Real estate exam vocabulary

Personal property that has been attached to real property so it becomes part of it (e.g. a built-in oven). A free-standing appliance stays personal property.

A business tenant's equipment installed for trade purposes — remains the tenant's personal property and is removable before the lease ends.

Annually cultivated crops (fructus industriales) — treated as the tenant's/cultivator's personal property. Trees and perennials are part of the land.

Immobility, indestructibility, and uniqueness (non-homogeneity). Distinct from ECONOMIC characteristics: scarcity, improvements, permanence of investment, and area preference (situs).

Government's power to regulate for health, safety, and welfare (zoning, building codes) — requires NO compensation, unlike eminent domain.

Government's power to take private property for public use WITH just compensation, through condemnation.

Property passes to the state when an owner dies with no will AND no heirs. It is NOT what happens for unpaid taxes — that is tax foreclosure.

An easement benefiting an adjacent parcel (dominant estate over servient estate); it runs with the land. An easement in gross benefits a person/company (e.g. utility lines).

A physical intrusion of an improvement onto a neighbor's land (fence, driveway, overhang) — typically revealed by a survey.

A legal description that traces the boundary by courses and distances from a point of beginning back to that same point.

The most complete freehold estate — the full bundle of rights, indefinitely inheritable.

A freehold estate measured by a life; on that death it passes to the remainderman (or reverts to the grantor).

Co-ownership with the four unities and right of survivorship — a deceased co-owner's share passes to surviving co-owners, outside probate.

Co-ownership with NO survivorship — each owner's undivided interest passes by will or intestacy; shares may be unequal.

Legal notice the world is deemed to have from the PUBLIC RECORD — created by recording. Actual notice is what a person really knows.

What passes title on a deed: the grantor must deliver and the grantee accept during the grantor's lifetime. Recording protects priority but is NOT required for validity between the parties.

Deed with the strongest grantor promises — covenants of seisin, quiet enjoyment, against encumbrances, further assurance, and warranty forever, covering the property's whole history.

Deed with NO warranties — conveys only whatever interest the grantor may have; commonly used to clear title clouds.

The recorded SEQUENCE of ownership. A title search is the process of examining it; an abstract of title is the summary document.

Acquiring title by open, notorious, hostile, continuous possession for the statutory period.

Dying without a valid will — the estate passes to heirs under the state's law of descent and distribution, through probate.

The most probable price a property should bring in an open, competitive market with informed parties acting without undue pressure — distinct from price (what was actually paid) and cost.

The appraisal principle capping value at the cost of acquiring an equally desirable substitute — the foundation of the sales comparison approach.

Progression: a lesser property is pulled UP in value by superior neighbors. Regression: a superior property is pulled DOWN by lesser neighbors.

The reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive (most profitable — same thing).

Valuing by adjusting recent comparable sales — most reliable for typical single-family homes in active markets.

Land value + replacement/reproduction cost of improvements − depreciation. Best for new or special-purpose buildings.

Valuing by the income stream — net operating income ÷ capitalization rate. Used for investment property.

Loss of value from outdated design or over-improvement WITHIN the property (poor layout, superadequacy).

Loss of value from factors OUTSIDE the property (neighborhood decline, nearby nuisance) — the two names mean the SAME thing, and it is incurable.

Loss of value from wear and tear — curable (deferred maintenance) or incurable.

A response changing the offer's terms — it REJECTS and terminates the original offer; the original cannot later be 'accepted'.

Something of legal value exchanged by each party — required for a valid contract.

Requires real estate contracts to be in WRITING to be enforceable — an oral sale contract is unenforceable, not void.

Void: no legal effect ever (illegal object). Voidable: valid until a protected party elects to cancel (minor, fraud victim).

Court remedy compelling a breaching party to perform the contract — available because land is unique.

Damages amount agreed IN the contract (commonly the buyer's earnest money on buyer default).

Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable care — the six duties an agent owes the principal. The C is Confidentiality.

Agent with limited authority for one transaction (a listing broker). A GENERAL agent has broad ongoing authority (a property manager).

One brokerage representing both parties in the same transaction — lawful only with the informed written consent of both (some states use other constructs, e.g. Texas intermediary).

Substituting a new contract or party for an old one, releasing the original obligor — vs. assignment, where the original party stays liable.

The buyer's good-faith deposit held in escrow/trust — NOT required for contract validity; consideration is the mutual promises.

Illegally inducing owners to sell by predicting protected-class entry into the neighborhood (panic selling).

Illegally channeling buyers toward or away from neighborhoods based on a protected class.

Lending/insurance discrimination by area — refusing or pricing loans by neighborhood rather than qualification.

Race, color, religion, national origin, sex, disability, familial status. (Age, marital status, and occupation are NOT federal classes.)

Non-factual opinion talk ('best view in town') — legal, but misrepresentation of FACTS is not.

Illegally mixing client trust funds with the broker's personal/business funds. CONVERSION is actually using client funds — worse.

Price fixing (agreeing on commission rates between brokerages), market allocation, group boycotts — commissions are always negotiable.

A known problem affecting value or safety that must be disclosed to buyers — silence or concealment is misrepresentation.

Federal disclosure required for residential housing built BEFORE 1978 — disclosure, pamphlet, and a 10-day inspection opportunity for buyers.

Property psychologically impacted by an event (death, crime) — many states limit or excuse disclosure; not a physical defect.

Odorless radioactive soil gas that accumulates in basements — the leading environmental cause of lung cancer after smoking; testable and mitigable.

The borrower's personal promise to repay — the evidence of the debt. The mortgage/deed of trust pledges the property as security for it.

Lets the lender declare the ENTIRE balance due on default.

Lets the lender demand full payoff if the property is transferred — prevents loan assumption without consent.

Cancels the lien once the debt is fully paid — the borrower receives a release/satisfaction.

Private mortgage insurance protecting the LENDER on conventional loans above 80% LTV (less than 20% down).

Prepaid interest paid at closing to buy down the rate — one point = 1% of the LOAN amount.

Federal law on settlement procedures — requires the Closing Disclosure, prohibits kickbacks/unearned fees on federally related mortgage loans.

Voluntary: created by the owner's consent (mortgage/deed of trust). Involuntary: by operation of law (tax, judgment, mechanic's liens).

Repaying a loan with regular payments covering interest plus principal so the balance reaches zero at term's end.

Sale price × rate = total commission; splits multiply down the chain (brokerage split, then agent split).

Loan amount ÷ value (or price, if lower) — drives PMI and qualification.

Dividing an expense (taxes, rent) between buyer and seller as of closing — 'through the day of closing' vs 'to the day of' changes who pays closing day.

Texas Real Estate Commission — nine members appointed by the governor (six brokers, three public); exists to protect the public; administers TRELA.

The Texas Real Estate License Act — the statute governing licensing and conduct, enforced by TREC.

The Texas statutory replacement for common-law dual agency: one brokerage facilitating between both parties with WRITTEN consent of each; appointed licensees may advise each side.

Information About Brokerage Services — must be provided at the first substantive communication about a specific property with a party the licensee doesn't represent.

TREC-issued contract forms that license holders MUST use when one fits the transaction (narrow exceptions, e.g. a party's attorney-drafted form). Licensees fill in blanks; they may not draft language.

In the TREC 1-4 Family contract: the buyer pays an option fee for the unrestricted right to terminate within the negotiated period.

Texas marital property system: property acquired during marriage is presumed community. NO automatic survivorship — absent a written survivorship agreement it passes by will or intestacy.

Protected from forced sale by MOST creditors — but NOT against purchase-money liens, property taxes, home-improvement/mechanic's liens, home equity, or owelty.

Additional homestead exemption plus a SCHOOL-TAX CEILING (freezes the tax amount, not the appraised value); taxes may also be deferred — but not erased.

Texas program offering eligible veterans below-market land, home, and home-improvement loans.

A Texas sales agent may act only through — and be paid only by — their sponsoring broker.

TREC-administered fund that can reimburse consumers damaged by a license holder's misconduct when a judgment is uncollectible.

18+, Texas resident (with exceptions), meet TREC's honesty/integrity standards, complete qualifying education, pass the exam, be sponsored.

NOT recognized in Texas. Survivorship forms available: joint tenancy or community property — each only WITH a written survivorship agreement.

The Real Estate Licensing and Registration Act (63 P.S. §455) — Pennsylvania's licensing statute, enforced by the State Real Estate Commission.

Sits in the Department of State (Bureau of Professional and Occupational Affairs); licenses, regulates, and disciplines licensees to protect the public.

PA's required disclosure of the business relationships available (seller agent, buyer agent, dual agent, designated agent, transaction licensee) — provided at the INITIAL INTERVIEW. (Not the Texas IABS.)

A PA licensee providing services WITHOUT an agency relationship — owes only honesty and disclosure of known material defects, not fiduciary duties.

Permitted in Pennsylvania with the informed WRITTEN consent of all parties; designated agency lets the broker appoint separate licensees for each side.

Pays a consumer holding an UNCOLLECTIBLE court judgment against a licensee for fraud, misrepresentation, or deceit — payment suspends the license until repaid with interest.

18+, complete 75 hours of approved pre-licensing education, pass both exam portions (75% each), and be employed by a sponsoring broker.

PA licenses renew every two years with required continuing education; practicing on a lapsed license is unlicensed activity.

The license must be transferred to the new broker before the salesperson may act for them; compensation comes ONLY from the employing broker.

Deposits go into the BROKER's escrow/trust account; a salesperson receiving funds must promptly deliver them to the broker. Commingling and conversion are prohibited.

Advertising that omits the employing broker's business name — prohibited; all advertising is under the broker's supervision and name.

68 Pa.C.S. Ch. 73 — the seller must deliver a written disclosure of KNOWN material defects BEFORE the buyer signs the agreement of sale; it is not a warranty.

Extends fair-housing protection beyond the federal classes — including ancestry, age (40+), and use of a guide or support animal.

Recognized in Pennsylvania for married couples — includes right of survivorship. (PA is NOT a community-property state.)

Where appeals from PA Real Estate Commission adjudications are heard (not the Court of Common Pleas).

Nine members; regulates and disciplines licensees to protect the public; administers the Real Estate License Law (Ch. 93A) and the Real Estate Education and Recovery Fund.

North Carolina's Real Estate License Law — the statute governing licensing and conduct, enforced by the NC Real Estate Commission.

NC's entry-level license — there is NO 'salesperson' in NC. A provisional broker works under a broker-in-charge and removes provisional status via 90 hours of postlicensing education.

The broker responsible for a firm/office; must have 2 years' full-time experience plus the BIC course; supervises provisional brokers and trust funds.

NC's required agency disclosure, given at first substantial contact. It is a DISCLOSURE, not a contract — and not the Texas IABS or PA Consumer Notice.

Paid by the buyer TO THE SELLER under the NC Offer to Purchase (Form 2-T); generally NON-refundable — it buys the buyer the due-diligence period.

The window in which an NC buyer may terminate for ANY reason and get the EARNEST MONEY back (but not the due-diligence fee).

Permitted in NC UNTIL the buyer is ready to make an offer — at that point the buyer-agency agreement must be in writing.

Both permitted with written consent. Designated agency lets the BIC appoint separate agents to each party within a dual-agency firm.

NC real estate closings are handled by a licensed attorney — not by the broker or a title/escrow company alone.

Client monies go into the firm's trust/escrow account; commingling and conversion are prohibited; transaction records are kept 3 years. A provisional broker delivers funds to the BIC.

NC excise tax is $1.00 per $500 of value, paid by the SELLER at closing.

The Real Estate Education and Recovery Fund reimburses a consumer holding an unsatisfied judgment against a licensee for fraud or misrepresentation.

18+, complete the 75-hour Broker Prelicensing Course, pass both exam sections (scaled score 75 each) within one 180-day window, affiliate under a BIC. Renew annually by June 10.

NC's mandatory seller disclosure of known property conditions and HOA information; NC also requires a mineral/oil/gas rights disclosure.

Nevada's real estate licensing statute; with NAC 645 (the regulations) it governs licensing and conduct, enforced by the Nevada Real Estate Division.

The state agency (with the Real Estate Commission) that licenses, regulates, and disciplines real estate licensees to protect the public.

Nevada's mandatory agency disclosure form describing the duties a licensee owes — provided to the parties. (Not the Texas IABS, PA Consumer Notice, or NC Working With Real Estate Agents form.)

Nevada's signed written consent allowing a licensee to act for MORE THAN ONE party in the same transaction — NV's mechanism for multiple representation.

NV's entry-level license — works under a licensed broker (or broker-salesperson); compensated only through the broker.

Nevada IS a community-property state — property acquired during marriage is presumed community property.

Nevada requires the seller of residential property to disclose known defects/conditions on the state disclosure form.

In an NV common-interest community (HOA), the seller must provide the buyer the resale package/certificate — a heavily tested NV requirement.

Fees collected before services are rendered — specifically regulated in Nevada, with accounting requirements.

Earnest money and client funds go into the BROKER's trust account; commingling and conversion are prohibited; a salesperson delivers funds to the broker.

Nevada fund that reimburses a consumer holding an unsatisfied judgment against a licensee for fraud or misrepresentation.

A Nevada licensee must promptly notify the Division of a conviction or guilty/nolo plea, a change of broker association, and changes in personal information.

Advertising must identify the broker; a salesperson advertises under the broker, not independently.

Nevada regulates when and how a licensee may give a broker price opinion — a value estimate that is not a formal appraisal.

Nevada licenses are renewed with required continuing education; status changes and denials are governed by NRS/NAC 645.

Washington's ENTRY-LEVEL real estate licence. Not 'salesperson' or 'sales agent' — those are other states' terms. A managing broker is a separate, HIGHER licence.

The licensee a real estate firm designates to be responsible for the firm — the supervising licensee. Do not confuse with 'managing broker', which is a licence level, not a role.

The licensed business entity under which brokers are affiliated. RCW 18.85.011 includes a sole proprietorship or LLC — not only partnerships and corporations.

Washington's STATUTORY agency law for real estate. It replaced common-law agency, so WA agency questions are answered from statute, not from common-law fiduciary doctrine.

The agency disclosure pamphlet a WA licensee must provide. Washington has NO IABS (Texas), NO Consumer Notice (Pennsylvania) and NO Working With Real Estate Agents form (North Carolina).

Legal with the written consent of both parties. Where two licensees of the same firm represent opposite sides, the firm's DESIGNATED BROKER is by default the dual agent.

Washington's real estate regulator, headed by the DIRECTOR — who adopts rules and imposes discipline. The Real Estate Commission ADVISES; it does not issue licences or adopt rules.

A body funded from licensing fees to support real estate research and education in Washington. Distinct from the advisory Commission.

Washington's tax on the sale of real property, paid by the SELLER and graduated by sale price. Not North Carolina's $1-per-$500 excise stamp.

Client money is held in the FIRM'S pooled trust account maintained by the designated broker under WAC 308-124. A broker delivers funds to the firm and never holds them personally; commingling and conversion are prohibited.

Washington IS a community-property state. It recognises tenancy in common and joint tenancy, but NOT tenancy by the entirety.

Washington's pre-licence education: a 60-hour Real Estate Fundamentals course plus a 30-hour Real Estate Practices course, each with its own school final requiring 70%.

Washington's exam is delivered by PSI, not Pearson VUE: 140 questions total — national 105 (100 scored) and Washington state 35 (30 scored) — needing 70% on EACH portion, scored independently.

Both exam portions must be passed within six months of each other, or you retake both. Separately, exam results stay valid for one year before you must apply for the licence.

Washington's landlord-tenant statute. Property management sits under the statutes-and-rules area of the state exam, not a separate landlord-tenant area as in North Carolina.

Washington has no state-mandated contract forms. The widely used NWMLS forms are private-industry forms — unlike Texas, where TREC promulgates required forms.

Florida's ENTRY-LEVEL real estate licence — not 'salesperson' or 'sales agent'. A sales associate works under a broker or owner-employer; broker is a separate, higher licence.

The Florida Real Estate Commission: SEVEN members appointed by the Governor — four licensed brokers, one broker or sales associate, and two consumer members who have never held a real estate licence. It adopts rules (61J2), sets education standards, and disciplines licensees.

The Department of Business and Professional Regulation — the umbrella agency that receives applications, investigates complaints, and houses the Division of Real Estate. FREC regulates; the DBPR administers.

Florida's PRESUMED (default) brokerage relationship — limited representation without fiduciary duties to either party, owing 8 statutory duties. Unless a single-agent or no-brokerage notice says otherwise, a Florida licensee is a transaction broker.

The Florida relationship with FULL fiduciary duties (9 of them), created only with the written Single Agent Notice. Moving from single agent to transaction broker requires the principal's written Consent to Transition.

Florida's third authorized status: the licensee represents nobody, owing only honesty and fair dealing, disclosure of known material defects, and accounting for funds.

Florida's mechanism where two sales associates in the SAME brokerage each represent one party as single agents — allowed ONLY in commercial transactions meeting statutory thresholds. Not the same as other states' designated agency.

A sales associate delivers a deposit to the broker by the end of the NEXT business day; the broker deposits it by the end of the THIRD business day after the brokerage receives it. The exam tests both clocks.

One of Florida's four escrow-dispute settlement procedures (mediation, arbitration, litigation, EDO): FREC itself orders how disputed escrow funds are paid out. A broker who follows an EDO and later loses in court is reimbursed by the Recovery Fund WITHOUT licence discipline.

Florida's fund reimbursing consumers with unsatisfied judgments against licensees for acts in a real estate transaction. Florida HAS one — don't import another state's 'no recovery fund' rule.

Constitutional protection from forced sale by most creditors, a tax exemption, the Save Our Homes 3% assessment cap, and restrictions on devise when there is a spouse or minor child. Heavily tested from several angles.

Florida's transfer taxes: doc stamps on the DEED (on price) and on the NOTE (on amount financed), plus intangible tax on the MORTGAGE. No state income tax — these are the exam's Florida tax staples.

Florida RECOGNISES tenancy by the entirety for married couples (with survivorship), and is NOT a community-property state — the reverse of Washington and Nevada.

Active, voluntarily inactive, involuntarily inactive (e.g. failed to renew — two years to cure), and null and void. Skipping the 45-hour post-licensing course before first renewal makes the licence NULL AND VOID, not merely inactive.

Florida's education ladder: 63-hour FREC Course I to qualify, 45 hours of post-licensing before the FIRST renewal, then 14 hours of continuing education per 2-year cycle. Three different numbers the exam loves to swap.

Florida's agreements with certain states letting their licensees skip Course I and take a 40-question Florida-law exam instead. Not reciprocity — Florida residents can't use it, and not every state qualifies.

Florida's sales associate exam is ONE 100-question test at Pearson VUE — 3.5 hours, pass at 75, national and Florida law mixed together. There is no separately-scored state portion, unlike every other state we serve.

California's entry-level licence — correctly 'salesperson', not Florida's 'sales associate' or Texas's 'sales agent'. A salesperson must be employed by and act under a licensed broker.

The Department of Real Estate, headed by the Real Estate Commissioner, regulates California licensees under Business and Professions Code Division 4 and the Commissioner's Regulations (Title 10 CCR). California has a COMMISSIONER, not a commission that adopts rules.

California's salesperson exam is ONE 150-question test written and administered by the DRE itself — three hours, pass at 70% (105 correct), four choices per item. No separately scored national and state portions.

A broker must place trust funds with the owner of the funds, into a neutral escrow depository, or into the broker's trust account within THREE BUSINESS DAYS of receipt — B&P 10145 and Regulation 2832.

Commingling is mixing trust funds with the broker's own money, complete the moment the deposit is made. Conversion is actually applying those funds to the broker's own use. The exam tests them as separate violations.

California's three-step agency process for residential property of one to four units, using the 'Disclosure Regarding Real Estate Agency Relationships' form. Confirmation is made in or with the purchase agreement.

Lawful only with the informed WRITTEN consent of both parties. A dual agent must not reveal either party's willingness to move on price without permission. California has no transaction-broker status.

The seller's disclosure for residential property of one to four units. Court-supervised transfers such as probate sales are exempt. Delivered after the offer is signed, it carries a three-day right to terminate on personal delivery.

Discloses whether the property sits in designated statutory hazard zones — flood, fire, seismic. It identifies zones; it never certifies that a property is safe.

A death on the property must be disclosed only if it occurred within the preceding three years. Separately, an occupant's HIV or AIDS status must NEVER be disclosed, whatever the seller says.

A licensee must make a reasonably competent and diligent visual inspection of residential property of one to four units and disclose material facts it reveals. It covers reasonably accessible areas only, and a seller cannot waive the licensee's own duty.

California's fund paying claimants holding an unsatisfied judgment against a licensee for acts in a licensed transaction. A payment brings AUTOMATIC SUSPENSION of that licensee until repaid with interest.

The Commissioner may issue one to stop conduct immediately, BEFORE any hearing. Suspension and revocation require the formal hearing process first.

California's standard security instrument: trustor (borrower), beneficiary (lender), and trustee holding bare legal title with a power of sale. That power enables NON-JUDICIAL foreclosure by trustee's sale, beginning with a recorded notice of default.

California bars a deficiency judgment on purchase-money loans secured by owner-occupied dwellings of one to four units. It does not extend to commercial or investment lending.

California IS a community-property state and recognises community property WITH RIGHT OF SURVIVORSHIP as a distinct vesting, adding survivorship to community property's basis treatment. California does NOT recognise tenancy by the entirety.

One percent base property tax rate on assessed value, with assessed value rising no more than two percent a year unless there is a change of ownership or new construction. A supplemental assessment bills the difference after a purchase.

California's county-level tax on recorded conveyances, calculated on the consideration paid.

The Map Act governs the physical division of land and local map approval. The Subdivided Lands Act is the DRE-administered consumer-protection statute requiring a PUBLIC REPORT before subdivided interests are offered. The exam swaps them deliberately.

Governs California common interest developments — condominiums, planned developments and stock cooperatives — including the association and its governing documents. CC&Rs are private restrictions running with the land, enforced by the association rather than by government.

PERMITTED in California, but the licensee must disclose the exact amount of profit before the principal becomes bound. An exclusive listing must also carry a definite termination date.

A fee collected before services are rendered to promote a sale or lease. California requires the materials to be submitted to the Commissioner in advance of use, and the funds are trust funds.

California's pre-licence education for a salesperson: three college-level courses totalling 135 hours — Real Estate Principles, Real Estate Practice, and one approved elective.

A CLTA standard policy covers matters of record. An ALTA extended policy adds off-record risks a survey or inspection would reveal, such as boundary and occupancy problems.

Requires open, notorious, hostile and continuous possession for the statutory period AND payment of the property taxes throughout. The tax-payment element is the one candidates forget.