Words I Struggle with

Question 1

Principle of progression

Answer 1

The idea that the value of a house increases when other, more valuable houses are built in the area. In other words, the “nicer” a neighborhood becomes, the more valuable all houses in it become.

Question 2

Functional obsolescence

Answer 2

a loss of value to improved real property due to inadequate, outmoded, or inappropriate improvements

Question 3

Special warranty deed

Answer 3

a deed in which the grantor warrants, or guarantees, the title only against defects arising during her tenure and ownership of the property and not against defects existing before that time, generally using the language “by, through or under the grantor but not otherwise”

Question 4

Lawful object

Answer 4

A lawful object is an element that must be present in a valid contract. It is legal, implying that something illegal cannot be the object of a contract. For example, a contract to sell a stolen car is a voidable contract from the beginning, as it is illegal to sell a stolen car.

Question 5

Contract for deed

Answer 5

a contract for the sale of real estate under which the sale price is paid in periodic installments by the purchaser, who is in possession and holds equitable title, although actual title is retained by the seller until final payment

Question 6

CC&Rs

Answer 6

Covenants, Conditions, and Restrictions. Condominium documents that serve as the operational procedures describing the rights and prohibitions of the co-owners in a condominium association

Question 7

Balloon loan

Answer 7

also known as a partially amortized loan, it has a fixed rate of interest over a period of time. At the end of the balloon period, the borrower must refinance or pay off the remaining balance - in other words, the rest of the loan balance becomes due.

Question 8

Impounds

Answer 8

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

Question 9

Leasehold estate

Answer 9

a tenant’s right to occupy real estate during the term of a lease, generally considered to be a personal property interest

Question 10

Capitalization rate

Answer 10

the rate of return a property will produce on the owner’s investment

Question 11

Township

Answer 11

the principal unit of the rectangular survey system. A township is a square with 6-mile sides and an area of 36 square miles

Question 12

Prepayment penalty

Answer 12

a charge imposed on a borrower who pays off the loan principal early. This penalty compensates the lender for interest and other charges that otherwise are lost

Question 13

Land trust

Answer 13

a legal entity that takes ownership of, or authority over, a piece of property at the request of the property owner

Question 14

Reversion

Answer 14

the remnant of an estate that the grantor holds after granting a life estate to another person – the estate will return, or revert, to the grantor; also called a reverter

Question 15

Involuntary alienation

Answer 15

the act of transferring property to another without the owner’s consent, as through eminent domain or adverse possession

Question 16

Freehold estate

Answer 16

an estate in land in which ownership is for an indeterminate length of time, in contrast to a leasehold estate

Question 17

suit to quiet title

Answer 17

a court action intended to establish or settle the title to a particular property, especially when a cloud on the title exists

Question 18

Procuring cause

Answer 18

the effort that brings about the desired result. under an open listing, the broker who is the procuring cause of the sale receives commission

Question 19

Estate at sufferance

Answer 19

Estate at sufferance is a leasehold estate that occurs when a tenant stays in possession of a rental property after their lease expires or terminates

Question 20

Regulation Z

Answer 20

law requiring credit institutions to inform borrowers of the true cost of obtaining credit; commonly called the Truth in Lending Act

Question 21

Right of survivorship

Answer 21

the right for a surviving joint tenant(s) to acquire the interest of a deceased joint tenant; also applies to community property right of survorship

Question 22

Economic life

Answer 22

the period of time during which a structure may reasonably be expected to perform the function for which it was designed or intended

Question 23

Blockbusting

Answer 23

the illegal practice of inducing homeowners to sell their properties by making representations regarding the entry or prospective entry of minority persons into the neighborhood

Question 24

Escrow

Answer 24

the closing of a transaction through a third party called an escrow agent, or escrowee, who receives certain funds and documents to be delivered on the performance of certain funds and documents to be delivered on the performance of certain conditions outlined in the escrow agreement

Question 25

Fee appraiser

Answer 25

also known as individual appraisal, is a comprehensive and detailed evaluation of a single property. It is often performed when a property is being sold, refinanced, or for other purposes such as estate planning or litigation.

Question 26

Earnest Money Deposit

Answer 26

an amount of money, deposited by a prospective buyer as evidence of good faith under the terms of a contract, that is to be forfeited if the buyer defaults but applied to the purchase price if the sale is closed

Question 27

Special Assessment

Answer 27

a tax or levy customarily imposed against only those specific parcels of real estate that will benefit from a proposed public improvement like a street or paved alley

Question 28

Trust deed

Answer 28

a deed of trust

Question 29

Open listing

Answer 29

a listing contract under which the broker's commission is contingent on the broker's producing a ready, willing, and able buyer before the property is sold by the seller or another broker

Question 30

Equitable title

Answer 30

the interest held by a vendee under a contract for deed or an installment contract; the equitable right to obtain absolute ownership to property when legal title is held in another's name

Question 31

Cost approach

Answer 31

an estimate of value based on current construction costs, less depreciation, plus land value. Contrast with the income approach to value and the sales comparison approach to value

Question 32

Laches

Answer 32

an equitable doctrine used by courts to bar a legal claim or prevent the assertation of a right because of undue delay or failure to assert the claim or right

Question 33

Encroachment

Answer 33

a building or some portion of it -- a wall or fence, for instance -- that extends beyond the land of the owner and illegally intrudes on some land of an adjoining owner or a street or alley

Question 34

Prepayment penalty

Answer 34

a charge imposed on a borrower who pays off the loan principal early. this penalty compensates the lender for interest and other charges that otherwise are lost

Question 35

servient tenement

Answer 35

land on which an easement exists in favor of an adjacent property (called the dominant tenement); also called servient estate

Question 36

Farmer Mac - FAMC

Answer 36

the Federal Agricultural Mortgage Corporation - a secondary market for farm real estate loans

Question 37

Real Estate Recovery Trust Account

Answer 37

a fund established from real estate license revenues to cover claims of aggrieved parties who have suffered monetary damage through the illegal actions of a real estate or property inspection license holder

Question 38

Fidelity

Answer 38

an agent's duty to represent the interests of the client

Question 39

Homestead

Answer 39

land that is owned and occupied as the family home. In TX, homestead property is protected or exempt from forced sale by creditors for payments of most debts, with several exceptions

Question 40

Referral fees

Answer 40

the money paid to or received when a real estate agent has referred a client to another real estate agent

Question 41

Nonconforming use

Answer 41

a use of property that is permitted to continue after a zoning ordinance prohibiting it has been established for the area

Question 42

Economic obsolescence

Answer 42

also known as external obsolescence; reduction in property's value caused by factors outside the subject property, such as social or environmental forces

Question 43

Ginnie Mae - GNMA

Answer 43

Government National Mortgage Association - a corporation within HUD that participates in the secondary market. It sells mortgage-backed securities that are backed by pools of FHA and VA loans

Question 44

Sherman Anti-Trust Act

Answer 44

the first federal law prohibiting contracts, conspiracies, or agreements that restrain trade

Question 45

Subordination clause

Answer 45

a written agreement between holders of liens on a property that changes the priority of mortgage, judgment, and other liens under certain circumstances.

Question 46

Protection Period Clause (safety clause)

Answer 46

included in a listing agreement to protect the agent. It allows the agent to continue receiving their commission even after the listing period expires if certain criteria are met.

Question 47

Reconveyance deed

Answer 47

a legal document that transfers the title of a property from a lender or mortgage holder back to the borrower once a mortgage has been fully paid off

Question 48

Easement in gross

Answer 48

an easement that is not created for the benefit of any land owned by the owner of the easement but that attaches personally to the easement owner; for example, a utility easement

Question 49

Graduated payment adjustable mortgage (GPAM)

Answer 49

allows for the deferment of certain principal payments. typically, this means that payments on a loan start at a lower monthly payment and increase over a specified time frame

Question 50

Police power

Answer 50

the government's right to impose laws, statutes, and ordinances, including zoning ordinances and building codes, to protect the public health, safety, morals, and welfare

Question 51

Statute of frauds

Answer 51

that part of state law that requires certain instruments, such as deeds, real estate sales contracts, and certain leases, to be in writing to be legally enforceable

Question 52

Intestate

Answer 52

the condition of a property owner who dies without leaving a valid will. Title to the property will pass to the heirs as provided in the state law of descent

Question 53

Liquidated damages

Answer 53

an amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive if the other party breaches a contract; usually the earnest money in residential sales transaction

Question 54

Promissory note

Answer 54

an unconditional written promise of one person to pay a certain sum of money to another at a future specified time

Question 55

Bequest

Answer 55

the transfer of personal property to a legatee in accordance with a will

Question 56

Probate

Answer 56

a legal process by which a court determines who will inherit a decedent's property and what the estate's assets are; literally means "to prove"

Question 57

Real Estate Investment Trust (REIT)

Answer 57

trust ownership of real estate by a group of at least 100 individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax

Question 58

Real Estate Mortgage Investment Conduit (REMIC)

Answer 58

a tax device that allows cash flows from an underlying block of commercial mortgages to be passed through holders without being subject to income taxes at the level of trustee or agent

Question 59

Real Estate Settlement Procedures Act (RESPA)

Answer 59

the federal law that requires certain disclosures to consumers about mortgage loan settlements. the law also prohibits the payment or receipt of kickbacks and certain kinds of referral fees

Question 60

Riparian rights

Answer 60

an owner's rights in land that borders on or includes a stream or river. these rights include access to and use of the water for domestic purposes

Question 61

Tenancy at will

Answer 61

a tenancy without a predetermined duration for the tenancy. Either party can terminate this tenancy at any time.

Question 62

Peddling

Answer 62

the illegal practice of inducing people in a neighborhood to sell their homes, by making them believe that members of a minority group are likely to buy property in and around their residential area. (Blockbusting)

Question 63

Home Equity Line of Credit (HELOC)

Answer 63

a line of credit that uses the equity you have in your home as collateral

Question 64

Eminent domain

Answer 64

the right of a government or public entity to acquire property for public use; the entity must make a good-faith effort to acquire the real property through direct negotiation and purchase from the owner

Question 65

Fee simple

Answer 65

the highest interest in real estate recognized by the law; the holder is entitled to all rights to the property

Question 66

Fee simple defeasible

Answer 66

a fee simple estate qualified by a special limitation. Language used to describe the limitation includes the words so long as, while, or during

Question 67

Secondary mortgage market

Answer 67

a market for the purchase and sale of existing mortgages, designed to provide greater liquidity for mortgages; also called the secondary money market. Mortgages are originated in the primary mortgage market

Question 68

Escheat

Answer 68

the reversion of property to the state in the event the property is abandoned or the owner dies without leaving a will and has no heirs to whom the property may pass

Question 69

LTV

Answer 69

the ratio of debt to value of a property; the loan amount divided by the lesser of sales price or appraisal

Question 70

TRID

Answer 70

requires the lender to provide the Loan Estimate, showing estimated costs, to the borrower within three business days of the date the borrower submits a loan application and the Closing Disclosure, showing actual costs, must be provided to the borrower three business days before closing

Question 71

Easement

Answer 71

a right to use the land of another for a specific purpose, such as for a right-of-way or utilities

Question 72

Option

Answer 72

the right to purchase property within a definite time at a specified price. there is no obligation to purchase, but the seller is obligated to sell if the option holder exercises the right to purchase

Question 73

easement appurtenant

Answer 73

an easement that passes with the land on conveyance

Question 74

easement by necessity

Answer 74

an easement allowed by law as necessary for the full enjoyment of a parcel of real estate; for example, a right of ingress and egress over a grantor's land

Question 75

easement by prescription

Answer 75

an easement acquired by continuous, open, uninterrupted, exclusive, and adverse use of the property for 10 years

Question 76

underwriter

Answer 76

approves, rejects, or returns the loan package to processing with contingency requirements that must be met before resubmission for approval

Question 77

bill of sale

Answer 77

a written instrument given to pass title to personal property

Question 78

lien

Answer 78

a right given by law to certain creditors to have debts paid out of the property of a defaulting debtor, usually by means of a court sale

Question 79

PMI

Answer 79

private mortgage insurance - default insurance on conventional loans, normally insuring the top 20-25% of the loan and not the whole loan

Question 80

Acceleration clause

Answer 80

the clause in a mortgage or deed of trust that can be enforced to make the entire debt due immediately if the borrower defaults on an installment payment or other obligation

Question 81

capital gains

Answer 81

income earned from the sale of an asset

Question 82

millage rate

Answer 82

the amount of tax payable per dollar of the assessed value of a property

Question 83

appurtenance

Answer 83

those rights, privileges, and improvements that belong to and pass with the transfer of real property but are not necessarily a part of the property, such as rights-of-way, easements, water rights, and property improvements

Question 84

arrears

Answer 84

can refer to late payments or to payments made after services are rendered, such as property taxes

Question 85

marketable title

Answer 85

good or clear title, reasonably free from the risk of litigation over possible defects

Question 85

cloud

Answer 85

any document, claim, unreleased lien, or encumbrance that may impair the title to real property or make the title doubtful; usually revealed by a title search and removed by either a quitclaim deed or suit to quiet title

Question 86

adverse possession

Answer 86

the actual, visible, hostile, notorious, exclusive, and continuous possession of another's land under a claim of title. possession for a statutory period may be a means of acquiring title

Question 87

encumberance

Answer 87

any lien (such as a mortgage, tax, or judgment lien) or an easement or a restriction on the use of the land that may diminish the value of a property; a cloud against clear, free title to property

Question 88

Mrs Murphy Exemption

Answer 88

Allows property owners to deny applicants based on nearly any criteria they choose. This exemption states that if a single dwelling has four or fewer units, and the owner lives in one of those units, that home is not subject to FHA regulations and discrimination lawsuits.

Question 89

Latent Defects

Answer 89

a hidden structural defect presumably resulting from faulty construction, known to the seller but not to the purchaser and not readily discoverable by inspection

Question 90

habendum clause

Answer 90

that part of a deed beginning with the words "to have and to hold", following the granting clause and defining the extent of ownership the grantor is conveying

Question 91

Chain of title

Answer 91

the succession of conveyances from some accepted starting point, whereby the present holder of real property derives title

Question 92

HUD

Answer 92

Department of Housing and Urban Development - a foreclosed property owned by the U.S. Department of Housing and Urban Development.

Question 93

Testate

Answer 93

having made and left a valid will

Question 94

Commingling

Answer 94

the illegal act by a real estate broker of placing client or customer funds with personal funds. By law, brokers are required to maintain a separate trust or escrow account for other parties' funds held temporarily by the broker

Question 95

Conversion

Answer 95

refers to the process of changing a property's use to enhance its value and marketability

Question 96

Littoral rights

Answer 96

property rights adjacent to a non-flowing body of water, such as a lake or ocean

Question 97

conveyance

Answer 97

the act of transferring property from one party to another

Question 97

cooperative broker

Answer 97

a real estate broker who helps another broker in a private property transaction

Question 98

express agency

Answer 98

a formal relationship between a property owner and a real estate agent or broker

Question 99

ostensible agency

Answer 99

a form of implied agency relationship created by the actions of the parties involved rather than by written agreement or document

Question 100

revocation

Answer 100

termination of licensure privileges for cause

Question 101

addendum

Answer 101

any provision added to an existing contract without altering the content of the original. It must be signed by all parties

Question 101

Certificate of reasonable value (CRV)

Answer 101

a form indicating the appraised value of a property being financed with a VA loan

Question 102

Grantee

Answer 102

a person who receives a transfer of real property from a grantor

Question 103

Hypothecation

Answer 103

to pledge property as security for an obligation or loan without giving up possession of it

Question 104

"subject to"

Answer 104

situation in which a buyer takes title to property but the existing loan stays in the name of the seller, so the seller is primarily liable for the loan

Question 105

Acre

Answer 105

a unit of land area equal to 4,840 square yards