VOCAB Flashcards
Good Funds
A wire, cashier’s check, or a certified check.
Agent
The one who acts for a principal in an agency relationship.
Competent Parties
Parties that are 18, sane, and sober.
Consideration
The exchange of something of value in return for the promise or service of the other party.
Deed
A signed instrument containing some kind of legal transfer (i.e. a contract conveying an interest in real property, etc).
Doctrine of Laches
A legal common law defense in an equitable action that “bars recovery by the plaintiff because of the plaintiff’s undue delay in seeking relief.”
Duress
When a party is acting while under threat or in some manner is being forced into the contract.
Elements of a Valid Contract
- Competent parties/Contractual capacity
- Mutual agreement/Meeting of the minds/Offer and Acceptance
- Lawful objective/Legal purpose
- Consideration/Money or something of value (NOT earnest money, which is NOT required)
- In writing and signed (certain contracts, based on statute of frauds)
Fraud
Intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.
Lawful Objective
The purpose of the contract (and the consideration) must be lawful.
Loan Assumption
A provision in a mortgage contract that allows the seller of a home to pass responsibility for the existing mortgage to the buyer of the home.
Mortgage Insurance
Insurance that indemnifies a lender in the event of a default by a borrower.
Mutual Agreement
An element required for the formation of a legally binding contract: the expression of an offer to contract on certain terms by one person (the “offeror”) to another person (the “offeree”), and an indication by the offeree of acceptance of those terms.
Parole Evidence Rule
A principle that preserves the integrity of written documents or agreements by prohibiting the parties from attempting to alter the meaning of the written document through prior and contemporaneous oral or written declarations that are not referenced in the document.
Principal
The person appointing an agent in an agency relationship.
Private Mortgage Insurance (PMI)
Mortgage insurance offered on conventional loans that is provided by private mortgage insurance companies.
Promulgated
Standardized contracts that are approved by the Texas Real Estate Commission and are required for use by licensees.
Transaction
An action or set of actions relating to the conduct of business, consumer or commercial affairs between two or more persons.
TREC
The Texas Real Estate Commission.
TRELA
The Texas Real Estate License Act, establishes rules that license holders must follow that pertain to obtaining, and later maintaining, a real estate license.
USDA Guaranteed Financing
A zero down payment mortgage for eligible rural and suburban homebuyers that are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture.
Annual Mortgage Insurance Premiums (MIP)
The second Mortgage Insurance Premium on FHA loans that is charged annually in addition to the Upfront MIP. It is usually paid monthly with the loan payment.
Antitrust Violations
Violations of laws designed to protect trade and commerce from abusive practices such as price-fixing, restraints, price discrimination, and monopolization. The principal federal antitrust laws are the Sherman Act (15 U.S.C. §§ 1-7) and the Clayton Act (15 U.S.C. §§ 12-27).
Arbitration
When parties to an agreement agree to binding arbitration of any dispute that might arise that can’t be resolved on a friendly basis. A third party, such as a judge, would impose a decision on them.
Back-Up Offer
Occurs when a seller is already under contract with a buyer but accepts a contract with a second potential buyer as a backup in case the first contract falls through.
Buy-downs
A mortgage subsidy made to the homebuyer on behalf of the seller.
Casualty Loss
A sudden, unexpected event. Fires, floods, storms, and earthquakes are examples.
Closing
The final step in executing a real estate transaction. The date is set during the negotiation phase and is usually several weeks after the offer is formally accepted.
Commitment Fee
A banking term used to describe a fee charged by a lender to a borrower to compensate the lender for its commitment to lend.
Community Property State
A state in which everything a husband and wife own together. This typically includes all money earned, debts incurred, and property acquired during the marriage.
Conveyance
The legal process of transferring property from one owner to another.
Deed Restrictions
Private agreements that restrict the use of the real estate in some way and are listed in the deed. The seller may add a restriction to the title of the property. Often, developers restrict the parcels of property in a development to maintain a certain amount of uniformity.
Default
When one party to the contract fails to fulfill the terms of the agreement.
Disclosure
A duty of an agent to a principal to discover and reveal information that might adversely affect the principal’s position. Also, an affirmative duty of every real estate licensee to reveal adverse material facts about property condition, inability of either party to complete the contract, non-availability of hazard insurance, inclusion in a flood plain, etc.
Discount Points
A form of pre-paid interest. One point equals one percent of the loan amount.
Escrow
A legal document that outlines the terms and conditions between parties involved in an escrow arrangement. An escrow third party agent would then follow the instructions outlined in the agreement.
FHA Insured Financing
A Government-Insured loan with the insurance being offered by the Federal Housing Administration under the Department of Housing & Urban Development (HUD) to approved lenders. The insurance indemnifies the lender in the event of a default by the borrower.
Interest
A charge for the use of money or the rental of money.
Liquidated Damages
An agreed-upon, estimated guess of the actual damages the seller would sustain if the buyer breached the agreement by failing to close.
Mediation
A method of alternative dispute resolution to attempt to get parties in dispute to come to a mutually acceptable agreement to resolve the dispute.
Possession
The control a person intentionally exercises toward a thing.
Prepayment Penalty
A clause in a mortgage document stating that a penalty will be assessed if the mortgage is prepaid within a certain time period.
Property Taxes
A tax or millage rate is an ad valorem tax on the value of a property, usually levied on real estate. The tax is levied by the governing authority of the jurisdiction in which the property is located. This can be a national government, a federated state, a county, a geographical region, or a municipality.
Pro-rations
It is used to describe the division of real estate expenses according to the proportion of ownership or rental.
Reverse Mortgage Financing
A reverse mortgage is a loan for seniors aged 62 and older.
Security Deposit
Any advance of money, other than a rental application deposit or an advance payment of rent, which is intended primarily to secure performance under a lease of a dwelling that has been entered into by a landlord and a tenant.
Seller Financing
Private financing offered by a seller where a seller agrees to defer a certain amount on the price that they are selling their property for with a promissory note and a security agreement such as a mortgage or deed of trust.
Settlement Expenses
The fee charged by a closing agent such as a title company to handle a mortgage loan’s closing. Many real estate professionals, including brokers and lenders, use the terms “settlement fees” and “closing costs.”
Specific Performance
When a court orders the parties to a contract to keep the promises made in the agreement. It requires the buyer and seller to a real estate sales contract to complete the transaction set out in the agreement.
Tenant at Sufferance
The situation when a tenant of real estate continues to occupy the premises without the landlord’s consent after the original lease or rental agreement between the landlord and the tenant has expired.
Tenant at Will
The situation when a tenant of real estate has permission from the landlord to stay beyond the expiration date of the original lease or rental agreement.
Texas Veterans Loan
A loan that gives Texas Veterans the opportunity to borrow up to $150,000 to purchase land at competitive interest rates while typically requiring a minimum 5% down payment for tracts one acre or more.
Third Party Financing
Loans provided by parties other than the buyer or the seller.
Trust Account
An account managed by one party for the benefit of another in a banking institution authorized to do business in Texas.
Trust Money
Client’s money, earnest money, rent, unearned fees, security deposits, or any money held on behalf of another person.
Upfront MIP (UFMIP)
The Mortgage Insurance Premium that is paid by a borrower in advance to obtain an FHA loan. It can be paid either in cash or added to the loan amount and financed.
VA Entitlement
The amount that the VA will remunerate to the lender in the event of a default by the veteran buyer; also refers to the maximum amount the VA will guarantee on behalf of the veteran borrower.
VA Guaranteed Financing
Loans that are guaranteed by the Department of Veterans Affairs which guarantee a lender a certain amount if the veteran borrower defaults on the loan.
