squared)
Section
A square made up of mile-long boundaries (1 square mile) that equates to 640 acres
Datum
A base point from which measurement is taken by moving upward or downward, marking standard heights or depths
Air Lot
Airspace above a parcel of land
Contour Map
A map where curved lines (contour lines) connect contiguous points of equal elevation to feline the contours of the land, also called a topographic map
Land Surveying
The science of determining points and the distances and angles between them, often for the purpose of establishing land maps and boundaries for ownership transfers of real estate
Contract
An agreement between two or more parties by which one party will receive consideration and the other will wither perform an act or refrain from performing an act
Performance Agreement
Part of a contract that requires the contracting parties either to perform certain actions or to uphold certain contractual promises
Forbearance Agreement
Part of a contract that requires one or more of the contracting parties to refrain from actions they are otherwise legally entitled to perform
Bilateral Contract
An agreement in which both parties give consideration and promise to perform the actions specified in a contract
Unilateral Contract
A contract in which only one of the contracting parties is bound to act
Addenda
Documents containing additional terms, information, or obligations that are attached to a contract
Four Corners Doctrine
A legal concept stating that the court can only consider information that appears within the four corners of the documents
Amendment
Changes or makes modifications to an already agreed upon contract
Executed Contract
A contract in which all terms have been fulfilled by all parties
Executory Contract
A contract that is not completely executed or performed
Statue of Frauds
A law which requires certain types of contracts to be written and to be signed by all parties who are bound by the contract
Parol Evidence Rule
a legal term that states that if the important details of an agreement were discussed but fail to make it into the written contract, the written and signed contract is given authority over any word of mouth
Partial Performance
this occurs when one or more of the contracting parties perform only a portion of the agreed-upon contractual duties
Substantial Performance
occurs when a party performs the majority of the contract’s requirements but does not perform according to the contract’s stipulations
Contingencies
stipulations or conditions that must be satisfied before the contract can be performed
Assignment
when one or more parties want to withdraw from a contract and transfer the rights and duties to a third party
Notation
the act of replacing an existing contract with a new, modified one
Recording
the placing of documents about the claims and ownership of real estate in the county clerk’s office at the courthouse
Abstract of Title
a condensed history of title to a tract of land that summarizes the transfers of owner- ship and encumbrances
Attorney’s Opinion of Title
a document written by a lawyer that identifies any defects in an abstract of title that may or may not state that the seller has marketable title to the property bill of sale
Title Insurance
insurance to protect the owner of a property if any other person proves ownership; covers the insured person’s investment into the property but does not guarantee continued ownership
Estate
the degree, quantity, nature, and extent of one’s interest in property
Statutory Estate
an estate that is created as a matter of state law
Freehold Estate
an estate in land in which ownership will last for an indeterminate duration
Leasehold Estate
a type of property interest allowing tenants to occupy and use a property they do not own; contains a reversionary right
Fee Simple Estate
maximum ownership of real property, indefinite duration, freely transferable, and freely inheritable; also called a fee or a fee simple absolute
Defeasible Estate
a type of freehold estate in which the person who has possession of the property is only able to hold the property until an event takes place or does not occur; also known as fee simple defeasible or qualified fee
Fee Simple Subject to Condition Subsequent
a defeasible fee estate in which a grantor conveys a par- cel of real estate subject to a condition of ownership
Fee Simple Determinable Estate
a defeasible fee estate that will come to an end automatically and immediately upon the occurrence of a designated event, the time of such occurrence being uncertain
Life Estate
an interest in real estate that will end upon the death of the life tenant or the pur autre vie life
Conventional Life Estate
a type of freehold life estate created by a deed or will that lasts for the duration of the tenant’s life
Legal Life Estate
a type of freehold life estate created by an act of law
Pur Autre Vie
a type of freehold life estate that grants someone ownership of a property for the duration of another person’s life
Remainder
the estate that will pass to another party at the death of the person upon whom the life estate is based
Reversion
the portion of an estate that will return to the original grantor when a life estate has ended
Reversionary Interest
an estate wherein, upon the death of the life estate owner, full ownership reverts to the original fee simple owner; also known as a revisionary right
Remainderman
the recipient of the remainder, either the grantor, who set up the life estate or a des- ignated third party
Estate for Years
a leased possession of property for a certain, specific period of time; also known as a tenancy for years
Encumbrance
any claim or right against a property held by another that is not the fee title owner
Easement
a right to use or cross someone else’s land for a specific purpose
Restriction
an outline of what someone may not do on their own personal piece of property
License
the permission to use someone else’s property for a temporary period of time
Conveyance
a transfer of ownership of a piece of real estate from one person to another
Probate
the legal process in which a court decides who will inherit property
Encroachment
an illegal use of another land owner’s property, occurring when the property of one owner extends beyond their property boundaries and onto the adjacent property
Statutory Lein
a lien brought by a government
entity such as a tax lien
General Lein
a lien in which the real estate and personal property may be sold to satisfy the debt
Specific Lein
a lien that is against only the real estate
Priority of Leins
the order in which debts or taxes levied by the government will be paid off through a court sale
Voluntary Lein
a lien that is created on purpose
and with the agreement of the owner of the property in question, such as a mortgage
Involuntary Lein
a lien that is created without the property owner taking any action to initiate it
Statutory Lein
a lien established by local, state, or federal law for a specific set of circumstances
Equitable Lein
a right that exists only in equity, with one party charging their property as security for a debt or loan
Mechanic’s Lein
a lien created when a worker has not been paid for work done on a property
Execution Lein
a lien created by a writ of execution issued by a court to force payment of monies owed from a judgment when a debtor does not pay
Federal Judgement Lein
a lien filed by the government for failure to pay certain debts
Lis Pendens
a document recording at the courthouse giving notice that a lawsuit is pending on a particular piece of property
Vendor’s Lein
a lien the seller has against a buyer as a security for the unpaid balance of the purchase price
Vendee’s Lein
a document declaring a claim from
a buyer that the seller has not transferred title to the buyer according to the agreement
Bundle of Legal Rights
ownership of land with all
of the legal rights of possession, control, enjoyment, exclusion, and disposition
Groundwater Rights
property owners’ right to use water under the surface through the rule of capture
Accretion
the process that results in the gradual increase in land area through deposits of soil by action of water
Avulsion
the sudden loss of land by flood, or when a stream or river changes course
Homestead
a property that a person or family owns and occupies as their primary residence
Separate Property
property owned by either spouse prior to the marriage or by gift or inheritance during the marriage
Individual Ownership
form of property ownership
in which one person is the owner of a property and has absolute control over the distribution and use of the land
Severalty
describes ownership of land by one person
Co-Ownership
ownership of a property by more
than one person
Joint Tenancy
co-ownership in which the parties have the right of survivorship — when one dies, the others receive that person’s portion of the estate
Tenancy in Common
a type of ownership in which each co-owner of the property holds their individual portion of the ownership interest in severalty
Community Property
property owned by a married couple in which each spouse has half ownership of any property obtained during the marriage, plus
a right of survivorship ownership after the death of either spouse
Living Trust
a trust created during someone’s life to manage their assets in life and in death
Testamentary Trust
a trust created through the use of a will when someone dies
Land Trust
atrust in which land is purchased to be held for a long period of time for the benefit of a named party
Real Estate Investment Trust (REIT)
an account in which 100 people or more place funds for the trust to invest in real property and then return the profits back to the investors
Corporation
an entity that is doing business
Syndicate
two or more people or companies that join together to create and run a real estate investment
Limited Liability Corporation (LLC)
a type of corporation in which none of the owners of the company can be held personally liable for debt
Listing Agreement
a contract between a seller and a broker created for the broker to market and sell the
property
Special Agent
an agent that is contracted by the client to perform a certain act
Cooperating Broker
the other broker or salesper- son that shows the listed property to a buyer who subsequently purchases the property
Municipal Utility District (MUD)
rural districts of Texas with lower tax rates that exist to provide developers a way to finance or be reimbursed for utility improvements they make
Public Improvement District (PID)
a district where property owners can decide on government financed and approved improvement projects for which they will be taxed
Buyer Representation Agreement
a document that creates agency between a broker and a buyer
Arbritration
a conflict resolution technique that requires a third party in the room to decide the best method of resolving the conflict; that decision is final
Open Listing
an agreement that gives multiple real estate brokers, and the owners, the right to sell the property; whoever is the procuring cause of the sale of the property gets the commission
Exclusive Right to Sell
a listing contract in which the broker has the exclusive rights to sell the property and the owner has agreed to pay them a commission
Exclusive Agency
listing contract between a broker and an owner in which the owner retains the right to sell the property while the broker may market the property as well
Net Listing
an agreement in which the seller names an amount they want their property to sell for, and then the broker tries to sell it for more, because they receive the difference as their commission
TREC Regulates what?
__________ regulates the activities of real estate brokers, sales agents, inspectors, and education providers (that’s me!) who offer real estate and inspection courses. The Commission also regulates residential service companies, timeshare developers, and easement or right-of-way developers.
TREC Regulates who?
- Real estate inspectors
- Easement/right-of-way agents
- Education providers for real estate & inspection courses
- Developers of timeshares
- Residential service companies
- Real estate brokers and sales agents
