Real Estate: Exam Key Vocabulary Flashcards

Question 1

Define Fee Simple Absolute.

Accepted Answer

The most complete form of private ownership: it has no time limit, can be sold or left to heirs, and is limited only by government powers and recorded restrictions.

Question 2

Define Life Estate.

Accepted Answer

An ownership interest that lasts only as long as a named person is alive, after which the property passes to someone else or returns to the original grantor.

Question 3

What is Remainderman?

Accepted Answer

The person named to receive ownership of a property automatically when a life estate ends, without needing a new deed or court order.

Question 4

Define Bundle of Rights.

Accepted Answer

The set of legal rights that come with owning real property, usually listed as possession, control, enjoyment, exclusion and disposition.

Question 5

Define Tenancy in Common.

Accepted Answer

A form of co-ownership in which each owner holds an undivided share, shares can be unequal, and there is no right of survivorship.

Question 6

Define Joint Tenancy.

Accepted Answer

A form of co-ownership with right of survivorship that traditionally requires the four unities of time, title, interest and possession.

Question 7

Define Right of Survivorship.

Accepted Answer

A feature of some co-ownership under which a deceased owner's interest passes automatically to the surviving co-owners instead of to the deceased owner's heirs.

Question 8

What is Easement?

Accepted Answer

A non-possessory right to use part of someone else's land for a specific purpose, such as access, drainage or utility lines, without owning that land.

Question 9

Define Easement Appurtenant.

Accepted Answer

An easement that benefits a neighboring parcel, called the dominant estate, burdens the servient estate, and transfers automatically when either parcel is sold.

Question 10

What is Encroachment?

Accepted Answer

A building, fence or other improvement that extends without permission onto a neighboring property or a public right of way, often discovered by a survey.

Question 11

What is Lien?

Accepted Answer

A legal claim against a property that secures payment of a debt and can allow the creditor to force a sale if the debt is not paid.

Question 12

What is Fixture?

Accepted Answer

An item of personal property that has been attached to or adapted for real property in a way that makes it part of the real estate.

Question 13

Define Eminent Domain.

Accepted Answer

The power of a government to take private property for public use, provided it pays the owner just compensation through a legal process called condemnation.

Question 14

Define Police Power.

Accepted Answer

The government's authority to regulate how private property is used in order to protect public health, safety and welfare, without paying compensation.

Question 15

Define Adverse Possession.

Accepted Answer

A way of gaining title to someone else's land by occupying it openly, continuously and without permission for the period set by state law.

Question 16

Define Bilateral Contract.

Accepted Answer

A contract in which each party makes a promise to the other, so both sides are legally bound from the moment it is formed.

Question 17

Define Unilateral Contract.

Accepted Answer

A contract in which only one party makes a binding promise, and the other party is free to act or not act in exchange for it.

Question 18

Define Void Contract.

Accepted Answer

An agreement that has no legal force from the start, usually because it lacks an essential element or has an illegal purpose.

Question 19

Define Voidable Contract.

Accepted Answer

A contract that is valid and binding until one party, who has the legal right to do so, chooses to cancel it.

Question 20

Define Statute of Frauds.

Accepted Answer

A state law that requires certain contracts, including contracts for the sale of real estate, to be in writing and signed to be enforceable.

Question 21

What is Consideration?

Accepted Answer

Something of legal value that each party gives or promises in exchange for the other party's promise, which makes an agreement a binding contract.

Question 22

Define Earnest Money.

Accepted Answer

A deposit a buyer makes after an offer is accepted to show good faith, usually held in escrow or a trust account and credited at closing.

Question 23

What is Contingency?

Accepted Answer

A condition written into a purchase contract that must be met, or waived, before the parties are required to complete the sale.

Question 24

Define Option Contract.

Accepted Answer

An agreement in which an owner, for a fee, gives another person the exclusive right to buy a property at a set price within a set time.

Question 25

What is Novation?

Accepted Answer

Replacing an existing contract or party with a new one by agreement of everyone involved, which releases the original party from liability.

Question 26

Define Time Is of the Essence.

Accepted Answer

A contract clause stating that every deadline in the agreement must be met exactly, so a missed date can be treated as a breach.

Question 27

Define Fiduciary Duties.

Accepted Answer

The duties an agent owes a client: obedience, loyalty, disclosure, confidentiality, accounting and reasonable care.

Question 28

What is Principal?

Accepted Answer

The person who hires a real estate agent and is owed fiduciary duties, also called the client, as opposed to a customer who is only owed honesty and fair dealing.

Question 29

Define Dual Agency.

Accepted Answer

A relationship in which one agent or brokerage represents both buyer and seller in the same transaction, which generally requires informed written consent and is banned in some states.

Question 30

Define Exclusive Right-to-Sell Listing.

Accepted Answer

A listing agreement under which the broker earns the commission if the property sells during the term, no matter who finds the buyer, including the owner.

Question 31

Define Exclusive Agency Listing.

Accepted Answer

A listing agreement with one broker in which the owner keeps the right to sell the property personally without owing that broker a commission.

Question 32

Define Open Listing.

Accepted Answer

A non-exclusive listing that an owner can give to several brokers, where only the broker who actually procures the buyer is paid.

Question 33

Define Procuring Cause.

Accepted Answer

The broker whose efforts started an uninterrupted series of events that resulted in a completed sale, which is used to settle commission disputes.

Question 34

What is Commingling?

Accepted Answer

Mixing clients' money, such as earnest money deposits, with a broker's own business or personal funds, which licensing laws prohibit.

Question 35

Define Material Fact.

Accepted Answer

Any fact that would likely affect a reasonable person's decision to buy, sell or set the price of a property, which agents must disclose.

Question 36

Define Special Agent.

Accepted Answer

An agent authorized to carry out one specific task or transaction for a principal, with no broader power to bind them.