Real Estate Principles I Flashcards
abstract of title
an abbreviated history of a property, including information on any transfers, grants, wills,
conveyances, liens, and encumbrances
accretion
the process that results in the gradual increase in land area through deposits of soil by
natural forces
ad valorem taxes
a tax calculated according to the assessed value of a piece of real estate
addenda
additions to a completed contract that specify supplementary information to the contract
agency
a relationship where one party is authorized to act on behalf of the other
agency by ratification
an unauthorized action taken on behalf of a principal which is accepted and legitimized after
the fact by the principal
agent
an individual with authority to act on behalf of another; a state license is required to operate
as an agent in real estate
air lot
area above parcels of land that are defined by elevation boundaries
air rights
the right to use the airspace above the surface of land
amendment
change or modification to an already agreed-upon contract
Americans with
Disabilities Act (ADA)
a federal civil rights law passed in 1990 which prohibits discrimination against and creates
standards for people with disabilities
amortization
the process of paying off a debt/mortgage in regular installments based on a fixed
payment schedule
apartment locator
a real estate license holder who locates dwelling units for prospective tenants
appointed license holder
a license holder designated to work with a client as part of an intermediary transaction
arrears
payment that occurs at the end of a period to compensate for charges accrued during
that time
assignment
the transference of rights and obligations in a contract from one party to another
attorney
a person who is licensed to give legal advice
avulsion
the sudden loss of land by flood or when a stream or river changes course
bilateral contract
a contract wherein both parties are obligated to perform in an exchange of promises
blockbusting
the illegal act of causing owners to sell their homes by creating fear that members of a
protected class are moving into the area; aka panic peddling
broker
a licensee who holds a broker license and who engages in an activity enumerated in the
license law for a commission or other valuable consideration
broker price
opinion (BPO)
a broker’s opinion of the value of a piece of real property, given in writing
bundle of rights
the ownership of land with all of the legal rights of possession, control, enjoyment, exclusion,
and disposition
buyer
representation agreement
an agency agreement between a broker and a buyer wherein the broker represents the buyer
in their effort to purchase or lease a property
Canons of Professional
Ethics and Conduct
the ethical and professional standard for the real estate industry in Texas
Civil Rights Act of 1866
a federal law that prohibits discrimination in housing based on race
cloud
any claim to or encumbrance on the title to a property that affects transferability
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
co-ownership
ownership of a property by more than one person
commingling
the illegal act of mixing personal funds with a client’s funds
common elements
portions of a shared ownership property not controlled by any one owner or tenant; examples
include parking lots, lobbies, fitness centers, elevators, etc.
community property
property owned by a married couple in which each spouse has 1/2 ownership of any property
obtained during the marriage, plus a right of survivorship ownership after the death of
either spouse
Community Reinvestment
Act (CRA)
legislation that seeks to enable all parts of a community to have access to credit
comparative market
analysis (CMA)
a report that compares the prices of recently sold or listed homes (“comparables”) in order
to estimate the market value of a similar property (the “subject property”) located in the
same area
condominium
property where each owner has a separate interest in their own unit and undivided interest in
the common areas
contingency
a provision within a contract that makes performance conditional upon the occurrence of a
stated event
contour map
a map in which curved lines (contour lines) connect contiguous parts of equal elevation to
define the contours of the land; aka topographic map
contract
a legally enforceable and binding agreement between parties wherein a promise to do or not
do something is given in exchange for valuable consideration
conventional life estate
a life estate in which the measuring life is that of the life tenant; an estate created by a deed
that lasts for the duration of the tenant’s life
conveyance
an instrument that transfers a grantor’s interest in real property
cooperating broker
the broker who assists another broker in showing the listed property to a buyer who
subsequently purchases the property
cooperative
property where each owner owns shares in a corporation that owns a building, then has a
proprietary lease for their unit
corporation (INC)
a legally created business entity representing the interests of more than one person
datum
a designated base reference point to elevation used by surveyors to determine the elevations
of land or property in an area
defeasible fee estate
a property interest characterized by perpetual ownership on the condition that the property is
used for a certain purpose or under specific conditions; ownership reverts back to the original
owner if these stipulations are violated
disability
a physical or mental impairment that substantially limits one or more major life activities, the
record of such impairment, or being regarded as having such an impairment
easement
an interest in, or a right to use, another individual’s land or property, generally for a specific,
limited purpose
encroachment
physical property that crosses the boundary into a neighboring landowner’s property
encumbrance
a non-possessory interest in a property that burdens the title
Equal Credit Opportunity
Act (ECOA)
a fair lending law that aims to bar discriminatory lending practices
equal opportunity
in housing
the concept that everyone will have equal access to housing with no discriminatory actions
taking place
equitable lien
a lien imposed by the courts with one party charging their property as security for a debt
or loan
errors and
omissions insurance
insurance that protects against mistakes a license holder might make in real estate
transactions; it does not cover acts of fraud or other intentional misconduct
estate
the degree, quantity, and extent of interest one owns in property
estate for years
a lease with a specific starting and ending date; aka tenancy for years
exclusive agency listing
an agreement in which the seller has an exclusive relationship with a broker but retains the
right to sell the property to named prospects
exclusive right to
sell listing
an agreement in which the seller guarantees the named broker receives a commission if the
property is sold, regardless of who brings the buyer
executed contract
a contract in which all terms have been fulfilled by all parties
execution lien
a lien on a property seized by writ of execution
executory contract
a contract that has not yet been fully performed (both sides have not yet completed
their obligations)
express agency
agency created by a clear, specific agreement; can be written or oral
Fair Housing Act of 1968
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
familial status
under the Fair Housing Act, a protected class composed of families who have children under
18, pregnant women, and people in the process of obtaining legal custody of a child
federal judgment lien
a general, involuntary lien imposed by the government that can attach to all of the owner’s
property except their homestead property
fee simple
determinable estate
a type of defeasible fee estate which causes the title to automatically revert to the original
owner if the deed requirements regarding property use are violated
fee simple estate
maximum ownership of real property; is of indefinite duration, freely transferable, and freely
inheritable; aka fee or fee simple absolute
fee simple subject to
condition subsequent
a type of defeasible fee estate that comes with specific requirements (or conditions) that, for
ownership to change, the grantor of the estate must prove in court that the condition has
been violated within a certain time frame
fiduciary duties
the full sum of obligations owed to the client in an agency relationship that ensures that the
agent always acts in the best interest of the client
fixity
the economic principle that says that real estate exists in a fixed location and cannot
be moved
fixture
an object that was once personal property but is now firmly attached to the land in such a
way that it is considered to be real property
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
four corners doctrine
a legal concept stating that the court can only consider information that appears within the
four corners of the documents
fraud
a misstatement made intentionally to deceive
freehold estate
a form of ownership with an indeterminate length
fructus industriales
plants or crops intended for harvest and treated as personal property, aka emblements
fructus naturales
trees, perennial plants, and uncultivated plants usually treated as real property because of
their permanence
general lien
a lien for which the real estate AND personal property may be sold to satisfy the debt
groundwater rights
property owners’ right to use water under the surface through the rule of capture
Home Mortgage
Disclosure Act
requires lenders to disclose specific lending information, which HUD then uses to map
lending patterns
homestead
a legal life estate that prevents a person’s primary residence from being forcibly sold to pay
certain kinds of debts
homestead tax exemption
an exemption that a homeowner can file to reduce the amount of ad valorem taxes paid on
their homestead
Housing and Community
Development Act
a 1988 amendment to the Fair Housing Act that added familial status and disability to the list
of protected classes
implied agency
agency that is created by the actions, conduct, and words of either or both parties without
ever being expressly requested
improvement
any non-natural structure built on or affixed to land
in severalty
describes undivided ownership of an estate, with an interest that is exclusive from
other owners
individual ownership
a 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
intermediary broker
a broker who negotiates a contract between two parties that are both being represented by
that broker
involuntary lien
a lien obtained through an action of law without the owner’s consent
joint tenancy
co-ownership in which the parties have an equal and undivided interest in the property;
includes the right of survivorship rather than inheritance
land surveying
the science of determining points and the distances and angles between them; aka surveying
land
the surface of the earth, including all permanently attached natural features, extending
downwards to the center of the earth and upwards to infinity
leasehold estate
an interest in the occupation of a property, established through a lease, aka non-freehold
or less-than-freehold
legal life estate
any life estate created by a function of law as opposed to the actions or desires of a
property owner
license
the right to use the land of another that can be granted as well as terminated by the
property owner
lien priority
the order in which liens against a property will be settled
life estate
a type of estate limited to the duration of a measuring life
limited liability company
a type of corporation in which none of the owners of the company can be held personally
liable for debt
lis pendens
a document recording at the courthouse giving notice that a lawsuit is pending on a particular
piece of property
listing agreement
a contract between a principal and a broker to sell or lease a property
littoral rights
rights that govern lakefront or oceanfront property and usually allow the property owner to
use the water bordering their property
lot and block
a system of legal land description that identifies a piece of platted property by referring to the
section, lot, and block numbers in a subdivision
material fact
a fact that, if known, could cause someone to take a different course of action or make a
different decision regarding the property to be purchased
mechanic’s lien
a type of involuntary, specific lien that a mechanic or materialman can impose upon a property
if the property owner fails to pay for materials or work done on the property
meridian
an imaginary line of longitude used to identify a certain area of the earth’s surface along a
north-south direction
metes and bounds
a land survey process in which a licensed land surveyor starts at a readily identifiable point
of beginning and defines the boundaries of a property in terms of distances and compass
directions, finally returning to the point of beginning
misrepresentation
a statement, written or spoken, that is false or misleading
monument
a fixed landmark, whether natural or human-made, used as a reference point in a metes and
bounds legal description
municipal utility
district (MUD)
rural taxing entity empowered to levy assessments on property owners to support the
building of infrastructure for basic utilities
net listing
an agreement in which the seller names a minimum sales price they will accept for a property,
with any excess paid to the broker as commission
nolo contendere
(no contest)
a plea where a defendant does not admit guilt to a crime they are accused of, but does accept
punishment as though they have been found guilty
novation
the act of replacing an existing contract with a new one
open listing
a nonexclusive listing agreement that gives multiple brokers (and owners themselves) the
right to sell the property
opinion of title
the official opinion of an attorney regarding the condition of a property’s title
parallel
a line of latitude
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
when one or more of the contracting parties perform only a portion of the agreed-upon
contractual duties
party
a person involved in a contract for sale, lease, or agency
performance agreement
part of a contract that requires the contracting parties either to perform certain actions or to
uphold certain contractual promises
personal property
any unattached, movable asset on the property not considered real estate (land plus
improvements); aka chattel or personalty
PITI
the components of a mortgage payment: principal, interest, taxes, and insurance
planned unit
development (PUD)
a subdivision that includes residential dwellings along with nonresidential real estate,
departing from normal zoning and subdivision regulations; recreational facilities may be co-
owned by PUD lot owners as tenants in common
plat
a map indicating the locations and dimensions of lots in a lot and block system
point of beginning (POB)
the starting point for a metes and bounds legal description
probate
a process by which courts determine and grant the appropriate ownership interest of an
estate to creditors, taxing entities, and heirs of an owner who dies intestate
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
prorate
to divide or allocate expenses between buyers and sellers based on the actual period of usage
of the item or service
proration
the act of dividing or allocating expenses between buyers and sellers based on the actual
period of usage of the item or service
protected classes
groups of people whom it is illegal to discriminate against, as provided by the Fair Housing
Act, ECOA, and other acts
public improvement
district (PID)
taxing entity created by the city or county to levy a special tax for specific improvements to a
specific neighborhood
puffing
the making of exaggerated claims (technically opinions) in order to achieve a sale or some
other objective
pur autre vie
a life estate characterized by ownership lasting only for the duration of a designated
party’s lifetime
range
the area of land between two consecutive range lines
real estate
land plus improvements
Real Estate Center
a group located at Texas A&M University to provide the results of research and education to
license holders
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
real property
land from the surface to the center of earth and upward into space, including everything
attached by humans or nature as well as the bundle of legal rights of ownership
REALTOR®
member of a local board who is affiliated with the National Association of REALTORS®
reasonable
accommodation
a change 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
recording
the act of documenting any transfer or claim of interest in the title to real property in public
records per state law
rectangular survey system
a system of legal land description that uses the global lines of longitude and latitude to create
a surveyed grid of meridians, base lines, townships, and ranges to describe a piece of land;
aka the government survey system
redlining
the illegal act of a lender refusing to issue mortgages in a specific area
remainder
the interest in an estate that will pass to another party (other than the grantor) at the death of
the person upon whom the life estate is based
remainderman
the person who holds the remainder interest in a life estate
restriction
a type of provision in a deed limiting the use of the property and prohibiting certain uses; aka
restrictive covenant or deed restriction
reversionary interest
the interest in an estate wherein, upon the death of the life estate owner, full ownership
reverts back to the original fee simple owner (grantor)
riparian rights
rights that govern the use of flowing water, such as rivers and streams that pass through or
border a property
sales agent
an individual holding a sales agent license from TREC who is sponsored by a broker
sales agent apprentice
education (SAE)
an educational requirement that must be completed in the first two years of being licensed as
a real estate agent
section
one of 36 equal square miles in a township
separate property
property owned by a married person that is separate and not co-owned by their spouse
situs
the economic significance of a property’s location
special agency
a form of agency relationship in which agents are limited in scope and are only authorized to
perform acts permitted by their principal
special agent
an agent with a limited scope of authority to act on behalf of their principal; usually towards a
single, specific objective, end, or goal that is not ongoing
specific lien
a lien that applies to a certain property only
statute of frauds
a law that requires certain types of contracts, including those conveying interest in real
property, to be in writing to be enforceable
statutory estate
estate created as a matter of state law
statutory lien
lien brought by a government entity
steering
the illegal act of guiding prospective home buyers toward or away from certain
neighborhoods because of their membership in a protected class; aka channeling
subagent
the agent of the agent; they owe the agent’s client the same fiduciary duties as the agent
substantial performance
when a party performs the majority of the contract’s requirements but does not perform
according to the contract’s stipulations
subsurface rights
ownership rights to all that is found beneath the surface of the tract of land owned, extending
downward to the center of the earth; aka mineral rights
surface rights
the rights to access the surface area of a parcel of real property
survey
a legally valid drawing of the dimensions of a piece of real estate, including its boundaries and
the location of improvements
syndicate
two or more people or companies that join together to create and run a real estate investment
tenancy in common
co-ownership in which each co-owner of the property holds their individual portion of the
ownership interest in severalty
Texas Real Estate
Broker-Lawyer Committee
a committee that creates and corrects contract forms to be used by Texas real estate
license holders
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
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
timeshare
a form of co-ownership where each owner has use of the property at a different prescribed
period of time; aka interval ownership
title insurance
a policy that protects homeowners (and likewise, lenders) from certain financial losses due to
title issues, such as defects, encumbrances, and liens
township line
line that runs east-west every six miles
trade fixture
personal property that is owned by and needed for a tenant’s business
unilateral contract
a contract wherein one party makes a promise and is obligated to perform if a second party
chooses to accept the offer and perform in exchange for that which was promised
vendee’s lien
a specific, involuntary lien imposed after a buyer claims that the seller has not transferred title
to the buyer according to the agreement
vendor’s lien
a lien the seller has against a buyer as a security for the unpaid balance of the purchase price
voluntary lien
a lien that is created with the consent of the owner of the property in question
water rights
the right of a property owner on a waterfront to access and use that water
