VOCABULARY Flashcards
Abatement
A reduction, decrease, or suspension of a continuing charge, such as rent.
Actual Damage
Monetary damages suffered due to another party’s actions or failures to act, compensating for real losses.
Addendum/Addenda/Addendums
An attachment or addition to a contract. “Addenda” (plural for two), “addendums” (plural for three or more) are used interchangeably.
Alienation Clause
If a borrower conveys any part of the property, the lender can demand full loan repayment.
Annexation
A governmental entity bringing real property within its boundaries, voluntarily or by law.
Appurtenance/Appurtenant
Rights or privileges that attach to the land, like water rights or a designated parking space.
As-Is
The buyer accepts the property in its existing condition, with no seller responsibility for defects or repairs.
Back-up Contract
A contract that becomes effective if an existing contract is terminated.
Balfour v Balfour
Established a presumption against legally enforceable agreements in domestic relationships.
Balloon Payment
A large final payment due at the end of a loan term, after smaller periodic payments.
Bargain and Sale Deed
No warranty of ownership and no warranty against encumbrances.
Base Rent
The fixed rent amount per square foot before additional costs like percentage rent or expenses.
Bilateral Contract
A contract where both parties exchange promises as consideration.
Breach of Contract
A party fails to fulfill its contractual obligations, leading to damages owed to the aggrieved party.
Broker-Lawyer Committee
Drafts and revises real estate contract forms for Texas real estate license holders.
Building Codes
Local or national regulations governing real estate construction standards.
Build-to-Suit Lease
A lease where the property owner constructs improvements per tenant specifications before leasing.
Buyer Agency Agreement/Exclusive Right to Buy
A contract where a broker is employed to find and negotiate a property purchase for a buyer.
Carbon Monoxide (CO)
An odorless gas from incomplete fuel combustion, which can be deadly.
Chain of Title
The history of ownership and transactions affecting a property’s title.
Chattel
Personal property that is movable, such as appliances and furniture.
Closing (Real Estate)
The final step in a transaction where property ownership transfers from seller to buyer.
Color of Title
A legal claim to ownership supported by some form of documentation.
Common Law
Law created by judges through written opinions, also known as judicial precedent or case law.
Community Property
Property acquired during marriage that can be willed to third parties or heirs; not applicable in all states.
Company
Certain equipment or items in a property; co-payments typically apply to most service calls.
Competence
A person’s mental capacity to participate in legal proceedings or transactions responsibly.
Competent Parties
Legally capable individuals who can enter a binding contract, determined by age, mental capacity, and authority.
Computerized Loan Origination (CLO)
Technology that helps consumers find lenders, mortgage products, and settlement services.
Concurrent Estate
Property ownership by more than one person at the same time, also known as co-tenancy.
Condition Subsequent
An event in a deed that terminates a person’s interest in real property.
Condition
A requirement that must be met for a contract to continue, often used interchangeably with contingency.
Condominium
A housing unit where owners have individual unit ownership but share common areas collectively.
Consanguinity
Relationship by blood or common ancestry.
Consideration
What each party provides to enter a contract.
Consumer
Under the DTPA, an individual, business, or entity acquiring goods or services by purchase or lease.
Contingency
A condition that must occur for a contract to be completed, such as financing approval.
Contingent Contract
A contract specifying actions that lead to specific outcomes under certain conditions.
Contract for Deed
Buyer makes payments toward purchase price while seller retains title until full payment is made.
Contract
An agreement between two or more parties creating obligations or responsibilities.
Contractual Privity
The legal relationship existing between two contracting parties.
Conveyancing
The legal transfer of property ownership or the granting of an encumbrance such as a mortgage.
Cooperatives
Buying shares in a corporation that owns a building instead of direct ownership of a unit.
Correction Deed
A deed used to correct mistakes in a previously recorded deed, such as names or legal descriptions.
Court
A government institution with authority to adjudicate legal disputes and administer justice.
Curtesy
A husband’s legal right to ownership in his wife’s real property.
Deed in Lieu
A deed given to a lender instead of foreclosure proceedings on a mortgage.
Deed of Trust
A document transferring property title to a trustee as security for a debt, with foreclosure rights if unpaid.
Deed Restrictions
Clauses limiting property use, such as building types, density, or specific activities.
Deed
A legal document transferring ownership or interest in real property.
Deficiency Judgment
A judgment against a borrower for unpaid amounts after foreclosure.
Dominant Estate
Property benefiting from an easement, with the servient estate burdened by it.
Dower
A wife’s right to a portion of her husband’s real property after his death.
DTPA
The Texas Deceptive Trade Practices-Consumer Protection Act, protecting consumers from unfair practices.
Earnest Money
A deposit showing a buyer’s serious intent to purchase; may be liquidated damages if the buyer defaults.
Easement
A right to use another’s land for a specific purpose, such as ingress and egress.
Eminent Domain
The government’s power to take private property for public use.
Encroachment
Unauthorized use of another’s property, such as building over property lines.
Encumbrance
A claim or liability on real estate, including liens, deed restrictions, and easements.
Escheat
The transfer of property to the state when no heirs exist.
Escrow
Holding funds with a third party for later disbursement.
Estate at Sufferance
A tenant remaining in possession after lease expiration without permission.
Estate at Will
A tenancy with no fixed term, terminable at any time with notice.
Estate for Years
A leasehold estate with a fixed duration.
Estate from Period-to-Period
A tenancy that automatically renews, such as month-to-month.
Exception
Items excluded from title insurance coverage.
Exclusive Agency Listing
A listing where the broker earns a commission unless the owner sells the property personally.
Exclusive Right to Sell Listing Agreement
A listing where the broker earns a commission regardless of who sells the property.
Executed Contract
A contract fully performed by all parties at signing.
Executory Contract
A contract where obligations remain unfulfilled.
Exemplary Damages
Also known as punitive damages, awarded to punish and deter misconduct.
Express Contract
A contract explicitly stated orally or in writing.
Fee Simple Absolute
The most complete form of property ownership with full rights.
Foreclosure, Judicial
Court-supervised foreclosure of a mortgage or deed of trust.
Foreclosure, Nonjudicial
Foreclosure through a public trustee without court involvement.
Fracking
Hydraulic fracturing to release oil and gas from underground formations.
Fraud
Intentional deception causing harm, including misrepresentation or omission.
General Partnership
A business arrangement where partners share liability.
General Warranty Deed
A deed offering the highest level of protection to the grantee.
Gentlemen’s Agreement
A non-binding agreement relying on mutual honor rather than legal enforcement.
Gift Deed
A deed transferring property as a gift.
Goods
Under the DTPA, includes tangible items and real property.
Graduated or Step-Up Lease
A lease where rent increases periodically by a set amount or percentage.
Grandfathered Use
A pre-existing use of property allowed despite new zoning laws.
Gross Lease
A lease where the tenant pays a fixed rent, while the landlord covers other expenses.
Guardian’s Deed
A deed used when the guardian of a person or minor transfers an interest in property to someone. Requires a court order.
Heads of Terms
A non-binding document outlining key issues relevant to a tentative sale, partnership, or agreement.
Homestead
A Texas right protecting homeowners from creditor claims and providing certain tax benefits.
HVAC
Heating, Ventilation, and Air Conditioning system used to control indoor climate and air quality.
Immobility
A characteristic of real estate meaning land cannot be moved or transported.
Implied Contract
An agreement formed by actions rather than written or spoken words.
Implied Obligation
A contractual duty inferred by law to fulfill the agreement’s intent.
Implied-in-Fact Contract
A contract formed through conduct rather than explicit words, implying mutual understanding.
Indestructibility
A real estate characteristic meaning land itself cannot be destroyed, only altered.
Intention to Create Legal Relations
A doctrine determining whether parties intended an agreement to be legally binding.
Intentionally
Doing or saying something on purpose, not by accident.
Involuntary Alienation
A property transfer occurring against or without the owner’s consent.
Joint Venture
Co-owners equally entitled to fee simple absolute, with shared control and possession.
Laches
A legal doctrine barring claims due to unreasonable delay in asserting rights.
Land
The earth’s surface, subsurface, and airspace, including natural attachments like trees.
Laundry List
A term referring to the list of prohibited practices under the DTPA.
Lawyer
A professional practicing law in various capacities such as attorney, barrister, or solicitor.
Lead-Based Paint
Paint containing lead, banned from manufacture after 1978 due to health risks.
Leasehold Estate
A tenant’s right to use real estate without ownership.
Legal Age
The age at which a person can legally contract; in Texas, it is 18.
Legal Capacity
The ability to have rights and liabilities or legal personhood in an entity.
License
Permission to use property for a specific purpose for a limited time, revocable at will.
Lien
A legal claim against property to secure debt repayment.
Life Estate
A property interest lasting for the holder’s lifetime, reverting to the grantor or third party after death.
Liquidated Damages
Predetermined damages agreed upon in a contract to avoid disputes over actual damages.
Loan
The lending of money with an obligation to repay principal and interest.
Mechanic’s/Materialmen’s Lien
A claim by labor or material providers for payment related to real property improvements.
Mediation
A dispute resolution process involving a neutral third party.
Meeting of the Minds
A mutual agreement between parties forming a valid contract.
Merritt v. Merritt
A legal case affirming that agreements between separated spouses can be legally binding.
Mineral Rights
Ownership rights to underground natural resources.
Minor (Law)
A person below the legal age of majority, typically under 18.
Mirror Image Rule
A contract law principle requiring acceptance of an offer without modifications.
Misrepresentation
A false statement of material fact inducing another party to act, either intentionally (fraud) or unintentionally.
Monetary Damages
Financial compensation awarded to place the injured party in their pre-damage position.
Mortgage Loan
A loan used by property purchasers to raise funds or by property owners to raise funds, with a lien on the property.
Mortgage
A document that places a lien on the property to secure the debt to the lender.
Mortgagee’s Policy
Insures against the invalidity of the lien, ensuring the deed of trust has first priority, and may also cover mechanics’ liens.
Mutual Agreement (Mutual Assent)
The situation where both parties have the same goal and terms in mind when forming a contract.
Mutual Rescission
When both parties agree to cancel or rescind a contract.
Negotiation
A dialogue between parties aimed at resolving conflict or reaching an agreement on mutual interests.
Net Lease
A lease where the tenant pays base rent plus a portion of the operating expenses like utilities, taxes, and insurance.
Net Listing
An agreement where the seller receives a set amount, and the broker receives any excess, often leading to conflicts of interest.
Nonconforming Use
Property that continues its previous use after a zoning change; must meet new zoning if the use changes.
Notary Public
A public officer who validates signatures, administers oaths, and performs other legal acts like taking acknowledgments and affirmations.
Offer and Acceptance
Essential elements of a contract, where an offer is made and accepted by the parties.
Open Listing
An agreement where the seller can employ multiple brokers, and only the successful broker gets paid. The seller can still sell without obligation.
Owner’s Policy
Insures that the property owner is the legitimate owner and protects against any title claims, except for specific exceptions.
Ownership
The state of legal possession and control over property, which may involve multiple rights collectively referred to as title.
Parol Evidence Rule
A rule that prevents changing written contract terms with verbal testimony about prior or different agreements.
Partial Performance
When a party fulfills part but not all of its obligations under a contract.
Patient
A recipient of healthcare services, often someone who is ill or injured and requires treatment by a healthcare provider.
Percentage Lease
A lease where the tenant pays a base rent plus a percentage of gross sales, which increases as sales rise.
Prepayment Penalty
A charge imposed by the lender if the debtor repays the loan before the agreed time.
Principal
The most important or primary element, particularly in terms of importance or rank.
Privity of Contract
The legal relationship between the parties to a contract, which allows them to enforce the terms of the agreement.
Promise
A commitment to do or refrain from doing something, either as a declaration or as an act of commitment.
Promissory Estoppel
A doctrine that prevents a party from denying the existence of a contract if the other party relied on it.
Promulgated Form
A form made available by TREC for use by real estate professionals in Texas.
Proration
The division of costs or benefits of a financial transaction in a fair manner.
Public Policy
A set of laws, regulations, and guidelines created to address real-world problems and issues through government action.
Puffing
Making exaggerated, nonfactual statements that a reasonable person would recognize as such, often seen in real estate sales.
Punitive Damages
Damages awarded to punish a breaching party and deter future breaches, in addition to compensatory damages.
Quasi-Contract
A legal concept where a court creates a contract to prevent one party from being unjustly enriched at the expense of another.
Quiet Title Suit
A lawsuit filed to resolve issues with property title when other corrective measures have failed.
Quit Claim Deed
A deed that transfers whatever title the signer holds without any warranty of title.
Quitclaim
A formal renunciation of a legal claim or right to land.
Radon
A colorless, odorless gas that can cause cancer; it poses minimal risk in most parts of Texas.
Real Estate Agent
A professional who represents buyers or sellers of real estate, typically working under a licensed broker.
Real Estate as defined in the DTPA
In the DTPA context, real estate refers to both tangible goods and property purchased or leased.
Real Estate
Property comprised of land and the buildings on it as well as the natural resources of the land including water and minerals. Any farmed crops, livestock or flora/fauna is also included.
Real Property
In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, is land which is the property of some person and all structures (also called improvements or fixtures) integrated with or affixed to the land, including crops, buildings, machinery, wells, dams, ponds, mines, canals, and roads.
Recording
The process of making a digital or other copy of a document and placing it in the public records that are available to anyone seeking to determine the title to the property.
Redlining
The practice of a lender creating areas on a map (drawing a redline around the area) in which they will not make mortgage loans, ostensibly because the area is blighted or otherwise has property values and/or conditions that make the real estate unsuitable as collateral for the loan. The practice was deemed discriminatory.
REIT
The acronym for a real estate investment trust.
Remainder Estate
Upon death of the life tenant, the property goes to the party (remainderman) named in the deed with the remainder interest.
Residential Service Company
A business that, for a fee, agrees to repair or replace certain equipment or items in a property. Co-payments typically apply to most service calls. Residential service companies are licensed and regulated by the Texas Real Estate Commission. The contract could be considered a form of insurance.
Residential Service Contract
A type of warranty or insurance that will vary in scope of coverage and limits, but can be useful when purchasing an older home with older appliances or other covered mechanical items.
Residential Service
A residential service company is a business that, for a fee, agrees to repair or replace.
RESPA
Acronym for the Real Estate Settlement Procedures Act.
Restatement of Contracts
A compilation of treatises on the subject of contract law. It attempts to demonstrate a consensus of what the law says in this country on contracts, but has no binding effect on the courts.
Reversionary Estate
Upon death of the life tenant, the property reverts to the grantor or the grantor’s heirs.
Riparian
In the context of water rights, the riparian system says that if you own the land bordering a river or stream, you also own the right to use the water in common with other landowners.
Rose & Frank Co v JR Crompton & Bros Ltd
Rose & Frank Co v JR Crompton & Bros Ltd [1924] is a leading decision on English contract law, regarding the intention to create legal relations in commercial arrangements. In the Court of Appeal, Atkin LJ delivered an important dissenting judgment which was upheld by the House of Lords.
Sale-Leaseback
A transaction in which an owner sells property to another, then leases all or a portion of the premises and becomes a tenant rather than an owner. An owner might do this to raise cash to continue to operate a business, or for any other purpose.
Seller Financing
An arrangement where the seller, in effect, loans the buyer the money to purchase the property. The seller receives a promissory note, usually secured by a mortgage or deed of trust, instead of cash at closing.
Services
The word service or services includes work, labor or services purchased or leased for use, including services furnished in connection with the sale or repair of goods. It does not apply to professional services, the essence of which is providing advice, judgment, opinion or similar professional skill.
Servient Estate
The servient estate is the property over which the easement runs, and the dominant property that benefits the easement.
Severability
Can be legally separated from something else. In the context of real estate, it usually refers to water and mineral rights as being able to be sold or leased separately from the land with which they are associated.
Sheriff’s Deed
A deed issued either by the sheriff’s office or the public trustee conveying title to foreclosed property to the purchaser at the foreclosure sale. Similar to either a special warranty deed or even a quitclaim deed (making no warranties at all, but conveying only whatever title the debtor may have had).
Short Sale
A short sale is one in which the property will be sold, usually by the lender either before or after foreclosure, for less than the amount that is owed on the loan.
Special Warranty Deed
This deed contains the same warranties as a general warranty deed EXCEPT the deed covers only the period during which the grantor owned the property. This deed would be used most frequently by a grantor that lacks the authority to warrant title of previous owners, such as the executor of an estate or a trustee of a trust.
Specific Performance
A remedy in which the court requires the breaching party to perform exactly the obligations or responsibilities required by the contract. Specific performance is awarded when monetary damages are deemed insufficient or too difficult to determine. This remedy is often provided as an alternative in real estate contracts.
Statute of Frauds
The legal doctrine that requires certain types of contracts to be in writing if they are to be enforceable.
Statute of Limitations
Laws that place a time limit on the commencement of lawsuits. If the time has expired, the suit cannot be maintained.
Tax Deed
When the county sells property to collect unpaid real estate taxes, it uses a tax deed, which is similar to a quit claim deed in that it transfers only whatever title was previously held by the owner.
Tenancy in Common
Has the unity of possession which means all of the owners have an undivided interest in the property even though their share of ownership may not be equal. When one of the owners dies, their share of ownership is passed to their heirs. Tenancy in common is the default if the conveyance is not specifically stated.
Tenancy in Severalty
Ownership by a single person or single entity.
Texas Statute of Frauds
Texas’ version of the legal doctrine that requires certain types of contracts to be in writing if they are to be enforceable.
Third Party Financing
An arrangement in which the buyer obtains a loan from someone other than the seller in an amount sufficient to purchase the property.
Timeshare
A timeshare is an ownership model in which many customers own allotments of usage in the same property. The timeshare model can be applied to many different types of properties, such as condominiums, homes, campgrounds, recreational vehicles and private jets.
Title Commitment
The document the title insurance company provides setting forth the state of the title to the property and stating the conditions under which it will insure that title.
Title Theory
The title (conveyance) theory holds that full legal title transfers to the mortgagee or trustee to secure the loan.
Title
The word we use to denote ownership of the property. The title is the collection of legal documents that, taken together, indicate the ownership of the property as well as liens, claims, easements, and encumbrances that impact such ownership.
Tort
French for wrong, a civil wrong, or wrongful act, whether intentional or accidental, from which injury occurs to another. Torts include negligence cases as well as intentional wrongs which result in harm.
Trade or Commerce
“Trade” and “commerce” mean the advertising, offering for sale, sale, lease, or distribution of any good or service, of any property, tangible or intangible, real, personal, or mixed, and any other article, commodity, or thing of value, wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this state.
TREC
Acronym for the Texas Real Estate Commission.
TRELA
Acronym for the Texas Real Estate License Act.
TRID
Acronym for the TILA (Truth in Lending Act) RESPA Integrated Disclosures.
Ultra vires
Ultra vires (‘beyond the powers’) is a Latin phrase used in law to describe an act which requires legal authority but is done without it.
Underwriting
The process that a lender will employ to determine the eligibility of a customer to receive a loan.
Undivided Interest
Title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. Such interests are typical between joint tenants, tenants in common, tenants by the entirety.
Unenforceable Contract
A document that was once a valid and enforceable agreement but as a result of certain legal doctrines cannot be enforced.
Uniform Commercial Code (UCC)
A statement of law developed as a joint effort between the American law Institute and the National Conference of Commissioners on Uniform State Laws. It covers the areas of sales, negotiable instruments, bank deposits and collections, letters of credit, documents of title, investment securities and secured transactions.
Unilateral Contract
A contract that comes into being even though only one party provides a promise.
Unilateral Rescission
The non-breaching party may refuse to perform (often in the form of refusing payment) because the breaching party has not performed his obligations.
Unilateralism
A doctrine that supports one-sided action.
Unjust Enrichment
Occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust.
Valid Contract
A document that meets the various requirements to form a document that is legally enforceable by the courts, and is binding on the parties to the agreement.
Void Contract
A contract that is not technically a contract at all because it is deemed unenforceable by either party.
Voidable Contract
A contract that at least one of the parties can declare non-binding.
Voidable
A transaction or action that is valid but may be annulled by one of the parties.
