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NY Real Estate Exam > Vocabulary > Flashcards

Vocabulary Flashcards

1
Q

Bundle of Rights

A

DEEP C

Legal rights of the real estate title holder. Includes the:
and the right of disposition
right of exclusion, 
right of enjoyment 
right of possession, 
right of control,
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2
Q

Real Property

A

Generally immovable. Goes with the real estate.

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3
Q

Personal Property

A

Generally movable. Goes with the person. Personal property can be hypothecated, alienated and become real property (a fixture).

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4
Q

Chattel Real

A

Often merely refers to tangible movable personal property.

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5
Q

Fixture

A

Personal property that is now real property- for example, a pool covering or a painting that has been nailed to the wall. The acronym MARIA is a test for whether or not something is a fixture (Method Adaptability Relationship Intention Agreement).

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6
Q

Trade Fixture

A

Linked to a business. They are personal property- for example, a hairdresser’s chair or a dentist chair. Although the chair is attached to the ground, it is not real property- it is personal because when the hairdresser sells her property, the chair will be going with her as part of her business. The chair is personal because it belongs with the person, not the land.

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7
Q

Riparian Rights

A

Water rights over a moving body of water- for example, a river or a stream.

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8
Q

Littoral Rights

A

Land which abuts a body of static water- for example, a lake, sea or ocean.

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9
Q

Accretion

A

An increase in actual land due to natural causes- for example, from the gradual action of the ocean or river waters.

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10
Q

Avulsion

A

Land is washed away by water- for example, a dam breaks and the rushing water washes away a strip of land.

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11
Q

Reliction

A

Gradual recession of water, leaving land permanently uncovered.

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12
Q

Appurtenances

A

Appurtenances include easements, stock in a mutual water company, covenants, and minerals (still in the ground). They are considered real property and “run with the land.”

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13
Q

Freehold Estate

A

Estate where ownership is held for an undefined length of time.

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14
Q

Fee Simple Estate

A

Also known as an “Estate of Inheritance” or “Fee Simple Absolute”, this is a type of freehold estate. A Fee Simple Estate can be sold or inherited, and is not free of encumbrances (taxes). Fee Simple Absolute is the most interest that one can hold in land.

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15
Q

Fee Simple Defeasible

A

Puts conditions on the use of a property- for example, if the deed had a condition that no alcohol would be sold on the property and that was violated, the owner could lose title.

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16
Q

Life Estate

A

An interest in real property that lasts the length of someone’s life. It is a type of freehold estate because it is indefinite in duration. When the life tenant’s life ends, title reverts to the original owner (reversion) or a remainderman.

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17
Q

Life Estate Pur Autrie Vie

A

An interest in real property that lasts the length of someone’s life (who is not the life tenant). It is a type of freehold estate because it is indefinite in duration. When the “measuring life” ends, title reverts to the original owner (reversion) or a remainderman.

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18
Q

Less Than Freehold Estate

A

Estate where ownership is held for a defined length of time.

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19
Q

Estate for Years

A

Estate or tenancy lasting a fixed period of time- for example, a summer rental lasting from April 5 to September 19.

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20
Q

Periodic Tenancy

A

Estate where tenancy is renewed periodically- for example, week to week, month to month or year to year.

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21
Q

Estate at Will

A

Estate that can be ended at any time by the landlord or the tenant.

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22
Q

Estate at Sufferance

A

Estate where a tenant continues to occupy a property after a lease or rental agreement has ended- for example, a deadbeat tenant.

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23
Q

Lease

A

A contract between a lessor and a lessee which gives possession but not ownership, to the lessee. Also known as a “Leasehold Estate”. The tenant doesn’t need to sign a lease to become a lessee, acting as a lessee is enough. This is NOT real property, a lease is considered personal property. Think of them as a piece of paper- a lease is a piece of paper, and you can move a piece of paper, so leases are personal property.

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24
Q

Percentage Lease

A

Lease where the amount of rent paid by the lessee is a percentage of the gross income of the lessee’s business- for example, a commercial parking lot.

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25
Q

Net Lease

A

Also known as a Triple Net Lease, this is a lease in which the tenant pays for taxes, insurance and maintenance in addition to other fees like rent and utilities.

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26
Q

Gross Lease

A

Lease in which the tenant pays a fixed amount to the landlord- for example, a standard residential lease.

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27
Q

Sandwich Lease

A

A lease in which an existing tenant sub-lets (or leases again) the property to a third party. The lessee becomes the lessor.

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28
Q

Sale Leaseback

A

Seller leases the recently-sold building from the new owner. The Vendor becomes the Lessee. This allows the seller to deduct all future rent payments as business expenditures.

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29
Q

Tenant Improvement Allowance

A

The amount a landlord is willing to spend so the tenant can retrofit or renovate a commercial space.

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30
Q

Assignment

A

When one party passes responsibility on to another.

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31
Q

Surrender

A

Giving up possession of a property.

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32
Q

Constructive Eviction

A

When a landlord does something, or fails to do something, that he or she is legally obligated to do, rendering the property uninhabitable.

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33
Q

Estoppel Statement

A

A signed statement certifying that certain facts are correct, which cannot be later contradicted by the signer- for example, that a lease exists or that rent is paid to a certain date.

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34
Q

Deed

A

Evidence of property transfer.

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35
Q

Grant Deed

A

A deed that includes two implied warranties: 1- The grantor has not already given the title to another person; and 2- The estate has no undisclosed encumbrances. It is not necessary to record the deed. Grant deeds are considered officially executed when signed by the grantor.

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36
Q

Quitclaim Deed

A

A deed that operates as a release. It transfers property quickly, but without any warranties on the title of any kind.

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37
Q

Warranty Deed

A

A deed in which a property owner, when transferring the title, warrants that he owns the property free and clear of all liens.

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38
Q

Special Warranty Deed

A

A deed in which the grantor warrants only against defects that occurred during their ownership (the grantor of a special warranty deed does not provide a warranty or guarantee against any defects in clear title that existed before their ownership).

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39
Q

General Warranty Deed

A

A type of deed where the grantor or the seller guarantees that s/he holds clear title to a piece of real estate and has a right to sell it. The guarantee is not limited to the time the grantor owned the property- it extends back to the property’s origins.

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40
Q

Bargain and Sale Deed

A

A deed that “conveys real property without covenants”. The grantor is implied to hold title and possession, but there is no warranty against encumbrances.

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41
Q

Reconveyance Deed

A

A deed which indicates that the borrower is released from a mortgage debt and transfers the property title from the lender (or beneficiary) to the borrower. Most commonly issued when a mortgage has been paid in full.

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42
Q

Title

A

Way of holding title to real property. Title means ownership of the bundle of rights in a property.

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43
Q

Chain of Title

A

Record of all prior transfers and/or encumbrances for a particular parcel of land. It is important when deciding to issue the title insurance.

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44
Q

Abstract of Title

A

A summary that provides details of the title deeds and documents that prove an owner’s right to dispose of land, together with any encumbrances that relate to the property.

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45
Q

Cloud on Title

A

A defect in title- for example, an unreleased lien or encumbrance that might invalidate or impair a title.

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46
Q

Quiet Title Action

A

Court action to remove a cloud or another claim that has been placed on title to property, thus “quieting” any challenges or claims to the title.

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47
Q

Alienation of Title

A

A loss of title. The opposite is acquisition of title (gain possession of title).

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48
Q

Title Insurance

A

Insures against any losses due to defects or problems with the title after it has been searched or examined. Ensures the buyer is getting a clean title. No title policy covers everything, however- for example, zoning.

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49
Q

Standard Policy of Title Insurance

A

Insurance policy most buyers get to protect themselves from forgery in the chain of title or defective delivery of a deed. A standard policy DOES NOT cover a site inspection or a survey.

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50
Q

Extended Policy of Title Insurance

A

Insurance policy with increased coverage. Helps with a dispute over property lines which are disclosed by a survey. Covers improvements on adjoining land.

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51
Q

Estate in Severalty

A

Property owned by just one individual (or corporation).

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52
Q

Concurrent Estate

A

Property owned by more than one person.

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53
Q

Joint Tenancy

A

Concurrent ownership with unities of Time, Title, Interest and Possession (TTIP). Has right of survivorship, meaning If one joint tenant dies, the surviving joint tenants take the remaining interest.

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54
Q

Tenancy in Common

A

Concurrent ownership with unity of possession only. No automatic right of survivorship, meaning a tenant in common can leave her interest to someone in her will.

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55
Q

Encumbrance

A

Burden on the property. It is a claim, lien, charge, or liability attached to real property. Title can still be transferred.

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56
Q

Easement

A

The right to use or enter someone else’s land for a special purpose, within limits. Land with an easement on it is encumbered.

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57
Q

Dominant Tenement

A

The land enjoying the easement. Can terminate an easement by recording a “quitclaim deed”.

58
Q

Servient Tenement

A

The land burdened by the easement.

59
Q

Easement by Prescription

A

Easement granted after someone has used or entered land for a period of time and is given a legal right to continue to do so. Requires “open, notorious, hostile, and continuous” use. Confrontation with the owner should not be involved. Can be lost or gained based on time of use.

60
Q

Appurtenant Easement

A

Easement attached a property which allows the owner the use of the neighbor’s land- for example, using your neighbor’s driveway to get to your garage. “Runs with the land”, so the easement passes to the next owner.

61
Q

Easement in Gross

A

Easement which attaches to an individual (person or entity). There is no dominant tenement- for example, the power company’s right to access utility lines.

62
Q

Encroachment

A

When a neighbor is using land which they do not own- for example, if the owner of a parcel of land built a driveway on his own land that accidentally crossed two feet over onto his neighbor’s land. Can be considered trespass.

63
Q

Lien

A

When money is owed. It is a claim against property, usually to secure payment of a debt.

64
Q

General Lien

A

Specific Lien

65
Q

Voluntary Lien

A

Lien obtained voluntarily- for example, when you get a mortgage or trust deed from the bank and a lien is placed on your property in exchange for a loan.

66
Q

Involuntary Lien

A

Lien that is imposed on a person- for example, a property tax lien imposed for unpaid property taxes.

67
Q

Mechanic’s Lien

A

Lien filed for to benefit someone who worked on the property. Only considered valid if they have been verified and recorded. Take priority depending on when work began- they may take priority earlier than their date of recording. Notices for mechanic’s liens can be for completion, cessation, and non-responsibility.

68
Q

Judgement Lien

A

Lien imposed upon someone by a court. It is a general involuntary lien.

69
Q

Government Powers

A

PETE

P- Police Power
E - Eminent domain
T - Taxation
E- Escheat

70
Q

Variance

A

Request to deviate from zoning laws- for example, when a landowner wants a building 3 feet higher than the zone’s height restrictions allow. Variance is done lot by lot.

71
Q

Down Zoning

A

Changing a zone from commercial to residential.

72
Q

Grandfather Clause

A

Allows a property to continue it’s existing use, even if it doesn’t comply with zoning laws.

73
Q

Nonconforming Use

A

Allows a property to continue it’s existing use when it no longer complies to zoning regulations, but did at the time the property’s use was established.

74
Q

Multi-family Residential

A

An R-3 zone is for Multi-family Residential use.

75
Q

Building Codes

A

Establish minimum standards of construction for public safety. Local building codes usually set high standards. When they are different from state standards or federal standards, the builder must follow whichever standards are highest- for example, if the local codes requires 1 handrail and federal law requires 2 hand rails, the builder must install 2 handrails.

76
Q

Escheat

A

When property is returned to the state because there is no individual owner- for example, when a property owner dies intestate (without a will), and without heirs. An individual cannot get property through escheat, it is a government power.

77
Q

Intestate

A

Without a will.

78
Q

Testate

A

Having a will.

79
Q

Probate Sale

A

The selling of a property when a homeowner dies and the property needs to be divided among inheritors or sold to pay debts. The broker’s commission is set by the court in a probate sale.

80
Q

Holographic Will

A

Handwritten will.

81
Q

1031 Tax Deferred Exchange

A

Process which allows investors to sell a property and reinvest the proceeds into a new property (as part of a qualifying like-kind exchange) while postponing the payment of capital gain taxes.

82
Q

Ad Valorem

A

When something is taxed based on its value. Latin for “According to Value.”

83
Q

Tax Shelter

A

General term for any property (or other investment) which gives the owner income tax advantages (such as deductions for property taxes, mortgage interest, or depreciation).

84
Q

Property Tax

A

An involuntary, specific lien levied against real property.

85
Q

Income Tax

A

An involuntary, general lien levied against income.

86
Q

Marginal Tax Rate

A

Percentage of tax applied to your income for each tax bracket in which you qualify. In essence, the percentage taken from your next dollar of taxable income above a predefined income threshold. It is applied to the nearest dollar of taxable earned income.

87
Q

Unadjusted Cost Basis

A

Original price of a property. Used to calculate capital gains. It is usually just the purchase price.

88
Q

Adjusted Cost Basis

A

Takes into account changes to a property which would affect its cost. To calculate, start with the amount originally paid, add the cost of improvements and assessments, then subtract deductions taken (such as depreciation and depletion)- for example, adding the cost of a new concrete patio on your personal residence. Mortgage payments are not included in this calculation.

89
Q

Eminent Domain

A

Property taken by the government for public use in exchange for just compensation. Government power.

90
Q

Condemnation

A

Action which results in compensation for a property when eminent domain rights are exercised by the government.

91
Q

Inverse Condemnation

A

Action taken to force the government to pay for property taken under eminent domain. Used when the government takes a property but fails to provide just compensation.

92
Q

Lis Pendens

A

A pending legal action- for example, a notice that a property is due to be taken to court which, depending on the results of the court case, could affect the title. A lis pendens remains in effect until there is a judgment or the court case is dismissed.

93
Q

Injunction

A

A court order to stop certain actions by certain individuals- for example, local homeowners could seek an injunction to stop another homeowner from putting up a large neon sign over his home that says “Motel”.

94
Q

Writ of Execution

A

A court order to enforce a judgement- for example, to sell a property to satisfy a judgment against the owner.

95
Q

Constructive Notice

A

A “legal fiction” that says someone has been notified of something even though actual notice didn’t happen. With property, once a document is recorded, subsequent buyers are deemed to have received “constructive notice” regarding the document and its effect on the property. Constructive Notice can also be given by taking possession.

96
Q

Actual Notice

A

When first-hand knowledge of something’s provided to an individual-for example, if a buyer knows that someone has taken possession of the property that is for sale.

97
Q

Material Fact

A

Fact that a reasonable person would think was relevant to a decision being made- for example, un-repaired water damage in the attic of a home for sale. If knowing something could cause a person to change their mind about a transaction, legally it’s a material fact.

98
Q

Escrow

A

Neutral third party hired to handle a property transaction, the exchange of money and any related documents. The rules of escrow vary state-to-state. Escrow duties usually include: ensuring that the terms and conditions of transfer are met before closing; asking for the funding of the buyer’s loan; releasing funds when appropriate; and reporting to the IRS on sales transactions.

99
Q

Debit

A

Money owed when escrow is closed- for example, the purchase price of a property is a debit for the buyer.

100
Q

Credit

A

Money owed to you when escrow is closed- for example, prepaid taxes are a credit for the seller.

101
Q

Short Rate

A

Method used by your insurance company to calculate any refund or premium due after you cancel your policy, especially with early cancellation.

102
Q

Impounds

A

Account maintained by the mortgage company to collect recurring costs such as insurance and tax payments that are necessary for you to keep your home, but are not technically part of the mortgage.

103
Q

R.E.S.P.A.

A

The Real Estate Settlement Procedures Act mandates that certain disclosures be provided so buyers can make informed decisions, and prohibits certain practices like referral fees and kickbacks. Applies to 1-4 family residential dwellings.

104
Q

T.I.L.A.

A

The Truth In Lending Act is designed to protect borrowers by requiring that lenders explain full credit terms to the borrower, like the amount of a loan, APR, finance charges, payment schedule, and total paid over the life of a loan. T.I.L.A. does not cover agricultural loans. Includes right of rescission for re-finance loans, which begins when loan documents are signed by the borrower.

105
Q

T.R.I.D.

A

The TILA/RESPA Integrated Disclosure, also called the “Know Before You Owe” rule, combines several documents required by RESPA and TILA into two: one provided at the beginning of the process called a “Loan Estimate”, and one provided at the end called a “Closing Disclosure”.

106
Q

A.P.R.

A

The Annual Percentage Rate is the cost of credit that consumers pay, expressed as a simple annual percentage. If an ad only states the APR, then other disclosures are not necessary.

107
Q

F.H.A.

A

The Fair Housing Administration was created by the National Housing Act of 1934 with the intention of regulating the rate of interest and the terms of mortgages that it insured in order to make home ownership more accessible.

108
Q

Jones vs. Mayor

A

The U.S. Supreme Court judgment which, under the Thirteenth (13th) Amendment, upheld anti-discrimination laws as constitutional in 1968.

109
Q

Sherman Anti-Trust Act

A

Federal Law that promotes free market competition by prohibiting any contract, trust, or conspiracy in restraint of interstate or foreign trade.

110
Q

Americans with Disabilities Act

A

A civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the general public. Became law in 1990.

111
Q

Steering

A

A form of racial discrimination where brokers or salespeople direct interested buyers away from or toward certain neighborhoods to control racial composition- for example, an agent that only shows minority buyers houses that are located in segregated areas. An agent should choose houses that he would show to a minority in the same way that he would choose houses for any other buyer.

112
Q

Blockbusting

A

Discriminatory practice of trying to convince owners in a neighborhood to sell their homes because members of a minority group are moving into the neighborhood. This is a violation of state and federal laws, and is not the same as duress.

113
Q

Panic Selling

A

Discriminatory practice of trying to convince owners in a neighborhood to sell their homes because members of a minority group are moving into the neighborhood. This is a violation of state and federal laws, and is not the same as duress.

114
Q

Panic Peddling

A

Discriminatory practice of trying to convince owners in a neighborhood to sell their homes because members of a minority group are moving into the neighborhood. This is a violation of state and federal laws, and is not the same as duress.

115
Q

Redlining

A

Discriminatory practice of mortgage lenders in which they draw “red lines” around portions of a map to indicate areas or neighborhoods where they don’t want to make loans.

116
Q

Specific Performance

A

Court order requiring a party to perform. In real estate, a buyer can force a seller to go through with the sale of property (according to a contract) when money is not sufficient compensation for a buyer. A broker cannot sue for specific performance.

117
Q

Misrepresentation

A

A misstatement about some material feature of a property- for example, when a broker fails to address or reveal a material feature of the property entirely. Can be fraudulent, negligent, or innocent. Misrepresentation by a licensee can lead to disciplinary action, as well as potential civil and criminal suits.

118
Q

Actual Fraud

A

An act intended to deceive another like making a false statement, making a promise without intending to perform it, or suppressing the truth- for example, a licensee who made a promise to advertise a property in a local newspaper, and then did not.

119
Q

Constructive Fraud

A

A circumstance in which a person or entity gains an unfair advantage over another by deceitful or unfair methods. Intent does not need to be shown, as in the case of actual fraud.

120
Q

Commingling

A

When personal funds are mixed with those of a client. It is illegal. By law, brokers must use a separate trust or escrow account for other people’s funds.

121
Q

Puffing

A

Exaggerating the benefits or features of a property. It is recognized in law.

122
Q

Caveat Emptor

A

Latin for “Buyer Beware”.

123
Q

Valid Contract

A

The four elements of a contract that make it valid are Capable parties,
Mutual consent,
Consideration,
and Lawful object.

It does not necessarily have to be written to be valid, nor does it have to be performed to be valid.

124
Q

Voidable Contract

A

A contract that can be rejected at a later date for a specific reason- for example, contracts signed under duress, contracts entered into with threat or menace, or contracts entered into with a minor.

125
Q

Mutual Consent

A

Also known as offer and acceptance or meeting of the minds, an agreement by the parties is necessary for the contract to be binding.

126
Q

Bilateral Contract

A

An agreement in which one person makes a promise in exchange for a promise from a second person (the contract is binding on both parties to perform)- for example, a broker’s listing which says: “In consideration of the execution of the foregoing, the undersigned broker agrees to use diligence in procuring a purchaser.”

127
Q

Unilateral Contract

A

An agreement in which one person makes a promise- for example, an open listing.

128
Q

Executory Contract

A

A contract in which terms of the contract have yet to be completed.

129
Q

Statute of Frauds

A

Statute that explains what contracts need to be written to be enforceable. Normally, any contract that is not performed within one year must be in writing- for example, any contract that leases real property for more than a year must be put in writing.

130
Q

Novation

A

Term used when part of an agreement is changed, or an old agreement is replaced by a new one.

131
Q

Codicil

A

An addition or supplement that explains, modifies, or revokes a will (or part of one).

132
Q

Agency

A

An individual or corporation who represents another. The other person or corporation is known as the “principal”. A real estate broker does the representing and this relationship is called an “agency”.

133
Q

Fiduciary

A

A professional responsibility to act truthfully and with good faith when you are representing a client. Title agents, bankers, and real estate agents all take on this responsibility. The fiduciary duty of a licensee is, however, only to their principal.

134
Q

Ostensible Authority

A

Situation where a reasonable third party would understand that an agent had authority to act. This means a principal is bound by the agent’s actions, even if the agent had no actual authority, whether express or implied. Also known as Apparent Authority.

135
Q

Dual Agent

A

When a real estate licensee works with both the buyer and the seller.

136
Q

General Agent

A

Agent who has the authority to perform any and all acts required for a job or business. When a real estate agent performs property management functions for a client, he or she is acting as that client’s general agent.

137
Q

Special Agent

A

Agent with the authority to perform a specific duty- for example, a listing agent.

138
Q

Estoppel

A

Signed statement of facts that can’t later be contradicted by the person who signed it- for example, that a lease exists under certain conditions.

139
Q

Exclusive Listing

A

Employment agreement in which a specified agent earns a commission if a property is sold within a specified time frame. The specified agent will generally earn a commission, even if another licensee finds a buyer. If two exclusive listings are signed, the seller may have to pay two commissions.

140
Q

Exclusive Agency Listing

A

Employment contract where the seller agrees to pay a broker commission if any agent/broker finds a buyer. But if the owner sells it themselves, the broker gets no commission.

141
Q

Exclusive Authorization and Right to Sell Listing

A

Employment contract where the owner agrees to sell the property only through the listing broker. The broker gets paid no matter who finds a buyer, so does not need to prove that he/she is the “procuring cause”.

NY Real Estate Exam (2 decks)

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